Price indexation under Bulgarian public procurement and construction contracts: Art. 117a of the Public Procurement Act, the methodology and disputes

Iva Petkova, attorney · Published 2 November 2026 · 7 min

The rise in material prices since 2021 has made indexation one of the key questions in construction and supply under public contracts in Bulgaria. We explain when and how the price can be increased, how it is calculated under the Council of Ministers' methodology, and what options exist for private contracts.

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Bulgarian public contracts are concluded at the tendered price, and the law allows them to be amended only in expressly listed cases. Since 2022 the Public Procurement Act has contained a specific basis for changing the price because of inflation, and the Council of Ministers has adopted a methodology for calculating it. Indexation is not automatic: it depends on the type of contract, on the availability of funds and on the documents the contractor submits every quarter.

When a public contract may be amended

Article 116(1) of the Public Procurement Act lists the permitted amendments exhaustively. For the price, three of them matter most:

• where the changes are provided for in the tender documents and the contract by clear, precise and unequivocal clauses, including price review clauses (item 1);
• where unforeseen circumstances require additional supplies, services or works not included in the original contract, and a change of contractor is impossible for economic or technical reasons and would cause significant difficulties or duplication of costs (item 2);
• where circumstances that the contracting authority could not have foreseen with due diligence require an amendment that does not change the subject matter of the contract (item 3).

Under items 2 and 3, a price increase may not exceed the value of the original contract by more than 50 per cent, and successive amendments count together (Art. 116(2)). Where the contract contains an indexation clause or uses determinable prices, the base value is its current value at the time of the amendment (Art. 116(4)). All documents on an amendment are published within 30 days (Art. 116(7)).

Inflation as a ground: Article 117a

In the cases under Article 116(1)(2) and (3), the price may be changed because of inflation that has significantly raised the prices of the key goods, materials and services making up the contract value, where funds are available and in accordance with a methodology approved by an act of the Council of Ministers (Art. 117a(1)). The general 50 per cent cap of Article 116(2) does not apply to these changes, but all price increases due to inflation together may not exceed the value of the original contract by more than 50 per cent (Art. 116(3)). The contracting authority may also tie the contract's price review clause to the methodology in advance (Art. 117a(2)).

The words "where funds are available" are key: the methodology sets how the change is calculated, but payment depends on the contracting authority's resources. The indexation request should therefore be filed in good time, with complete documents and calculations, and its handling should be followed up.

The methodology: which contracts it covers

The Methodology for changing the price of a public contract as a result of inflation was adopted by Council of Ministers Decree No. 290 of 27.09.2022 and last amended by Decree No. 184 of 08.10.2026 (State Gazette No. 94 of 2026, in force from 13.10.2026). It applies to (Art. 1(1) of the methodology):

• construction contracts and framework agreements;
• supply contracts of contracting authorities carrying out sector activities in natural gas, heat or electricity, where the supply relates directly to that activity;
• since 16.12.2025, contracts for design services in spatial planning and investment design and for consultancy services under Article 166(1) of the Spatial Planning Act.

Inflation is taken to start on 31.12.2020 (§ 2 of the methodology), and for construction, prices are changed for work done after 30 June 2021 (§ 4). The change aims to compensate the increase in costs at the time the work, supply or service was actually performed (Art. 1(2)).

How it is calculated for construction

The change is calculated for each calendar quarter by the formula Kn = [(In − Io)/Io] × 100 × Tn (Art. 4 of the methodology), where:

• In is the quarterly producer price index of construction materials for the quarter in which the work was done, published by the National Statistical Institute 55 days after the quarter ends (Arts 3 and 4);
• Io is the index at 31.12.2020 for tenders submitted before that date, or for the quarter in which the tender was submitted (Art. 4; § 3);
• Tn is the weight of construction materials in the cost of the relevant type of works: for example 58 per cent for buildings, 55 per cent for roads and streets and 57 per cent for railway infrastructure (Art. 2).

Within 30 days after each quarter, the parties draw up an interim quarterly report showing the type, quantity and value of the work done, with the records and protocols under Ordinance No. 3 of 2003 attached (Art. 4a(1) and (2) of the methodology). The part of advance payments due for deduction is subtracted from the report's value, and the resulting change is reduced by any other inflation-related price changes agreed in the contract (Art. 4a(3) and (4)). For work done after the contractor fell into delay for reasons for which he is responsible, the lower of the indices at the due date and at the date of performance applies (Art. 1(3)).

Supplies and design services

For supplies by sector contracting authorities, monthly producer price indices or quarterly import price indices are used (Art. 5 of the methodology), and the change applies only where the indices differ by more than 5 percentage points (Art. 6). For design and consultancy services, the index is the national minimum wage (Arts 8 and 9), and the parties draw up a statement of the amount due with proof of performance, deducting the advance to be withheld (Art. 10).

Indexation requests pending on 13.10.2026 are completed under the new rules and are treated as started on the date of the written request (§ 6 of the transitional provisions of Decree No. 184 of 2026).

Private construction contracts

Outside public procurement there is no methodology, and the rule is that a contract has the force of law between the parties and can be changed only by mutual consent or on a ground provided by law (Art. 20a of the Obligations and Contracts Act). The safest protection is therefore a price review clause in the contract itself. The law offers two options:

• under a commercial contract, the court may, at a party's request, amend or terminate the contract where circumstances have arisen that the parties could not and were not obliged to foresee, and keeping the contract would be contrary to fairness and good faith (Art. 307 of the Commerce Act);
• under a contract for works, the remuneration changes if during performance the "duly determined price" of materials or labour changes, even where a lump sum was agreed (Art. 266(2) of the Obligations and Contracts Act); whether this rule covers market prices is a question of court practice that must be checked in the specific case.

Common mistakes

• interim quarterly reports not signed or drawn up late, without which the calculation cannot be made;
• an indexation request without a calculation under the methodology and without the records of the work done;
• overlooking the advance that must be deducted;
• ignoring the 50 per cent cap on all inflation-related increases;
• private construction contracts without a price review clause.

Where a lawyer changes the outcome

• in the assessment: whether the contract allows indexation and on what basis;
• in the request: the calculations and documents without which the contracting authority refuses;
• in negotiations: an amendment that does not amount to an unlawful modification of the contract;
• in the dispute: a claim for unpaid indexation;
• in future tenders: price adjustment clauses.

The team at Petkova & Minkov Law Firm includes lawyers with long experience of construction and infrastructure contracts, public procurement and price indexation under them. We work in Bulgarian, English, Russian and German.

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