Importance of robust Saudi procurement, competition law in agreeing government contracts

Importance of robust Saudi procurement, competition law in agreeing government contracts

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Comprehensive government procurement and competition laws are key to the development of a vibrant economy. Robust legislation ensures the proper and compliant execution of governmental projects with the main focus being on the quality of goods and services.

In Saudi Arabia, all contractual documents and appendices must be drafted in Arabic at the contracts stage. Another language may be used provided that Arabic is adopted in interpreting and implementing the contract, and determining its specifications, plans, and all related correspondences.

Under the Kingdom’s rules, a government entity may rely on the exchanged correspondence if the contract value does not exceed SR300,000 ($80,000).

One of the most important points in relation to contracts is the duration of service agreements that have a continuous implementation, such as maintenance, cleaning, operations, and catering, where such contracts should not exceed five years. The term may be extended in certain cases on the approval of the Ministry of Finance.

In all contracts, the period specified for the implementation of the project must be commensurate with the size and nature of the works, and with the annual appropriations allocated for spending on the scheme.

Also, service contracts with continuous implementation should include conditions related to the level of performance and continuous evaluation, with government entities having the right to terminate them or reduce payments if performance levels are not met. Furthermore, contracts may include clauses related to the transfer of knowledge, training, and operational skills to government agency employees.

Contracts can be signed after the winning bidder has been notified of the awarding decision and has submitted a final letter of guarantee.

Successful public construction contractors should be able to implement a contract within 60 days of an award notification date unless competition documents state otherwise.

Government agencies are also obligated to share the details of specified contracts with the Ministry of Finance before signing them. The ministry must then review any such contract within 15 working days of receipt, otherwise it can be considered approved.

Exceptions are made for entities that do not have appropriations in the state’s general budget.

Dimah Talal Alsharif is a Saudi lawyer and legal consultant. Twitter: @dimah_alsharif

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