New Procurement and State Revenues Laws

Within the space of three weeks, Saudi Arabia has renewed the legal framework governing both sides of its public balance sheet. On 14 July 2026, the Council of Ministers approved an updated State Revenues Law, replacing a framework in place since 2010. On 4 August 2026, it approved a new Government Tenders and Procurement Law, replacing the 2019 law under which all government contracting has since been conducted. Taken together, the two instruments represent the most significant recalibration of the Kingdom’s public finance legislation since the current procurement regime was introduced — one law governs how the State spends; the other, how it collects.

Neither text has yet been published in the Official Gazette (Umm Al-Qura). Publication will fix the commencement dates and transitional arrangements, and much of the operational machinery of both laws is reserved to implementing regulations still to be issued. The direction of travel, however, is already clear from official statements, the drafts released for public consultation anda transitional royal decree issued in July — and there are concrete steps that government entities, contractors, suppliers, investors and financial institutions should be taking now.

Set out below is an overview of the most significant developments and their practical implications, addressing the procurement law first and the revenues law second.

Part One: The New Government Tenders and Procurement Law

The new law replaces the Government Tenders and Procurement Law issued by Royal Decree No. (M/128) dated 13/11/1440H (16 July 2019), which itself replaced the 2006 competitions regime and introduced the architecture that market participants now know well: the unified electronic portal (Etimad), defined procurement methods, standstill periods and local content preferences.

The 2026 law retains that architecture. What changes is the calibration: decision-making is devolved and accelerated, the direct purchase channel is materially widened, pricing discipline is tightened, and — most consequentially for contractors — an entity’s ability to award new contracts is linked to its record of paying for existing ones.

1. Faster, More Devolved Decision-Making

The head of each government entity is granted authority to decide all procurement procedures for amounts above SAR 50 million, with the ability to delegate that authority to entity officials for amounts up to SAR 50 million, and to delegate the signing of contracts and other documents without a financial ceiling. The Ministry of Finance’s window for clearing contracts is cut from fifteen days to four business days, and requests to the unified procurement authority become subject to fixed decision periods, failing which approval is deemed granted. The bid opening and bid examination committees are merged into a single committee whose members will, for the first time, be remunerated for completing procedures within the statutory periods — paired with an express prohibition on combining committee membership or chairmanship with the authority to decide the award.

The minimum standstill period between the award announcement and contract signature is reduced from five days to three, and new exemptions apply where a standstill serves no purpose: direct purchases, single-bid competitions, urgent cases and competitions in which all bids but one have been withdrawn. For bidders, the practical consequence is a shorter window in which to identify and challenge a defective award decision. Active monitoring of the portal during the award phase, and readiness to file a grievance quickly, become correspondingly more important.

2. A Materially Wider Direct Purchase Channel

The ceiling for the direct purchase method rises from SAR 100,000 to SAR 1 million, and the grounds on which it may be used expand considerably: procurement for research, development and innovation purposes; contracting with licensed freelancers; software licences, electronic programmes and subscriptions; specialised scientific journals; the booking of exhibition, event and conference space; and the training of government employees. Contracting between government entities may also proceed by direct purchase, entities may act as agents for one another in conducting procedures, and contracts under which the entity pays no financial consideration are expressly accommodated.

Limited tendering is recalibrated in parallel. The ground permitting its use for works below SAR 500,000 is removed — pushing low-value procurement towards open competition or the widened direct purchase channel — as are the grounds relating to non-local non-profit organisations, while licensed freelancers are added. The same equalisation runs through the security regime: bond exemptions for non-local non-profits are withdrawn, final guarantee requirements are unified across companies, the threshold below which no bond is required rises from SAR 100,000 to SAR 300,000, and exemptions are introduced for freelancers and for emergency and urgent cases.

For technology vendors, consultancies and training providers, the addressable direct-award market becomes significantly larger. For freelancers, the law is a formal invitation into the government market. For smaller contractors, more low-value work should now flow through open, portal-based competition.

3. Pricing Discipline: All-In Estimates, Reserves and Real Negotiation

Estimated costs must now be comprehensive — inclusive of all fees and taxes — and entities must build in a reserve percentage, to be set by the implementing regulations. That figure acquires legal force: the merged committee may negotiate with the best bidder where the best price exceeds the estimated cost plus reserve, and an entity is prohibited from awarding above that combined figure, subject to a narrow exception where competing bids have been withdrawn. Cancellation of a competition becomes mandatory in defined cases — including where the bid validity period expires without an award or extension, where all bids are withdrawn or excluded, and where the underlying need has lapsed — with notification to the General Court of Audit, subject to carve-outs.

Bid validity is extended from ninety days to ninety business days — several additional weeks in practice — with the extension mechanism left to the regulations, and bidders gain an express right to submit queries which the entity must answer before the bid deadline. Bidders should price on genuinely all-in assumptions, anticipate negotiation invitations where estimates are exceeded, and account for the longer validity period in bond costs and capacity planning.

