Article 72 of the Saudi Government Tenders and Procurement Law

This Article sets the maximum delay fine imposed on a contractor if he is late in performing the contract past the set date.

When is it imposed? If the contractor is late in performing the contract past the date set in it.

The maximum:

• Supply contracts: the fine does not exceed 6% of the contract value.
• Other contracts (such as works and services): it does not exceed 20% of the contract value.

The text sets a ceiling the fine may not exceed, and does not state here how it is calculated day by day or in stages.

Increasing the percentages: These percentages may be increased on two conditions together:

1. The prior approval of the Minister, who is the Minister of Finance.
2. That the increase is explained to the bidders before they submit their bids, so they enter the tender knowing of it.

So a contractor may not be surprised after the award with a higher percentage that was not announced before bids were submitted.

After this Article comes Article 73, which regulates the fine for default in continuing service contracts at a limit not exceeding 20% of the contract value. Before it is Article 71, which makes the contractor jointly liable with the subcontractor for performance. If a contractor believes the delay is not his fault or that the fine exceeded the limit, he can consult a lawyer who specializes in government contracts and administrative cases.