Saudi Arabia reverses major rule

Saudi Arabia has reversed its earlier restriction and will now allow government entities to contract with international companies and institutions that do not have a regional headquarters in Saudi Arabia.

The decision, announced by the Local Content and Government Procurement Authority, aims to maintain spending efficiency while ensuring the timely execution of strategic projects.

Relevant entities have been instructed to submit exception requests through the digital ‘Etimad Platform’, the Ministry of Finance’s official digital gateway for budget, contract, and procurement management.

The move balances compliance with the “regional headquarters relocation” rule, introduced in early 2024, with the practical need for specialised technical expertise and competitive pricing in government projects.

Under the previous restriction, contracts with any foreign company without a regional HQ in Saudi Arabia were suspended for all government entities, institutions, funds, and affiliated authorities.

Authorities clarified that exceptions can be requested for specific projects, groups of projects, or defined time periods, provided the requests are submitted before launching a tender or direct contracting procedure. Two circulars issued by the authority outline the submission process and the handling of such contracts.

Foreign companies remain eligible to participate in public tenders, but bids will only be accepted if they are the sole technically compliant offer or at least 25% lower than the next competitor. Projects valued at SAR 1 million or less are exempt from these controls.