Firms submit fresh bids for Saudi border deal

25 July 2008
Rising cost of raw materials has led to delays in the project to install a radar-based security system.

Three firms are re-submitting bids for the second phase of the multi-billion-dollar project to strengthen Saudi Arabia’s border defences, following delays to the scheme caused by rising raw materials costs.

The three companies are the local Al-Rashid Trading & Contracting Company (RTCC ) in a joint venture with the Germany-based European Aeronautic Defence & Space Company (Eads), the US’ Raytheon, and the local Madaf for Trading & Contracting with France’s Thales.

Bids are due to be submitted to the Interior Ministry in the first week of August, and the evaluation of offers is expected to take one and a half months.

While the value of the contract is not yet known, one source close to the process tells MEED the re-submitted bids are expected to come in below the original prices of about SR37bn ($10bn).

One way of doing this is by using different technologies to reduce the overall cost, he adds.
“I think the bids being re-submitted will be lower this time,” says the source. “Everyone will try to find a way of dropping the price.”

The project is the second phase of the Interior Ministry’s plan and involves installing a radar-based system to detect incursions along its border with Jordan, Kuwait, Qatar, the UAE, Oman and Yemen and its Gulf and Red Sea coasts.

“It measures approximately 6,000 kilometres,” says the source. “It covers the Gulf side, the southern side and the coastal side running up to Jordan. It is the biggest project of its kind in the world. There is nothing else like it. That is why you have these international firms seeking to get involved.”

Another contractor close to the scheme says only a limited number of firms can meet project’s design requirements. “You need to be very experienced to work on such a project,” he says. “It is not an easy task. You have to build a system in a remote area and be able to maintain it. It is not just providing the security system, it is how you reach that area, and how to supply roads to that area.”

In June, the first phase of the project, involving a $900m contract to build a fence along the border with Iraq, was awarded to a joint venture of RTCC and Eads. The contract covers the construction of a 900km-long fence along the frontier (MEED 20:6:08).

The venture received a letter of intent in mid-June from the Interior Ministry and is due to commence mobilisation works.

The original bids for the Iraq border fence were submitted in October 2007, with the expectation that a contract would be awarded by the end of that year. The decision was delayed because of the rising cost of raw materials.

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