- The law was issued by Royal Decree No. (M/76) dated 27/2/1448H, published in Umm Al-Qura on 4 September 2026, and takes effect 120 days after publication.
- Work and purchases tendered under the previous law (M/128) continue under its provisions.
- What needs preparation most: the annual procurement plan, the standstill period before contracting, the final guarantee and delay penalties.
This article is an educational summary. The official text published in Umm Al-Qura and its implementing regulations are the binding reference.
On 4 September 2026, the Umm Al-Qura gazette published Saudi Arabia’s new Government Tenders and Procurement Law, issued by Royal Decree No. (M/76) dated 27/2/1448H. It replaces the law issued by Royal Decree (M/128) in 1440H and takes effect 120 days after publication. That leaves procurement departments in government entities only a few weeks to adjust their procedures.
Why does this change matter now?
Government procurement is one of the largest areas of public spending, and any change to its rules affects every government entity and every supplier and contractor that deals with them. The new law has 101 articles and changes periods and percentages procurement teams have worked with for years.
The decree settles an important transition question: work and purchases tendered while the previous law was in force continue under its provisions. Many entities will therefore run two regimes for a while: the old one for tenders issued before the effective date, and the new one for tenders issued after it.
Which provisions need preparation?
Annual procurement plan (Article 12)
At the start of each fiscal year, every entity must publish a procurement plan in line with its budget. The law states that publishing the plan creates no commitment. The aim is transparency and giving suppliers, especially SMEs, time to prepare.
Direct purchase (Article 32)
The law lists twelve cases in which direct purchase is allowed, including when the estimated cost does not exceed SAR 1 million. In that case priority goes to local small and medium enterprises. Direct purchase also does not require a bid bond.
- 1Annual planPublished at the start of the fiscal year (Art. 12)
- 2Tender and bidsBids valid 90 working days (Art. 39)
- 3Award decisionBidders notified
- 4Standstill period3 to 10 working days for grievances (Art. 50)
- 5Contract and guarantee5% final guarantee within 15 working days (Art. 59)
Bid validity (Article 39)
Bids remain valid for ninety working days from opening. A bidder who withdraws within that period forfeits the bid bond. The entity may extend the period, provided bidders confirm their consent.
Standstill before contracting (Article 50)
After the award decision is issued and bidders are notified, the entity must wait at least three and at most ten working days before completing the contract. This lets bidders file grievances before signature. Exemptions may apply in cases set out in the regulations.
Final guarantee (Articles 59 and 60)
The winning bidder provides a final guarantee of 5% of the contract value within fifteen working days of the award notice. It remains in place until obligations are fulfilled and final acceptance is complete. For continuous-service contracts the guarantee decreases annually but never below 5% of the remaining value.
Delay penalties (Articles 70 and 71)
The delay penalty is capped at 6% of contract value for supply contracts and 15% for other contracts. For continuous-service contracts, if the contractor defaults for reasons within its control, the cap is 15%, and the value of unperformed work is deducted in all cases.
| Item | Rule | Article |
|---|---|---|
| Direct purchase | Up to SAR 1 million, priority for local SMEs | 32 |
| Bid validity | 90 working days from bid opening | 39 |
| Standstill period | 3 to 10 working days after award notice | 50 |
| Final guarantee | 5% of contract value within 15 working days | 59 |
| Delay penalty | Cap of 6% for supply, 15% for others | 70 |
| Continuous services | Cap of 15% for default | 71 |
What should procurement teams do now?
- Review live tenders: identify what was issued before the effective date and stays under the old law, and what will be issued after.
- Update templates: tender documents, guarantee forms and contract templates must match the new periods and percentages.
- Prepare the annual plan: start now so it is ready to publish at the start of the fiscal year.
- Train the team: on the standstill period and grievance procedures, which change when contracts can be signed.
- Watch for the implementing regulations: the law leaves many details and exemptions to them.
Conclusion
The new law balances procedural speed, transparency and bidders’ rights. Entities that start reviewing their templates and training their teams now will move to the new law without disrupting their procurement.
Frequently asked questions
When does the new law take effect?
120 days after its publication in Umm Al-Qura. It was published on 4 September 2026, so it takes effect around the start of January 2027.
What about tenders already issued?
Under the royal decree, work and purchases tendered while the previous law was in force continue under its provisions.
What is the direct purchase threshold in the new law?
One of the direct purchase cases is an estimated cost not exceeding SAR 1 million, with priority for local small and medium enterprises (Article 32).
How long are bids valid?
Ninety working days from bid opening, and the entity may extend the period with bidders' consent (Article 39).
References
- Umm Al-Qura Gazette. Government Tenders and Procurement Law (Arabic) (1448H / 2026)
- Umm Al-Qura Gazette. Royal Decree No. (M/76) dated 27/02/1448H (Arabic) (1448H / 2026)
- Ministry of Finance. Implementing Regulations of the Government Tenders and Procurement Law (previous law)
- Al-Weeam. 101 articles and one million riyals: a new state procurement law after 120 days (Arabic) (2026)
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