New Saudi Procurement Law Boosts Local Content Rules

Saudi Arabia has introduced a set of measures under its Government Tenders and Procurement Law aimed at strengthening local content, supporting innovation, and clarifying rules on contract changes in public projects. The updates affect how government entities award and manage contracts nationwide.

Under the new provisions, the maximum permissible increase in a contract's value through variation orders rises from 10% to 20%, while the maximum permissible reduction stays at 10%. Price amendments to contracts or framework agreements are allowed only in specific cases: a change in the prices of listed materials or services, changes to customs tariffs, duties or taxes, or unforeseeable material difficulties during implementation.

Local content at the center

Local content is now a mandatory evaluation dimension in high-value government contracts, applied through a local content weight mechanism in financial evaluation, with pure supply contracts excluded. Scoring covers the percentage and wages of Saudi workers, local supply-chain spending, investment in local facilities, technology transfer and training, and research and development in the Kingdom. Bidders must submit a local content plan alongside their technical and financial proposals.

Mandatory Minimum Local Content (MMLC) thresholds apply in specified sectors, and bids that fall short are treated as non-compliant. A National Product Mandatory List (NPML) of products that must be sourced from Saudi manufacturers or suppliers now exceeds 1,500 products across 16 sectors and is expected to reach around 2,000 products by 2026. The Local Content and Government Procurement Authority (LCGPA) administers the framework and evaluates local content plans.

Government entities must give preference to local content, Saudi SMEs, and companies listed on the Saudi capital market. For non-Saudi contractors, at least 30% of a government contract's works must be assigned to Saudi contractors, with pure supply contracts generally excluded. Regional headquarters requirements also carry an exemption for projects valued at no more than SAR 1,000,000, and firms without a regional headquarters are not automatically excluded from tenders under set conditions.

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