Freedom was added to government contracts – Newspaper Kommersant No. 146 (7347) of 08/12/2022

The government has expanded the possibilities of using the mechanism for reviewing the prices of government contracts, which was introduced earlier due to a sharp rise in the cost of building materials. In particular, the upper limit of the increase in the price of the contract has been removed, and the ban on extending the term of its execution has also been removed. Market participants support the measures, noting that the adjusted procedure will allow the industry to respond more flexibly to price volatility.

The Ministry of Construction announced the simplification of the procedure for reviewing the prices of state construction contracts in 2022 – since August, some restrictions have been lifted for such adjustments. To clarify, we are talking about a mechanism that has been in force since August last year, which implies the possibility of concluding an additional agreement by contractors and state customers, which allows increasing the price of the contract within 30% of its value. For projects more than 100 million rubles. at the same time, a second state examination is required to confirm the estimate (according to the Nostroy association, about 6 thousand contracts with a total value of 5.2 trillion rubles are currently operating in this price range). As Deputy Prime Minister Marat Khusnullin previously reported, a revision of the cost of contracts worth 100 billion rubles has already been made, by the end of the year it is predicted that contracts will need to be adjusted by another 80 billion rubles.

According to the updated rules approved by the government, in cases where changes in the terms of the contract associated with an increase in the cost of building materials do not affect the volume or types of work performed, the restriction on increasing its price by no more than 30% of the cost of work will not apply (revision, as before must be within the limits of budgetary funds). The ban on extending the term of the contract will also be lifted.

It should be noted that plans to expand the possibilities of increasing contract prices were discussed back in May. Market participants then supported the initiative, noting that contractors were faced with situations where an acceptable increase in the cost of the contract had already been chosen, and new resources were required for its execution (see Kommersant on May 20). At the same time, the Ministry of Finance insisted that an increase in the contract price in excess of 30% is possible only within the adjusted budget limits, which is now provided. This clause, we note, worries market participants – many government customers refuse contractors to go through the procedure for increasing the price of contracts due to the lack of limits. Among the further plans, already announced by the Ministry of Construction, is to make the contract price review mechanism permanent, now it is limited to this year.

“Despite the fact that the removal of restrictions on the terms and cost of government contracts indirectly confirms inflation of estimated prices above 30%, this is good news for the industry,” says Rifat Garipov, head of the commission for project financing of the public council under the Ministry of Construction. According to him, the need for adjustments is long overdue, since rising prices for building materials entail a new examination, and therefore lead to additional costs and an increase in the cost of construction. Therefore, the ability to change the price of the contract in a simplified manner will allow builders to respond more flexibly to price volatility and meet deadlines for the completion of facilities.

Ilya Ponomarev, General Director of Yuginvestproekt JSC, calls the published changes relevant in many cases, especially for metal-intensive projects or facilities with a significant part of imported equipment. “Complication, and sometimes even a direct ban on supplies, requires revising previously made decisions, and the price rally of the last two years dictates the need for greater freedom in decision-making,” he says. In general, Ilya Ponomarev notes, “I would like the issue of the price of a state contract not to be considered in isolation from the cost of the life cycle of an object, from its quality, the point on terms is also connected with this.” According to the expert, a number of objects, primarily technologically complex ones, require processing “in the process”, replacement of systems, materials, engineering solutions. “This is not the fault of the contractors, and it is perfectly reasonable to relax the legislative imperatives for the good of the cause,” Mr. Ponomarev says.

Evgenia Kryuchkova