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Policies and Procedures

Procedures provide a methodology for contract procurement. Procedures also control some aspects of contract administration that is carried on by the Contract Proponents with the assistance of the Contract Representative. (Contract Proponents are users of the procurement services and Contract Representatives are responsible for procuring the services.) Saudi Aramco's procurement process can best be characterized as a progressive series of procedurally mandated and interrelated steps required to develop a contract. Each procedural step is designed to ensure that Saudi Aramco's Contracting Policies and Procedures, highlighted below, are carried out while at the same time providing necessary procurement services.

For more information about our Policies and Procedures, please view the Policies and Procedures by going through the following links.

Introduction
Saudi Aramco Contracting Policies
Confidentiality
Contractor Information
Saudi Aramco Procurement Process
Bid Slate Development
Job Explanation Meeting
Bid Closing Date And Bid Opening
Negotiation Of Competitive Bids
Contract Award
Debriefing Meeting
Contract Performance And Administration
Claims
Applicable Laws And Manpower
Contractor Assistance
Summary
Saudi Aramco Bulletin Boards

Introduction
Saudi Aramco's basic corporate objective with respect to contracting is to have the work performed in full compliance with the scope of work, within the prescribed time allocated to perform the work and at the least overall cost to Saudi Aramco. It is Saudi Aramco policy to procure and administer contracts based on the highest standard of ethics and fairness.

The Saudi Aramco Contracting Department's Mission Statement in this regard is, to provide procurement services for Saudi Aramco and its affiliates, worldwide in conformity with established contracting Policies and Procedures. Policies are the primary corporate regulations governing the procurement of contracts. Procedures provide a methodology for contract procurement. Procedures also control some aspects of contract administration that is carried on by the Contract Proponents with the assistance of the Contract Representative. (Contract Proponents are users of the procurement services and Contract Representatives are responsible for procuring the services).

Saudi Aramco's procurement process can best be characterized as a progressive series of procedurally mandated and interrelated steps required to develop a contract. Each procedural step is designed to ensure that Saudi Aramco's Contracting Policies and Procedures, highlighted below, are carried out while at the same time providing necessary procurement services. <Return Up>

Saudi Aramco Contracting Policies
The following policies are highlighted for your information:

1. Saudi Aramco policies regarding business ethics must be adhered to and a high standard of ethics and fairness shall be maintained.

2. All contracts must be in writing and shall be executed before committing work to a contractor, or a contractor starting work.

3. Lump Sum contracting is normally the preferred contract form when it can be properly used.

4. Competitive bidding will be used whenaever possible to select the technically and financially qualified contractor whose bid represents the least overall cost to Saudi Aramco. Negotiated contracting shall only be used in exceptional circumstances and must be adequately justified and approved in advance by Saudi Aramco Management.

5. For work to be performed in Saudi Arabia, Saudi Aramco will normally consider a contractor's technical and financial qualifications and will award contracts to only those contractors who are properly registered or licensed to conduct business in Saudi Arabia.

6. It is Saudi Aramco's policy to encourage the continued development of a strong, broad-based local contractor community in its various areas of operations. In support of this policy, the Company distributes Saudi Aramco's contract work widely as possible among qualified Saudi Arab contractors.<Return Up>

Confidentiality
Saudi Aramco considers all aspects of any contractor screening inquiry and an Invitation for Proposal to be confidential, which includes all bid documents, attachments thereto and all drawings. A contractor must agree before responding to a screening inquiry and bidding on Saudi Aramco work to limit the disclosure of information contained therein to only those employees who require it either to respond to an inquiry or to prepare a bid. A contractor must also agree not to disclose any information contained in a screening inquiry and an Invitation for Proposal to a third party without obtaining Saudi Aramco's prior written approval. In this regard a contractor may be required to sign a confidentiality agreement.<Return Up>

Contractor Information
Saudi Aramco requires current detailed information on active Saudi Aramco contractors. Contractors new to Saudi Aramco may register their interest through Saudi Aramco's Contracting Department. Applicants must complete a registration package that includes a questionnaire requesting general, financial and contractor capability information. This registration package is available from the Contracting Information and Control Unit of the Contracting Department. To ensure that the information about your company is correct you must provide all the information requested. Following satisfactory completion of the registration package you are assigned a Saudi Aramco Contractor Number. Your information is input to SAP which is a system that is used to monitor contract and contractor activity.

All information supplied by the contractor to Saudi Aramco is kept confidential and made available only to those organizations within Saudi Aramco that require such information. Financial information is reviewed and retained only by Saudi Aramco's Treasurer's organization.

It is requested that at least once annually contractors update their information to ensure accuracy. However, contractors are urged to notify the Contracting Department in writing regarding any substantive changes so that the additional or amended information can be input without delay.

