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Public procurement

By Buju, Stanciu & Asociații

How can the price of a public procurement contract be adjusted

One of the frequently asked questions from our clients active in the field of public procurement is "how can the price of a public procurement contract be adjusted?". Our specialists set out below the conditions for adjusting the price.

The contract cannot be amended in the absence of revision clauses

Before presenting the conditions under which a public procurement contract may be adjusted, it is important to point out that a contract may only be modified without organising a new award procedure where revision clauses were included in the initial procurement documents. Accordingly, this type of clause must be clear, precise and unequivocal, and must specify the scope and nature of possible modifications. For this reason, specialist advice at this initial stage of the procedure is essential.

Specifically, the price adjustment clauses in public procurement contracts must set out in detail:

  1. the concrete method of price adjustment;
  2. the indices to be used;
  3. the source of the information regarding their evolution (such as statistical bulletins or commodity exchange quotations).

The conditions that must be cumulatively met

If such amendment clauses have been included, the contract price may be adjusted doar provided that cumulativ the following conditions are met:

  1. the modification has become necessary as a result of circumstances which a diligent contracting authority could not have foreseen;
  2. the modification does not affect the overall nature of the contract;
  3. the price increase does not exceed 50% of the value of the initial public procurement contract/framework agreement;

Other cases in which the contract price may be adjusted

The contract price may also be adjusted where the contracting authority demonstrates that the conditions set out in art. 221 alin. (1) lit. e) și alin. (7) din Legea nr. 98/2016 (Law no. 98/2016) are met, namely:

  1. the contract or framework agreement does not display characteristics substantially different from those of the initial document;
  2. no conditions are introduced which, had they been included in the initial award procedure, would have allowed for the selection of candidates other than those initially selected, or the acceptance of a tender other than the one initially accepted, or would have attracted additional participants to the award procedure;
  3. the economic balance of the public procurement contract/framework agreement is not altered in favour of the contractor in a manner not provided for in the initial public procurement contract/framework agreement;
  4. the scope of the public procurement contract/framework agreement is not considerably extended;
  5. the initial contractor is not replaced by a new contractor, other than in the cases provided for under art. 221 alin. (1) lit. d).

In practice, authorities frequently refuse to adjust the price even where the conditions are met. In such situations, the only remedy is to initiate legal proceedings. The contractor may thus apply to the court to compel the contracting authority to adjust the price. In this context, we note that our public procurement specialists have successfully handled numerous such disputes. This demonstrates that the courts understand the importance of the successful completion of public procurement projects, which are often contingent on such price adjustments.