Guidelines for Local Content

Measurement Template

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Introduction:

1.1. The Kingdom aims to increase the local content in the Saudi economy, to
maximize the benefit of Government procurement through private sectors by:
 Increase the actual value contributed in the Kingdom's economy in the
segment of employment, manufacturing of goods and provision of services.
 Increase the volume of expenditure on local goods and services by increasing
the contribution of small and medium enterprises in the Kingdom.
 Training Saudis and developing their expertise and skills to enable them to
promote higher positions.
 Increasing the investment in the Kingdom's productive capital assets and local
capacities of the fixed productive assets.
 Developing R & D capabilities and activities in the Kingdom.
 Developing training and education institutions in the Kingdom.
 Improving the competitiveness of Saudi enterprises at the international level
and contributing improvement of their exports of goods and services.
 Increase the employment opportunities of Saudi nationals in higher positions,
for Saudi women and young people.
 In this document or in the Local Content measurement template, nothing
contradicts or exempts the Contractor from any legal obligation set forth in
applicable laws and regulations in the Kingdom of Saudi Arabia

2-Definitions and terms

Definitions of key performance indicators for local content:

 Value added to the Kingdom of Saudi Arabia from employment (Saudi riyals).
The value of the total wages of the labor during the period of implementation
of the contract for Saudi employees (100%) and foreigner (37%) within the
labor of the establishment. These expenditures should not repeated in more
than one section of the template.
 Value added of the Kingdom of Saudi Arabia Goods and services (Saudi
Riyals): The value associated with the Saudi components in the goods and
services that the contractor will purchase during the period of execution of the
contract from all the suppliers for its operations within the Kingdom. These
expenditures should not repeated in more than one section of the template.
 Training and development of Saudis (Saudi riyals): is the total expenditure
during the period of implementation of the contract for the training of Saudis
in the contractor labor including on-site and off-site training. For example,
induction training for staff, environmental and health / Safety training in
addition to technical and vocational skills, internships, vocational training and
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 scholarships, and should not duplicate these expenditures
in more than one section of the model.
 Expenditure on Supplier Development (Saudi riyals): The contractor spends
during the contract execution period on local suppliers to increase their
production capacity, improve their level of quality, market access and other
enabling initiatives for local enterprises. These expenses should not repeated
in more than one section of the model.
 Value added of Saudi Arabia from depreciation: Depreciation of productive
assets within Saudi Arabia during the period of execution of the contract (asset
Example: plant, real estate, equipment).

Manpower:

 Contractor manpower refers only to the internal workforce, which consists of

staff and internal contractors.

Capacity development:

 On-site training means: training of personnel, which takes place at one of the
contractor's project sites or facilities.
 Off-site training means: training of personnel, which is not carried out at one
of the project sites or facilities of the contractor.

3-General instructions:

3.1.Through the local content measurement template, the contractor provides

an overview of the quantitative and relative performance levels of the local
content to be achieved during the execution and the contractor should follow
the below general guidelines during filling out the local content measurement
template.

3.2. All amounts stated in the local content measurement template must be in
Saudi Riyals, and the amounts must be in line with what reflected in the
entity's financial statements.

3.3. The revenues and costs included in the local content measurement
template must be consistent with the revenues, and costs provided by the
Contractor in accordance with the Saudi Organization for Certified Public
Accountants (SOCPA) standards in the Kingdom of Saudi Arabia. ‘’For
example,
‘’If a company does not record an item as revenue or cost in the income
statement, it cannot be added to the local content measurement template‘’.
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 3.4.The amounts in the Local Content Measurement
template in sections 3 to 6 may not counted in duplicate. For example, if the
costs of providing local training services described in Section 4, they may
not counted again in Section 5 of the Saudi Training and Development
section.
3.5. The contractor should enter the data in sections 2 to 6 in the Local
Content measurement template, to the level of the project for which the bid
submitted and reflected the expected expenditure at the end of the contract.
3.6. The contractor is required to enter the data in the white fields in the
form, and the fields highlighted in light green are equations based on data
entered in other fields in the template.

Local Content Measurement template:

Section-1: General information:

1.1. This section contains general information about the facility & its
subsidiaries, the types of goods and services it provides.
1.1.1. The contractor should provide the tender information including the
value of the bid submitted by the Contractor (Section 1.1). In
addition to the name and address of the facility. (section 1.2) and the
person responsible for managing the communication there in
(Section 1.2) in order to complete the local content measurement
template (Section 1). Moreover, The Contractor shall comply with
the Commercial Registration Number, and if it is not available, the
Contractor shall enter "N / A" to indicate that it does not exist in
Saudi Arabia.
1.1.3. The contractor shall provide a brief statement about the goods and services
provided (section 1.4), it shall be complete and clear limited to few
sentences, complete and clear.

