Section 31, The Public Procurement Act, 2004

(1) Price adjustment is not permitted unless provided forin the procurement contract to take into account changes in economic circumstances. (2) If the procurement contract provides for the possibility of price adjustment, it shall stipulate the conditions, such as increases or decreases in the cost of materials, labour, transportation and energy, in which price adjustment would be permitted; the formulas, and indices to be referred to in order to determine whether economic conditions have altered to a significant enough degree to justify a price adjustment and to identify the amount of increase or decrease; the frequency with which price adjustments may be implemented; and procedures to be followed. (3) The procurement contract may provide that, when the application of price adjustment leads to a modification exceeding a stipulated percentage of the initial price or a stipulated percentage of the balance of the contract, the procuring entity may terminate the (4) Any price variation shall be subject to approval by the respective procurement committee.