New rule: Saudi Arabia reverses restriction, allows foreign companies in government projects

Saudi Arabia has reversed its previous restriction and now permits government entities to contract with international companies and institutions that do not have a regional headquarters in the Kingdom.

The move is designed to maintain spending efficiency while ensuring timely execution of strategic projects.

The Local Content and Government Procurement Authority has informed relevant entities about submitting exception requests through the digital Etimad Platform.

This balances compliance with the “regional headquarters relocation” rule, introduced in early 2024, with practical project requirements demanding specialised technical expertise or financial competitiveness.

Previous restriction

Under the earlier government decision, contracting with any foreign company whose regional headquarters was outside Saudi Arabia was suspended from early 2024. The directive applied to all government entities, institutions, funds, and affiliated authorities.

Regulatory framework and controls

Authorities have clarified the rules for contracting with foreign companies lacking a regional HQ. Government entities can submit requests to a competent committee for exceptions on specific projects, groups of projects, or defined time periods, provided the request is made before launching a tender or direct contracting procedure.

Two circulars issued by the authority detail the submission process and the handling of contractual cases under these controls.

Etimad Platform role

The exception service is available for tenders issued through the Etimad platform, the Ministry of Finance’s official digital gateway for budget, contract, and procurement management.

Tenders launched before the rollout or outside the platform continue under previous submission mechanisms. Etimad supports transparency, efficiency, and digital transformation in government operations.

Conditions for foreign bidders

The rules do not bar foreign companies or related parties from participating in public tenders, but acceptance of bids is limited to two scenarios:

1. Only one technically compliant bid is submitted.

2. The bid is the best offer following evaluation, priced at least 25% lower than the next competitor.

Projects valued at SAR 1 million or less are exempt from these controls.