Amendment to the Price Adjustment Regime of Public Works Contracts and Public Works Consulting Contracts of the National Public Administration.
Public Law Department Report | Amendment to the Price Adjustment Regime of Public Works Contracts and Public Works Consulting Contracts of the National Public Administration
Decree of Necessity and Urgency No. 490/2023, published in the Official Gazette on October 2nd, replaces Annex I of Decree No. 691/2016, thereby amending the Price Adjustment Regime for Public Works Contracts and Public Works Consulting Contracts of the National Public Administration. The main modifications introduced in the regime are as follows:
a) Financial Assistance Agreements: It is established that when public works contracts are entered into by the Provinces, the Autonomous City of Buenos Aires, Municipalities, or other entities, and they receive financial assistance from the National Government, the price redetermination and/or adjustment requested by the respective contractors must be approved by the jurisdiction or beneficiary entity responsible for the execution of the work, in accordance with the established guidelines.
b) Admissibility Requirement: It is established that the prices of contracts for the remaining portion to be executed may be provisionally adjusted at the contractor’s request when, through the application of the established mathematical expression, an alteration of the economic-financial equation exceeding 2% over the contract prices or the prices resulting from the last price redetermination, as applicable, is demonstrated.
c) General principles to which the price redetermination procedure must adhere: (a) maintenance of the original economic-financial equation of the contract; (b) commutativity of the public works contract; (c) equity and bona fide; in its application and interpretation; (d) efficiency, effectiveness, and expeditiousness of the procedures established herein; (e) transparency and publicity; and (f) collaboration between the parties.
d) Reference prices. It is established that the reference prices or reference indices to be used for the price redetermination procedure shall be those reported – in the first immediate publication following the month under analysis – by INDEC, or other specialized agencies or entities approved by the contracting authority.
e) Standardized Structures. The new regime stipulates that each organism shall approve, through a resolution of the competent authority, standardized weighting structures by type of work, which shall be applicable in the adjustment and/or price redetermination procedures for all works of similar characteristics carried out under its jurisdiction. Notwithstanding this, with proper justification by the contracting authority, a different weighting structure from the standardized ones may be used, which must be established in the Book of Basis and Conditions.
f) Mathematical expression. The bidding documents governing the selection procedures shall include the mathematical expression or the weighting structure of inputs or main factors according to the established work typology – which shall also be applicable to determine the percentage of provisional adjustment – and the sources of price information.
g) Default and partial fulfillment of a contract. It is established that the costs corresponding to contractual obligations that have not been executed according to the last approved work plan shall be calculated based on the prices applicable in the month of execution, and, if it corresponds, the application of any penalties for delays that may be applicable.
h) Procedure. The new regime stipulates that the prices of items executed according to the bill of quantities and budget must be provisionally adjusted when the configuration of the foreseen admissibility requirement is proven, through the presentation of the respective certificate. Notwithstanding this, the prices of contracts corresponding to the remaining portion to be executed shall be definitively redetermined, either at the contractor’s request or ex officio, upon contract completion.
i) Price Variation. It is established that the variation in the prices of the inputs that make up the bill of quantities and budget shall be calculated from the bid or from the last percentage variation and shall apply to the work executed from the first day of the month in which the respective variation occurred until the last day of the month prior to the new variation.
j) Request for Provisional Price Adjustment. The new regime establishes that the contractor shall submit the request for provisional adjustment to the contracting party when the foreseen admissibility requirement is configured, in electronic format through the TAD platform.
k) Provisional Adequate Certificate. The new regime establishes that the provisional adequate certificate, processed jointly with the basic value certificate, shall result from applying 95% of the last approved redetermination factor to the prices (1 + (Fri – 1) * 0.95).
l) New Amount of the Performance Bond. It is established that the contracting party must determine, for each approved adequate certificate, the new amount of the Performance Bond considering the percentage stipulated in the contract. Payment for each adequate certificate may not be released until the contractor presents a guarantee satisfactory to the contracting party, of similar quality as the originally approved one, replacing the previous one, for the amount calculated based on the aforementioned provisions.
Please, do not hesitate to contact us should you require any further information on this matter.
Sincerely,
Oscar Aguilar Valdez
Santiago Barbarán