Consequences for the performance of public contracts

Companies in several sectors are currently faced with significant increases in the price of raw materials (including gas and petrol), or even shortages in or temporary interruptions to supplies. These raw materials are necessary if they are to carry out their activities and duly perform their contracts, including public contracts.

Multiple factors have converged to bring about this situation – a particularly strong global economic recovery after the 2020 recession, health or social difficulties in certain supplier countries, and now the war in Ukraine. The Ukrainian war has had other effects on the performance of public contracts in the EU; in particular, European Decision (CFSP) 2022/578 of 8 April 2022 prohibits the award and continued execution of public contracts and concessions either with Russian nationals or entities/bodies established in Russia. The war is likely to seriously affect the performance conditions and the economic balance of contracts, to jeopardise the sustainability of numerous businesses and their ability to retain staff, and, consequently, to interrupt the continuity of public services.

The rise in materials costs raises several questions:

• May existing public contracts be amended?

• Might certain legal solutions – such as the imprévision theory in some jurisdictions – be implemented?

• Will delays or failures to perform a public procurement contract in this context lead to sanctions being imposed on economic operators?

• Do the relevant regulations contain anything about the execution of public contracts?

• Are public contracts that are governed by private law mentioned in the relevant regulation?

In this context, various jurisdictions have invited public purchasers to adapt their practices to the performance of public contracts. 

Click here to access the guide: CMS Guide on rising raw material prices & public contracts

Click here to access individual chapters: