Article 42 of the Saudi Government Tenders and Procurement Law
المادة 42 من نظام المنافسات والمشتريات الحكومية · الفصل الثاني: الضمان الابتدائي
The article excepts five cases from the duty to provide the initial guarantee, including direct purchase, the competition, contracts among government entities, and contracting with local small and medium enterprises.
Official text (Arabic)
This article has not been amended since the law was issued.
استثناء من حكم المادة (الحادية والأربعين) من النظام، لا يلزم تقديم الضمان الابتدائي في الحالات الآتية:
1- الشراء المباشر.
2- المسابقة.
3- تعاقدات الجهات الحكومية فيما بينها.
4- التعاقد مع مؤسسة أو جمعية أهلية أو كيان غير هادف إلى الربح.
5- التعاقد مع المنشآت الصغيرة والمتوسطة المحلية.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 42 explained in plain English
Article 41 requires the competitor to provide an initial guarantee with his bid at 1% to 2% of the bid value, and provides for excluding a bid submitted without the guarantee. This article is an express exception to that ruling, specifying five cases in which the initial guarantee is not required:
- Direct purchase.
- The competition.
- Contracts among government entities.
- Contracting with a non-profit institution, association or entity.
- Contracting with local small and medium enterprises.
In practice, this means that a competitor who falls into one of these cases does not have his bid excluded for failing to attach the initial guarantee, because the guarantee requirement does not apply to him in the first place.
The fifth case highlights the Law's orientation toward supporting local small and medium enterprises. The text requires the enterprise to be local, not merely small or medium.
This article does not address the final guarantee; it is specific to the initial guarantee only. After the bid submission stage, the bid-opening committee formed under Article 43 opens them.
To be sure your enterprise falls within one of these cases, it is advisable to consult a lawyer who specializes in administrative disputes and government contracts.
Practical example
Sarah owns a small local establishment in Taif and applied to a government tender to supply educational materials. Because contracting with local small and medium enterprises is one of the excepted cases, she was not required to provide an initial guarantee with her bid.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 42 of the Saudi Government Tenders and Procurement Law
Are small and medium enterprises exempt from the initial guarantee?
Yes. The initial guarantee is not required when contracting with local small and medium enterprises.
Is the initial guarantee required in direct purchase?
No. Direct purchase is one of the cases in which the initial guarantee need not be provided.
Are non-profit associations exempt from the initial guarantee?
Yes. The initial guarantee is not required when contracting with a non-profit institution, association or entity.
Articles this article refers to
More articles on Submitting Bids and the Initial Guarantee
- Article 37
The article requires bids to be submitted encrypted through the portal by the set deadline, allows sealed envelopes if the portal is technically unavailable, and requires the entity to announce the names of those who applied.
1- تقدم العروض مشفرة من خلال البوابة، وفق ما تحدده اللائحة. 2- تقدم العروض في الموعد المحدد لقبولها، ولا يجوز قبول العروض التي تقدم بخلاف ذلك. 3- يجوز قبول العر
- Article 38
The article allows the government entity to ask competitors to attach a sample of the required procurement to their bids.
للجهة الحكومية طلب إرفاق عينة من المشتريات المطلوبة.
- Article 39
The article sets bid validity at 90 days from opening, with the initial guarantee not returned to a bidder who withdraws during it, and allows extension by another 90 days with the guarantee also extended.
1- تكون مدة سريان العروض في المنافسات (تسعين) يوماً من التاريخ المحدد لفتح العروض، فإن سحب مقدم العرض عرضه خلال هذه المدة فلا يعاد إليه ضمانه الابتدائي. 2- يجوز
- Article 40
The article requires total prices and any increase or reduction to be stated in the bid letter itself, disregards a reduction in a separate letter, and bars changing prices after submission except where negotiation is permitted.
1- يجب أن تحدد الأسعار الإجمالية وما يرد عليها من زيادة أو تخفيض في خطاب العرض، ولا يعتد بأي تخفيض يقدم بوساطة خطاب مستقل حتى لو كان مرافقاً للعرض. 2- لا يجوز ل
- Article 41
The article requires the competitor to submit an initial guarantee of 1% to 2% of the bid value with his bid, and a bid without the guarantee is excluded.
1- يُقدم المتنافس مع عرضه ضماناً ابتدائياً بنسبة تتراوح من (1%) إلى (2%) من قيمة العرض. ويستبعد العرض الذي لم يقدم معه الضمان. 2- تحدد اللائحة الأحكام المتعلقة
- Article 63
The Article sets the accepted forms of guarantee in tenders and government contracts: a guarantee letter from a local bank, from a foreign bank through a local bank, or any form the Regulations specify.
تقبل الضمانات إذا كانت وفق أحد الأشكال الآتية: 1- خطاب ضمان بنكي من أحد البنوك المحلية. 2- خطاب ضمان بنكي من بنك خارج المملكة يقدم بوساطة أحد البنوك المحلية. 3-
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.