Since Saudi Aramco uses this information to develop bid slates, it is in the contractor's interest to provide the Contracting Department with up-to-date, accurate information. Failure to update this information may result in your company being excluded from bidding on some Saudi Aramco work. <Return Up>

Saudi Aramco Procurement Process
The Saudi Aramco contract procurement process is described below. It is Saudi Aramco's intention to make clear that communications during all stages of a contract procurement between bidders and Saudi Aramco must be authorized and conducted by the Contracting Department.<Return Up>

Bid Slate Development
Saudi Aramco uses four different methods for procuring contracts as follows:

a. Open Bidding - A notice is posted on Saudi Aramco Bulletin Boards in Dhahran and other Saudi Aramco offices.(See Saudi Aramco Bulletin Boards list attached.) This Information for Bidder Notice provides general overall description of the work, any pre qualification requirements that must be met and the date of the Job Explanation Meeting. Any contractor may bid when this procurement method is used.

b. Open Solicitations With Selective Bidding - These open solicitations are also posted on the Saudi Aramco Bulletin Boards to allow all contractors the equal opportunity to indicate interest in submitting a bid. After a careful analysis of the responses received for the solicitation, Saudi Aramco will select those contractors considered to be best qualified for bidding the work and directly extend to them an invitation to the Job Explanation Meeting. This is the Company's most common and preferred procurement method.

c. Restrictive Selective Bidding - Saudi Aramco reviews the record of contractors who have indicated capabilities in a particular type of Saudi Aramco work and then selects those contractors considered most capable of performing the work. Saudi Aramco uses this method when it determines that the contract requirements are so stringent that only a few contractors would qualify or the high cost of preparing a bid indicates that size of the bid slate should be limited.

d. Sole Source - Saudi Aramco does not favor this means of contract procurement, and it is used only after a careful review of the unique circumstances that may justify it. Sole Source procurement is justified, for example, when a contractor provides a unique proprietary service, when there is an unusual urgency to the work, or when a contractor has mobilized and the limited work scope does not justify mobilizing another contractor. For a contractor's commercial bid to be considered for any contract, the contractor must be considered qualified to perform the work. Saudi Aramco reviews technical and financial qualifications and determines whether a contractor is qualified.

Preliminary contractor capabilities are determined primarily from SAP information including contractor performance reports on other contracts. Additional pre qualification or technical proposal information unique to the specific procurement may be requested from the contractor.

Saudi Aramco's Treasurer's Organization determines the financial capabilities of contractors. Consequently, contractors must supply current financial information, to the Contracting Department, for delivery to the Treasurer's Organization. Contractors with assets above SR. 15,000,000 who wish to be considered for contracts must also submit current audited financial statements. The Treasurer's Organization maintains all financial information in a strictly confidential manner. <Return Up>

Job Explanation Meeting
A Job Explanation Meeting (JEM) is held to explain the contract, describe the scope of the work and to answer any questions concerning the contract or the procurement process. If possible, before the Job Explanation Meeting, the complete bid package is distributed to the bidders for review. This package consists of a proforma contract, the scope of work including plans and specifications of the proposed project, general instructions to the bidders for preparing the bid, and any special instructions that the particular project may require. In many cases, the bidders are invited to visit the proposed contract work site to familiarize themselves more fully with the work requirements. During Job Explanation Meetings and job site visits bidders are encouraged to ask questions. If answers to these questions are not readily available, both the question and the answer are communicated to all bidders in writing. Questions that arise following the Job Explanation Meeting must be submitted in writing to the Contract Representative. The Contract Representative will respond to the questions in writing and provide a written copy of the questions and answers to all bidders. The Contract Representative will also transmit to all bidders, in writing, any modifications to the bid package during the bidding period. <Return Up>

Bid Closing Date And Bid Opening
The Instructions to Bidders will clearly specify a bid closing date and a time. Bids must be deposited according to the Instructions to Bidders in the Contracting Department's locked bid box. The bid boxes are located in North Park II Bldg. 3301, Contracting Department's Reception Center Room # A162, Dhahran. It is important that bids be submitted in duplicate and that they be clearly labeled in accordance with the instructions.

In many cases bidders are requested to submit separately two proposals, a technical proposal and a commercial proposal. In these instances, the bidder's technical proposal is evaluated first and the bidder's commercial proposal will be evaluated only if the technical proposal is determined to be sufficient for the contract requirements.

All bid openings are conducted by the Contracting Department and the Finance Organization in strict compliance with Saudi Aramco procedures designed to assure confidentiality and fairness to all bidders.

Following the bid opening there will be no information released on the progress of the bid evaluation. This information is strictly confidential. <Return Up>

Negotiation Of Competitive Bids
Bidders should be aware that Saudi Aramco does not negotiate base bids that have been solicited on a competitive basis. Exceptions to this policy are very rare and if at all considered require the approval of Saudi Aramco's Corporate Management. Saudi Aramco assumes that a bidder's first price is its best price and its last price. Accordingly, the Company does not expect contractors to include a contingency for negotiation because such negotiations with respect to the bidder's basic proposal will not take place.

