The Kingdom is allowing limited exemptions to its ban on government contracts with foreign firms without a regional headquarters (RHQ), Asharq Al Awsat reports. The Local Content and Government Procurement Authority embedded the process into the Etimad platform, allowing exceptions for projects needing highly specialized technical expertise or when a non-RHQ bidder offers significantly lower pricing.

How it works

The exemption workflow: Government entities can’t apply retroactively — they must seek approval through the Etimad platform before launching a tender or starting direct negotiations. Requests may apply to a single project, a portfolio of projects, or a set timeframe. Tenders issued before the platform went live — or outside it — will continue under the old process.

Criteria for non-RHQ bidding: The default preference remains for companies with a Saudi-based RHQ. However, non-RHQ bidders can still secure contracts if they are the only technically compliant offer, or if they rank among the strongest technically and undercut the next-best bid by at least 25%. Smaller contracts valued at SAR 1 mn or less are automatically exempt, pending ministerial oversight.

Why it matters

Saudi Arabia is signaling flexibility in enforcing its RHQ mandate to avoid delaying strategic projects. Shifting the exemption process to Etimad suggests the government is balancing policy objectives with execution needs, particularly for projects requiring specialized global expertise not yet based in the Kingdom.

IN CONTEXT- The RHQ mandate, effective since 2024, was a “join us or lose us” ultimatum for global firms, requiring that they either relocate or forgo government contracts. While it has drawn in more than 700 companies, surpassing the 2030 target, the scale and technical demands of the 2026 project pipeline — spanning AI, specialized technologies, and Expo 2030 preparations — mean some required vendors may not yet have a full Saudi footprint.

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