Saudi Arabia’s Interior Ministry has tendered one of its biggest ever construction contracts as part of plans to increase security services across the country.
Commercial and technical bids for the the SR22bn ($6bn) deal, to build a network of security compounds, are due on 26 July, sources close to bidding firms tell MEED.
The facilities will be used to house, educate and train members of Saudi Arabia’s security agencies
The contract covers the construction, operation and maintenance of 28 different types of facilities, to be built at 41 locations throughout the country.
The facilities will be used to house, educate and train members of Saudi Arabia’s public security, civil defence service, fire service, police force, passports division and special security and investigative forces.
The compounds have been designed to include schools, mosques, theatres, civilian dormitories, military barracks, administration buildings, training facilities and buildings for recreation and entertainment.
The majority of the security premises will be built in and around Riyadh, sources close to the project say, although facilities will also be built in the provinces of Qassim, Hail, Tabuk, Jeddah, Madinah, Taif, Al-Jouf and on Saudi Arabia’s Northern borders.
At least seven companies have expressed interest in bidding alone or through a consortium, although many of them are hoping the ministry will extend the deadline to allow more time to finalise the bids. They include Al-Rashid Trading & Contracting Company, Al-Arrab Contracting Company, Nesma & Partners Company, Alfanar Construction Company, Al-Redwan Trading & Engineering Company, Al-Khodari Sons Company, Saudi Binladin Group and Saudi Oger.
During a pre-bid meeting held in the second quarter of 2010 the ministry asked prequalified firms to bid on the contract in its entirety, but said that it would probably divide the contracts and allocate portions to several contractors or consortiums.
The contract is only open to local companies but the size and scope of the contract would make it difficult for a single firm or consortium to complete in its entirety.
“Contractors are being asked to provide a complete offer for all the facilities, which would allow the ministry to specify which contractors will be awarded which contracts,” says an executive at a firm which plans to bid on the deal.
“This is a huge project,” says a source at another contractor which is looking for joint venture partner to bid on the contract with. “There are probably only two or three companies in Saudi Arabia that could afford to bid alone on the project. For us, we wouldn’t pass the prequalification unless [the Interior Ministry] divides it.”
The scheme is probably the biggest tender ever issued by the ministry. It is currently assessing bids for an estimated $3.4bn contract to build rehabilitation facilities for recently released prisoners across the country. Six local contractors submitted bids for the contract in the February 2009, and an award is expected before the end of the year.
In April 2009, Chinese contractor Norinco bid SR17bn on an Interior Ministry tender to build 17,000 homes on 11 sites for members of the Saudi National Guard. Local contractors Saudi Binladin Group and Saudi Oger are the only other companies to have bid for the entire package (MEED 9:4:09).
In 2006, the ministry awarded the local Saudi Binladin Group an estimated $1.6bn contract to build nine prisons and associated administration buildings. The prisons are scheduled for completion in early 2011.
Saudi Arabia’s population is growing at 3 per cent a year and the kingdom faces a shortage of up to 1 million new homes. Up to 43 per cent of the country’s populations is between the ages of 20 and 34 and an estimated 11 million people need jobs.
Large-scale projects are being developed throughout the kingdom to address the job and housing shortages, and contractors see public infrastructure as becoming a major source of work in the future. In late 2009 Riyadh approved a budget of $144bn for construction and development projects during the year.
“The cities in Saudi Arabia are growing very quickly and the civil service facilities have not caught up to the suburban sprawl,” says John Harris, director of Jones Lang LaSalle in Saudi Arabia. “Budgets are good right now. Many government departments are seizing the opportunity to upgrade the services they offer. The consciousness of security threats in Saudi Arabia is stronger than ever right now, so it’s no doubt that the Interior Ministry is upgrading as well.”