- Published in Umm Al-Qura on 4 September 2026; law firms report it takes effect 120 days later, on 2 January 2027.
- Direct purchase rises from SAR 100,000 to SAR 1 million, with priority to local SMEs (Article 32/3).
- No legal or financial obligation arises for the entity until the contract is signed (Article 52/1): stop working on verbal orders.
- Tenders issued under the 2019 law stay under it (the Minister of Finance may apply some new provisions); update templates now, but wait for final regulations before re-pricing.
Saudi Arabia has a new Government Tenders and Procurement Law. It has been approved and published in the official gazette, but it is not yet in force, and its executive regulations are still a draft. Contractors and suppliers therefore have a short window to fix their files before the switch. That applies to Saudi firms, to Gulf suppliers that sell into the Kingdom, and to Egyptian contractors that run Saudi bids from Cairo. This piece sets out what is confirmed, what is still only reported, and what to change this month.
What happened
- 4 August 2026: Cabinet approval. The Council of Ministers approved the law by Resolution No. (199) dated 21/2/1448H (4 August 2026 by our conversion), according to the resolution as published in Umm Al-Qura. Greenberg Traurig dates the meeting to 4 August. Clyde & Co gives 5 August, which is the date of the Ministry of Finance statement.
- 5 August 2026: Ministry of Finance summary. The Minister of Finance’s statement lists the headline changes. The bid-opening and bid-evaluation committees merge, and the direct purchase ceiling rises to SAR 1 million. Limited tendering is extended to practitioners of liberal professions, and heads of entities get wider powers. Entities must settle private-sector dues within set timeframes before they take on new commitments. The statement also announces frameworks for research and innovation procurement and for localisation and knowledge transfer.
- 6 August 2026: warning on verbal orders. Asharq Al-Awsat, republished by Arab News, reported a Ministry of Finance warning to contractors. They should not start work before an award decision, rely on verbal work orders, or work outside a contract’s scope without completing the legal procedures. Legitimate claims should go through the Etimad platform with full supporting documents.
- 27/2/1448H: Royal Decree. Royal Decree No. (M/76) approves the law “in the attached form”.
- 4 September 2026: publication. Umm Al-Qura published the decree, the resolution and the text of the law under the date 22/3/1448H (4 September 2026).
- What it replaces. Law firms, including Baker McKenzie, report that the new law replaces the 2019 law issued by Royal Decree No. (M/128) dated 13/11/1440H. The decree itself does not state a repeal in the text we read. It sets transitional rules instead. The 1440H law continues to apply to works and purchases tendered while it was in force, although the Minister of Finance may apply some provisions of the new law to those tenders. In addition, contract extension requests and delay cases that pre-date the new law are dealt with under the old provisions. Resolution 199 also repeals Cabinet Resolution No. (650) of 13/11/1440H.
- Entry into force. Greenberg Traurig, Clyde & Co and Baker McKenzie all report that the law takes effect 120 days after gazette publication, and Baker McKenzie gives the date as 2 January 2027. The online gazette page we read shows Articles 1 to 76 only, so we have not seen the commencement article ourselves. The 2019 law used the same 120-day rule (Article 99). According to the Ministry’s FAQ, it was published on 1 August 2019 and took effect on 1 December 2019.
- Regulations. On 21 October Baker McKenzie wrote that only a draft of the new executive regulations had been released for public consultation.
What changes, checked against both texts
Each row below compares the Ministry’s English translation of the 2019 law with the Arabic text published in Umm Al-Qura. The Arabic text is the official one.
| Rule | 2019 law (M/128) | New law (published 4 Sep 2026) |
|---|---|---|
| Direct purchase ceiling | SAR 100,000, also with priority to local SMEs (Art. 32/3) | SAR 1 million, with priority to local SMEs (Art. 32/3) |
| Bid validity | 90 days (Art. 39/1) | 90 working days (Art. 39/1) |
| Committees | Separate opening and examination committees | One committee opens and examines bids. The Local Content and Government Procurement Authority may send a representative to the examination discussions (Art. 43) |
| Standstill before award | 5–10 working days (Art. 53) | 3–10 working days (Art. 50/1) |
| Head of entity may delegate up to | SAR 10 million (Art. 54) | SAR 50 million (Art. 51/1) |
| Ministry of Finance contract review | 15 working days (Art. 60/1) | 4 working days (Art. 57/1) |
| Final guarantee not required up to | SAR 100,000 (Art. 61/3) | SAR 300,000 (Art. 59/2/a) |
| Change orders | Increase up to 10%, decrease up to 20% (Art. 69) | New items up to 10%; additions and increases combined capped at 20% (Art. 67) |
| Delay penalty cap | 6% supply, 20% other contracts (Art. 72) | 6% supply, 15% other contracts (Art. 70). There is also a 15% cap for deficient performance in continuous-service contracts (Art. 71) |
Two more provisions matter for site teams. Article 16 requires procurement procedures to run through the government portal. Article 52(1) says the entity has no legal or financial obligation until all parties have signed the contract.
