The new face of governmental procurement in KSA

The new regulation of the government procurement and competition systems in Saudi Arabia includes a number of concepts and mechanisms aimed at raising the efficiency of government spending, ensuring sound and fair mechanisms in the spending process and determining the fate of financial resources. The new regulation focuses on an honest mechanism for evaluating contractors, detailing pre- and post-qualification mechanisms and controls and the limits of subcontracting, which will lead to a higher quality of project implementation and put an end to corruption that may occur if the stipulated mechanisms are not followed.

The regulation included details of mechanisms for immunizing government agencies for their purchases by adopting a number of innovative contracting methods that ensure the required transparency, including framework agreements, electronic reverse auction, two-stage competition, industry localization and knowledge transfer, and the competition.

We will start first with the framework agreements, which are deals concluded between one or more government agencies (the buyer), and one or more suppliers, through which the terms and conditions of agreements that will be awarded during a certain period are clarified. These agreements save time and cost in the procurement process from other sources, as they avoid the buyer having to renegotiate terms and conditions. In addition, in the long term, such agreements contribute to strengthening the relations between buyers and sellers, as they work together to find detailed solutions that meet the needs of both parties after cooperation has been established and where strengths and weaknesses have been identified.

Then, we have the electronic reverse bidding method, which is an electronic method to present successively reduced offers during a specified period for the purpose of selecting the lowest price offers. This leads to reducing purchasing costs, increasing efficiency in the market and helps the buyer (the government entity in this case) to reach a larger global data base of suppliers.

The third developed method in the governmental procurement and competition regulation is the two-stage competition. This method is similar to the method of general competition, when the government entity launches and announces in the first stage a general description of the nature of the project, and receives technical offers. In the second stage, the entity will present the conditions and detailed specifications of the project.

The competition can be in two stages if it is not possible to determine the technical specifications and the final contractual terms, due to the complex nature of some projects and services, whereby bidders can help determine the technical requirements and scope of work.

Moreover, and to develop creativity and innovation, we have the competition method, which is often used to the agreements related mainly to the preparation of designs, plans, or other artistic and intellectual projects where bidders can devise new mechanisms that keep pace with the goal of the project as well as the way it is presented.

As we mentioned earlier, integrity and transparency are two of the most important values that the new procurement law is focusing on, even in the case of disputes, where we will have the specialized committees to look into complaints, appeals and impose the proper mechanisms to resolve disputes. In addition to that, this integrity will be served by the accuracy of the automatic procurement process on the electronic portal (Etimad) during all its stages.