Saudi Arabia - Selling to the Government Saudi Arabia - Government Sales
Foreign companies interested in operating without a Saudi agent can open offices and appoint representatives to pursue business opportunities directly with various government agencies and departments. Foreign companies interested in bidding on a government project must make themselves known to that specific government agency/ministry offering the project. When a project becomes available, the government agency/ministry selects bidders from a list of prequalified/known companies and invites them to bid for that project although this is not a particularly transparent process.
The Saudi Government Contracting and Procurement Law states that all qualified companies and individuals will be given equal opportunities and will be treated equally. The law also affirms that all government bids must be announced in the official gazette Umm al-Qoura (Arabic), in two local newspapers, as well as in electronic media. There is no central tender board and each government agency has its own full contracting authority. The Ministry of Finance operates a central government procurement portal where all government tenders are listed.
Foreign companies can provide services to the SAG directly without a service agent and can market their services to public entities through an office that has been granted temporary registration. Foreign suppliers to the SAG, if not already registered to do business in Saudi Arabia, are required to obtain a temporary registration from the Ministry of Commerce and Investment within 30 days of contract signing.
Most Saudi defense contracts are negotiated outside these regulations on a case-by-case basis. Contractors must subcontract 40 percent of the value of any government contract, including support services, to firms that are majority-owned by Saudi nationals. An exemption may be granted where no Saudi-owned company can provide the goods and services necessary to fulfill the procurement requirement.
The tender regulations require that preferences be given in procurements to Saudi individuals, establishments, and other majority Saudi-owned suppliers. The tender regulations also give preference to products of Saudi origin that satisfy the procurement’s requirements. In addition, Saudi Arabia prioritizes GCC products in government procurement. These items receive up to a ten percent price preference over non-GCC products in all government procurements in which foreign suppliers participate. Several royal decrees strongly favor the GCC nationals in the award of government procurement contracts. Foreign suppliers that participate in government procurement are required to establish training programs for Saudi nationals.
The U.S. Commercial Service in Saudi Arabia has noticed an increase in the number of U.S. firms receiving unsolicited but seemingly attractive business proposals from entities masquerading as a Saudi government agency. In several instances, the scammers present themselves as working for a Saudi government or reputed business entity that is seeking a potential partner to participate in lucrative government procurement opportunities. These scammers use official-looking letterheads, websites, known names of government and business executives, routine tender/procurement language, and procedures to give the impression of legitimacy. U.S. companies are strongly advised to carefully scrutinize and vet such “offers” and “entities” before making any payments, shipping samples, or committing other resources. When unsure, we encourage U.S. firms to contact the nearest U.S. Export Assistance Center in the United States and to consider utilizing the Commercial Service’s due diligence services to verify the identity of potential partners and legitimacy of contracts.
Advocacy
U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Click here for more information.
Multilateral Development Banks and Financing Government Sales
Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects through borrowing from the Multilateral Development Banks (MDB). Please refer to the Project Financing Section in Trade and Project Financing for more information. A helpful guide for working with the MDBs is the Guide to Doing Business with the Multilateral Development Banks.
The U.S. Department of Commerce’s (USDOC) International Trade Administration (ITA) has a Foreign Commercial Service Officer stationed at each of the five different Multilateral Development Banks (MDBs): the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank.