At the beginning of 2022, the Law Firm “Ibrahimović & Co” wrote about the impact of inflation on the amendment or termination of concluded contracts, and the conditions that must be met in order for this institute to be applied. Even though we already advocated the position that modification and termination of contracts due to changed circumstances must also be possible for contracts that were concluded in public procurement procedures, the contracting authorities were generally not open to cooperation and considered that if this possibility was not foreseen in the tender documentation, there is no possibility for later changes to the agreed price.
Such a strict attitude of the contracting authorities ultimately led to an almost complete blockade of public works and a huge number of court proceedings, which are still ongoing, in order to terminate the contracts. Bidders, in justified fear, stopped responding to tenders in which a fixed price was foreseen, and the contracting authorities distrustfully prepared tender documents in which they predicted the possibility of a price change. In the end, the citizens suffer, both because of delays in the execution of almost all public works, and because of the accumulation of budget costs caused by court proceedings with no end in sight. The Public Procurement Agency of Bosnia and Herzegovina did not take a proactive stance and issue a binding opinion on the unified procedure for contracting authorities, and the business community decided to look for another way to solve the problem.
The Foreign Trade Chamber of Bosnia and Herzegovina, together with the Chambers of Commerce of the Federation of Bosnia and Herzegovina, Republic of Srpska and Brcko District of Bosnia and Herzegovina, organized a round table in mid-2022 on the topic “Regulation of contracts in the light of disturbances in the prices of construction materials and products”.
The conclusions of this round table were delivered to all relevant institutions in Bosnia and Herzegovina, and one of the conclusions was the formation of an expert working team with a task to determine the methodology of price calculation and submit it to the competent institutions, based on the good experiences of the countries in the region (Croatia, Serbia) and the EU countries. The methodology for calculating price variability is an important instrument used to amortize and overcome the challenges and problems faced by both the contracting authorities and the contractors themselves.
In order to objectively and transparently determine the volatility of the direct costs of the contracted price, which arose as a result of unpredictable events, the Foreign Trade Chamber of Bosnia and Herzegovina, in cooperation with the Chamber of Commerce of the Federation of Bosnia and Herzegovina, the Chamber of Commerce of the Republic of Srpska and the Chamber of Commerce of the Brčko District, directed at the end of February 2022 is a proposal to the Council of Ministers of Bosnia and Herzegovina, and to the governments of the Federation of Bosnia and Herzegovina, Republic of Srpska and Brčko District on the Methodology for the objective determination of the variability of the contracted price in public procurement procedures in Bosnia and Herzegovina.
In order to objectively and transparently determine the volatility of the direct costs of the contracted price, which arose as a result of unpredictable events, the Foreign Trade Chamber of Bosnia and Herzegovina, in cooperation with the Chamber of Commerce of the Federation of Bosnia and Herzegovina, the Chamber of Commerce of the Republic of Srpska and the Chamber of Commerce of the Brcko District, directed at the end of February 2022 is a proposal to the Council of Ministers of Bosnia and Herzegovina, and to the governments of the Federation of Bosnia and Herzegovina, Republika Srpska and Brcko District on the Methodologies to objectively determine contractual price volatility in public procurement procedures in Bosnia and Herzegovina.
The mentioned methodology does not represent a solution to the problem, but it is a significant initial step towards solving open questions. In this way, the government received clear and unified guidelines on the basis of which it can determine the further action of the contracting authorities and use the conclusions of the working group with the aim of solving open issues referring to concluded public works procurement contracts. Although the further path of the formal application of the methodology depends on the political readiness, an adequate and fair model based on good comparative practices was offered, the application of which could solve a large number of court proceedings and speed up the stalled public works in BiH.
