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  • Rules of Advance Payment Guarantee

    Pursuant to article 8(a) of the Government Procurement Regulations, the following rules must be observed:

    1. The advance payment guarantee must be equivalent to the advance payment disbursed to the contractor.
    2. The guarantee shall be valid until the advance payment is recovered in full.
    3. The government agency must notify the issuing bank to reduce the value of the guarantee by an amount equal to that recovered from invoices on the date of recovery and with no request by the contractor. This procedure must be applied even if the government is delayed in paying the invoices for reasons the contractor is not responsible for.

    • Extension of Guarantees

      Pursuant to articles 10 & 24 of the Implementation Rules of the Government Procurement Regulations, the following rules must be observed:

      1. If reasons for extending the validity of a guarantee are available, extension shall be effected during the validity of the guarantee.
      2. The contracting government agency shall address the extension request to the contractor, not the bank. The extension shall be for a specific necessary period and the issuing bank shall be supplied with a copy of the request stating that the bank has to pay the value of the guarantee without any delay during the validity period if it fails to finalize the extension procedures before the expiry of the guarantee validity term.

    • Confiscation of Guarantees

      1. Pursuant to Ministry of Finance & National Economy circular No. 17/2740 dated 20-10-1405H, if the government agency is obliged to confiscate any bank guarantee, a committee must be formed to study the case and make a documented recommendation to the party with the authority to issue the confiscation request. In studying the case, the committee must take into consideration the circumstances surrounding the performance of the project and the consequences of confiscation.
      2. Pursuant to Ministry of Finance & National Economy circular No. 17/222, dated 19-6-1407H the confiscation request must be limited to the operation where the contractor defaulted on its obligations and shall not be extended to other operations with one or several government agencies.
      3. Confiscation requests, when justified and in compliance with applicable procedures, must be addressed directly to the issuing bank which has to respond immediately and notify SAMA accordingly.

    • General Conditions

      1. Pursuant to paragraph (c) of the Ministry of Finance & National Economy decision No. 17/1486 dated 25-3-1398H, which defined the form of acceptable guarantees, the guarantee shall be payable upon the first request by the government agency, notwithstanding any objection by the bidder and without the need of a ruling from a court or an arbitration body.
      2. Employees of Ministries and government agencies in charge of controlling guarantees are urged to interface with the tender sections therein, if any, and they must coordinate with the financial administration in this respect.
      3. Accurate records for controlling guarantees must be kept to facilitate coordination with other concerned parties in the event of requesting guarantee extension or confiscation.
      4. In the event a guarantee is submitted in violation of the approved form, it must be rejected in order to avoid problems with the contractor or weaken the rights of the government agency.
      5. Ministries, government agencies and public institutions must not request guarantee forms not in compliance with the attached forms.