Local content guide · Saudi government tenders
Target local content percentage in Saudi Arabia: how it is scored in tenders, how to commit to it and how to meet it
The target local content percentage in Saudi Arabia is the share of local content a bidder undertakes, when it submits its tender, to reach by the end of the contract. Tenders that use the local content weight in financial evaluation or a minimum local content requirement ask for it in the technical bid, and a bid without it is excluded. After award it becomes an obligation: a shortfall of more than 5% allows a fine of up to 10% of the contract value. This guide explains the rules from the regulation and LCGPA's guide, and how your purchases, including network devices assembled in Riyadh, enter the calculation.
Target local content percentage in Saudi Arabia: where it appears in a tender
The local content preference regulation (Council of Ministers Decision No. 245) sets three mechanisms; the target is central to two.
| Mechanism | Where it applies | Role of the target |
|---|---|---|
| Local content weight in financial evaluation (Articles 14–22) | High-value contracts, except supply contracts | Scored with your baseline, then monitored until the contract ends |
| Minimum local content requirement (Articles 23–27) | Contracts that LCGPA designates with EXPRO | Must not be below the tender's minimum; a lower target is disqualified at technical evaluation |
| Price preference for national products (Articles 10–13) | National products not on the mandatory list | No target; supply tenders compare shares of national products |
Under Article 7, tender documents using either mechanism must exclude a bidder whose technical bid omits its target. Under Article 16, inadequate answers to clarification requests about the target can also disqualify a bid.
Price preference for national products in government tenders
Baseline and target are two different numbers
| Baseline | Target local content percentage | |
|---|---|---|
| What it is | The local content percentage your establishment has reached when it submits the tender | The percentage you undertake to reach by the end of the contract |
| Where it comes from | Your establishment's local content certificate | Your own plan for the contract, prepared on LCGPA's contract-level model |
| What it measures | Your establishment as a whole, for a past financial year | The contract, over its execution period |
How the target is scored
Article 17 gives the formula for bids that pass technical evaluation:
Financial evaluation = (lowest technically qualified price ÷ price of the bid) × 60% + (target × 50% + baseline × 50% + 5% if the company is listed on the capital market) × 40%
Under Article 19 the highest evaluation wins, provided its price is no more than 10% above the lowest technically qualified bid; otherwise the second-highest evaluation wins. LCGPA and EXPRO may agree to raise the 10% margin, which must then be stated in the tender documents (Article 19), and to raise the weights of the target, the baseline and the listing bonus (Article 17).
| Bid | Price (SAR) | Baseline | Target | Financial evaluation |
|---|---|---|---|---|
| A | 10,000,000 | 30% | 30% | 60.0 + 12.0 = 72.0 |
| B | 10,500,000 | 30% | 50% | 57.1 + 16.0 = 73.1 |
Bid B is 5% more expensive but scores higher and is within 10% of the lowest price, so B wins. Its target is now a contract obligation: if B reaches 40% instead of 50%, the gap exceeds 5% and the agency may fine B up to 10% of the contract value.
How the target local content percentage is built
In LCGPA's guide to the contract-level target model (version 0.2), the bidder prepares the target with its tender response, using planned figures in Saudi riyals for the contract period. The model has four parts:
| Part | What you enter |
|---|---|
| Workforce | Planned pay for the staff working on the contract. Saudi pay counts in full and non-Saudi pay in part |
| Goods and services | Planned spending, with a list of suppliers covering at least 70% of it. Each supplier is classified as local or foreign, and you can use the ratio LCGPA has approved for that supplier or the ratio for its sector |
| Capability development | Training of Saudi staff, supplier development, and research and development in the Kingdom |
| Depreciation and amortisation | Assets made or developed in the Kingdom count in full; assets made abroad count at a lower share |
LCGPA issues a contract-level target document through its e-services. Keep complete records, including assumptions and calculations, for at least 10 years: LCGPA may verify the data. Use the current model version on LCGPA's website.
After award: the plan, the reports and the final measurement
- Gradual plan within 60 days of award, on the local content portal form, matching the target (Article 20).
