Saudi Arabia Revises Procurement Policy for Foreign Companies
In a significant policy adjustment, foreign companies that do not maintain a regional headquarters within Saudi Arabia are no longer automatically disqualified from securing government contracts. This move introduces a structured exemption framework, softening the stringent 2024 relocation mandate while preserving the overarching goals of the initiative.
Targeted Adjustment to the 2024 Rule
Since the start of 2024, Saudi government entities, including agencies, institutions, funds, and their affiliates, have been prohibited from contracting with foreign firms whose regional headquarters are located outside the Kingdom. The new step does not overturn this decision but establishes a formal pathway for exceptions. These exemptions are permitted in scenarios where projects demand highly specialized technical expertise or demonstrate strong financial competitiveness.
The Local Content and Government Procurement Authority has officially communicated the regulatory framework governing such contracts, which also covers arrangements involving related parties.
How the Exemption Process Works
Government entities can now submit requests to a designated committee for exemptions pertaining to:
- A specific project
- A group of projects
- A defined time period
Requests must be filed prior to issuing a tender or initiating direct contracting procedures. To streamline this process, the authority has launched an electronic service via the "Etimad" digital platform, which became operational in November 2025. This service is accessible to government entities that publish their tenders through the platform.
For tenders published before the service's introduction or those issued outside "Etimad," the previously established submission mechanism will remain in effect.
What Is 'Etimad'?
The "Etimad" platform serves as the Ministry of Finance's official electronic portal for financial services. It supports the digital transformation of government operations, aiming to enhance transparency and efficiency across budgets, contracts, tenders, payments, and procurement processes. Additionally, the system is designed to strengthen interaction between government entities and the private sector.
When Can Bids Be Accepted?
The regulations clarify that companies without a regional headquarters in Saudi Arabia are not automatically excluded from public tenders. However, their bids will only be accepted under two specific conditions:
- If no more than one technically compliant bid is submitted, or
- If the bid, after comprehensive technical evaluation, is deemed the most advantageous and is at least 25 percent lower than the second-best offer
Projects with an estimated value not exceeding SR1 million are exempt from these restrictions.
Headquarters Relocation Milestone
By early 2026, more than 700 international companies had relocated their regional headquarters to Saudi Arabia, surpassing the original target of attracting 500 companies by 2030. The relocation policy was introduced to deepen the integration of foreign companies working with Saudi government entities and affiliated bodies. It also seeks to generate employment, reduce economic leakage, enhance spending efficiency, and ensure that key products and services are delivered domestically with appropriate local content.
The latest exemption mechanism reflects an effort to maintain these objectives while allowing room for specialized expertise and competitive advantage when required.
