Article 61 of the Saudi Government Tenders and Procurement Law

This Article regulates the final guarantee that the winning bidder submits after being notified of the award, as security for performing the contract.

First: the percentage and the deadline. The party awarded the tender submits a final guarantee of 5% of the contract value within 15 working days of the date he is notified of the award, and the government entity may extend the deadline for an equal period. If he is late in submitting it, the initial guarantee is not returned to him, and the entity negotiates with the next bid under the provisions of the Law. The percentage of the guarantee may be increased after the approval of the Minister, meaning the Minister of Finance.

Second: local small and medium enterprises. If the bidder is one of these, he pays the government entity a fine equal to the value of the initial guarantee if he withdraws his bid before the end of the bids' validity period, or does not submit the final guarantee after being awarded the tender. If 60 days pass from the date of withdrawing the bid or from the end of the deadline for submitting the final guarantee without paying the fine, he is punished by being barred from dealing with government entities for one year.

Third: cases in which the final guarantee is not required:

• If the value of the works and purchases does not exceed SAR 100,000.
• Contracting between government entities.
• Contracting with a foundation, civil association or non-profit entity.
• Contracting with companies in which the State owns at least 51% of the capital.
• If the contractor supplies all the items awarded to him and the entity accepts them as final within the period for depositing the guarantee, or supplies a part that is accepted and whose price is enough to cover the value of the final guarantee, provided that the amount covering the guarantee is not paid out until the contractor performs his obligation.
• If the contractor is commissioned with additional work.

Fourth: how long it is kept. The final guarantee is kept until the contractor performs his obligations and the project is received as final under the contract. Article 62 completes this provision by reducing the guarantee annually in continuing service contracts according to what has been performed, provided it is not less than 5% of the value of the remaining works.