Fixed-Contract's Price Adjustment Elegibility

Dear Sir/Madam,

We are writing this letter to you, hopping to get World Bank’s legal opinion and feedback concerning price adjustment’s eligibility in World Bank’s Financed-Contract which was awarded to our firm.

We would appreciate your kind assistant in sharing World Bank’s rules on this issue after having gone through contract’s facts and circumstances below:

1. Contract’s Type: Fixed-Price Contract for Procurement of Goods (Supply of Gabion baskets), and Financed by IDA Credits for Republic of Yemen.
2. Bidding Procedures: Bidding was conducted through International Competitive Bidding (ICB) procedures as per World Bank's Guidelines: Procurement under IBRD Loans and IDA Credits (January 1995, last revised in January 1999), and World Bank’s Standard Bidding Documents for Procurement of Goods.
3. Bid’s Opening Date: September 12, 2007
4. Bid’s Validity Period: 90 days from bid’s opening date i.e. December 10, 2007
5. Extension of Bid’s Validity: Bid’s validity period was extended to January 30, 2008, as per purchaser’s request.
6. Notice Letter: On February 4,2008, we served a notice to purchaser reminding them that extended bid’s validity period has expired, and price’s adjustment shall be applied to our original bid if contract awarded to us as per World Bank’s Guidelines and SBD.
7. Notification of Award: On February 9,2008, We have received Purchaser’s notification of award, after expiry of extended validity period (sixty (60) days from expiry of initial validity period)
8. Price Adjustment Negotiations: After receiving purchaser’s notification of award, we negotiated price adjustment to our original bid as per our condition mentioned in notice letter (item 6) which confirm to World Bank’s Guidelines. Purchaser confirmed our eligibility for price adjustment and assured us that adjustment of price will be conducted after signing contract as its their common procedures.
9. Signing Contract Agreement: We trusted in purchaser’s verbal commitment and assurance for price adjustment, agreement signed on February 27,2008.
10. Contract’s Clauses: After signing contract, we have noticed that contract did not include a price adjustment provision clause (Purchaser’s claims that this was overlooked)
11. Letter of Credit: On May 26, 2008, a workable L/C was received (Ninety (90) days from signing of contract!!)
12. Increase in Material Prices: Goods which intended to supply are manufactured from Galvanized Steel Wire Rods, and as well known, material’s prices raised by a min. of forty (40) percent over the past months (During unnecessary delay of purchaser, after expiry of initial validity period).

13. Supporting our Eligibility for Price’s Adjustments as per WB’s Guidelines and SBD:
13.1 Purchaser failed to award contract during our both initial and extended validity periods, As per WB’s Guidelines for Procurement under IBRD Loans and IDA Credits (ICB 2.56) “In the case of fixed price contracts, requests for second and subsequent extensions will be permissible only if the request for extension provides for an appropriate adjustment mechanism of the quoted price to reflect changes in the cost of inputs for the contract over the period of extension”
13.2 Purchaser delayed awarding contract sixty (60) days beyond expiry of initial validity, As per current issue of WB’s SBD (ITB 20.3) “In the case of fixed price contracts, if the award is delayed by a period exceeding fifty-six (56) days beyond the expiry of the initial bid validity, the Contract price shall be adjusted as specified in the request for extension. Bid evaluation shall be based on the Bid Price without taking into consideration the above correction”

Keeping in view the above stated circumstances and facts, kindly advice us if we are eligible for price adjustment, and what steps shall be taken to protect our rights for price adjustment to reflect changes in the cost of inputs over the period after expiry of our initial validity period which caused by purchaser delay.

Appreciating your time, and look forward to hear from you.

Best Regards,
David Moor

[olive]

World Bank or ICC?

Did they respond?