Insights
The new procurement law: what a government contractor settles before 2 January 2027
The new Government Tenders and Procurement Law was published on 4 September 2026 and takes effect on 2 January 2027; its implementing regulations follow within the same period. A contractor that waits for them will be reading the rules in the middle of its next bid.
What has changed
The law replaces the 2019 law and keeps its model. What moves is speed and weight. The amount a head of entity may delegate rises from SAR 10 million to SAR 50 million. Direct purchases may reach SAR 1 million, with priority to local small and medium enterprises. The Ministry of Finance’s review before signing falls from up to fifteen working days to four. Overdue payments to contractors must be settled before new award decisions are issued, and contracts may be transferred between government entities.
| 2019 law | New law | |
|---|---|---|
| Delegable by the head of entity | SAR 10 million | SAR 50 million |
| Direct purchase ceiling | SAR 100,000 | SAR 1 million |
| Ministry of Finance review before signing | up to 15 working days | 4 working days |
Local content moves into the award
The priority given to local content, to Saudi small and medium enterprises and to companies listed on the Saudi Exchange continues. What is new is how closely it is tied to planning, evaluation and delivery — through Etimad, the Local Content and Government Procurement Authority and the Regional Headquarters Programme. Serious or repeated breaches of local content obligations can lead to exclusion from government contracting and a lower contractor classification.
What it means for a contractor
Three things decide the next two years: the local content position the company can prove, the terms it will accept when its contract is transferred to another entity or amended, and the payment and claims provisions it relies on. Each is cheaper to settle before a bid than after an award.
What we would do now
A short readiness review, before the regulations are issued. We read the company’s standard bid documents, subcontracts and local content file against the new law, and return one page: what changes, what to fix, and in what order. The work is done once; every bid after it uses the result.
Where we come in
Our Projects, Energy & Real Estate circle carries construction and supply contracts; our Financial Regulation & Competition circle handles the dealings with the authorities.
This note is general information, not legal advice. It reflects the law as we understand it on the date shown.