Saudi Arabia Raises Government Procurement Thresholds

Saudi Arabia has published a new Government Tenders and Procurement Law in the official gazette on 4 September 2026, introducing higher spending thresholds and faster review procedures. The law enters into force 120 days after publication, in early 2027, and applies to purchasing carried out by government entities.

Under the new rules, the direct purchase threshold rises from SAR 100,000 to SAR 1,000,000, allowing government bodies to buy goods and services without a full public tender when within this value, subject to documentation and compliance with competition and spending-efficiency principles. Importantly, priority in direct purchases based on this threshold must be given to Saudi small and medium enterprises (SMEs).

The law also expands the powers of heads of government entities. The delegation ceiling for procurement decision-making increases from SAR 10,000,000 to SAR 50,000,000, while the change-order threshold rises from a maximum increase of 10% to 20% of the original contract value, covering both new line items and increases to existing ones.

Faster reviews and stronger contractor protection

To speed up processes, the Ministry of Finance pre-signing review period is cut from up to 15 working days to up to 4 working days, with silence within the window still counting as approval for contracts that require review. Limited competition can no longer be used simply because the estimated value is under SAR 500,000; entities must now justify why open competition is unsuitable.

The law requires overdue payments owed to contractors to be settled before new award decisions are issued to them, and introduces a mechanism to transfer ongoing contracts between state entities. Rules on foreign firms remain: since 1 January 2024, companies without a licensed regional headquarters in the Kingdom generally cannot win central-government contracts above SAR 1,000,000, unless specific exemptions apply. All procurement continues to be handled through the Etimad platform.

For local businesses and SMEs, the changes signal wider access to government contracts and quicker, more predictable payment cycles.

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