This paper presents results of a study to assess the Government Contractor Classification System in Saudi Arabia. Contract award procedures in public projects of Saudi Arabia are accomplished in two steps. The first one involves qualifying contractors to insure that their technical, financial, and managerial capabilities are suitable for the project to be awarded. This qualification is accomplished by the Contractor Classification Agency- Ministry of Municipal and Rural Affairs- in which the contractor is classified according to his specialty and capabilities. In the second step, bids of the contractors who satisfy the required classification are evaluated to select the best bid. Since the contractor classification is the only screening method to disqualify incompetent contractors and the difficulty of dismissing a qualified contractor who submits the lowest bid, the contractor classification must be an actual measure for the contractor's capabilities. To assess the contractor classification system a questionnaire has been prepared and distributed to the project mangers in different public ministries and agencies. The number of distributed questionnaire was 250 and 198 were collected and used in this study. In order to conduct an objective evaluation, a comparison has been conducted between performance of contractors who are awarded projects based on the contractor classification only with performance of contractors who are awarded projects based on the contractor classification and an additional prequalification by the project owner. Also, Chi-squared test was used to verify the cause of the difference in results of using these two types of prequalification. Results of the study reveal that the contractor classification system does not properly reflect the contractors’ capabilities.