Initiatives and Regulations

​​The contracting method of Localization of Industry & Knowledge Transfer (LIKT) is a newly introduced government contracting method in the new Government Tenders and Procurement Law. LCGPA is responsible for supervising the activation of the method through cooperation with global investors and owners of leading technologies to localize the targeted industries in Saudi Arabia. Local Content and Government Procurement Authority supervises the activation of the method, in accordance with Article 35 of the Law, which granted the Authority the power to contract on localizing an industry and transferring its knowledge on its own or at the request of a government entity (after the approval of the Ministry).​​

Brief on industry localization and knowledge transfer agreements​

Industry localization and knowledge transfer agreements are agreements directed to investors and the owners of leading technologies around the world to motivate them to transfer technology and knowledge to the Kingdom in exchange for a government purchase guarantee, the percentage and duration of which are agreed upon according to a feasibility study that considers the investment returns on the government commitment as well as on the investor.

Method Application Journey:

• Feasibility study: in cooperation with EXPRO and other government entities, the study includes the optimal contracting method, the expected opportunities, and the impact of localizing that industry or transferring knowledge on promoting economic development.
• Offering competition: taking into consideration the specifications and quantities of products and the requirements of local content.
• Commitment agreement between government entity and the authority it specifies the commitment of government entities to the required quantities and specifications.
• Concluding an agreement to localize the industry and transfer knowledge : with an investor who will establish the factory locally to produce and sell products to government agencies entities with the specifications, quantities and prices referred to in the agreement.
• Follow-up of the project: after signing the agreement until the completion of the project by the work team.
• Activating the agreement with government The: activation the of government entity procurement the agreement and following it up with the contractor and government entity.
• Follow-up of the contractor's performance and obligations: Evaluate and monitor the contractor's performance and verify its fulfillment of the terms of the agreement.

The Importance of The Method:

• Contribute to maximizing local content through the development of new industries, through the establishment of factories for international companies within the Kingdom.
• Strengthening the Kingdom's strategic location to be a base for a number of pioneering industries in the region.
• Meet government demand in a faster time, lower cost and higher quality.
• Rationalizing expenditure by providing sustainable and highly efficient national products.
• Enhancing self-sufficiency capabilities by creating promising industries and new sectors.
• Empowering Saudi capabilities  and generating job opportunities.

The Eeconomic Impact of The Method:

• Developing local content through the impact of the establishing of factories of a major international companies within the Kingdom, .as well as creating jobs, knowledge transfer and creating new local supply chains. 
• Attracting foreign investments.
  
• Reducing dependence on imported products and creating new opportunities to export local products.

Systematic framework for applying the method:

The method is systematically based on the following articles:

1. Article 35 of the Governmental Competition and Procurement Law: The Authority may, on its own or at the request of a government entity - after the approval of the Ministry - contract to localize an industry and transfer knowledge, in accordance with the controls specified by the regulation.
2. Article 58 of the Executive Regulations of the Governmental Competition and Procurement Law:

The contract of the Authority shall be to localize an industry and transfer knowledge; According to the following controls:

1. The localization of the industry or the transfer of knowledge should not result in a monopoly on that industry or knowledge.
2. To consider changes and developments in technology​, industry and knowledge when concluding agreements.
3. That the Authority does the following:

• Coordination with the EXPRO and relevant entities (each according to its competence) to prepare a feasibility study for the industry targeted for localization or the knowledge to be transferred, provided that the study includes the optimal contracting method, the expected opportunities, and the impact of localizing that industry or transferring knowledge on promoting economic development.
• Submitting the feasibility study to the Ministry for approval.
• Coordination with EXPRO and relevant entities (after the Ministry's approval) to prepare conditions and specifications documents and contract models; In preparation for contracting.
• Include in the agreement a specification of the percentages of government entities' purchase of the products of that industry or knowledge, provided that the percentages are determined in coordination with the beneficiary entities.

Opportunities offered and their status:

For Inquiries: LIKT@LCGPA.gov.sa