Guidelines for the Local Content
Plan Template for Large Contracts
(at Contract Level)
Applicable for NEOM Contracts
That Required a Minimum Local Content
Threshold Score
Version 2.0
Guidelines for the Local Content Plan
Template at Contract Level
1- Introduction
1-1 In the context of the Vision 2030, NEOM anticipates that NEOM procurement spends shall
contribute to:
• Increasing the actual value contributed to the economy of the Kingdom of Saudi
Arabia (“Kingdom” or “KSA”) in labor and manufacturing of goods and the provision
of services.
• Increasing the proportion of expenses on goods and services provided by in-KSA
suppliers.
• Training of Saudis to improve their experience, skills and competencies, thus, allowing
them to progress into higher job positions.
• Developing research and development capabilities and activities in the Kingdom.
• Promoting international competitiveness and exports of Saudi business.
• Increasing the employment opportunities for Saudi citizens in high value job positions.
2-1 Nothing contained in these Guidelines or the Local Content Template (the “Template”) shall
contradict or relieve the commercial entity from any legal obligation in accordance with the
relevant laws and regulations of the Kingdom of Saudi Arabia.
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Guidelines for the Local Content Plan
Template at Contract Level
2- Local Content Plan within Tender Submission
2-1 The commercial entity (“entity”) shall submit a Local Content Plan as an integral part of its
response to a Request for Proposal (“RFP”). The Local Content Plan shall constitute
quantification of the level of Local Content performance anticipated related to the contract
execution for which an RFP is issued. In preparation of the Local Content Plan, the entity shall
closely adhere to the definitions in the appendix of these Guidelines.
2-2 The entity shall submit its Local Content Plan as a single and stand-alone document that
contains all responses, supporting and qualifying information.
2-3 In the process of tender evaluation, if requested by the procuring body, the entity shall
provide additional information regarding the submitted Local Content Plan.
2-4 The entity should take into consideration that the procuring body shall convert the
information submitted in the contractor’s Local Content Plan into binding contractual
commitments.
2-5 The entity shall retain a true, complete and auditable set of records pertaining to the
information in the submitted Local Content Plan, including the assumptions and calculations
used to generate the levels of anticipated Local Content performance.
2-6 NEOM have the right to verify and audit the information contained in the Local Content Plan
in accordance with the local content terms and conditions.
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Guidelines for the Local Content Plan
Template at Contract Level
3- General instructions
3-1 The entity shall provide a concise overview of its Local Content Plan, highlighting the
quantified performance levels of Local Content in execution of the contract. As the entity
completes the Template, it should follow the below general guidelines.
3-2 All financial amounts shall be reported in Saudi Arabian Riyal (SAR).
3-3 Costs reported in the Template shall be consistent with the costs the entity would report
in accordance with the accounting standards that are endorsed in the Kingdom of Saudi
Arabia.
3-4 Amounts reported in Section 3 through Section 6 cannot be double counted. For example,
if a local training service provider’s costs are shown in Section 4, these costs cannot be
counted again in Section 5 under expense on Training of Saudis. The entity may only
assign costs to a single category.
3-5 The cells within the Template that are colored in white are the ones where the entity will
be required to input data. The grey cells are formulas and calculations that are derived
from data input into other areas of the spreadsheet.
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Guidelines for the Local Content Plan
Template at Contract Level
4- Local Content template
4-1 Section 1: General Information
3-6 This section contains general information about the entity and the types of products and
services offered.
3-7 The entity shall provide tender information including tender name and contract start/end
date (Section 1.1). In addition to the name of the entity, address and the entity shall also
provide its financial year end. Further, it shall list its commercial registration number, if no
such number is available, the entity shall enter “N/A" to indicate it does not have a
presence in the Kingdom of Saudi Arabia (Section1.2), and provide a contact person in the
entity’s organization who is the main point of contact for completing the local content
entity Template (Section 1.3).
