Legal update
New Government Tenders and Procurement Law: what changes for contractors
Published on 4 September 2026 and in force 120 days later, the new law raises the direct purchase ceiling to SAR 1 million, doubles the change order cap to 20% and requires agencies to clear private sector dues before taking on new commitments.
The Council of Ministers approved the new Government Tenders and Procurement Law on 4 August 2026. It was issued by Royal Decree No. M/76 and published in the Official Gazette on 4 September 2026, and it enters into force 120 days after publication, at the start of January 2027. It replaces the law that has governed government contracting since 2019; the Ministry of Finance will issue new implementing regulations.
The headline changes announced on approval: the ceiling for direct purchase rises from SAR 100,000 to SAR 1 million; the bid opening and bid evaluation committees merge into one; the delegation limit for procurement decisions rises from SAR 10 million to SAR 50 million; and the Ministry of Finance's pre-signing review shortens from up to 15 working days to up to four.
For contractors, three changes matter most. Contract value may now be increased by up to 20%, against 10% before. Contracts may be transferred between government entities by novation or assignment. And an entity must settle amounts due to private sector contractors within the prescribed timeframes before it enters into new commitments, a statutory lever against late payment.
Contractors with live government contracts should confirm which law governs each one. Bidders preparing for tenders in 2027 should follow the implementing regulations closely: the detail on change orders, novation and standstill periods will sit there.