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Legal insight: Quality control for KSA engineers

Clyde & Co’s Abdulaziz Al-Bosaily and Ulf Bathke explore the legal ramifications of the recant legislative change, which will affect engineering companies operating in the Kingdom

ECCs that have failed to deliver on previous government contracts should be most apprehensive about Ministerial Decision 15098, according to legal experts at Clyde & Co.
ECCs that have failed to deliver on previous government contracts should be most apprehensive about Ministerial Decision 15098, according to legal experts at Clyde & Co.

Lured by the expectation of lucrative government contracts, an ever-increasing number of engineering companies and consultancies (ECCs) from all over the world are operating in the Kingdom of Saudi Arabia.

Not all of these ECCs, however, are in a position to deliver services that meet industry quality standards: the Saudi Arabian Council of Engineers claims that, last year alone, there were approximately 30,000 engineers working in KSA without appropriate – or worse, with doctored – qualification certificates. The following article examines a new law for Saudi Arabia, which has been introduced in a bid to address these issues.

Ministerial Decision No 15098
Like other GCC countries, notably the UAE, the Saudi Arabian government has now taken decisive steps to raise quality standards in this area and assist its ministries and other governments and semi-government entities to identify suitable ECCs with whom to contract.

Ministerial Decision No 15098, which was issued by the Ministry of Municipal and Rural Affairs, establishes a new classification system for ECCs operating in the Kingdom. The decision came into effect on 16 August, 2015. As of 10 March, 2016, it will be compulsory for any ECCs wishing to bid for and/or carry out government contracts in Saudi Arabia to have completed this classification process. An ECC wishing to participate in the tender process for a public project will need to satisfy the specific classification criteria set out in the tender documents.

The new classification system
The new classification system comprises eleven main categories: (i) civil engineering; (ii) electrical engineering; (iii) mechanical engineering; (iv) construction engineering; (v) planning engineering; (vi) safety engineering; (vii) chemical engineering, (viii); industrial engineering; (ix) electronic engineering; (x) telecommunication technology; and (xi) information technology.

An ECC may apply for classification under one or more of these categories, within either or both of the disciplines of ‘project management’ and ‘study, design, and supervision’.

Classification criteria
The Ministry of Municipal and Rural Affairs will be responsible for categorising applicant ECCs based on an assessment of their technical, organisational, and financial capabilities. In forming its assessment, the ministry will examine matters such as: an applicant’s financial strength; its management; the qualifications and experience of its engineers and technicians; the quality of its machinery; and interestingly, its past performance in relation to private and public sector projects, both in Saudi Arabia and abroad. The ministerial decision does not, however, set out the specific criteria an ECC must fulfil so as to be assigned to any particular tier.

Once the ministry has completed its assessment, it will issue a certificate confirming the applicant is qualified to provide engineering services, the aforementioned categories it is classified for, and the tier it has achieved. This certificate is valid for a period of four years. It may, however, be amended or cancelled by the ministry during this period.

Outlook
Those ECCs, which may in the past have failed to deliver on their commitments under Saudi Arabian government contracts, will have the most reason to be apprehensive about the new classification regime.

For other ECCs, whilst the changes may prove burdensome from a time and cost perspective, the general raising of standards in this area may prove welcome.

The above article was authored by Abdulaziz Al-Bosaily, partner, and Ulf Bathke, senior associate at Clyde & Co.

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