Public Procurement Contract for Goods and Services Following the Presidential Decree Number 12 of 2020 on the Stipulation of the Coronavirus Disease (Covid-19) Pandemic as a National Disaster

Abstract

The Covid-19 Pandemic affects many sectors. Therefore, the Indonesian Government passed the Presidential Regulation Number 12 of 2020 to manage the Pandemic. Unfortunately, this regulation has evoked various interpretations on the disaster contingency as a foundation to apply force majeure condition. The Government’s policies of budget refocusing and reallocation to manage the Covid-19 Pandemic have brought significant effects on goods and services procurement contracts. This condition may lead the Government into default, and it is force majeure. Therefore, the Government is discharged from any liabilities. Consequently, it may injure contractors of procurement. This study aims to investigate the actuality of such procurement contracts following the Presidential Regulation. This study is a normative law research. Based on the Presidential Regulation, the force majeure condition is likely to be applied on procurement contracts. However, the condition does not immediately nullify or terminate the contracts. They remain legally valid and binding. In case of a condition permanently prevents debtor to fulfill obligations, contract can be terminated. In case of a condition temporarily prevents the contract’s implementation, the best solution to encourage conducive business climate is renegotiation that is legalized by contract addendum.