Insights

On 15 July 2022, the Malta Ministry for Finance issued the Temporary Suspension of Certain Provisions Relating to Public Procurement Regulations (the “Regulations”).

The effect of these Regulations is the suspension of the following provision in Maltese public procurement law: “A contractor cannot claim any increase whatsoever in price of commodities to be used in a public contract unless otherwise provided in the procurement document”.

This suspension is being justified “in view of the current hostilities in Eastern Europe and are applicable solely to the conflict between Russia and Ukraine.”

The Regulations provide a methodology for contractor to request for compensation for increase in prices where:

• The public contract was signed on or before 24 February 2022
• The public contract was still in force and binding as of 24 February 2022
• The subject-matter of the public contract is recognised as one which is subject to price increase according to policies that may be issued by the Department of Contracts, Malta’s central purchasing body.

No policies have been issued as at the time of this communication.

Where supplies, works and, or services have already been delivered or rendered prior to the 24 February, 2022, no requests for compensation can be made.

These requests for compensation will be made with the respective contracting authority and then passed on for the Department of Contracts’ decision, if the contracting authority finds the request to be applicable, fair and reasonable. The Regulations provide that the Department of Contracts’ decision will be final.

If the request for compensation is approved, then this additional compensation will be recorded in an addendum to the contract and the compensation will be funded by the contracting authority (and not by the Department of Contracts).

The effect of these Regulations shall cease on 15 January 2023 (i.e. within 6 months from 15 July 2022) and any requests for compensation shall be made within this time window.

Please contact Clement Mifsud-Bonnici and Calvin Calleja in case of any queries.