Insights

Legal Notice 79 of 2023 has ushered in two small but significant changes:

• the time-window for submission of price compensation requests under government contracts has been extended until 31 July 2023;
• price compensation requests can now also be submitted for any contracts signed between 24 February 2022 and 30 September 2022.

Background

On 15 July 2022, Subsidiary Legislation 601.13 entitled ‘Temporary Suspension of Certain Provisions Relating to Public Procurement Regulations’ (the “Regulations”) kicked into force to address the price hikes occasioned by the Ukrainian conflict (read more about this here). It established a framework within which contractors under public contracts could claim compensation for any increases in the price of works, supplies, and services, contracted but not yet delivered or executed before the breakout of the conflict. The Department of Contracts was tasked with devising policy documents to provide for the procedure to be followed in the submission of price compensation claims.^[1]

The Regulations laid down two cumulative conditions for claiming compensation:

• the public contract must have been signed on or before 24 February 2022; and
• the public contract must have still been in force on 24 February 2022.

The Regulations were set to expire on 15 January 2023.

^{Legal Notice 79 of 2023}

This legal notice ushered in two small but significant changes. First of all, the validity of the Regulations has been extended till 31 July 2023, which means that contractors can continue to file compensation claims until that date.

Secondly, and perhaps even more notably, this legal notice has extended the scope of contracts which qualify for compensation requests. Contractors can now claim compensation under any contract which was signed on or before 30 September 2022.

These amendments will come as welcome news to contractors and may arguably provide for a more consistent approach with the General Rules Governing Tenders. Even tenderers who submitted a bid in a tendering process where the deadline for submission lapsed on or before 24 February 2022 can benefit from these amended Regulations, as long as the final contract was signed by 30 September 2022.

It is worth bearing in mind that such tenderers were bound to maintain the validity of their offers for a period of 90 days following the deadline for submission, and for a further 60 days from the date of notification of award.

[1] Read more about the procedure for public works contracts here.

Read more about the procedure for public contracts involving supplies here.