Saudi Aramco may conduct clarification meetings with one or more bidders before award to ensure that both parties have a clear understanding of the work and the terms and conditions under which it will be performed. Base bids submitted in competitive circumstances are not negotiated or changed at these clarification meetings. <Return Up>

Contract Award
When the bid evaluation has been completed by a Saudi Aramco Bid Review Team, the recommended award is presented to Saudi Aramco Management for approval. Procurement plans and award recommendations are reviewed by Saudi Aramco Corporate Management for high value contracts.

After the contract has been signed on behalf of Saudi Aramco, two original copies are presented to the selected bidder for signature. The contract is not binding unless signed by both Saudi Aramco and the contractor. After a contract has been awarded, all unsuccessful bidders are notified by telex or facsimile or, for open bidding, by general announcement on the Saudi Aramco Bulletin Board located in Dhahran or Jiddah. <Return Up>

Debriefing Meeting
An unsuccessful bidder may, request in writing from the Contracting Department, that a meeting be held to determine why the contractor's bid or pre qualification proposal was not successful. Saudi Aramco encourages such meetings because they help contractors improve subsequent proposals. Proposals from competitors are never disclosed to the contractor requesting the debriefing. A contractor will be informed why Saudi Aramco decided not to award it the contract or select it for a bid slate. Debriefing for unsuccessful pre qualification will not be held until after the job explanation meeting. Debriefing for unsuccessful contractors will not take place until after contract award.

If a debriefing meeting is requested, it should be done within one month after the contractor is informed it was unsuccessful. This is to ensure that Saudi Aramco has retained all the relevant documentation to make the debriefing meaningful. <Return Up>

Contract Performance And Administration
Day to day administration of the contract is the responsibility of the contract proponent organization. Contract changes are negotiated with the contractor as needs arise and take the form of either change orders or amendments to the base contract. <Return Up>

Claims
Saudi Aramco contracts also provide for the fair and equitable resolution of disputes that may arise between Saudi Aramco and contractors. The Claims and Technical Services Unit of the Contracting Department is responsible for the resolution of claims. Claims must be filed according to the terms of each contract. Resolution occurs through Saudi Aramco's claim process and approved by the Saudi Aramco contract signatory. Contractors have the right to appeal that decision through the establishment of a Saudi Aramco Contract Dispute Settlement Board (Appeal Board). In addition, Saudi Aramco contracts normally contain arbitration provisions. <Return Up>

Applicable Laws And Manpower
Contractors are expected to comply with all applicable governmental laws and regulations and to structure their bids accordingly.

Saudi Aramco strongly encourages its contractors to employ Saudi Arab nationals for the performance of Saudi Aramco contract work. When the contractor finds it necessary to employ foreign labor, compliance with the Saudi Arabian Government regulation and control of visas and iqamas is the responsibility of the contractor. Saudi Aramco does not provide assistance in this regard. <Return Up>

Contractor Assistance
Questions regarding specific contract procurement should be referred to the Contract Representative in the Contracting Department responsible for that procurement. For general information or for submitting updated contractor information, contractors may contact the Contract Information and Control Unit in theContracting Department, Dhahran or the Contracting Services Unit in Jiddah. <Return Up>

Summary
Saudi Aramco's major contracting objectives are to complete the work on time in conformance with demanding technical standards and at the least overall cost to Saudi Aramco. To meet that objective, SaudiAramco conducts its contract procurement in a fair and equitable manner and endeavors to create and maintain a procurement environment attractive to qualified, competitive contractors.

Saudi Aramco welcomes all qualified contractors to compete for Saudi Aramco contracts. <Return Up>

Saudi Aramco Bulletin Boards

Saudi Aramco
CR/WR Contracts Procurement Division
Musadia Annex Bldg.
Room MA 10
Jiddah, Saudi Arabia

Saudi Aramco
S.A. Contracts Admin. Unit
Abqaiq Admin. Bldg.
Room W-222
Abqaiq, Saudi Arabia

Saudi Aramco
Central Region Contracts Admin. Unit
Riyadh Refinery
Bldg. No. 305, 2nd. Floor
Riyadh, Saudi Arabia

Saudi Aramco
Saudi Aramco Affairs, Central Province
Takhasussi Street, Opposite King Faysal Specialist Hospital
Riyadh, Saudi Arabia

Saudi Aramco
N. A. Contracts Admin. Unit
Najma Admin. Bldg.
Room 1985
Ras Tanura, Saudi Arabia

Saudi Aramco
Yanbu Contracts Administration Unit
Yanbu Refinery
AD-155
Yanbu, Saudi Arabia

Saudi Aramco
Contracts Administration Unit
Rabigh Refinery, RBR Admin. Bldg
Room 37
Rabigh, Saudi Arabia

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