SECTION 98

(1) The introduction of a price revision clause in a contract shall not be systematic; prices concluded should be firm, wherever possible. (2) Any Contract whose execution period does not exceed 12 (twelve) months may not be subject to a price revision. (3) The amount price of goods and services shall be revisable where the contract provides for the modification of the initial amount as execution progresses. (4) Subject to an express waiver and by mutual agreement between the Contracting Authority and the contract holder, the contract amount may be updated after a period of at least 6 (six) months between the date of the bid-opening and the date of notification of the contract award. a. This update shall consist in an overall review of prices based on a formula stipulated in the conditions of contract in order to factor in changes in economic conditions between the date on which the prices in the bid were set, which is also the date of bid-opening, and the contractually agreed start date. It shall be applied only once after the beginning of service delivery, in case of delays in the performance of the contract or in case of an extension of the contract period for reasons not attributable to the contract holder. b. Where the price update is due to an overrun of the deadline not attributable to the contractor, it shall only apply to the remaining goods and services to be delivered. c. Only fixed-price contracts may be updated. However, in case of overrun of the 6 (six) months period mentioned above, the Contracting Authority shall assess the outlook of economic conditions and inform tenderers if the prices may be updated or not, and ask those wishing to pursue the bidding process to extend the validity of the bids with or without updates. Where prices can be updated, the Contracting Authority, for all contracts within its jurisdiction, shall seek the prior opinion of the Board of Directors on the formula and terms for calculation to be communicated to the tenderers. d. For contracts with conditional phases of a total duration of more than 12 (twelve) months, the Contracting Authority shall specify in the general conditions of contract whether they may be updated or reviewed, and shall determine the formula and terms for calculation, subject to the opinion of the Board of Directors. In case of any update, this shall be done only once on the global amount of the phases concerned by the update conducted between the notification date of the initial contract and the Notice to Proceed with execution of the phase concerned. e. When the extension of the contract implementation period, not attributable to the contractor, leads to an update, the formula and terms for the update shall be examined and adopted by the competent Tenders Board within the framework of the procedure for adoption of the related amendment. In addition, prices shall be updated for contracts with an initial execution period of not more than 6 (six) months and a total duration of more than 12 (twelve) months, or for those with an initial execution period of more than 6 (six) months and a total duration of more than 18 (eighteen) months. f. The updating formula should not include an adjustment margin. It should however set an update threshold. g. The update shall be applicable to prices of the initial contract and not to new prices. Nevertheless, if new prices are set based on a breakdown of all-in rates or a detailed breakdown of prices contained in the initial contract and on the basis of initial economic conditions, these new prices shall be updated. h. The normal price updating process consistent with contract clauses shall not give rise to an amendment. However, the Contracting Authority should include a provision to cover such expenses. Even though it is calculated before the commencement of activities, payment arising from the update shall be made progressively and depending on goods and services effectively delivered. It shall be done by separate tallies, first by tallies and attachments for the remuneration of effectively delivered goods and services as stipulated in the detailed contract estimate, and secondly by decision for remuneration of the statement of amounts due. i. A deadline extension for reasons attributable to the contract holder shall be deducted from the deadline to be considered for the calculation of the update. j. A fixed-price contract may be updated where the deadline of the initial contract is exceeded by more than two months for reasons not attributable to the contract holder. (5) A contract may either be revised, or updated under the terms set out in (3) and (4) above. (6) Price revision consists in reassessing the amount of goods and services delivered based on a contractually agreed formula, to factor in changes in economic conditions between the date on which the prices in the bid were set and that of delivery of the services over the period under consideration. It shall be applied to each breakdown issued by the contracting partner of the public corporation. (7) Price adjustment shall be a type of price revision recommended for goods and service and specifically for goods and services whose value changes based on set benchmarks or a State commodity price list, or even the contractors’ pricing list. This technique shall involve calculating the value at the time of payment based on the benchmark provided for and set out in the contract A hedge or safeguard clause shall be mandatory for contracts that use this technique. (8) The revision and update threshold: The revision and update threshold represents the percentage difference below which no revision or update shall be applicable. For contracts with revisable prices, it should be higher than or equal to the adjustment margin. (9) The adjustment margin is the share of the price variation increase which shall be covered by the contract holder, or decrease, which the contractor will inversely benefit from; the adjusted margin shall always be lower than or equal to the revision threshold; it should be deducted from the overall variation observed in the application of the price revision formula. (10) The safeguard clause shall be used where the Contracting Authority deems that a rise in prices may cause an overrun of the limits of the available budget. In this case, provision should be made for a safeguard clause offering the possibility, as soon as the new price or cumulative amount of the revision exceeds a rate set out in the contract, to either: terminate the uncompleted part of the contract without compensation, or; modify the initial price variation formula per amendment; or renegotiate lower prices. This rate shall be capped at 25% (twenty-five percent) of the amount of the initial contract, unless where there is a special dispensation from the Authority in charge of Public Contracts. The contrary of the safeguard clause is the escape clause which states the lowest level of the variation. (11) An index shall be a number which indicates a periodically measured value whose variation over time helps to revise or update the price of a public contract. The revision or update of prices in keeping with contract clauses shall not give rise to amendments. VIII.3. Conditions for Revising or Updating Contract Amounts