Section- 2: Evaluate of the Local Content Measurement template:

1.2.1 This section evaluates the local content measurement template through
two elements:
A- Complete the local content measurement template,
B-Determine the level of performance of local content expected from
the contractor during the contract execution period.
1.2.2. The value of bid submitted in Section 2.1 shall entered in Saudi Riyals
and the information will be automatically update based on the data
entered in the rest of the sections.

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 1.2.3. The result of the local content calculated in Section
2.1 refers to the contractor's expenditure during the contract execution
period that contributes to the local content.
1.2.4. In case, if the value of the total expenditures of the local content is
higher than the bid value, then local content points will be determined as
zero (0).
1.2.5. In case, if the local content measurement template is not submitted with
the Bid, then the local points will be determined as zero (0).

Section- 3: Labor:

The contractor in this section shall provide information on the compensation of

employees.

1.3.1 The contractor shall complete (Section 3.1) Saudi wages and foreigner
wages data during the project implementation period. The wage costs
include salaries, allowances, commissions, overtime and benefits
(such as transportation, health care, social insurance, etc.),The costs of
trainees, trainers, development of suppliers and research and
development activities should be excluded from this section and
included in sections 4 or 5.
1.3.2. On completion of Section 3.1, the Contractor shall only include
personnel directly involved in the execution of the Contract, i.e. staff
who are not directly involved in the execution of the contract, such as
human resources officers, should excluded.
1.3.3. This section should include only contractor employees, including sub-
entities, and subcontractors / contractors (who should be included in
section 4) should excluded as service providers.
1.3.4. Saudi labor wages are 100% local content and foreigner labors are
37% local content.
1.3.5. COMPANY has the right to request clarifications or supporting
documents from the contractor and accepted by the COMPANY about
the value of the expenditure in Labor of Section 3. In addition, if the
contractor is not provided COMPANY request, the percentage of local
content in Section 3 of the workforce will be determined as zero (0).
1.3.6. The contractor shall complete in (section3.2) numbers of Saudi and
foreign employees participate during the project execution period.

Section- 4: Goods and Services:

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 1.4.1 1 In this section, the contractor will enter his
expected expenditure on goods and services during the contract
execution period, including local suppliers in the Kingdom and
abroad. Moreover, the contractor should include the total expected
procurement to implement the requirements of this project. following
are examples of the types of expenses listed in this section:

Excluded Listed
 Income taxes, Zakat, fines and government fees  Materials and supplies
 Costs of inter-group operations  Transportation / Shipping
 Expenditures related to the salary and benefits  Professional services
schedule for Saudis and expatriates are included in  Catering services
Section (3)  Equipment rental
 Expenses associated with the training of Saudis are  Temporary employment
included in Section (5)  Contractors / Consultants
 Expenditures related to supplier development are  Overheads Such as utilities, insurance, finance and
listed in section (5) security
 Costs associated with R & D are listed in Section  Others.
(5)
 Depreciation (included in section 6)
 Capital expenditures

1.4.2. Section 4.1 summarizes the contractor's total expenditure on goods

and services for the execution of the contract, in addition to the
actual value of Saudi Arabia's expenditure on goods and services.
1.4.3. In section 4.2, the Contractor should list the names of the suppliers to
spend during the project period for the execution of the project
works. If 70% of the total expenditure on goods and services has
reached, it may be sufficient to reach only what has been reach, and
if the suppliers are not identified the contractor may not mention the
supplier's name and trade register information.
1.4.4. In Section 4.2, the Contractor should include the local content
percentage for each supplier listed in the table in the "Local supplier
Content percentage" column, based on the following:

1.4.4.1. The percentage of the supplier, if he has a percentage approved

by an external auditor & by the company.

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 1.4.4.2. If the supplier does not have a specific
percentage of its own and is approved by an approved external auditor
(or the resource is not specified when the local content measurement
template).

