Adjustment clause in public contracts subject to conditions

The introduction of a price review clause in public contracts is provided for in article 7 of the Ministry of Development bill submitted to the Parliament, provided that the contracting authority has the necessary credits to implement the adjustment.

With the mandatory introduction of the clause, the possibilities of price adjustment will be explicitly defined, so that these are known to the bidders already at the time of the start of the bidding process.

As stated in the Explanatory Memorandum, price adjustment clauses may be used by contracting authorities provided they are clear, specific, expressed in a mathematical formula and justified based on the specifics of the contract or if the prices of the goods arise dynamically by reference to data from official price observatories.

The price adjustments of public procurement contracts will be made with reference to reliable and independent sources of information on the evolution of prices, such as the data of the Hellenic Statistical Authority (EL.STAT.) and will not be left to the formulation of arbitrary requests from suppliers for excessive price increases that they do not correspond to the real picture of the market.

As noted, the proposed provision seeks to regulate the issue of revaluations of goods procured by the public through public contracts. However, Law 4412/2016 (Article 53) allowed the contracting authorities to insert adjustment clauses in the contract documents, due to the low inflation that prevailed since the country joined the euro area. But the contracting authorities rarely took advantage of this possibility because, as the legislator explains, they were unable to determine the appropriate mathematical relationship.

It is noted that a distinction is made between the mathematical formulas used to determine the readjustment clause for contracts for the supply of goods and services and in particular cleaning and building security services, the price of which depends to a high degree on the salary costs of the employees.

How will the adjustment be made?

In the contract documents for the price adjustment, the formula will be applied: T = Toffer X (1 ± CPI)

Where CPI: the consumer price index on an annual basis of the specific category to which the goods belong, as announced by the Hellenic Statistical Authority (EL.STAT.) for the month preceding the time of delivery of the goods, Toffer: the price of the economic of the economic operator to whom the contract is awarded and T: the adjusted price. The price adjustment is only applied if, at the time of delivery of the goods, the following conditions are cumulatively met:

a) at least 12 months have passed since the closing date for submission of tenders, specified in the contract documents,

b) the consumer price index (CPI) is less than -1% and greater than 3%;

c) the contracting authority has the necessary credits to implement the price adjustment.

Another type of price adjustment may be provided for in the contract documents if it is clear, specific, mathematically expressed and specifically justified based on the specifics of the contract or if the prices of the goods are calculated based on official reference prices (price observatories).

In the procedures for awarding a public contract for the provision of general services, a price adjustment condition, the conditions and the manner of this adjustment can be clearly defined in the contract documents.

Especially for contracts for the provision of cleaning and building maintenance services, it is stipulated that the price must be adjusted according to the formula: T = Toffer X (1 ± α)

Where a: the percentage of increase in the minimum wage of an employee compared to the one in force on the final date of submission of offers, Toffer: the price of the economic offer of the economic operator to which the contract is awarded and T: the adjusted price. The price adjustment is only applied if the contracting authority has the necessary credits for its implementation.

The readjustment clause can be applied, by decision of the contracting authority, to contracts for supplies that have already been awarded and are being carried out when the law comes into force. And in contracts for the provision of cleaning services and building security that are concluded pursuant to contract award procedures that have already started, as well as in contracts that have already been awarded and are being executed when the law comes into force.

Source: RES-MPE