3-8 The entity shall give a brief description of the goods and services the entity provides
(Section 1.4). This should be limited to just a few sentences.
3-9 At a high level, the entity shall highlight the its progress and support of the Local Content
development in KSA (Section 1.5).
4-2 Section 2: Evaluation
4-2.1 Section 2.1 will be populated automatically based on the information provided in the
other sections.
4-2.2 Section 2.1 contains the calculation of the Local Content Score, i.e. the contribution
value of the entity as a share of its expenses related to contract execution.
4-3 Section 3: Labor
3-10 In this section, the entity shall provide compensation information related to its labor.
3-11 The entity shall complete Section 3.1 with the compensation of Saudis and expats
employed in the entity’s labor involved in the contract execution. Compensation costs
include all salaries, wages, bonuses and benefits (e.g., commissions, overtime,
transportation allowances, housing allowances, leave, other allowances, end of service
benefits and General Organization for Social Insurance (“GOSI”) contributions). Entity costs
related to healthcare, interns, trainers, supplier development and research and
development are excluded from Section 3 and shall be included in Section 4 or Section 5.
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Guidelines for the Local Content Plan
Template at Contract Level
4-3.1 The entity shall only include employees directly involved in execution of the contract,
i.e, employees who are not directly involved in the execution of the contract are
excluded.
4-3.2 This section shall exclude contractors/sub-contracted employees (which shall be
accounted for in Section 4 as suppliers of services).
4-3.3 The calculation of the value to KSA within Labor captures 100% of compensation paid
to Saudi employees and 37% of compensation paid to expat employees to account for
remittances.
4-4 Section 4: Goods and Services
4-4.1 In this section, the entity shall capture its spent on goods and services related to
contract execution, including in-KSA and out-of-KSA suppliers. Below are the expenses
to be excluded in this section:
Excluded
• Income taxes, Zakat, and related penalties
• Intercompany costs for consolidated entities
• Customs and duties (even if included in inventory costs)
• Government fees (e.g., visa fees)
• Non-cash transactions (e.g., provisions and any other losses)
• Costs associated with compensation for Saudis and expats (included under Section 3)
• Costs associated with training of Saudis (included under Section 5)
• Costs associated with supplier development (included under Section 5)
• Costs associated with research & development (included under Section 5)
• Depreciation and amortization (included under Section 6)
• Capital expenditure
4-4.2 Section 4.1 summarizes the entity’s total spent on goods and services related to
contract execution as well as the contributed value from this spent to KSA.
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Guidelines for the Local Content Plan
Template at Contract Level
4-4.3 Section 4.2 the entity shall List at least 70% or the top 50 suppliers of the total expenses
on goods and services in descending order.
4-4.4 Section 4.2 the entity shall select the sector that best describes the procured goods or
services from the drop-down menu (Sector of Product or primary Goods / Services
procured from Supplier) as follow:
4-4.4.1 If the supplier has a verified local content score from Local Content
& Government Procurement Authority, the score shall be inserted.
4-4.4.2 If the supplier does not have a Local Content score and is not
verified by the Authority (or the supplier is not specified when the
local content plan is developed), referred to Appendix A in the
Template and specifying which sectors the supplier belongs to. The
sector is then selected from the list in the table "Sector of product
or primary Goods / Service procured from supplier".
4-4.5 The remaining of total expenses are calculated automatically.
4-5 Section 5: Capacity Building
4-5.1 In this section, the entity shall capture costs of KSA capacity development related to
contract execution in the following areas:
(a) training of Saudis
(b) KSA supplier development
(c) KSA research and development
4-5.2 The entity shall complete Section 5.1 for its spent on the training and development
related to contract execution, both on-site and off-site, of Saudis employed directly by
the entity.
4-5.3 The entity shall complete Section 5.2 for its spent on initiatives related to contract
execution for the development of in-KSA suppliers that related to developing business
processes, technologies, and access to market.
