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    FAQ

    Local Content concept

    It is the total spending in the Kingdom of Saudi Arabia occurring through the contribution of Saudi elements in the workforce, goods, services, assets and technology.

    Any commodity produced in the Kingdom of Saudi Arabia including all extractive, agricultural, animal, and industrial products, whether in their initial form or at any stage of subsequent processing or manufacturing.

    The national product is part of local content.

    Local content is calculated through a balanced equation that expresses spending on Saudi elements as a share of total spending.

    Salaries: the salaries of Saudi employees contribute 100% to local content whereas the salaries of non-Saudi employees contribute to 37% to local content.

    Goods & services: Local content in spending on goods and services based on the local content rate of the sector the product or service belongs to.

    Capacity Building: Spending on training of Saudis and developing suppliers and Research and Development in the Kingdom contributes 100% to local content.

    Assets: For in-Kingdom assets bought from a local manufacturer, the local content contribution is 100% of depreciation value while the local content contribution of imported in-Kingdom assets is 20% of depreciation value.


     

     

     

    KPIs

    salaries on salaires

    Spending on goods & services

    Spending on training Saudis

    Spending on developing suppliers

    Spending on Reasearch & Development

    Assets depreciation

     

     

    Nineteen months.

     

    No, but any company that has a local content score approved by local content programs (such as Nusaned, Binaa, or Nartaqi), will certainly have a local content ratio approved by LCGPA and that the company can use in applying for government tenders.

     

    A compulsory plan prepared and submitted by the contractor to clarify the targeted local content ratio throughout the stages of contract execution.

    The score of local content that the contractor undertakes to attain by the end of the contract.

    It is a measurement of the contractor's commitment to sourcing items from the mandatory list of national products.

     

    The share of the value of national products that the contractor sources out of the total bid value, excluding the products in the mandatory list.

     

    Yes, the government entity can apply the minimum threshold for local content mechanism only for the projects LCGPA has identified in agreement with the Center of Spending Efficiency.

    2

    Mandatory List

    A list of products manufactured in the Kingdom of Saudi Arabia. The list is contained in the tender documents and is mandatory for the contractor with the government entity in all the services or purchases according to the nature and type of the contract.

    Local content portal and Etimad platform.

    The mandatory list will be attached to the tender documents whereby the government entity shall comply with the list when supplying the materials or products needed to execute the contract.

    The mandatory list applies to all types and sizes of government contracts whose scope of work includes the listed products.

    The contractor shall submit an exemption request to the government entity which shall accept or reject the application based on the exemption parameters issued by LCGPA.

    The contractor shall comply with the list attached in the tender documents upon launching the tender.

    The government entity verifies that the supplied products are manufactured in Saudi Arabia through a certificate of manufacture issued by LCGPA. The government entity shall decline from receiving any product of a non-Saudi origin.

    3

    Price preference for the national product

    It is a policy granting Saudi products a 10% price preference over their counterparts of foreign manufacture. This ratio varies respectively depending on the local content score in the bid.

    The price preference policy is applied directly or indirectly as follows:

    Direct Application: This occurs when the government entity prefers national product in the sourcing contracts.

    Indirect Application: This occurs when the contractor grants preference to the national product in all contracts, excluding supplier sourcing contracts, through granting preference to national products when procuring the necessary materials or equipment. The contractor also commits to applying the preference policy in all its sub-contracts, whereby all subcontractors commit to applying the preference policy upon the same mechanism in the direct application regarding the sourcing procedures.

    The price preference for the supplier sourcing contracts, and not the services contracts, is directly applied through the government entity, while the SMEs preference is applied on all types of contracts excluding supplier sourcing contracts that do not fall within the scope of high-value contracts.

    The price preference policy does not apply to the products on the mandatory list.

    The national product is granted a price preference through considering foreign products 10% higher than the price in the tender documents.

    In fragmented tenders, the national products’ share is considered 100% national product.

    In indivisible tenders, preference is given according to the share of national products offered by the contenders.

