Saudi Arabia has published a new Government Tenders and Procurement Law that raises the financial thresholds governing how state bodies award contracts, shortens approval timelines and streamlines the committees that assess bids.

The law was published in the official gazette, Umm Al-Qura, on 4 September and replaces the previous procurement law issued under Royal Decree M/128 in 2019. It takes effect 120 days after publication.

The most significant change for contractors and suppliers is a sharp increase in the value of contracts that the head of a government entity can delegate to another official. Under the 2019 law, delegation was capped at SR10m ($2.7m). The new law raises that ceiling fivefold to SR50m ($13.3m), widening the scope for faster decision-making below the level of the entity head.

The threshold for direct purchase, which allows a government body to contract without a full competition, rises tenfold from SR100,000 ($26,667) to SR1m ($266,667). Contracts using this method must give priority to local small and medium-sized enterprises.

The law also cuts the finance ministry's review period for contracts before signing to four working days, down from up to 15 working days under the previous regime. If the ministry does not respond within that period, its approval is deemed granted. Bodies without an allocation in the state budget are exempt from the review requirement.

Government entities gain more room to adjust contracts once awarded. The permissible increase in a contract's value through change orders rises to 20%, against 10% previously, split between new line items and increases to existing ones. The head of an entity may now also delegate authority to sign contracts and other documents without a financial limit.

The two committees that previously handled bid opening and bid evaluation separately are consolidated into a single committee responsible for opening, examining and recommending awards. The law introduces payments for committee members, an area the previous law did not address.

Other provisions carried into the new text include a performance bond set at 5% of contract value, a primary bid guarantee of between 1% and 2%, and a bid validity period of 90 working days. The law introduces a mechanism allowing government contracts to be transferred between state entities, and requires entities to settle overdue payments to contractors before issuing new award decisions.

The standstill period between an award decision and contract signing, during which unsuccessful bidders can lodge grievances, is set at between three and 10 working days. The law allows exemptions from the standstill for tenders whose nature does not require it.

The full implementing regulations, which will carry much of the operational detail, are to be issued by the finance ministry within 120 days of publication and will take effect alongside the law. Two further frameworks covering research, development and innovation, and localisation and knowledge transfer, are also provided for.