Background
The launch of Saudi Arabia’s Vision 2030 has brought a surge of new, high-profile projects into the spotlight within the business world. With many international construction companies entering the Saudi market to participate in projects across diverse industries, it is crucial for foreign companies to understand the legal framework and rules governing Saudi government tender and procurement procedures.
While Aramco tenders are specific to the oil and gas industry, the tendering procedures differ from those governing government tenders. This article will therefore focus on highlighting the tendering procedures and required documents for participating in government tenders and procurement.
The Government Tenders and Procurement law, Royal Decree No. (M/128) published on 1 August 2019 (Hereinafter referred to as “the Tender Law”) set in place to govern the governmental projects, that include purchasing goods, services, and works, offered to the public. The Saudi Ministry of Finance (“MOF”) is in charge of overseeing the tender and procurement procedure.
Construction Contractual Obligations
The obligations set in all contracts related to construction and renovation are based on the Saudi Building Codes (Hereinafter referred to as “the SBC”). Whereas, the SBC aims to achieve safety and public health through the durability and stability of buildings and facilities. The SBC are updated every three years, as they are the minimum legal requirements for construction. In other words, the designs, plans, maquettes, and construction work plan, should follow the SBC.
It is important to emphasize, that all tender agreements related to construction would ask the contractor to follow the SBC. The procedure would include permits and approvals from relevant parties. The relevant parties are the Ministry of Municipal and Rural Affairs and Housing, Ministry of Energy, General Directorate of Civil Defense, Saudi Standards, Metrology and Quality Organization (SASO).
To get the building permits, the relevant parties, shall review the designs and technical documentation to ensure it meets with the SBC. The designs and plans for all construction projects is based on the approved SBC.
After obtaining the building permits contractors must obtain a construction permit. Construction permits are set in place for engineers to follow up and supervise the project during implementation. This will contribute to the quality of work, and meeting the standards.
At the completion of the project stage, the contractor shall get a certificate of completion from the relevant parties. The fulfillment of all requirements of SBC and regulations is one of the preconditions for the contractors to obtain the project completion certificate.
It is important to note that the contractors must follow the guidelines of warranties set in SBC after the completion of the project which are set in place to ensure the sustainability, and effectiveness of the projects.
Remedies and Dispute Resolution
If the government authority breaches the contract, the contractor can seek to suspend performance or terminate the contract before expiry through the administrative court. The contract may also include an arbitration clause for settling disputes, but this requires prior approval from the Ministry of Finance.
Conclusion:
It is important to be informed regarding the laws, regulations, and standards that are set in place to ensure positive outcomes. The completion of one awarded tender is the start of gaining projects around Saudi Arabia, as it will set you as a successful contributor in the Saudi market.