    Using the following equation:

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    Adjusted bid value = price of bid1 (in SAR) + [(10% x price of bid (in SAR) )x (1 national product portion)]

    Yes.

    Yes. When evaluating the bids, the score of the national products presented in the bid will be reviewed and compared to the tables of quantities and prices included. If there is a discrepancy between the score offered in the bid and the calculated score of the national product, the lower score will be considered when giving preference or evaluating the contractor's obligation.

    The contractor shall provide the government entity with a final report within 30 days from the end of the contract including validation that the products are national through a Saudi manufacture confirmation form, including the actual score of the national products.

    The government entity shall review the report within 10 working days of receiving the report for approval. In case this did not happen within the specified time frame, the government entity shall be deemed as having approved the contractor’s report.

    1: price of bid: the total value of the bid if the tender was indivisible. If the tender was fragmented, it shall be considered as an item price.

    The government entity should provide LCGPA with a copy of the final report once it is approved.

    4

    Local content weight in the commercial evaluation

    A weight of 40% is allocated to local content and to listed companies during the commercial evaluation phase of the bids, in addition to a price weight of 60%.

    The local content weight is applied in the commercial evaluation through a weighted equation that includes the price, the baseline, the targeted local content score, and whether the company is listed on the stock exchange or not.

    It is applicable in projects excluding sourcing contracts which fall under high-value contracts whose estimated value exceeds SAR 100 million.

    1. A minimum value for the baseline (if stipulated in the book of terms and specifications):

    The contenders should include a baseline approved by LCGPA in their bids.

    2. Targeted local content score:

    The government entity shall state in the book of terms and specifications that each contender should provide a targeted local content score, for the company or the contract depending on the nature of the tender and its estimated value as determined by the government entity. During the technical evaluation phase, the government entity can also require the contender to provide further clarifications surrounding the targeted local content score proposed.

    Progressive Plan:

    The contractor should submit to the government entity the progressive plan for local content which specifies the local content score that it plans to attain throughout the contract. This score should correspond to the targeted local content score mentioned in the bid.

    This should be submitted within a maximum of 60 days from the date of awarding the tender.

    Periodic reports:

    The contractor should regularly submit periodic local content reports approved by LCGPA to the government entity to present the progress in achieving the targeted local content.

    The final report:

    • The contractor should submit an audited final report approved by LCGPA to the government entity to confirm adherence to the targeted local content score.

    Yes, the periodic and the final reports should be approved by LCGPA prior to being submitted to the government entity in charge of the project in question.

    If the contractor is unable to submit an audited periodic report to the government entity, then the contractor can request an extension for a period not exceeding 30 days from the government agency.

    If the contractor wishes to delay the submission of the final report until the end of the contract, then it is not obligatory for the contractor to submit the periodic contract for the financial year directly preceding the end of contract.

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    Minimum local content threshold

    A minimum local content threshold shall be specified for each of the projects identified by LCGPA and the Center of Spending Efficiency. The government entity shall suggest a minimum local content in the book of terms and specifications which shall be approved by the Center of Spending Efficiency and LCGPA.

    After being identified by LCGPA and the Center of Spending Efficiency, the list projects is disseminated to the relevant entities through Etimad platform and other channels.

    The government entity in charge of the project to which the minimum local content threshold is applied shall submit studies determining the minimum local content.

    The minimum local content threshold is applied to projects determined by LCGPA and the Center of Spending Efficiency excluding sourcing contracts that fall under the high-value contracts worth over SAR100 million.

    1. A minimum value for the baseline (if stipulated in the book of terms and specifications):

    The contenders should include a baseline approved by LCGPA in their bids.

    2. Targeted local content score:

    The government entity shall state in the book of terms and specifications that each contender should provide a targeted local content score, for the company or the contract depending on the nature of the tender and its estimated value as determined by the government entity. During the technical evaluation phase, the government entity can also require the contender to provide further clarifications surrounding the targeted local content score proposed.

