Saudi Arabia has introduced a new exemption mechanism allowing government entities to contract with foreign companies lacking regional headquarters in the Kingdom, offering a flexible alternative to the blanket requirement imposed in early 2024 while maintaining strategic oversight through the Etimad procurement platform.
Saudi Arabia has modified its government procurement policy by introducing an exemption mechanism that allows government entities to contract with foreign companies without a regional headquarters (RHQ) in the Kingdom under specific circumstances.
The Local Content and Government Procurement Authority now permits government bodies to request exemptions through the Etimad Platform’s dedicated e-service. This approach maintains the RHQ requirement introduced in early 2024 whilst addressing practical needs for specialised expertise and competitive pricing.
Foreign companies without Saudi-based regional offices can participate in government tenders under two conditions: they must either be the sole technically compliant bidder or offer pricing at least 25% lower than competitors after evaluation.
Exception requests must be submitted before launching tenders or direct contracts. Projects valued at SAR 1 million or less are exempt from these controls. The Etimad Platform, the Ministry of Finance’s digital procurement system, manages all exception requests to ensure transparency and efficiency in government contracting processes.
This policy shift allows Saudi Arabia to balance strategic objectives with operational flexibility whilst maintaining oversight of foreign company engagement in government projects.
