In these Regulations, the following terms and phrases shall have the meanings assigned thereto, unless the context requires otherwise:

• Law: Government Tenders and Procurement Law.

• Regulations: Regulations on Preference for Local Content and Local SMEs and Companies Listed on the Capital Market in Business and Procurement Transactions. Minister: Minister of Finance.

• LCGPA: Local Content and Government Procurement Authority.

• EXPRO: Expenditure Efficiency and Projects Authority. Committee: The committee, formed in accordance with Article 88 of the Law, in charge of reviewing violations committed by bidders and contracted parties pursuant to the provisions of the Law and concluded contracts.

• Government Agency: Ministries, government agencies, and public corporations, authorities, and institutions, as well as entities with independent public legal personalities.

• Local SMEs: Local micro-, small-, and medium-sized enterprises, as classified by the Small and Medium Enterprises General Authority, of which 50% or more of the capital is owned by Saudi citizens.

• Portal: A unified government procurement portal supervised by the Ministry.

• National Product: Any product manufactured in the Kingdom, including all extractive, agricultural, animal, and industrial products, whether in its raw form or at any subsequent stage of assembly, processing, or manufacturing.

• Share of National Products: The ratio of the value of national products a bidder undertakes to supply compared to the total bid value, excluding products on the mandatory list.

• Local Content: Total spending in the Kingdom through national elements, including goods, services, assets, technology, workforce, and the like.

• Local Content Gradual Plan: A mandatory plan prepared and submitted by a contractor which indicates the local content percentage to be reached during execution of the contract.

• Local Content Percentage: A percentage indicating the amount of spending on Saudi elements in the contract or in the establishment as compared to total spending.

• Targeted Local Content Percentage: The percentage of local content a bidder, upon submitting his tender, undertakes to reach by the end of the contract.

• Minimum Local Content: A minimum amount of local content that a contractor is required to reach by the end of the contract. Baseline: The local content percentage fulfilled by a bidder’s establishment upon submitting his tender. Mandatory List: A list of national products issued and updated by the LCGPA on a regular basis.

The provisions of these Regulations shall not prejudice the powers of the General Authority for Military Industries granted thereto under the law.

For the application of these Regulations, the amount of a high-value contract shall be determined by the LCGPA in agreement with EXPRO.

Upon tendering its projects and procurements, a government agency shall:

• 1. comply with the mandatory list in accordance with Articles 8 and 9 of these Regulations;

• 2. grant local SMEs a price preference, by assuming that the bid prices of other establishments are 10% higher than the price stated in the bid documents; such approach shall, with the exception of supply contracts, be applied to all contracts that are not deemed to be high-value contracts;

• 3. adopt, without prejudice to paragraphs (1) and (2) of this Article, the following local content mechanisms:

  • a) The price preference mechanism for national products, as provided for in Chapter 1 of Part 2 of these Regulations.

  • b) The local content weight mechanism in financial evaluations, as provided for in Chapter 2 of Part 2 of these Regulations.

  • c) The mechanism for determining the minimum local content requirements, as provided for in Chapter 3 of Part 2 of these Regulations.

1. The LCGPA shall establish and manage a local content portal linked to the Portal to:

• a) enable a bidder to register and enter data to assess his local content contribution using LCGPA forms;

• b) enable a bidder to submit to a government agency his local content obligations using LCGPA forms;

• c) enable a contractor to estimate his local content contribution and monitor its increase during the execution of the contract using LCGPA forms; and

• d) enable a government agency to monitor and assess the contractor’s compliance with local content requirements.

2. If the local content portal is out of service for more than three consecutive days due to technical reasons, the LCGPA shall provide government agencies, bidders, or contractors, an alternative channel for the provision and submission of forms referred to in these Regulations.

1. The LCGPA shall prepare the mechanisms and the terms, conditions, and requirements of the local content and submit the same to the Unified Procurement Agency to be included in the contract forms, tender documents, and contractor performance assessment forms.

2. The Unified Procurement Agency shall submit to the LCGPA tender documents for projects and procurements with a value equal to or higher than the amount of high-value contracts to review the mechanisms and the terms, conditions, and requirements of local content, and the LCGPA shall provide its comments, if any, to the Unified Procurement Agency.

3. A government agency shall assess a contractor’s performance in terms of his compliance with the provisions of these Regulations using the contractor performance assessment forms referred to in paragraph (1) of this Article.

Subject to the provisions of Article 6(1) of these Regulations, a government agency shall ensure that tender documents include, according to their type and value, the following information:

• 1. A list of the products included within the mandatory list in government projects and procurements.

• 2. The local content mechanisms required in government projects and procurements in accordance with these Regulations.

• 3. The terms and conditions of local content mechanisms and bid assessment criteria.

• 4. A provision excluding the bidder if the targeted local content percentage is not included in the technical bid; such statement shall be included when using either the local content weight mechanism in financial evaluation or the mechanism for determining the minimum local content requirements.

1. The LCGPA shall, in agreement with EXPRO, set the rules and criteria required for inclusion in the mandatory list or exclusion therefrom, in coordination with the Ministry of Industry and Mineral Resources, the Saudi Standards, Metrology and Quality Organization, and the Federation of Saudi Chambers.

2. The LCGPA shall issue the mandatory list and regularly update it in accordance with the rules and criteria referred to in paragraph (1) of this Article.

1. Bids which do not comply with the mandatory list shall be excluded from supply tenders or mixed tenders which include supply items. If a bid is divisible, only items not complying with the mandatory list shall be excluded.

2. The government agency shall monitor the contractor's compliance with the mandatory list during execution of the contract and shall not receive any supplied products in violation of the mandatory list; this shall not apply to products that have been exempted for the contractor.

3. The contractor shall comply with LCGPA instructions regarding the delivery of products included in the mandatory list.