Contracting in the Saudi Public Construction Projects: What Do U.S. Contractors Need to Know?

Contracting in the Kingdom of Saudi Arabia (KSA) poses unique challenges due to the Kingdom’s distinctive cultural, political, and religious facets. Being the largest economy in the Middle East and North Africa, and having massive planned investments in infrastructure public works, KSA is a fertile soil for investments by U.S. contractors; especially for those who aim at strengthening their global presence. Despite that, the literature is short in guiding U.S. contractors and preparing them for the contractual challenges they are expected to face in KSA. This paper presents contract administration guidelines for U.S. contractors partaking, or intending to partake, in public works projects in the KSA. To this end, a comparative analysis has been conducted between the Saudi Public Works Contract (PWC) and the U.S. Federal Acquisition Regulation (FAR). Moreover, the unique contractual and legal considerations that are unique to the KSA have been extracted from the different relevant laws and regulations. In addition to the provided discussions, the paper presents a summary of the findings in the form of: (1) a comparative checklist showing the similarities and differences between the two governmental approaches, and (2) a matrix of relative opportunities and risks of the PWC and FAR. This study should be beneficial to U.S. contractors in honing their understanding of the risks and opportunities associated with working in the KSA; thus, helping them in attaining their desired strategic global presence. The study also adds to the body of knowledge by filling a gap in the seldom-researched legal risks of international construction related to poor contract administration.