Saudi Arabia: New Rules for Foreign Firms in Government Contracts & Etimad Platform Use

Saudi Arabia has revised regulations governing government contracts, permitting foreign companies to bid on projects even without establishing a regional headquarters within the Kingdom. The move, announced on February 21, 2026, represents a reversal of restrictions implemented in early 2024 and is intended to streamline project execution and maintain spending efficiency, according to officials.

The previous directive, enacted in early 2024, mandated that foreign firms seeking to participate in Saudi government projects must have a regional headquarters located within Saudi Arabia. This policy aimed to attract foreign investment and bolster the local economy, but reportedly created logistical hurdles and limited competition for key projects. The new rules allow government entities to request exceptions to this requirement through the digital Etimad Platform, managed by the Ministry of Finance.

The Local Content and Government Procurement Authority has informed relevant entities about the process for submitting exception requests. These requests can apply to specific projects, groups of projects, or defined time periods, but must be submitted prior to the launch of any tender or direct contracting procedure. Authorities have clarified the rules through the issuance of two circulars detailing the submission process and handling of contractual cases.

Conditions for Bidding

While the new regulations ease restrictions, foreign companies are not guaranteed contracts. Acceptance of bids is limited to specific scenarios. A foreign company can be awarded a contract only if it submits the sole technically compliant bid, or if its bid is the most competitive, priced at least 25% lower than the next best offer. These conditions are designed to ensure value for money and maintain a level playing field.

Projects valued at SAR 1 million (approximately $266,000 USD) or less are exempt from these controls, suggesting the regulations are primarily targeted at larger, more complex undertakings. This exemption likely aims to minimize bureaucratic hurdles for smaller contracts while focusing oversight on projects with significant financial implications.

The Role of the Etimad Platform

The Etimad platform, Saudi Arabia’s official digital gateway for budget, contract, and procurement management, will serve as the central hub for managing these exceptions. Tenders issued through Etimad are subject to the new rules, while those launched before the rollout or outside the platform will continue to be governed by the previous submission mechanisms. The platform is intended to promote transparency, efficiency, and digital transformation within the government’s procurement processes.

Etimad offers a range of services related to government tenders and procurement, including digital contracting, payment management, and framework agreements. It also facilitates the management of tendering committees, allowing government entities to establish and manage groups responsible for bid examination, awarding contracts, and handling appeals. The platform’s functionalities are available in both Arabic and English.

Tendering Committee Management

Governmental entities can utilize Etimad to manage all aspects of tendering committees, from direct purchase processes to qualification assessments and appeals. The platform allows for the creation of new committees, the input of committee member details, and the ability to modify or cancel committee configurations. Regulations stipulate that committees must have at least three members, plus a chairman, and that individuals should not hold multiple committee positions simultaneously.

Geopolitical Context and Implications

Saudi Arabia’s decision to relax restrictions on foreign companies reflects a pragmatic approach to achieving its ambitious economic diversification goals under Vision 2030. The Kingdom is undertaking a massive program of infrastructure development and economic reform, requiring significant foreign expertise and investment. While the initial restrictions aimed to localize economic benefits, they may have inadvertently hindered progress on critical projects.

The move also comes amid a broader trend of increasing competition for foreign investment in the Gulf region. Other countries, such as the United Arab Emirates, have actively sought to attract international businesses by offering favorable regulatory environments and streamlined business processes. By easing restrictions, Saudi Arabia aims to remain competitive in attracting the foreign capital and expertise necessary to realize its economic vision.

The revised regulations are likely to be welcomed by international companies that had previously been hesitant to invest in Saudi Arabia due to the regional headquarters requirement. However, the conditions attached to bidding – the requirement of being the sole compliant bidder or offering a price at least 25% lower than competitors – will likely ensure that only highly competitive firms are successful. This could lead to increased pressure on pricing and a focus on efficiency in government procurement.

The Etimad platform will play a crucial role in implementing and monitoring the new regulations, providing a centralized and transparent system for managing government contracts. Its continued development and adoption will be essential for ensuring that the benefits of the revised regulations are fully realized.