Royal Decree M/76 of 27/2/1448 AH issued a new Government Tenders and Procurement Law replacing the 1440 AH law. It enters into force 120 days after publication in the Official Gazette. This guide collects what a supplier or contractor needs before bidding on any government tender.
Issuance, entry into force and tenders already running
The law was issued by Royal Decree No. M/76 dated 27/2/1448 AH and published in Umm Al-Qura on 4 September 2026 according to the Gazette's website. It has 101 articles and enters into force 120 days after publication (Article 101) — around early January 2027. It replaces the law issued by Royal Decree M/128 dated 13/11/1440 AH (Article 100).
Under the Council of Ministers decision approving it, tenders floated while the previous law was in force remain governed by it, and contract extensions and delays in pre-existing cases are handled under the old law, although the Minister of Finance may apply some provisions of the new law to them under a mechanism he sets. The implementing regulations and the preference regulation are due within 120 days of publication (Articles 98 and 99).
Procurement methods: public tender is the default
All works and purchases go to public tender unless the law provides otherwise (Article 28), advertised on the unified e-procurement portal (Article 29). Limited tendering is allowed for limited supply, urgent cases, consulting services, licensed professionals and local non-profits (Article 30).
Direct purchase is allowed in 12 cases (Article 32). The one that matters most to SMEs: where the estimated cost does not exceed SAR 1 million, with priority for local small and medium enterprises. Others include software licences and online subscriptions, training for government staff, exhibition and conference space, research and innovation, and emergencies. Splitting purchases to fall under the direct-purchase limit is prohibited (Article 27).
- • Priority goes to local SMEs, local content and companies listed on the stock market (Article 9).
- • Specifications may not name a brand or trade name except in cases set by the regulations (Article 22).
- • Reverse auctions, two-stage tenders, competitions and framework agreements are available under the regulations.
Bids and guarantees: the numbers to know
Bids are submitted encrypted through the portal, and total prices — including fees and taxes — must be stated in the bid itself; a discount in a separate letter is disregarded (Articles 36 and 40).
| Item | Rule | Article |
|---|---|---|
| Bid validity | 90 working days from the bid-opening date; extendable | 39 |
| Bid (initial) guarantee | 1%–2% of the bid value; bids without it are rejected | 41 |
| Bid guarantee exemptions | Direct purchase, local SMEs, emergency and urgent cases, among others | 42 |
| Abnormally low bids | Excluded only if 25% or more below the estimated cost, after discussion with the bidder | 46 |
| Standstill period after award | 3–10 working days; the contract cannot be signed during it | 50 |
| Performance (final) guarantee | 5% of contract value within 15 working days of award notice | 59 |
| Performance guarantee exemption | Contracts up to SAR 300,000, among other cases | 59 |
| Award decision instead of a contract | Allowed for contracts up to SAR 300,000 | 52 |
| Continuous service contracts | Maximum 5 years unless the Ministry approves longer | 53 |
Grievances: short deadlines
A bidder may file a grievance with the government entity against any pre-award decision within 5 working days of the decision, and against the award decision during the standstill period. The entity must decide within 15 working days; silence counts as rejection. The bidder may then escalate to the review committee within 3 working days, and the committee decides within 15 working days, extendable once (Article 85).
Escalation requires a deposit of 0.5% of the bid value, or SAR 15,000 for a pre-qualification decision, refunded if the grievance succeeds; committee decisions bind the government entity (Article 84).
During performance: prices, change orders and penalties
Contract prices may change only if prices of key materials or services specified by the regulations change, customs duties, fees or taxes change, or unforeseeable physical difficulties arise (Article 66). The entity may issue change orders adding new items up to 10% with the contractor's consent, increasing existing items up to 20%, and reducing them up to 20%, with total increases capped at 20% (Article 67).
Delay penalties are capped at 6% of a supply contract and 15% of other contracts, and may be raised with the Minister's approval only if disclosed before bidding (Article 70). Extensions and penalty waivers apply for additional work, insufficient budget, delays caused by the entity or emergencies, or causes beyond the contractor's control (Article 72). Assignment and subcontracting require written approval (Articles 68 and 69).
Sanctions and contractors' rights
A violations committee may bar a bidder or contractor from government business for up to 5 years, downgrade its classification, or both — or impose a fine of up to 10% of the bid value instead of a ban. Decisions may be challenged in the competent court within 60 days (Article 87).
On the other side, a government entity that fails to act on overdue payments to contractors after notice from the Ministry of Finance may not issue new awards (Article 91). Contractors may sue for compensation if the entity breaches the contract, and arbitration is possible with the Minister's approval (Article 94).
A practical checklist before you bid
Because the new law applies to tenders floated after it takes effect, the first question for any tender is its floating date.
- • Check the tender's floating date: before entry into force it follows the old law; after, the new one.
- • Put all-inclusive prices, including fees and taxes, in the bid itself — not in a separate discount letter.
- • Prepare a 1–2% bid guarantee, or confirm your exemption as a local SME.
- • Diary grievance deadlines the moment any decision issues: 5 working days pre-award, the standstill period after award.
- • Review penalty, change-order and price-adjustment clauses before signing.
Practical takeaway
- • Issued by Royal Decree M/76 (27/2/1448 AH); in force 120 days after publication.
- • Direct purchase is allowed up to SAR 1 million estimated cost, with priority for local SMEs.
- • Grievance windows are very short: 5 working days pre-award, then 3 working days to escalate.
- • Low bids can be excluded only if 25% or more below the estimated cost, after discussion.