Urgent: “Local Content” imposes obligations of up to 25% on foreign companies to localize technology
The authority revealed that the new legislation will apply immediately upon its enactment to government procurements whenever the value of the competition reaches 75 million riyals for a single foreign company.
The document clarified that the minimum cumulative amount for consolidated purchases is SAR 100 million for the foreign company across multiple contracts over two consecutive calendar years.
SAR 300 million.
75 million and
The regulations indicated a decrease in the compliance rate to 20% for purchases exceeding 300 million up to 500 million riyals, and to 15% for purchases exceeding half a billion riyals.
transfer technology , and export development.
Balance Multiplier tool
The system highlighted the development of a "credit multiplier" tool, ranging from 1 to 4, to evaluate and reward projects based on their added value to the national economy.
The draft also addressed the availability of an "outputs" track for major contracts exceeding 500 million riyals, a qualitative track that relies on assessing the actual economic impact rather than the amount of spending.
Mandatory instructions emphasized the contractor's obligation to provide an executive financial guarantee equivalent to 10% of the total value of the economic participation commitments.
The supervisory department stressed its commitment to monitoring performance annually, with a mechanism to deduct amounts from the financial guarantee according to a specific formula in case of failure to achieve the required targets.
The authority also authorized foreign companies to build a "proactive credit" by executing strategic projects before the commitment arises, to be used as a financial tool to fulfill future government contract obligations.
