Saudi Arabia Approves New Government Procurement Law

The Council of Ministers has approved a new Government Tenders and Procurement Law (GTPL) in early August 2026, overhauling the rules governing public procurement and contractor payments across government entities. The new law replaces the existing procurement regime and introduces a wide restructuring of how the public sector awards and pays for contracts.

The new GTPL will enter into force 120 days from its publication in the Official Gazette. Until then, the previous law and its executive regulations continue to apply. The reform is designed to improve procedural efficiency, strengthen support for the private sector, ensure equal treatment of bidders, and align public procurement with the economic objectives of رؤية السعودية 2030.

Faster payments for contractors and suppliers

A key change requires government entities to process private-sector dues within set timeframes before entering new contractual commitments. In practice, an entity cannot make new awards while it still owes contractors outstanding amounts and has not taken the required steps to pay them — except where non-payment stems from higher-level procedures or a lack of budget allocation despite completing the required actions.

The law confirms that contract values are paid in ريال سعودي, with the option to use other currencies in tender documents subject to prior approval from the Ministry of Finance. The total contract value must include all expenses, including fees and taxes paid by the contractor, and no tax exemptions on contractor profits or employee income are permitted unless provided by separate legislation.

On advance payments, government entities may pay in advance in return for a bank guarantee of equal value. Under the executive regulations, an advance payment may not exceed 10% of the total contract value, is paid only after the contractor provides a guarantee, and is recovered proportionally starting from the first invoice. Advance payments are not allowed when contracts are merely extended or when additional works are assigned. The new law also raises the contract variation threshold, allowing entities to increase a contract's value by up to 20% of the original amount.

---

Stay updated with the latest news, events, sports updates, business insights, real estate and lifestyle stories on Saudi Living — the leading online platform for residents, expats, and visitors in Saudi Arabia.

Follow Saudi Living for daily updates:

• Instagram - @saudiliving
• X - @saudiliving
• Facebook - @saudiliving
• YouTube - @saudiliving