Decree No. 515/2020 – Renegotiation of Public Work Contracts

On June 26, 2020, the Decree No. 515/2020 of the Province of Buenos Aires (the “Decree”) was published in the Official Gazette. This Decree approved the regulation of sections 7 and 8 of Law No. 14,812 and sections 4, 5 and 6 of Law No. 15,165 and the “Procedure for Renegotiation and Termination of Public Works Contracts”  ordering the regulatory framework of emergency laws No. 15,165, No. 14,806, No. 14,812 and No. 14,815. The regulation came into force after its publication in the Official Gazette. –

  • The Decree contemplates the renegotiation and / or termination of public works agreements executed prior to 12/24/2019 which generate obligations for the provincial State. 
  • The renegotiation may be initiated by the Contracting Authority or at the founded request of the co-contractor as long as the latter has not committed malicious or ostensibly negligent conduct.
  • The renegotiation must be substantiated and resolved within a period not exceeding one hundred eighty (180) calendar days, counted from the notification of the start of the procedure to the co-contractor.
  • In the administrative act signed at the end of the renegotiation procedure, the partial or total suspension, limitation or neutralization of the terms of the agreement may be foreseen, as soon as it is less detrimental to the public interest.
  • In the event that a renegotiation agreement is reached, the procedure will culminate in the signing of an agreement and the approving administrative act, which must have the prior intervention of the advisory and control bodies.
  • The Renegotiation Agreement shall include the resignation, expressly and in writing, of the co-contractor to his right to claim unproductive expenses, higher direct or indirect general expenses of any nature, as well as any other compensation or compensation derived from the reduction of the rate of work or its total or partial stoppage, accrued from the conclusion of the contract and until the date of the renegotiation agreement.
  • Renegotiation procedure initiated at the request of the contractor: if the renegotiation is initiated by the contractor, he must submit: (a) impact and situation report: explaining and substantiating the factual situation that has generated an affectation greater than 10% of the contract price ; (b) investment curve and proposed work plan; (c) contractual evolution: reporting the degree of progress and fulfilment of the contract.
  • Renegotiation procedure initiated at the request of the Contracting Authority: it may include: (a) adaptation of the terms and / or the work plan to the conditions of availability of funds of the principal; (b) modifications of work that produce increases in contracted items, creation of new items or reductions; (c) in certain cases, the work may be re-contracted with the same principal at updated values.
  • The compensation that should  eventually be paid to the co-contractor in case of not reaching a renegotiation agreement, will only include the payment of the item corresponding to the consequential damage and will be adjusted to the provisions of article 6 of Law No. 15,165.

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