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PROZORRO system - all about the conclusion, adjustment and termination of contracts: explanatory comments of the Ministry of Economy

The Public Procurements Department of the Ministry of Economic Development, Trade and Agriculture of Ukraine has prepared explanatory comments on the process of making any changes to procurement contracts that were concluded through the official platform of the electronic public procurement system PROZORRO.

According to Article 41 of the Law On Public Procurement, the Public Procurements Department of the Ministry of Economic Development prepared and publicly presented the first official comments concerning the possibility of making adjustments to contracts between Customers and Suppliers. We are talking about contracts that were concluded through the PROZORRO platform.

Comments on changes in the essential terms of contracts have become particularly important. The law stipulates that any essential conditions under signed public procurement contracts are not subject to further change. The only exception are the cases that are prescribed in part 5 of Article 41 of the Law of Ukraine. We will briefly analyze all the comments of the Department on each item that concerns making adjustments to the already agreed and signed contract:

  • Change in purchase volumes, taking into account the actual volume of expenses of the Customer himself:
    • A smaller change in the volume of purchases is possible only if such an opportunity was previously prescribed in the contract;
    • The decrease in the volume of purchases is also reflected in the contract price;
    • A case in which the volume of purchases can be reduced is, for example, a situation when the Customer's estimate has been changed. The new volume of purchases in this case depends on the full amount of financing.
  • 10% increase in the price for one unit of goods in the case when the price on the market fluctuates and, given that this change will not affect the total amount of the purchase, which is determined by the contract:
    • After signing the contract, this change is allowed to be made no more than once in 90 days, exceptions include the purchase of gasoline, diesel, electricity and gas;
    • The increase occurs by exactly the percentage by which the price of a unit of goods on the market has changed, but not by more than 10%; at the same time, the total amount of the contract does not change, the increase in price affects only the quantity of delivered goods;
    • Information about current prices for a particular product can only be provided by authorized persons who are determined by the state (these may be bodies, institutions and organizations);
    • All changes are recorded in the supplementary contract.

PROZORRO system - all about the conclusion, adjustment and termination of contracts: explanatory comments of the Ministry of Economy

  • Improving the quality of supplied products:
    • After signing the contract, the parties can agree on improving the quality of the supplied products. Making these adjustments is allowed, but only if such a change does not lead to a change in the subject of purchase itself;
    • Product quality refers to the economic category. The change should contribute to improving the efficiency of products (for example, an increase in reliability, safety, aesthetics, mobility, environmental friendliness, etc.).
  • Extension of the validity period of the public procurement contract:
    • It is possible to change the term of the contract only after documentary confirmation of objective circumstances (for example, these include delays in the financing of the Customer);
    • The change can be made only if it does not lead to an increase in the amount that is fixed in the contract;
    • The Law does not define the form of documentary confirmation of the circumstances. Therefore, the Customer has the right to determine it himself, but at the same time, relying on the legislation. For example, force majeure circumstances are regulated by the Law of Ukraine On Chambers of Commerce and Industry in Ukraine.
  • Coordination of changes that are caused by fluctuations in the price of goods on the market and are directed towards a decrease:
    • The parties to the public procurement contract may agree to reduce the price under the contract, if the price per unit of goods on the market has decreased. In this case, the number of units of the purchased goods does not change, and the price is adjusted. Such a change can happen, for example, if the price of a seasonal product on the market has changed. All current prices and their detailed statistics can always be found out from competent high-ranking officials who are responsible for the process.
  • Change in the total amount under the public procurement contract, which is caused by a change in the rate of mandatory fees and taxes:
    • The adjustment of the amount of the contract, which is caused by changes in the rate of taxes or fees, can be made both in the direction of decrease and in the direction of increase. The volume of purchases does not change at the same time;
    • If a taxpayer has switched from the simplified taxation system to the general one, this does not affect the change in the tax rate, which is set by the Tax Code of Ukraine. Consequently, the change in the payer's taxation system does not in any way affect the price under the public procurement contract and is not the reason for the change in the terms of the contract.

You can fully familiarize yourself with all the comments of the Department on the official page of the Ministry of Economy of Ukraine. The number of the document in which all changes and possible situations in which they may occur are spelled out in detail is 3304-04/69987-06 dated 24/11/2020.

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