Reported but not yet checked against the text: Al Tamimi & Company reports that Article 91(2) bars new award decisions while contractor dues remain unpaid after Ministry notice, with exceptions. It also reports that the final guarantee exemption for companies at least 51% Saudi-owned has been removed. Baker McKenzie reports that the draft regulations would cut the maximum payment period from 70 to 47 working days.
The law covers Saudi government entities only. Procurement in the UAE and Qatar is unchanged, and so is Egypt’s Law No. 182 of 2018, which our guide to losing tenders on price compares with the Saudi system. Any Gulf or Egyptian company that bids for Saudi government work, however, will be bound by the new rules.
Why it matters
More mid-size buying can skip the open tender. Direct purchase used to stop at SAR 100,000. It can now be used up to SAR 1 million, with priority to local small and medium enterprises. Many fire-safety supply orders, MEP maintenance packages, fit-out works and professional services fall in that band. The entity now has a legal route to buy them from a supplier it already knows.
Decisions get faster. The Ministry’s contract review falls from 15 to 4 working days, the minimum standstill falls from five to three working days, and heads of entities can delegate up to SAR 50 million. The gap between “you are the preferred bidder” and “sign now” will shrink. If your guarantees, authorisations and company documents take a week to assemble, that delay will start to cost you work.
Paper protects payment. Article 52(1) and the Ministry’s August warning point the same way. Work done before a signed contract, or on a verbal instruction, is a commercial risk to the contractor. The wider room for change orders (additions and increases up to 20% combined, against 10% before) means more scope can be added by a change order. Each addition still needs a written order behind it.
Cash flow and risk shift slightly in suppliers’ favour. Lower penalty caps for non-supply contracts and the duty to settle dues before new commitments both help contractors. How much they help depends on regulations that are not yet final.
For Gulf and Egyptian firms, the priority for “local” SMEs is the open question. A company that serves Saudi clients through a branch of an Emirati or Egyptian parent should check how “local” is defined once the regulations are final, before it builds a direct-purchase strategy around that priority.
RX analysis
1. The SAR 1 million band rewards being known before the need exists. In an open tender, a capable firm the entity has never heard of can still win on the strength of its file. In a direct purchase, the entity chooses whom to ask. In our judgement, procurement officers and user departments will tend to approach vendors who are already registered on Etimad, already have a clean vendor file and are already familiar to the engineers who raise the request. For firms in this band, the company profile, capability statement and reference sheets become sales tools, not compliance paperwork.
2. Speed punishes the unprepared, not the small. A four-day review and a three-day minimum standstill leave little time for last-minute document hunting. We expect firms that keep a ready, current document set to gain more from this law than firms that are simply larger.
3. Large tenders are still won on the technical file. Merging the committees changes who reads your proposal and when. It does not remove technical evaluation. The criteria-led approach in our technical proposal guide still applies. What needs updating is the article numbers and timings in your templates, not the method.
4. “No signed paper, no claim” becomes a sales-team habit. Verbal work orders usually start in good faith on site or in a client meeting, often with the sales or account manager in the room. In our view, the most useful change a contractor can make this quarter is a short internal rule that no work starts and no extra scope is accepted without a written order. That rule needs a template the team will actually use.
5. Do not over-build on the draft. The final executive regulations will set the real mechanics: direct-purchase procedure, how SME priority works, payment periods. We would update documents now and leave any change to pricing or bidding strategy until the final text is out. The same caution applies to Egyptian and Emirati bid teams. Their templates often carry Saudi article numbers from 2019, and those numbers are now out of date.
Practical implications
Checklist for this week
- Find every verbal instruction on live government work. List any work under way without a signed contract or written change order. Ask for the paperwork now, and file claims through Etimad with complete supporting documents.
- Mark which law governs each open bid. Under the decree’s transitional rules, works tendered while the 2019 law was in force stay under it, unless the Minister of Finance applies specific new provisions to them. Add a “governing law” column to your bid pipeline.
- Correct article references in your templates. For new-law tenders, standstill moves from Article 53 to Article 50, the final guarantee from 61 to 59, delay penalties from 72 to 70, and Ministry review from 60 to 57. Bid validity becomes 90 working days.
- Refresh your Etimad registration and vendor file. Check commercial registration, classification, Zakat and other certificates and their expiry dates. Our vendor registration document guide lists what large Saudi buyers ask for.
- Build a direct-purchase pack for the SAR 1 million band. It should contain a one-page capability statement and three to five references, each with scope, value band, client type, your role and proof. Add certificates, any local content evidence and a quotation format a buyer can approve without rework.
