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THE LAW FIRM OF HAZIM AL MADANI ATTORNEYS AND LEGAL CONSULTANTS

Approval of Government Agencies’ Contracting Controls with Companies and Related Parties That were Not Headquartered in KSA

Subject to Council of Ministers at their meeting chaired by Custodian of the Two Holy Mosques, King SALMAN BIN ABDULAZIZ AL SAUD, regarding the transaction received from the Royal Court No. 57440 on 13/09/1443, including His Excellency of Finance Minister’s Letter No. 7955 of 10/09/1443 regarding the government agencies’ contracting controls with companies and related parties that were not headquartered in KSA After reviewing the above-mentioned controls, After reviewing Notes No. 127 of 10/01/1444, No. 992 of 27/03/1444 and No. 1305 of 26/04/1444 prepared by Committee of Experts of the Council of Ministers, After reviewing the minutes prepared by Council for Economic Affairs and Development No. 510/44/م of 30/04/1444, After reviewing the Recommendation of the General Committee of the Council of Ministers No. 5473 of 26/05/1444,

Decides the following:

First: Government agencies’ contracting controls with companies and related parties that were not headquartered in KSA as per the attached form shall be approved.

Second: Ministry of Investment, Ministry of Finance and General Authority for Foreign Trade, in establishing the standards and controls referred to in Article (5) of the Controls referred to in Clause (First) of the Decision, shall uphold the Kingdom’s relevant international commitments. 

SALMAN BIN ABDULAZIZ AL SAUD

Article (1)

The following terms and expressions, wherever they may occur in the controls, shall have the meanings respectively indicated below, unless the context indicates otherwise

Controls: Government agencies’ contracting controls with companies and related parties that were not headquartered in KSA

Ministry: Ministry of Finance

Minister: Finance Minister

Committee: Committee for Exception from the controls formed according to Article (10) of the Controls

Chairman: Chairman of the Committee

Region: Middle East & North Africa

Companies that was not headquartered in KSA:

Foreign companies that do not have a regional headquarters in KSA, but have a regional headquarters in the region and are included in the list referred to in Article (5) of the controls.

Related Party: Any agent, distributor, supplier, or goods or services provider regarding such goods and services of companies that were not headquartered in KSA.

Government Agencies: Ministries, government bodies, public bodies, administrations, public institutions and independent agencies with public moral personality.

Emergency: A situation where determining public safety, public security or public health is serious and unexpected matter, or where a breach is foreshadowing loss of life or property.

Portal: Unified e-portal for government procurement under the Ministry’s supervision.

Article (2)

The controls aim to regulate the contracting of government agencies with companies that do not have a regional headquarters in KSA, or with any relevant party.

Article (3)

When carrying out their business and securing their purchases, government agencies shall not contract companies that do not have a regional headquarters in KSA or any relevant party except in accordance with the provisions of the controls. All government agencies are obliged to implement the controls whether they are subject to the provisions of the government competition and procurement system or any other laws or regulations. The controls are complementary to the provisions applied by government agencies in carrying out their business and securing their purchases.

Article (4)

The following business and procurement controls are excluded:
  • That estimated cost shall not exceed (SAR 1,000,000) one million Saudi riyals. In accordance with public interest requirements, the Minister issues a decision to amend this amount, cancel this exception or temporarily suspend it.
  • That implemented out KSA.

Article (5)

The Ministry of Investment, in coordination with the Ministry and the General Authority for Foreign Trade, prepares a list of companies that have no regional headquarters in KSA, periodically updates the list or whenever needed, and the list is published on the e-portal.

Article (6)

Without prejudice to the statutory provisions applied by government agencies in carrying out their business and securing their purchases. Controls shall not preclude companies that do not have a regional headquarters in KSA or any relevant party from submitting offers for any public competition offered by any of these entities, provided that such entities shall not accept the submissions of such companies or relevant parties, except in one of the following cases:
  • No more than one offer is technically acceptable
  • The offer submitted by the company that does not have a regional headquarters in KSA or the relevant party is the best offer after the total evaluation technically, where it is less than 20% or more than the value of the second best offer

Article (7)

Without prejudice to the statutory provisions applied by government agencies in carrying out their business and securing their purchases. Government agencies shall not invite companies that have no regional headquarters in KSA or any relevant party to participate in their limited competitions except in one of the following cases:
  • There are no more than one qualified competitors other than companies that have no regional headquarters in KSA or relevant parties to carry out the business or secure the required purchases
  • The existence of an emergency which can only be dealt with by inviting companies that do not have a regional headquarters in the Kingdom or relevant parties.

