Saudi Finance Ministry Warns Against Starting Government Projects Before Contract Awards

Saudi Arabia's Ministry of Finance has issued a stern warning to domestic private-sector companies, emphasizing that work on government projects cannot commence until all contract award and contracting procedures are completed in strict accordance with approved regulations. This directive comes as the Kingdom implements a new Government Tenders and Procurement Law designed to bolster governance, transparency, and efficiency within its public procurement system.

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The Cabinet on Tuesday approved the new Government Tenders and Procurement Law to strengthen governance and transparency, improve planning and execution, and promote clarity, fairness and equal opportunity in competitive bidding and contractual dealings.

The Cabinet recently approved this new law, which seeks to improve planning and execution, promote clarity, fairness, and equal opportunity in competitive bidding and contractual dealings. Finance Minister Mohammed Al-Jadaan highlighted that the legislation supports Saudi Vision 2030 objectives, including stimulating investment and enhancing the sustainability of public finances.

The Ministry of Finance stressed that bypassing established procedures, such as beginning work before an award decision, relying on verbal work orders, or undertaking tasks beyond a contract's scope without proper legal authorization, can result in unjustified financial claims, disputes, and grievances. These issues can lead to payment delays and violations of the Tenders and Procurement Law and its implementing regulations.

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bypassing contract award and contracting procedures, such as beginning work before an award decision is issued, relying on verbal work orders, or carrying out work beyond a contract’s scope without completing the required legal procedures, could lead to unjustified financial claims, as well as disputes and grievances that delay payments and violate the Government Tenders and Procurement Law and its implementing regulations.

The ministry cited specific prohibited practices, including commencing work before a contract award is issued, proceeding based on verbal authorization, or performing work outside a contract's scope without necessary legal approvals. Such actions could trigger disputes with government entities, lead to repeated financial claims, and cause delays in legitimate payments. The ministry urged stakeholders, including the Contractors Committee, to adhere to the law to minimize violations and safeguard the rights of all parties involved. It also encouraged private companies to submit legitimate financial claims promptly through the Etimad electronic platform.

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starting work before a government entity issues a contract award and completes contracting procedures, carrying out work or procurement based on verbal authorization, and performing work outside a contract’s scope without the required legal approvals.