Direct purchase in Saudi government procurement: the SAR 1 million threshold and what now qualifies

Under the 2019 rules, a Saudi government entity could buy directly only up to SAR 100,000. For anything above that, even a small specialist scope usually went to a tender. From 2 January 2027 that changes. The new Government Tenders and Procurement Law, issued by Royal Decree No. M/76, raises the direct purchase ceiling tenfold, to SAR 1 million (Article 32).

For specialist firms, this is the most practical change in the new law. It moves a whole band of work out of formal competition and into a channel that rewards being known.

What now qualifies

The law adds six cases where direct purchase is permitted:

• research, development and innovation
• work available only from an individual licensed professional
• software licences, software and website subscriptions
• specialist scientific journals
• space at exhibitions, events and conferences
• training of government employees

The law also widens existing cases, including military and security procurement through the General Authority for Military Industries.

The conditions

Direct purchase is not a free pass. The entity must document its reasons, and every use must respect the principles of competition and spending efficiency (Article 32). Local small and medium enterprises keep their priority in direct purchase.

What changes next to it

Limited tender loses its old value ground: entities could previously run a limited tender for work estimated up to SAR 500,000 with at least five bidders. That ground is gone. A limited tender now needs stated reasons explaining why a public tender is unsuitable (Article 30).

In practice: the band of small scopes that used to go to limited tender now splits two ways. Some move up to public tender. Many, especially specialist services, training and software, move into direct purchase.

Who wins in this channel

Direct purchase is decided before the request goes out. The entity needs a documented reason to choose a supplier, which means it needs to know the supplier, its capability and its price before the need is formalised.

Three moves for specialist firms:

1. Map the entities that buy your category below SAR 1 million. Training, research, software and professional services are the obvious starting points.
2. Make the justification easy. A clear capability statement, published pricing logic and relevant references give the entity what it must document.
3. Register as a local SME if you qualify. The priority in direct purchase is written into the law.

The principle behind it

As thresholds rise, the decision moves earlier. A supplier that waits for the tender notice will find that, for this band of work, there is no notice.

If you want a view on where your services sit under the new thresholds, send an enquiry.

This article summarises published legal commentary and is not legal advice. Check the final text and implementing regulations with qualified counsel.