The change in raw materials prices in the Egyptian construction industry used to be, and still is, constant before and after the global economic crisis. The Egyptian Parliament is facing these changes by amending and modifying State Procurement Law provisions. Meanwhile, the Ministry of Finance is modifying its executive regulations. The main aim of these amendments is to promote contractual equilibrium between the employer (state administration) and the contractor, because public works contracts are complex and long-term agreements. To maintain stability of the contract price, the Egyptian legislator created certain mechanisms in 2005 and 2008 instead of the customary parameters of the traditional theory of the administrative contract. These mechanisms changed considerably some of the leading principles of administrative contract theory which have existed since the establishment of the Egyptian Conseil d’état (State Council), in 1946.

The traditional theory of the State Council, which is mainly found in the Supreme Administrative Court judgments and in the General Assembly for Legal Opinion (Fatwa) as well as the Legislation Department, had certain stipulations about the maintenance of stable contract prices during the contract, and until its final completion. The new amendments in the Egyptian legislation created new mechanisms to change contract prices on a regular basis.

This article has three parts: first, the traditional theory of administrative contracts and its leading stipulations to maintain price stability are set out; secondly, modifications and enhancements of Egyptian State Procurement Law and its executive regulations since 2005 are described, and, thirdly, current changes to the Egyptian State Procurement Law introduced in 2008 and their significance as a result of globalisation, as well as their impact on the administrative contract are discussed.