Article 63 of the Saudi Government Tenders and Procurement Law
المادة 63 من نظام المنافسات والمشتريات الحكومية · الفصل الثاني: الضمان النهائي
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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- أي شكل آخر تحدده اللائحة.
وتوضح اللائحة شروط الضمانات وأحكامها ونماذجها.
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 63 explained in plain English
The Law repeatedly requires the submission of guarantees, such as the initial guarantee with the bid and the final guarantee after the award. This Article sets the forms that the government entity accepts for any of these guarantees.
Guarantees are accepted if they come in one of the following forms:
- A bank guarantee letter from a local bank.
- A bank guarantee letter from a bank outside the Kingdom, on condition that it is submitted through a local bank; it is not enough for the foreign bank to submit it directly.
- Any other form the Implementing Regulations specify.
The Article leaves it to the Implementing Regulations to explain the conditions, provisions and forms of guarantees, so the Law does not state here the validity period of a guarantee letter or its wording, and reference is made to the Regulations for that.
The importance of this Article is practical: a bidder who submits a guarantee in other than these forms may face its non-acceptance, which may affect his bid or his contract. The Article relates to what precedes it: Article 62 speaks of reducing the final guarantee annually in continuing service contracts, and Article 64 makes payment of contract values in Saudi riyals the rule. Foreign companies that deal with banks outside the Kingdom need to arrange for the guarantee to be submitted through a local bank.
Practical example
A foreign engineering company won a tender with a government entity in Jeddah and wants to provide the final guarantee from its bank abroad. The letter is accepted only if it is submitted through a local bank, so the company arranges with a local bank to submit it to the entity.
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 63 of the Saudi Government Tenders and Procurement Law
Is a guarantee letter from a foreign bank accepted in government tenders?
Yes, on condition that it is submitted through a local bank.
Can the guarantee be provided in cash or by check?
The Article mentions bank guarantee letters and any other form the Regulations specify, so refer to the Regulations for the other accepted forms.
Where can I find the guarantee letter form and its conditions?
The Article refers to the Implementing Regulations for the conditions, provisions and forms of guarantees.
More articles on Concluding the Government Contract and the Final Guarantee
- Article 55
The Article requires government contracts and their documents to be drafted in Arabic, allows another language alongside it with Arabic governing, and allows correspondence alone to suffice if the contract value does not exceed SAR 300,000.
1- تُصاغ العقود ووثائقها وملحقاتها باللغة العربية، ويجوز استخدام لغة أخرى إلى جانب العربية على أن تكون العربية هي المعتمَدة في تفسير العقد وتنفيذه وتحديد مواصفا
- Article 56
The Article caps continuing service contracts at five years unless the Ministry approves more, requires the term to fit the work, and requires performance and evaluation conditions allowing termination or reduced payments.
1- لا تتجاوز مدة عقود الخدمات ذات التنفيذ المستمر، كالصيانة والنظافة والتشغيل والإعاشة، (خمس) سنوات، وتجوز زيادتها في العقود التي تتطلب طبيعتها ذلك؛ بعد موافقة
- Article 57
The Article refers to the Implementing Regulations the determination of the types of contracts that government entities may use.
تحدد اللائحة أنواع العقود التي يجوز للجهات الحكومية استخدامها.
- Article 58
The Article allows government contracts to include clauses on transferring knowledge, training and operating skills to the employees of government entities.
يجوز تضمين العقود بنوداً تتعلق بنقل المعرفة والتدريب ومهارات التشغيل إلى موظفي الجهات الحكومية.
- Article 59
The contract is drawn up with the winning bidder after he is notified of the award and submits the final guarantee letter, and in public construction contracts the contractor must be enabled to start within 60 days unless the documents say otherwise.
1- يحرر العقد بين الجهة الحكومية وصاحب العرض الفائز بعد إبلاغه بقرار الترسية وتقديم خطاب الضمان النهائي. 2- يُمكّن المتعاقد معه في عقود الإنشاءات العامة من البد
- Article 60
The Article requires government entities to submit the contracts specified by the Regulations to the Ministry of Finance for review before signing; the Ministry reviews them within 15 working days or they are deemed approved.
1- تلتزم الجهات الحكومية بعرض عقودها -التي تحددها اللائحة- على الوزارة لمراجعتها قبل توقيعها، وعلى الوزارة مراجعة تلك العقود خلال (خمسة عشر) يوم عمل من تاريخ ور
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.