FAQs

They represent the total spending in the Kingdom of Saudi Arabia, which includes the following elements:

1. Assets
2. Workforce
3. Goods and services
4. Technology and similar factors

• Low-value projects: These are projects with an estimated value of less than 25 million Saudi Riyals.
• High-value projects: These are projects with an estimated value of 25 million Saudi Riyals or more.

1. Mandatory List
2. Price preference mechanism for national products
3. Preference mechanism for medium and small enterprises, applied to service projects and low-value projects
4. Local content weighting mechanism in financial evaluation
5. Minimum local content requirement mechanism

It is a list of national products issued and periodically updated by the Local Content and Government Procurement Authority. It is applied according to the competition activity with the sectors included in the list, regardless of the project’s value.

This mechanism is applied to supply projects or mixed supply projects for low-value projects. It can also be applied to high-value supply projects in coordination with the Local Content and Government Procurement Authority. Under this mechanism, national products are granted a price preference of 10%. The price preference is applied assuming that the foreign product is priced 10% higher than its value stated in the competition documents, according to the following formula:

Adjusted bid value = Bid price (in SAR) + 10% × Bid price (in SAR) × (1 - National product share)

Where:

• Bid price: The value of products not listed in the mandatory list, with the value of products listed in the mandatory list added to the adjusted bid value using the formula above after calculation.
• National product share: The percentage of national products committed by the competitor, excluding products listed in the mandatory list.

This mechanism is applied to high-value contracts, excluding supply contracts. The targeted local content percentage is determined at the contract or company level according to the terms and conditions in the competition documents, in coordination with the Local Content and Government Procurement Authority. A weight of 40% is allocated to local content and to companies listed on the financial market during the financial evaluation phase of the bids, with an additional weight of 60% for price, according to the following formula:

Financial Evaluation = (Lowest Technically Qualified Bid Price (in SAR) ÷ Bid Price of the Competitor Being Evaluated (in SAR) × 60%) + (Targeted Local Content Percentage × 50% + Baseline × 50% + 5% Points for Companies Listed on the Financial Market) × 40%

The implementation of high-value contracts and verification of the targeted percentages are monitored by the center and the Local Content and Government Procurement Authority through the submission of periodic reports by the contractor, after ensuring they have been audited and reviewed by accredited offices with the Local Content and Government Procurement Authority.

This mechanism is applied to high-value contracts determined by the Local Content and Government Procurement Authority in coordination with the center, excluding supply contracts. After conducting the necessary studies, the center determines the minimum required local content and submits it to the relevant authority for centralized procurement for review and approval, in cooperation with the Local Content and Government Procurement Authority. A weight of 40% is allocated to local content and to companies listed on the financial market during the financial evaluation phase of the bids, with an additional weight of 60% for price, according to the following formula:

Financial Evaluation = (Lowest Technically Qualified Bid Price (in SAR) ÷ Bid Price of the Competitor Being Evaluated (in SAR) × 60%) + (Targeted Local Content Percentage × 50% + Baseline × 50% + 5% Points for Companies Listed on the Financial Market) × 40%

The implementation of high-value contracts and verification of the targeted percentages are monitored by the center and the Local Content and Government Procurement Authority through the submission of periodic reports by the contractor, after ensuring they have been audited and reviewed by accredited offices with the Local Content and Government Procurement Authority.

1. The contractor is notified in the award letter to submit certificates and follow the instructions for delivering national products according to the type of commitment.
2. The terms and conditions of the mandatory list are included in the contract.
3. The contractor is monitored during the execution of the works and must submit certificates proving the nationality of the product in accordance with the regulations, whether it is a (SABER certificate, written declaration from the manufacturer, or certificate of origin), supported by photos and other documentation. The center will not accept any products supplied that do not comply with the mandatory list agreed upon by the contractor, except for products the contractor has received an exemption for.
4. The contractor submits the final report for national products to the supervisory committee on the contract and coordinates with the local content development team at the center to ensure the validity and accuracy of the certificates and report, in accordance with the instructions of the Local Content and Government Procurement Authority.
5. If the contractor complies with the conditions and regulations of the local content list and submits the compliance report for supplying the products on the mandatory list as per the bill of quantities, along with the required certificates, payment will be made to the contractor.

These are reference codes that confirm the existence of national products and factories, which obligate the contractor or supplier to provide national products.

It refers to local small, micro, and medium enterprises, as classified by the General Authority for Small and Medium Enterprises, where the ownership percentage by citizens is no less than 50% of the enterprise's capital. The purpose is to grant small and medium enterprises a price preference, assuming the prices of offers from other enterprises are 10% higher than those stated in the bid documents. This applies to all contracts, except supply contracts, that do not fall under the scope of high-value contracts.

It is a mandatory plan prepared and submitted by the contractor to clarify the targeted local content percentage to be achieved during the stages of contract execution. The plan ensures that the contractor gradually achieves the committed local content percentage over the years of the contract. This applies to high-value projects, where the plan is submitted within 60 days after the award. For contracts shorter than one year, the contractor is not required to submit a gradual plan.

In accordance with the penalties and final provisions outlined in the Local Content and Preference for Small and Medium Enterprises (SMEs) and Listed Companies in Financial Market Works and Procurement Regulation, issued by Cabinet Resolution No. (245) dated 29-3-1441H, the fines and penalties are detailed in the terms and conditions attached to each contract according to the applicable mechanism.

There are documents that prove the products supplied by the supplier are locally made. These include: (SABER certificate / Written declaration from the manufacturer / Certificate of origin) and the local content certificate for the manufacturer.
The documents are updated according to the instructions issued by the Local Content and Government Procurement Authority.

It refers to the percentage of local content in the enterprise of the competitor when submitting their bid.

You can access the list of approved auditing offices through the Local Content Measurement on their website (lcgpa.gov.sa). You can view the accredited auditing offices by clicking here.

The contractor must provide the National Center for Meteorology with a final report within 30 days of the contract's completion, which includes proof that the products are locally made according to the Saudi Industry Proof Model. The report should also include the actual share of national products. Reports from the Local Content and Government Procurement Authority can be viewed, such as the final price preference report (click here), the contractor's commitment to mandatory list products report (click here), or through the manufacturer's or service provider's declaration that the product is locally made (click here), as per the instructions issued by the Local Content and Government Procurement Authority (click here).

An exemption request can be submitted to the center, which will accept or reject the request based on the exemption regulations issued by the Local Content and Government Procurement Authority. You can view the exemption mechanism (click here).

It is a certificate issued by the Local Content and Government Procurement Authority that specifies the approved local content percentage for the enterprise.

The Local Content Certificate indicates the local content percentage for the enterprise in the targeted fiscal year, allowing the enterprise to assess its current local content status and identify ways to increase it. The certificate also enables industrial enterprises to meet the local content requirements set by the Local Content and Government Procurement Authority.

• Calculation of salary expenditures
• Calculation of expenditures on goods and services
• Calculation of expenditures on training Saudis
• Calculation of expenditures on supplier development
• Calculation of expenditures on research and development
• Calculation of asset depreciation

The validity period of the Local Content Certificate is "nineteen months."