Saudis changing procurement rules to save money, boost local firms

Saudi Arabia’s government is changing the way it procures goods and services to save money, make the process fairer and aid local suppliers, the Finance ministry said on Sunday.

The ministry, responsible for allocating tens of billions of dollars each year to keep the government running and build infrastructure projects, published the first draft of a new law on procurement and invited public comment until October 28.

The draft proposes creating a “strategic procurement unit” which would coordinate purchases of commonly used goods across government bodies, ensuring contracts were filled at competitive prices.

A committee would be established to steer proportions of procurement budgets towards smaller companies rather than large enterprises, and towards local suppliers instead of imports.

Among other changes, smaller companies and not-for-profit organisations would not have to post security before bidding for contracts, while government bodies would have a new mechanism to reduce payments when contractors performed poorly.