4. No New Awards Until Private-Sector Dues Are Addressed

The most commercially significant provision for contractors may be the prohibition on government entities issuing award decisions while outstanding financial dues to the private sector still require action from the entity, under controls to be set by the regulations. The Minister of Finance has been explicit about the intent: an entity that wishes to keep procuring must keep paying. The provision aligns each entity’s procurement pipeline with its payment performance and, for the first time, gives contractors’ receivables systemic leverage rather than merely contractual remedies. Contractors should ensure that all legitimate claims are submitted promptly and completely through the Etimad platform, with supporting documentation in order — both to be paid and, indirectly, to keep their government clients able to award.

5. Contract Management Recalibrated

The variation regime is restructured. Entities may issue variation orders adding new items to a contract, or to a purchase order under a framework agreement, up to 10% of its value, and increasing existing items by up to 20% — with the contractor’s consent required for any increase beyond 10% — while reductions are capped at 20% and aggregate increases from all variation orders may not exceed 20% of the contract or purchase order value. Non-financial terms may now be varied by agreement. Under the 2019 law, upward variations were capped at 10% overall; the new headroom gives entities real scope to expand a project without retendering, but the aggregate cap is hard.

Delay and default penalty ceilings are cut from 20% to 15% of contract value for contracts other than supply contracts and for continuing-execution contracts, and contractors under continuing contracts are relieved of default penalties where the causes lie beyond their control. Termination by mutual agreement is expressly recognised, concluded contracts may be assigned to other government entities, and full advance payment of the contract value becomes possible under controls to be set in the regulations. Discipline is also imposed at the signing stage: the entity fixes a signing date, and a winning bidder that fails to sign within ten business days of being warned faces cancellation of the award and transfer to the next bidder, together with forfeiture of the final bond or — where exempt from a bond — a penalty of 5% of its bid value; a parallel 2% penalty regime applies to suppliers exempted from initial bonds. Standard-form subcontracts and consortium arrangements should be reviewed so that variation shares, penalty pass-downs and signing obligations track the new caps and deadlines.

6. Procurement as Industrial Policy

The law embeds the Local Content and Government Procurement Authority across the procurement lifecycle: entities must coordinate with the Authority at the advance planning stage, the Ministry of Finance must coordinate with it when issuing policies, directives and guidance under the law, and the Authority may participate in bid examination discussions. References to country of origin are prohibited, with a narrow exception where precise specification is impracticable — conditional on the unified procurement authority’s approval and on “or equivalent” language in the tender documents. A dedicated regulation will be issued under the law to support procurement for research, development and innovation, alongside rules supporting industrial localisation and knowledge transfer.

The message to international suppliers is that local content is no longer an evaluation overlay but part of the structure of Saudi public procurement. Localisation and knowledge-transfer commitments should be treated as core bid strategy, and origin-neutral specifications should, at the margin, widen the field of qualifying products.

7. Grievances, Integrity and an Early Enforcement Signal

The two-committee grievance architecture is retained with adjustments: the violations committee’s minimum membership is set at three, both committees continue operating pending reconstitution, and a general secretariat is established to support them. The deposit requirement for appeals is extended to challenges against pre-qualification decisions, at 0.5% of the bid value or SAR 15,000. Combined with the bar on committee members deciding awards and the new remuneration regime, the integrity framework is tangibly strengthened.

Enforcement has, in a sense, already begun. Within days of the law’s approval, the Ministry of Finance publicly warned contractors against commencing works before award and contracting procedures are complete, acting on verbal work orders, or performing works outside the contracted scope without the required approvals — practices it linked to unjustified financial claims, disputes and payment delays. Contractors should treat that warning as a statement of the compliance posture that will accompany the new law: no early mobilisation, nothing verbal, everything through the portal.

Part Two: The Updated State Revenues Law

The updated law replaces the State Revenues Law issued by Royal Decree No. (M/68) dated 18/11/1431H (26 October 2010), itself the successor to the State Funds Collection Law of 1359H (1940). The 2010 framework was built around enumeration and collection: entities estimated revenues annually, could neither waive nor defer any due amount, issued written notices allowing thirty business days for payment, and routed waiver requests through a Ministry of Finance committee. The updated law repositions the entire exercise as revenue management.

8. From Collection to Revenue Management

The law introduces medium- and long-term revenue estimation — what the Minister of Finance has described as a predictive dimension, moving revenue planning beyond annual horizons — allocates roles and responsibilities between the Ministry and revenue-generating entities, and tasks the Ministry with monitoring entities’ collection performance and with collecting revenues whose responsible entity is unclear. The reform lands in a fiscal context that explains its priority: the 2026 budget projects revenues of SAR 1.147 trillion against expenditure of SAR 1.313 trillion, and the development of non-oil revenues remains a central Vision 2030 objective. For businesses, more strategic revenue management should, over time, translate into more predictable fee and charge policy — and into more systematic collection.