4-5.4 The entity shall complete Section 5.3 for its spent related to contract execution on
initiatives directed at research and development activities that take place in KSA and
benefit the Kingdom.
4-5.5 In Section 5.1 through Section 5.3, the entity shall not have duplicate entry with all
sections.
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Guidelines for the Local Content Plan
Template at Contract Level
4-6 Section 6: Depreciation and Amortization
4-6.1 In this section Assets that are bought from In-KSA manufacturer, their Local Content
contribution in terms of depreciation and amortization is 100%, if Assets are imported,
their Local Content contribution is 20%, only if assets are operating within the kingdom.
4-6.2 In Section 6.1 the entity shall report its total depreciation and amortization related to
contract execution in accordance with the adopted methodology that reported in the
financial statements.
4-6.3 In Section 6.2 the entity shall further break down its total depreciation and
amortization based on productive assets classes:
4-6.3.1 Report the productive assets related to contract execution which
are located and bought from In-KSA manufacturer, and productive
assets that are bought from out of KSA manufacturer will be
calculated automatically.
4-6.3.2 If productive assets from In-KSA manufacturer do not match any of
the productive assets classes, allocate the depreciation to “Other”,
and describe this productive asset class in a level of detail that
matches the descriptions of the existing productive asset classes,
which contributes 100% to Local Content.
4-6.4 The contribution to local content from each productive asset class is automatically
.calculated
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Guidelines for the Local Content Plan
Template at Contract Level
Appendix – KPIs and Definitions
Local Content Key Performance Indicators:
Value to KSA within labor (SAR): Value of the total compensation involved in contract execution
of Saudi employees (100%) and expat employees (37%) in the entity workforce. Do not double
count with expenses that reported in other sections.
Value to KSA within goods and services (SAR): Value of national components of the goods and
services purchased related to contract execution across all suppliers for the entity’s in KSA
operations. Do not double count with expenses that reported in other sections.
Expenses on Training of Saudis (SAR): Total expenses by the entity related to contract execution
for the training of Saudis in the entity workforce, including both on-site and off-site training, e.g.,
induction, and technical and professional skills, internships and apprenticeships; scholarships are
to be included. Do not double count with expenses that reported in other sections.
Expenses on KSA supplier development (SAR): Expenses by the entity related to contract
execution for the development of in-KSA suppliers that related developing of business processes,
technologies, and access to market. Do not double count with expenses that reported in other
sections.
Expenses on KSA research and development (SAR): Operational expenses by the entity on in KSA
research and development activities related to contract execution. Do not double count with
expenses that reported in other sections.
Value added to Saudi Arabia from depreciation and amortization (SAR): Depreciation and
amortization of productive assets within Saudi Arabia related to contract execution.
Local Content is defined as the total spending on Saudi components within Labor, Goods,
Services, Assets, Technology and other items of the sort within the Kingdom of Saudi Arabia.
Commercial Entity means an entity that has a commercial registration in KSA, or licensed to
perform a commercial activity in KSA.
A Contract is a document, service agreement, purchase order or other contractual agreement for
the purpose of purchasing the goods or services for which the terms and conditions document
was issued.
Financial Statements are an Entity’s financial statements that have been prepared in accordance
with accounting standards that are endorsed in the Kingdom of Saudi Arabia, and have been
audited by an independent auditor in accordance with auditing standards that are endorsed in
the Kingdom of Saudi Arabia.
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Guidelines for the Local Content Plan
Template at Contract Level
Labor means the internal workforce of the entity only, comprising employees and in-house
contractors.
Saudi means any person who holds Saudi nationality or who is treated as a Saudi.
Expat means an individual who is not a holder of Saudi citizenship or who is not treated as a
Saudi.
On-site Training means training to workers, taking place on a project site or the premises of
the entity.
Off-site Training means training to workers, taking place not on a project site or premises of
the entity.
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