Article 70 of the Saudi Government Tenders and Procurement Law

A government contract is concluded with a contractor chosen after a tender and an assessment of his capabilities, so this Article restricts transferring it to someone else.

The provision: The contractor may not assign the contract or part of it to another contractor, undertaker or supplier, except after obtaining written approval from two parties together:

• The government entity that owns the contract.
• The Ministry, which is the Ministry of Finance under the definitions of Article 1.

The approval of one without the other is not enough, and oral approval is not enough. The prohibition covers assigning the whole contract or part of it.

The Article refers to the Implementing Regulations the conditions and rules for assignment, so the text does not state here when approval is granted or what qualifications the assignee must have.

The difference from subcontracting: Article 71 regulates subcontracting, in which the original contractor remains a party to the contract and assigns part of the performance to someone else with written approval of the government entity alone, and remains jointly liable with the subcontractor. Assignment, by contrast, means transferring the contract or part of it to another party, which is why the text requires the Ministry's approval for it as well.

Anyone considering transferring his contract to another company, as in cases of restructuring or sale, should consult a lawyer who specializes in government contracts before any step.