Procurement Methods
Direct Purchase and Limited Competition: Where SMEs Have the Edge on Etimad
17 July 2026 · 7 min read · By NextBid Bid Experts · Updated 16 October 2026
Open competition gets the attention, but two lower-profile methods - limited competition and direct purchase - are where small and medium enterprises often have their best odds. The current law deliberately gives local SMEs priority in these lower-value procurements, and the new law, which takes effect in early January 2027, changes the value limits.
Open competition gets the attention, but two lower-profile methods - limited competition and direct purchase - are where small and medium enterprises often have their best odds. The current law gives local SMEs priority in these lower-value procurements. The new law, which takes effect in early January 2027, keeps that priority in direct purchase, raises the direct purchase ceiling from SAR 100,000 to SAR 1,000,000, and removes the SAR 500,000 value ground for limited competition. A tender offered before the new law takes effect stays under the current law unless the Minister of Finance decides to apply some of the new rules to it, so check that tender's booklet and announcements. Knowing how the two methods work tells you where your size is an advantage, not a disadvantage.
The value limits that allow a different method
| Method | Value limit | How it works |
|---|---|---|
| Direct purchase | Up to SAR 100,000 under the current law; up to SAR 1 million under the new law, which takes effect in early January 2027 | The entity buys directly, without a full open competition - used for low-value or specific needs. |
| Limited competition | Up to SAR 500,000 on the value ground under the current law; the new law, which takes effect in early January 2027, removes it (the other grounds have no value limit) | A smaller field of invited suppliers competes. On the SAR 500,000 value ground at least five are invited and local SMEs are prioritised. |
| General competition | No value limit: the default method for any value | Open to all qualified suppliers and published openly. |
These limits are set in the law itself, and the Regulations add the procedures; always confirm the method and rules against the specific tender.
Why SMEs have the edge here
The system is designed to broaden participation, and these lower-value methods are where that shows. Under the current law, in limited competition on the SAR 500,000 value ground, at least five suppliers are invited and local small and medium enterprises are prioritised - meaning your registered SME status can be the reason you are at the table. The new law, which takes effect in early January 2027, removes that value ground. In low-value direct purchase, both the current and the new law give local SMEs priority of invitation, so being a registered, qualified and responsive local supplier is what gets you into the room.
How to position to benefit
- Get and keep your SME status and classifications current, so you qualify for the priority.
- Register your activities precisely and sign up to the supplier lists that entities announce on the portal, so entities inviting limited competitions can find and invite you.
- Build relationships with the entities that buy what you sell at these values - for direct purchase, being known and responsive matters.
- Be ready to move fast; lower-value procurements often run on shorter timelines.
In big open competitions, your size can be a disadvantage. In direct purchase, and in limited competition on the SAR 500,000 value ground under the current law, local SMEs have priority of invitation, which can turn size into an advantage - if you are registered, qualified, and visible to the right buyers. The new law, which takes effect in early January 2027, removes that limited-competition ground.
Frequently asked questions
When does a buyer use direct purchase?
For low-value needs (up to SAR 100,000 under the current law and up to SAR 1 million under the new law, which takes effect in early January 2027) and certain specific cases. Legally it is the exception to open competition, but because many small purchases go this way it is the most common method by number of tenders, though a small share of total awarded value.
What is limited competition?
A method where a smaller field of invited suppliers competes. The current law allows it when only a few suppliers can do the work, in urgent cases, for non-profit providers, for consultancy and, up to SAR 500,000, for lower-value needs (at least five invited, with priority for local SMEs). The new law, which takes effect in early January 2027, removes the value ground and adds freelancers.
How do SMEs benefit?
The current law prioritises local small and medium enterprises within limited competition on the SAR 500,000 value ground and in low-value direct purchase - so your size and status can be the advantage. The new law, which takes effect in early January 2027, removes the limited-competition value ground, keeps the priority in direct purchase and raises its ceiling to SAR 1 million.
How do I get invited to limited competitions?
Keep your registration, activities, and classifications current, keep your Etimad subscription active, and sign up to the supplier lists that entities announce on the portal, so they can find and invite you. Building a track record with relevant buyers also helps.
Not every opportunity is a giant open competition where scale wins. For many SMEs, the steadier path runs through limited competition and direct purchase - where being registered, qualified, and visible turns your size into your edge. Our team helps SMEs find the opportunities that fit their size and registration.