Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Foreign companies interested in operating in Saudi Arabia without a Saudi agent can open offices and appoint representatives to pursue business opportunities directly with various government agencies and departments. Foreign companies interested in bidding on a government project must make themselves known to that specific government agency/ministry offering the project. When a project becomes available, the government agency/ministry selects bidders from a list of prequalified/known companies and invites them to bid for that project.
The Saudi Government Contracting and Procurement Law states that all qualified companies and individuals will be given equal opportunities and will be treated equally. The law also affirms that all government bids must be announced in the official gazette Umm al-Qoura (Arabic), in two local newspapers, as well as in electronic media. There is no central tender board in Saudi Arabia. Every government agency has its own full contracting authority. The Ministry of Finance operates a central government procurement portal where all government tenders are listed. The system was established, among other things, to standardize the government procurement process and procedures, promote fairness and transparency, and enable the sharing and exchange of data and information between the government and the private sector.
Foreign companies can provide services to the Saudi Arabian government (SAG) directly without a Saudi service agent, and can market their services to public entities through an office that has been granted temporary registration. Foreign suppliers to the SAG, if not already registered to do business in Saudi Arabia, are required to obtain a temporary registration from the Ministry of Commerce and Investment within 30 days of contract signing.
Most Saudi defense contracts are negotiated outside these regulations on a case-by-case basis. Contractors must subcontract 40 percent of the value of any government contract, including support services, to firms majority-owned by Saudi nationals. An exemption is granted where no Saudi-owned company can provide the goods and services necessary to fulfill the procurement requirement.
The tender regulations require that preferences be given in procurements to Saudi individuals and establishments and other suppliers in which Saudi nationals hold at least 51 percent of the supplier’s capital. The tender regulations also give a preference to products of Saudi origin that satisfy the requirements of the procurement. In addition, Saudi Arabia gives priority in government purchasing to GCC products. These items receive up to a 10 percent price preference over non-GCC products in all government procurements in which foreign suppliers participate. In addition, several royal decrees strongly favoring GCC nationals in the award of government procurement contracts have been issued. Foreign suppliers that participate in government procurement are required to establish a training program for Saudi nationals.
The U.S. Commercial Service in Saudi Arabia has noticed an uptick in the number of U.S. firms receiving unsolicited, but seemingly attractive, business proposals from entities masquerading as a Saudi government agency. In several instances, the scammers present themselves as working for a Saudi government or reputed business entity that is seeking a potential partner to participate in lucrative government procurement opportunities in the Kingdom. These scammers use in their communications official-looking letterheads, websites, known names of government and business executives, and routine tender/procurement language and procedures to give the impression of legitimacy. U.S. companies are strongly advised to carefully scrutinize and vet such “offers” and “entities” before making any payments, ship samples, or commit other resources. When unsure, we encourage U.S. firms to contact the nearest U.S. Export Assistance Center in the United States and to consider utilizing the Commercial Service’s due diligence services to verify the identity of potential partners and legitimacy of contracts.
Many governments finance public works projects through borrowing from Multilateral Development Banks. Please refer to “Project Financing” Section in “Trade and Project Financing” for more information.