Article (8)

Without prejudice to the statutory provisions applied by government agencies in carrying out their business and securing their purchases. Government agencies shall not invite companies that have no regional headquarters in the Kingdom or any relevant party to engage directly with them except in one of the following cases:
  • The business or procurement shall be available exclusively to the company that has no regional headquarters in KSA or the relevant party.
  • The existence of an emergency which can only be dealt with by direct contracting with the company that does not have a regional headquarters in KSA or the relevant party

Article (9)

According to the controls, government agencies that contract with any company and related parties that were not headquartered in KSA shall obliged to prepare a report includes the reasons for the contract, and to provide the General Auditing Bureau and the Governmental Spending and Projects Efficiency Authority with a copy of it, within a period not exceeding 30 working days from the date of signing the contract

Article (10)

  • 1. Under the regulations, a committee called the Committee for the exception of government agencies’ contracting controls with companies and related parties that were not headquartered in KSA, is established, which is tied to the Ministry.
  • 2. The Committee shall be chaired by a representative of the Ministry and shall be a members of:
  • Representative of Ministry of Investment
  • Representative of Local Content and Government Procurement Authority
  • Representative of Governmental Spending and Projects Efficiency Authority
  • Representative of Saudization and Balance of Payment Committee
  • No more than (3) three members with expertise and competence, appointed by decision of the Minister in agreement with Minister of Investment
  • 3. Government entities shall not be less than ranked number fourteenth or equivalent.
  • 4. Among its members, the Committee selects representatives of government agencies as Vice-Chairperson.

Article (11)

The Committee is competent to consider and decide on requests by government agencies, excluding companies that do not have a regional headquarters in KSA and relevant parties from controls and to decide on them.

Article (12)

The Committee shall have a General Secretariat based in the Ministry, chaired by a Secretary-General, to be assigned by the Minister at the suggestion of the committee chairman.

Article (13)

  • The committee shall establish task forces of its members or others to support the Committee's work.
  • The Committee may be assisted by, when required, of such those with expertise and competence as it deems necessary locally or internationally.

Article (14)

Government agencies shall submit to the Committee a request for exemption of a company with no regional headquarters in KSA or a relevant party from the controls for a project, projects or specific time period. The request shall be submitted prior to the competition or the commencement of direct contracting proceedings. The request shall include the following:
  • The name of the company that does not have a regional headquarters in KSA or the relevant party to be excluded.
  • Reasons and justifications for the request, in addition to boosting request with studies or reports.
  • Project or projects, that theme of the request.
  • Goods and services, that theme of the request.
  • The estimated cost of contracts expected to be entered into upon approval of the request.

Article (15)

  • The government agency, petitioner, referred to in article (14) shall be attend the meeting of the Committee devoted to consider of its request, to discuss the request without the right to vote on the decision to be taken thereon, provided that the Committee expresses its desire to attend when submitting the request.
  • In the event that the government agency expresses its desire to attend the meeting referred to in paragraph (1), and its representative is absent, the committee shall complete its work and shall not be entitled to request a reconvening of the meeting.
  • The estimated cost of contracts expected to be entered into upon approval of the request.

Article (16)

The Committee shall issue its decision in respect of the request referred to in article (14) for approval or denial on grounds, in accordance with the provisions of the regulations and as it deems to be in the public interest. The approval decision shall include the following:
  • The name of the company that does not have a regional headquarters in KSA or the excluded relevant party.
  • The project /s that are the theme of the exception, or the time period of the exception, provided that it does not exceed three years.
  • Goods and services, that the theme of the exception.
  • Any considerations, requirements or restrictions deemed by the Committee.

Article (17)

The government agency, petitioner, referred to in article (14) may challenge the Committee’s decision, which is submitted to the Minister. The Minister shall issue his decision regarding the objection. The decision shall be final and effective from the date of its issuance.

Article (18)

The committee and its general secretariat shall have an clause within the Ministry’s budget.

Article (19)

The Minister shall promulgate the rules of work of the committee and its general secretariat and shall include controls on the assisted by experts, bonuses of members of the committee, staff of its general secretariat and the experts engaged.

Article (20)

The Ministry develops the e-portal in accordance with the provisions of the controls

Article (21)

These controls are published in the Official Gazette and shall be effective from 19/06/1445.