- The Difference Between Public and Limited Tenders in Saudi Arabia

Public Tenders

Definition of Public Tenders

Public tenders are a type of bidding process held to select the best proposals submitted by suppliers or contractors to meet public sector needs. These tenders are characterized by open participation for an unlimited number of bidders, which encourages competitiveness and positively affects prices and the quality of services or products offered. Public tenders are based on a clear system that includes transparency and credibility, requiring participants to submit their bids according to specific specifications, which are then evaluated objectively before a decision is made on the winning bid.

Public Tender Procedures

The procedures of public tenders are clear and organized, contributing to fairness among all competitors. Here are the main steps typically followed in this type of tender:

1. Preparation of Tender Documents:
   • Preparing technical and general specifications notebooks, designs, and required timelines, ensuring document clarity to avoid confusion.
2. Tender Announcement:
   • Publishing the tender announcement in various media outlets, such as local newspapers or official websites, including all project details.
3. Receipt of Bids:
   • Submitting bids in sealed envelopes to maintain confidentiality while adhering to the deadline.
4. Opening of Bids:
   • Opening envelopes at a specified time in the presence of representatives from relevant authorities and competitors, where bids are publicly announced to enhance transparency.
5. Evaluation of Bids:
   • Bids are evaluated based on price, quality, and compliance with predetermined technical specifications.
6. Contract Award:
   • Signing the contract between the granting authority and the winning bidder with clear financial and contractual terms.

These procedures require high precision and reliability to ensure desired goals are achieved and trust between the government and contractors is enhanced.

Limited Tenders

Definition of Limited Tenders

Limited tenders are another type of bidding process aimed at selecting approved suppliers or contractors to execute specific projects. Participation in these tenders is limited to a certain number of participants listed in the approved contractors' list, enhancing the level of specialization in these projects. Qualified contractors or suppliers are invited to submit their bids according to specific criteria, but unlike public tenders, participation is not open to everyone, leading to decreased diversity in offers and fewer available options.

Differences in Limited Tenders

There are notable differences between public and limited tenders, summarized as follows:

• Number of Participants:
  • Limited tenders restrict participation to a few suppliers, whereas public tenders allow unlimited participation.
• Transparency and Diversity:
  • Public tenders guarantee greater transparency by allowing everyone to bid, while limited tenders lack this degree of transparency.
• Prices:
  • Limited tenders often witness higher prices due to fewer competitors, unlike public tenders which are marked by greater competitiveness.
• Growth Opportunities:
  • Public tenders provide opportunities for small and new companies, whereas these opportunities are reduced in limited tenders that are restricted to approved suppliers only.
• Procedures and Arrangements:
  • Limited tenders are characterized by flexibility and take less time in submission and evaluation, while public tenders require strict adherence to procedures.

Implementation in Saudi Arabia

Legal Framework for the Tender System

Article Thirty of the Saudi Government Procurement and Competition System provides a legal framework for limited tenders, allowing government entities to contract through limited tenders in specific cases, such as:

• When works are available only to a limited number of contractors.
• If the value of the works is less than 500,000 Riyals.
• Urgent cases requiring quick implementation.

Application of Limited Tenders in Major Projects

Limited tenders are frequently used in major construction projects, where entities need highly experienced contractors and advanced resources. This helps ensure work quality and reduce risks by inviting approved contractors from the approved contractors' list.

Advantages and Disadvantages of Each Type of Tender

Advantages of Public Tenders

• Transparency: The system allows any contractor to participate, enhancing trust between the government and the community.
• Equal Opportunities: All suppliers have the opportunity to submit their proposals, encouraging healthy competition.
• Achieving Best Prices: Due to multiple offers, the granting authority obtains competitive prices.
• Variety of Offers: The increased number of participants expands the variety of offers and solutions available.

Disadvantages of Public Tenders

• Time-Consuming: The submission and evaluation process may be lengthy.
• Complex Procedures: It requires multiple and complex procedures, which may be an obstacle for new suppliers.
• Numerous Offers: The large number of offers makes the evaluation process more complex.

Advantages of Limited Tenders

• Higher Efficiency: The limited number of offers makes the evaluation process easier.
• Focus on Quality: Contractors are chosen based on predefined criteria.
• Accelerating Procurement Process: Procedures are faster, facilitating urgent project implementation.

Disadvantages of Limited Tenders

• Lack of Transparency: They may be perceived as directed towards certain contractors only.
• Higher Prices: Fewer offers may lead to price increases.
• Restricted Opportunities for New Suppliers: Limited to approved contractors, reducing opportunities for new suppliers.

Factors Influencing the Choice of Tender Type

1. Nature of the Project:
   • Large projects like infrastructure are better suited for public tenders due to the multitude of options.
   • Specialized projects are better suited for limited tenders.
2. Timing of the Process:
   • When speed is needed, limited tenders are the best option to reduce the time taken.
3. Project Budget:
   • Projects with limited budgets favor public tenders for competitive offers.
   • Large projects may prefer limited tenders to ensure quality.
4. Risks Associated with the Project:
   • High-risk projects require limited tenders to minimize risks by selecting approved contractors.
5. Legal and Regulatory Factors:
   • Governmental regulations may require adherence to a specific type of tender to ensure transparency and fair competition.

Conclusion

In summary, both public and limited tenders have their advantages and disadvantages. Public tenders are ideal for enhancing transparency and competitiveness, while limited tenders are more efficient for projects requiring speedy execution or high levels of specialization. The choice between them depends on the nature of the project, timing, budget, and legal and regulatory factors, contributing to achieving the objectives in the best possible way.