Article 74 of the Saudi Government Tenders and Procurement Law
المادة 74 من نظام المنافسات والمشتريات الحكومية · الفصل السادس: الغرامات وتمديد العقود
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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 وتاريخ التكليف بها.
2- إذا كانت الاعتمادات المالية السنوية للمشروع غير كافية لإنجاز العمل في الوقت المحدد.
3- إذا كان التأخير يعود إلى الجهة الحكومية أو ظروف طارئة.
4- إذا تأخر المتعاقد معه عن تنفيذ العقد لأسباب خارجة عن إرادته.
5- إذا صدر أمر من الجهة الحكومية بإيقاف الأعمال أو بعضها لأسباب لا تعود إلى المتعاقد معه.
وتحدد اللائحة ضوابط وإجراءات تمديد العقود والإعفاء من الغرامة.
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 74 explained in plain English
After Article 73 set the default fine in continuing service contracts, this Article sets the cases in which the contract is extended and the contractor is exempted from the fine, because the delay in them is not attributed to him or has a justification.
The five cases:
- The contractor is commissioned with additional work, provided that the added period is proportionate to the volume and nature of this work and the date it was commissioned.
- The annual financial appropriations for the project are not sufficient to complete the work in the set time.
- A delay attributable to the government entity or to emergency circumstances.
- The contractor is late for reasons beyond his control.
- The government entity issues an order to stop the work or part of it for reasons not attributable to the contractor.
Note that the first case is restricted by proportionality; commissioning small additional work does not mean a long extension. The fifth case is restricted by the reason for the stoppage not being attributable to the contractor.
The Article leaves it to the Implementing Regulations to set the rules and procedures for extension and exemption, such as how to file the request and its documents, and the text does not state them here.
After it comes Article 75, which allows the entity to withdraw part of the work and execute it at the contractor's expense if he breaches his obligations after being warned. A contractor facing a delay of this kind should document its reasons, and can consult a lawyer who specializes in government contracts.
Practical example
A contractor is building a school for a government entity in Hail, and the entity issued an order stopping the work for two months to amend the designs, a reason not attributable to the contractor. This is one of the cases in which the contract is extended and the contractor is exempted from the delay fine for that period, under the rules and procedures the Regulations set.
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 74 of the Saudi Government Tenders and Procurement Law
When is a contractor exempted from the delay fine in a government contract?
In the five cases the Article lists, including delay attributable to the government entity, emergency circumstances, or reasons beyond the contractor's control.
Does commissioning additional work extend the contract?
Yes, provided the added period is proportionate to the volume and nature of the additional work and the date it was commissioned.
If the government entity stops the project, is the contract extended?
Yes, if it issues an order stopping the work or part of it for reasons not attributable to the contractor.
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 73
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.
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،
- 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.