9. Faster Demands, a Longer and Clearer Runway.

Collection timelines are restructured. Entities must issue a demand on the business day following the due date — replacing the previous written-notice regime — and enforcement and collection procedures follow where the debtor has not paid within forty-five business days of the demand. The practical effect is a regime that starts faster but gives debtors a clearer, longer runway before enforcement: the compliance deadline to diarise is forty-five business days from the demand, not thirty from a notice. The consultation draft also designated State debts as privileged debts ranking ahead of other privileged debts and not subject to extinguishment; both points should be confirmed against the published text. Businesses with recurring government payables — fees, royalties, fines and cost-recovery charges — should align treasury processes to the new clock and expect collection to be increasingly platform-driven.

10. Structured Flexibility: Deferral, Instalments and Waivers

For the first time, the law codifies a graduated relief architecture. The senior official of an entity may defer collection for up to one year in emergency cases, and may approve instalment plans of up to five years for debts not exceeding SAR 1 million where the debtor is unable to pay in a lump sum. Debts above SAR 1 million may be scheduled by the Minister of Finance, or his delegate, over periods of up to twenty-five years. Waivers of debts up to SAR 1 million are considered through committees at the Ministry — which, under the consultation draft, must include a member with Sharia or legal specialisation — after verifying the debtor’s inability to pay; waivers above SAR 1 million require the approval of the Prime Minister on the Minister’s recommendation, and a partial waiver may be combined with instalments of the balance. Properly documented evidence of financial hardship will be the currency of this regime; the procedures will sit in the implementing regulation.

11. The Bridge Decree: A Timing Signal

Days after the Cabinet’s approval, Royal Decree No. (M/44) dated 28/1/1448H (July 2026) created an immediate bridge: as an exception to Articles 20 and 22 of the current law, financial fines owed to the State by private-sector and non-profit establishments may be paid in instalments under rules approved by the Minister of Finance, with the relevant entity reviewing applications within ten days and the Ministry deciding within fourteen. The decree applies for a limited window — it lapses on 1 January 2027 or upon the entry into force of the new State Revenues Law and its implementing regulation, whichever comes first. That sunset is the clearest official signal yet that the Government expects the new framework to be operational by early 2027. Establishments carrying outstanding fines have an opportunity to regularise now, on defined timelines, rather than await the new law.

What Should Organisations Be Doing Now?

• Submit and complete claims: ensure all legitimate financial claims against government entities are lodged through Etimad with full documentation — payment discipline is about to acquire statutory teeth.
• Do not mobilise early: no works before award and contracting are complete, no verbal instructions, and no out-of-scope performance without the required approvals.
• Reset pricing models: all-in estimated costs, reserve margins, negotiation scenarios and ninety-business-day bid validity.
• Review delegations and signing protocols: align internal authority matrices and counterparty due diligence with the SAR 50 million devolution and the ten-business-day signing regime.
• Reposition for the new channels: research and development, software and subscriptions, training and freelancer contracting all become direct-purchase eligible; treat local content and knowledge transfer as core bid strategy.
• Manage State debts proactively: assess the Royal Decree M/44 instalment window for outstanding fines and prepare hardship documentation against the new deferral, instalment and waiver architecture.
• Track the Gazette and the regulations: commencement dates, transitional rules and most operational thresholds will be fixed there.

Looking Ahead

Both laws await publication in Umm Al-Qura, which will fix their commencement dates and the transitional treatment of ongoing procedures and existing contracts. The implementing regulations will carry unusual weight: on the procurement side, they will set the reserve percentage, the unified procurement authority’s decision windows, bid validity extension mechanics, advance payment controls and the controls governing the link between outstanding dues and new awards; on the revenues side, the instalment, deferral and waiver procedures. Points to watch include the treatment of tenders in progress at commencement, the interaction of the new law with existing framework agreements and with the specialised regulatory documents issued through the Expenditure and Projects Efficiency Authority, and the fate of exceptions previously applied to Vision Realization Programs. On the revenues side, the Royal Decree M/44 window closes by 1 January 2027 at the latest. If the regulations hold the line, faster award cycles, wider direct-award channels and statutory payment discipline should improve contractor liquidity and, over time, the pricing of government risk.

Conclusion

The two laws are best read together: a State that intends to spend faster, more flexibly and more strategically, and to collect more systematically and more fairly. For businesses contracting with the Saudi government, the opportunities are real — wider channels, stronger payment protection and softer penalty caps — but so are the disciplines: shorter challenge windows, harder pricing limits and a collection regime that starts the day after the due date. Preparation should not wait for the Gazette.

 

Disclaimer: This article is intended for general information purposes only and does not constitute legal advise.