Policy for localizing military equipment maintenance: 5 conditions for boosting the national industry
The General Authority for Military Industries (GAMI) in Saudi Arabia announced a new strategic step aimed at enhancing the Kingdom's strategic independence by introducing a comprehensive policy for localizing maintenance, repair, overhaul, and operation of military equipment. This policy was launched through the "Istilaa" platform to regulate the sector and clearly define responsibilities among all stakeholders, ensuring efficient spending and increased military readiness.
The context of Vision 2030 and the localization of military industries
This step aligns with the objectives of the Kingdom's Vision 2030, which has set an ambitious goal of localizing more than 50% of the Kingdom's military spending by 2030. This localization extends beyond the manufacturing of equipment and ammunition to include vital support services such as maintenance and operation, which constitute a significant part of the defense systems' lifecycle. Localizing these services is a fundamental pillar for ensuring the sustainability of military operations and reducing reliance on external support during times of crisis.
Policy scope and targeted sectors
The authority clarified that the new policy will apply to all maintenance contracts related to future military and security procurement orders. This includes a wide range of industrial sectors, most notably:
- Air, land, and sea systems.
- Defense electronics and communications systems.
- Armaments and ammunition.
The Authority noted that the policy excludes contracts that were signed or tendered before the effective date of this document, in order to ensure the stability of the legal positions of current contractors.
5 key requirements for localization
The policy identified five key requirements and criteria to ensure the success of the localization process without compromising military readiness:
- Early planning: Obliging beneficiaries to submit maintenance work plans 24 months before signing contracts, in order to accurately determine needs.
- Priority for local contractors: Limiting maintenance contracts to local contractors when technical capability is available, to enhance local content.
- Foreign partner percentage: If it is necessary to contract with a foreign subcontractor, the percentage of work carried out by him should not exceed 30% of the contract value.
- Knowledge transfer: Requiring the transfer of technology and knowledge from the foreign partner to build sustainable national capabilities.
- Gradual implementation: Taking into account a well-thought-out gradual approach to raising the capabilities of local contractors without negatively affecting the operational readiness of equipment, as readiness remains the top priority.
Expected strategic and economic impact
The implementation of this policy is expected to create promising investment opportunities for the Saudi private sector, as well as generate high-quality jobs for Saudi nationals in the fields of engineering and precision technical maintenance. This policy will also enhance the security of military supply chains, giving the Kingdom greater flexibility in managing its defense systems, independent of global market fluctuations.
Measurement mechanisms and implementation timeline
To ensure compliance, the Authority has established rigorous monitoring mechanisms, including quarterly reports on progress and localization rates. The policy is scheduled to take effect 180 days after its publication, a grace period granted to beneficiaries and contractors to adapt to the new requirements. This reflects the Authority's commitment to the smooth and effective implementation of this significant shift in the national defense sector.
