Article 73 of the Saudi Government Tenders and Procurement Law
المادة 73 من نظام المنافسات والمشتريات الحكومية · الفصل السادس: الغرامات وتمديد العقود
The Article imposes on a contractor who defaults in continuing service contracts a fine not exceeding 20% of the contract value, with deduction of the value of the work not performed.
Official text (Arabic)
This article has not been amended since the law was issued.
إذا قصّر المتعاقد معه في عقود الخدمات ذات التنفيذ المستمر في تنفيذ التزاماته؛ تُفرض عليه غرامة لا تتجاوز (20%) من قيمة العقد، مع حسم قيمة الأعمال التي لم تُنفذ، ويجوز زيادة تلك النسبة بموافقة مسبقة من الوزير، على أن توضح تلك الزيادة للمتنافسين قبل تقديم عروضهم.
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 73 explained in plain English
This Article concerns continuing service contracts, which are contracts in which work is provided continuously throughout the contract term, such as operation, cleaning and periodic maintenance.
When does it apply? If the contractor defaults in performing his obligations in this type of contract. The criterion here is default in obligations, not lateness past a set date as in Article 72.
The penalty has two parts:
- A fine not exceeding 20% of the contract value.
- Deduction of the value of the work not performed; the contractor is not paid for what he did not provide, in addition to the fine.
Increasing the percentage: The 20% may be increased on two conditions: the prior approval of the Minister (the Minister of Finance), and that the increase is explained to the bidders before they submit their bids.
The text does not state how the fine is calculated for each case of default, and reference is made to the contract and the tender documents for that. After this comes Article 74, which sets the cases of extending the contract and exemption from the fine, such as where the delay is attributable to the government entity, to emergency circumstances, or to reasons beyond the contractor's control.
A person on whom a default fine is imposed and who believes it misplaced can consult a lawyer who specializes in government contracts and administrative cases.
Practical example
A company provides cleaning services to a government hospital in Taif under a contract worth SAR 1,500,000, and did not provide the agreed number of workers in some months. The entity is entitled to deduct the value of the work not performed and impose a fine whose total does not exceed SAR 300,000 (20% of the contract value), unless a higher percentage was announced with prior approval.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
How we write and review contentA question about Article 73 of Government Tenders and Procurement Law?
Describe what happened and specialist lawyers answer. You can write in English.
- Completely free
- Lawyers from the directory answer
- Your name stays hidden
Administrative Law lawyers: ask a specialist about your case
Describe your situation briefly and we'll suggest a lawyer who specialises in this law
Administrative Law (Board of Grievances) lawyers
Lawyers who handle this kind of case
Dr. Ali Al-Rubaie Law Office and Ittihad Al-Asr Legal Company
Active contributor
Unwan Law Firm
Frequently asked questions about Article 73 of the Saudi Government Tenders and Procurement Law
What is the default fine in continuing government service contracts?
It does not exceed 20% of the contract value, with deduction of the value of the work not performed.
Is the unperformed work deducted in addition to the fine?
Yes. The Article provides for imposing the fine with deduction of the value of the work not performed.
Can the fine be more than 20%?
It may be increased with the prior approval of the Minister of Finance, provided the increase is explained to the bidders before they submit their bids.
More articles on Delay Penalty and Contract Extension
- Article 72
The Article imposes on a contractor who is late a fine not exceeding 6% of the value of a supply contract and 20% of other contracts, which may be increased with the Minister's approval if announced in advance.
إذا تأخر المتعاقد في تنفيذ العقد عن الموعد المحدد؛ تفرض عليه غرامة تأخير لا تتجاوز (6%) من قيمة عقد التوريد، ولا تتجاوز (20%) من قيمة العقود الأخرى، ويجوز زيادة
- Article 74
The Article sets five cases in which a government contract is extended and the contractor is exempted from the fine, and refers the rules and procedures for extension and exemption to the Regulations.
يكون تمديد العقد والإعفاء من الغرامة في الحالات الآتية: 1- إذا كُلف المتعاقد معه بأعمال إضافية، بشرط أن تكون المدة المضافة متناسبة مع حجم الأعمال وطبيعتها وتاري
- Article 75
The Article allows the government entity to withdraw part of the works and purchases and carry them out at the contractor's expense if he breaches his contractual obligations after being warned.
للجهة الحكومية سحب جزء من الأعمال والمشتريات وتنفيذها على حساب المتعاقد معه؛ إذا أخل بالتزاماته التعاقدية بعد إنذاره، وتوضح اللائحة ما يلزم لتطبيق هذه المادة.
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.