- Do not re-price yet. Note the lower penalty caps, but wait for the final regulations and the Ministry’s new contract templates before changing risk allowances.
Who does what
| Task | Owner | Done when |
|---|---|---|
| Written-order rule and template | Operations with sales | No live government job runs without a signed contract or change order |
| Pipeline tagged by governing law | Bid manager | Every open bid shows “2019 law” or “new law” |
| Template article numbers | Bid or contracts team | Old-law and new-law versions both exist and are clearly labelled |
| Vendor file and Etimad | Admin or finance | All certificates valid beyond the first quarter of 2027 |
| Direct-purchase pack | Sales with marketing | A procurement officer could shortlist you from the pack alone |
| Regulations watch | Legal adviser or owner | Final executive regulations read and summarised for the team |
The checklist applies equally to a Riyadh contractor, a Dubai supplier with a Saudi branch and a Cairo engineering firm bidding into the Kingdom. The pack should also be bilingual where the buyer works in Arabic.
Sources
- Government Tenders and Procurement Law (Arabic text), Royal Decree M/76 and Cabinet Resolution 199, Umm Al-Qura, 4 September 2026
- Minister of Finance statement on Cabinet approval, Ministry of Finance, 5 August 2026
- Government Tenders and Procurement Law, 2019 (English translation) and FAQ on the 2019 law, Ministry of Finance
- Saudi finance ministry warns against starting government projects before contract awards, Arab News / Asharq Al-Awsat, 6 August 2026
- Law firm briefings: Greenberg Traurig (10 August 2026), Al Tamimi & Company (23 September 2026), Clyde & Co (1 October 2026), Baker McKenzie (21 October 2026)
Related RX services
Most of the checklist is document work: a vendor file, a capability statement, reference sheets, proposal templates, a written-order template for site teams. RX’s Business Solutions & Sales Enablement service builds these files, including tender and pre-qualification files and vendor registration documents. Company profiles and presentation decks sit under Brand Identity & Positioning. Neither replaces your legal adviser on the law itself. For a contracting and MEP example of one direction across brand, content and sales communication, see the Azeidk case.
Frequently asked questions
When does Saudi Arabia's new Government Tenders and Procurement Law take effect?
It was published in Umm Al-Qura on 4 September 2026. Greenberg Traurig, Clyde & Co and Baker McKenzie report that it takes effect 120 days after publication, which Baker McKenzie gives as 2 January 2027. Confirm against the official text and any Ministry of Finance notice.
Does the new law apply to tenders already issued?
Under the transitional rules in Royal Decree M/76, the 2019 law (M/128) continues to apply to works and purchases tendered while it was in force, although the Minister of Finance may apply some provisions of the new law to them, and extension and delay cases that pre-date the new law are handled under the old provisions. This is not legal advice; check the current text before relying on it.
What is the new direct purchase limit in Saudi government procurement?
Article 32(3) of the new law allows direct purchase where the estimated cost does not exceed SAR 1 million, with priority to local small and medium enterprises. The 2019 limit was SAR 100,000. The detailed procedure will be set in the executive regulations.
Can a contractor be paid for work done on a verbal instruction?
It is a serious risk. Article 52(1) of the new law says the entity has no legal or financial obligation until all parties sign the contract, and in August 2026 the Ministry of Finance warned against verbal work orders and work outside contract scope. Get written orders and submit claims through Etimad with full documents.
- Umm Al-Qura (Official Gazette), Government Tenders and Procurement Law (Arabic text) (2026-09-04).
- Umm Al-Qura (Official Gazette), Royal Decree No. (M/76) dated 27/2/1448H (2026-09-04).
- Umm Al-Qura (Official Gazette), Council of Ministers Resolution No. (199) dated 21/2/1448H (2026-09-04).
- Ministry of Finance, Saudi Arabia, Saudi Minister of Finance thanks leadership for Cabinet approval of the new Government Tenders and Procurement Law (2026-08-05).
- Ministry of Finance, Saudi Arabia, Government Tenders and Procurement Law, Royal Decree No. M/128 of 1440H (English translation).
- Ministry of Finance, Saudi Arabia, Frequently asked questions on the Government Tenders and Procurement Law (2019).
- Arab News (Asharq Al-Awsat), Saudi finance ministry warns against starting government projects before contract awards (2026-08-06).
- Greenberg Traurig, The Kingdom of Saudi Arabia approves new Government Tenders and Procurement Law (2026-08-10).
- Al Tamimi & Company, Key changes to Saudi Arabia's newly adopted Government Tenders and Procurement Law (2026-09-23).
- Clyde & Co, Saudi Arabia's new Government Tenders and Procurement Law: an overview of the key reforms (2026-10-01).
- Baker McKenzie, Saudi Arabia: key changes under new government procurement law (2026-10-21).
