Saudi Arabia Permits Exceptions to Regional Headquarters Rule

Government entities in Saudi Arabia can now contract with international companies and institutions that do not have a regional headquarters in the Kingdom, under an exception framework outlined by the Local Content and Government Procurement Authority and processed through the Ministry of Finance’s Etimad platform.

The authority stated that the measure is designed to maintain spending efficiency and ensure timely execution of strategic projects. It follows a government decision in early 2024 that suspended contracting with any foreign company whose regional headquarters was outside Saudi Arabia, applying to all government entities, institutions, funds, and affiliated authorities. Two circulars set out the submission process and the handling of contractual cases within the new controls.

Under the regulatory framework, government entities may submit requests to a competent committee to approve exceptions on specific projects, groups of projects, or for defined time periods, provided the request is lodged before launching a tender or starting any direct contracting procedure. The exception service is available for tenders issued through the Etimad platform, the official digital gateway for budget, contract, and procurement management. Tenders launched prior to the rollout of the exception service, or those issued outside the platform, will continue under previously established submission mechanisms.

Foreign companies and related parties are not barred from participating in public tenders; however, acceptance of their bids is limited to two scenarios. First, when only one technically compliant bid is submitted. Second, when the offer is assessed as the best and is priced at least 25% lower than the next competitor. Projects valued at SAR 1 million or less are exempt from these controls. The authority indicated that submissions must align with the outlined procedures and timing to ensure compliance with the regional headquarters rule while addressing specialised technical needs or financial competitiveness in strategic procurements.