It is referred to Appendix A in the form and specifying belongs to

sectors the resource or product to be purchased (The supplier is not yet
selected), and then the local content percentage for that sector is placed
in the "Local content of the supplier"
1.4.4.3 The local content percentage of the supplier or manufacturer is
added, if he has a local content certificate approved by one of the
external auditors accredited by the COMPANY. And then, this
percentage is included in the “Audited Score” column. COMPANY
has the right to request from the contractor to provide the certificate of
the local content approved for the supplier. And, if the certificate of the
local content is not provided, the local content percentage of Section 4
Goods and Services will be determined as zero (0)
1.4.4.4 If the supplier or manufacturer does not have a local content
certificate approved by one of the external auditors accredited by the
COMPANY, or if the supplier is not identified when filling out the
local content measurement template. Then refer to Appendix A in the
template and specify which sectors the supplier or product belongs to,
and reflect the percentage on “Sector of Product or Primary
Goods/Services Procured From Supplier” column, the local content
percentage will be automatically reflected in the “Sector score” column
1.4.4.5 COMPANY has the right to request clarifications or supporting
documents from the contractor and accepted by the company about the
value of the expenditures in Section 4 Goods and Services. And, if the
contractor is not provided COMPANY request, the percentage of local
content in Section 4 Goods and Services will be determined as zero
(0).
1.4.5. In Section 4.2, at the end of the table, the Contractor should enter the
remaining value, which expected to spend on goods and services
during the project period, calculated as follows: Total expenditure on
goods and services expected for project implementation or total
expected expenditure on 70% of the value of expenditure on goods
and services for project implementation.

Section- 5: Capacity building:

1.5.1. In this section, the contractor should mention the costs of developing of
the local capacities during the project period to carry out the project
works in the following areas:
(a) Training and development of Saudis.

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 (b) Development of suppliers within the Kingdom.
1.5.2. The Contractor shall complete (Section 5.1) by mentioning the expenses
during the contract execution period relating to the training and
development, both on site and outside, to the Saudis directly employed
by the Contractor.
1.5.3. The contractor shall complete (section 5.2) by mentioning expenditures
during the period of execution of the contract to local suppliers to
increase their productive capacities, improve their quality of access,
market access and other enabling initiatives for local enterprises.
1.5.4. From (Section 5.1) to (Section 5.2), the Contractor should not repeat
what has entered in the other sections of the Form.
1.5.5. COMPANY has the right to request clarifications or supporting
documents and accepted by the company about the value of the
expenditures in Capacity Building of Section 5. In addition, if the
contractor is not provided COMPANY request, the percentage of local
content in Capacity Building of Section 5 will be determined as zero (0).

Section- 6: Depreciation inside kingdom of Saudi Arabia:

1.6.1. All asset data entered in this section must be for the assets that directly
related to the execution of the contract, and if any assets that are not
directly related to the execution of the contract (such as the company's
administrative buildings) should be excluded.
1.6.2. Part of the depreciation of assets produced in the Kingdom is
accounted for local content if the assets purchased from within Saudi
Arabia in proportion to the asset type.
1.6.3. In Section 6.1, the total depreciated value of the assets produced within
Saudi Arabia that are expected to be used to execute the project during
the period of the contract (including assets purchased from outside the
Kingdom) is entered into based on the methodology used in calculating
depreciation of the assets in the financial statements.
1.6.4. In Section 6.2, depreciation of assets is made based on the type of
assets produced, taking into account the following:
1.6.4.1 It has to update the value of the depreciation of the produced assets
purchased from the Kingdom only, and the assets purchased from
outside the Kingdom are not included in this section.
1.6.4.2 It can be, assumed "Buildings" and "Land Improvements" be used
to implement the project as assets purchased within the Kingdom.

1.6.4.3 1.6.4.3. The filling of Section 6.2 shall be completed by introducing

the expected value of the depreciation of the assets produced within
the Kingdom that are expected to be used to execute the project
during the contract period by type of asset.

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 1.6.4.4 If the type of productive asset is not on the list,
the contractor must enter the expected depreciation value in the
"Other" field.
1.6.4.5 If a type of asset selected under the "Other" section, the contractor
must estimate the local content percentage of this section, while
retaining the reasons and justifications to support this percentage.
1.6.4.6 Local content will calculated from the value of depreciation of
assets produced automatically.
1.6.4.7 COMPANY has the right to request clarifications or supporting
documents and accepted by the company about the value of the
expenditures in Depreciation of Section 6. In addition, if the
contractor is not provided COMPANY request, the percentage of
local content in Depreciation of Section 6 will be determined as zero
(0).

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