    If the tender did not call for a minimum baseline, the contenders shall have be free to choose whether or not to submit a baseline. If the contender chooses not to submit a baseline in the bid, a baseline of 0% shall be counted during the financial assessment of the bid. If the contender submits a baseline, then the provided baseline shall be counted in the financial assessment.

    Progressive Plan:

    • The contractor should submit to the government entity the progressive plan for local content which specifies the local content score that it plans to attain throughout the contract. This score should correspond to the targeted local content score mentioned in the bid.
    • This should be submitted within a maximum of 60 days from the date of awarding the tender.

    Periodic reports:

    • The contractor should regularly submit periodic local content reports approved by LCGPA to the government entity to present the progress in achieving the targeted local content.

    The final report:

    • The contractor should submit an audited final report approved by LCGPA to the government entity to confirm adherence to the targeted local content score.

    Yes, the final report should be approved by LCGPA before being sumitted by the govenrment entity.

    In the event the contractor was unable to submit an audited periodic report to the government entity, then the contractor shall be entitled to appeal to the government entity and request extending the deadline for submitting the report for a maximum of 30 days.

    6

    Local Content Portal

    The minimum level agreed upon by LCGPA and the Center of Spending Efficiency will be specified within the tender documents.
    Periodic reports will be submitted via the local content portal, as it is not  currently allowed to submit them through Etimad. That will be achieved during the second phase of the platform.

    Periodic reports will be submitted via the local content portal, as it is not currently allowed to submit them through Etimad. That will be achieved during the second phase of the platform.

    Currently, government entities’ employees are tasked with calculating and imposing penalty fees. This will later be done electronically through the platform during its second phase.

    Final report for mandatory list:

    The government entity imposes a penalty fee equivalent to 10% of the value of the items specified in the mandatory list and included in the contract in the case of failure to submit the final report within 30 days from the end of the contract. In addition to the penalty fee, the government entity petitions the case to the committee formed according to article 88 from the Government Procurement and Tenders Law.

    Including local content is not mandatory for pre-qualification requirements.

    Local content is calculated through filling special local content forms available on Etimad’s local content portal.

    • Calculating the local content baseline for commercial enterprises and applying for their approval
    • Submitting the targeted local content score
    • Submitting the progressive plan
    • Submitting periodic reports
    • Submitting the final reports
    • Sharing local content calculation forms for the baseline, in addition to periodic and final reports to LCGPA's accredited audit offices.

    No, the baseline is always calculated based on the level of the commercial enterprise.

    • If the estimated tender value is under SAR 400 million, local content score will be calculated based on the level of the enterprise.
    • If the estimated tender value is under SAR 400 million, with a minimum level of targeted local content, the local content score will be calculated based on the level of the contract.
    • If the estimated tender value is over SAR 400 million, local content score will be calculated on the level of the contract.

    Through using the same access credentials used for Etimad.

    No, users are only required to sign up for Etimad, or have an existing Etimad account.

    • Firstly, the form is filled and saved by the user
    • The system allows users to select their audit office to review and audit the application or return it to the applicant when necessary
    • The audit office will appoint an auditor to handle the application and share their feedback with LCGPA
    • LCGPA's audit team will review the application and approve or return it to the audit office or applicant as required
    • After approving the report by LCGPA, the local content score is reflected directly into Etimad.

    A dedicated log-in page is available for auditing entities or auditors. This is not done via the Etimad portal.

    No. All agreements, contracting, and auditing fees payment should be done directly between the enterprise and its chosen auditing office.

    Yes, this can be done only prior to finalizing the audit and submitting the application to LCGPA for revision.

    No, as long as the tender requires a local content score and the company has an approved and effective score.

    7

    Auditing local content measurement forms

    It is not possible to audit the targeted score.

    The achieved local content score can be audited by LCGPA accredited auditors.

    The progressive cannot be audited and does not need to be submitted to LCGPA, however it should be submitted to the government authority in charge of the project.

    Local content portal.

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