- Periodic reports. Progress is reported as the tender documents require; where they say so, LCGPA reviews reports and may require an audit (Article 21).
- Final report. At the end of the contract, the contractor reports the percentage reached for LCGPA's approval, with an audit if the tender documents set the conditions (Article 22).
- Consequences. Compliance feeds the contractor's performance evaluation. A gap of more than 5% between target and reached percentage, or a late final report, allows a fine of up to 10% of the contract value (Articles 31 and 32). With the Minister of Finance's approval, fine percentages may be raised if bidders are told before they submit (Article 33). A gap above 15%, or above 10% in three contracts over three consecutive years, must be referred to the committee under the procurement law, which may impose further penalties (Articles 37 and 38).
Setting a target you can meet
- Start from your baseline. Know your certificate's percentage and expiry date before you price.
- Map the contract's spending. Split the bill of quantities into workforce, goods, services and assets, and find the largest goods lines.
- Choose suppliers line by line. For each large goods line, ask whether a supplier in the Kingdom can deliver it and whether it has an LCGPA-approved ratio.
- Get commitments in writing. Quantities, delivery dates and the documents your reports will need.
- Leave a margin. The fine applies to the gap at the end of the contract, so a target you can exceed is safer than one you must stretch for.
Where network devices fit
In projects that include customer premises equipment, fibre terminals or Wi-Fi, network devices are a goods line in the target model. Their supplier is classified as local or foreign, and if it has an LCGPA-approved ratio you can use it instead of the sector ratio.
Ask a device supplier which legal entity in the Kingdom will invoice you, whether it holds an LCGPA local content certificate (ask for a copy and check its verification link or QR code), which manufacturing steps take place in the Kingdom, and whether it can confirm quantities and dates in writing.
Network devices assembled in Riyadh by IK Semiconductor
IK Semiconductor (Interkey Semiconductor) is an Interkey group company that assembles network devices in Riyadh under OEM contracts.
- Today, at the SKD stage: partly built sub-assemblies are completed, tested, loaded with firmware and packaged in Riyadh.
- Planned for 2028, the CKD stage: complete assembly from individual components, including SMT and DIP board processes.
- Device families: 5G CPE, Mesh Wi-Fi and ONT are the factory's SKD product lines, ready for manufacturing partnerships; 5G MiFi is a planned line.
- Local content certificate: IK Semiconductor holds a local content certificate issued by LCGPA; ask us for a copy.
- Mandatory list: IK Semiconductor is listed on LCGPA's mandatory list for government procurement.
How a purchase from us enters your target is set by LCGPA's model and checked through your reports. We do not set your ratio or promise a score.
Questions bidders ask
Is the target local content percentage the same as the baseline?
No. The baseline is what your establishment has already reached, taken from your certificate. The target is what you commit to reach by the end of this contract.
What happens if we miss the target?
If the gap between the target and the percentage reached at the end of the contract exceeds 5%, the agency may fine the contractor up to 10% of the contract value (Article 31). Larger or repeated gaps are referred to the committee for further penalties.
Can a supplier promise our target?
No. Your target depends on your whole plan for the contract. A supplier can show where it manufactures, share its certificate and commit to quantities and dates.
Discuss locally assembled devices for your contract
Tell us the device, quantities, delivery dates and the contract. We will reply with what the Riyadh line can assemble at its current stage, which steps take place in the Kingdom, and a copy of our local content certificate.
info@interkey-sc.com.sa · +966-11-2180999 · +966-55-3475469 · Riyadh, Saudi Arabia
Sources (checked 2 November 2026)
- Regulations on Preference for Local Content, Ministry of Finance (English translation; the Arabic text governs)
- LCGPA guide to the contract-level target local content model, version 0.2 (copy published by King Faisal University, Arabic)
- Regulations on Preference for Local Content, consolidated Arabic text and status (in force), Bureau of Experts at the Council of Ministers
- Council of Ministers Decision No. 199 approving the Government Tenders and Procurement Law, Umm Al-Qura, 4 September 2026 (Arabic)
- Local Content and Government Procurement Authority