Introduction
The ongoing armed conflict in the Middle East has caused a significant impact on the economy globally, including in Thailand. On 26 March 2026, the Thai Cabinet approved a proposal by the Ministry of Finance to adopt measures aimed at assisting contracting parties in the public procurement sector.
Recently, on 8 April 2026, the Ruling Committee on Public Procurement and Supplies Management issued Letter GorKor (GorWorJor) 0405.2/Wor242, setting out new practical guidance for government authorities in managing public procurement during the period affected by the Middle East conflict (“Guidance“). The Guidance aims to mitigate the adverse impacts on private parties engaged with government agencies.
In summary, the Guidance allows government agencies, as procuring entities, to implement certain special measures across three key stages of public procurement under the Public Procurement and Supplies Management Act B.E. 2560 (2017), namely: (i) contract signing, (ii) contract implementation, and (iii) contract amendment.
1. Contract Signing – Opt-Out Option for Successful Bidders
Under the Guidance, a degree of flexibility is given in relation to procurement projects where a successful bidder has already been selected and the government agency has issued a written notice requiring the bidder to execute the contract on or after 28 February 2026. In these cases, where the successful bidder informs the agency in writing that it is unable to attend the contract execution within the prescribed period due to the impact of the Middle East conflict, such circumstance will be regarded as a reasonable cause. In these circumstances, the bidder will not be deemed to have abandoned the work, and therefore will not be subject to blacklisting. In addition, the bid security must also be returned to the bidder.
2. Contract Implementation – Time Extension, Delay Penality Relief, Work Suspension, and Contract Termination
2.1 Extension of Time and Delay Penalty Relief
The Guidance provides that where a private counterparty is affected by the Middle East conflict, such circumstances shall be treated as a force majeure event. This applies to contracts signed before 28 February 2026 where performance has not yet commenced, as well as contracts signed before or after that date where performance has already commenced but remains ongoing.
In such cases, the private counterparty may request an extension of time for completion or a waiver or reduction of delay penalties. Importantly, this means that the private counterparty is not required to wait until the force majeure event has ceased before making the request for time extension. However, the private counterparty must still notify the procuring agency of its intention to seek such relief and demonstrate that the request arises from the impact of the Middle East conflict.
2.2 Suspension of Works by Agreement
The Guidance also recognises the need to temporarily suspend performance. Where the contracting parties are of the opinion that the work should be temporarily suspended, the parties may mutually agree to suspend the works until the situation improves.
2.3 Termination for Non-Commenced Contracts
For contracts signed on or after 28 February 2026 where performance has not yet commenced due to the effects of the Middle East conflict, the government agency is granted discretion to agree to terminate the contract with the private counterparty. In the event of such termination, the performance security must be returned to the private counterparty. Where any advance payment has already been made, the private counterparty is required to refund such advance payment before the corresponding advance payment security is returned.
3. Contract Amendments – Cost and Scope Adjustment
In respect of the procurement of goods or services (other than construction works), the Guidance provides flexibility for government agencies to amend existing contracts where there has been an increase in material prices or where it is necessary to revise or vary the scope of work. However, in exercising such discretion, the government agency must continue to comply with all applicable laws and regulations governing public procurement in relation to cost adjustments.
Practical Challenges – Burden of Proof?
Notwithstanding the relief measures introduced, the Guidance imposes an important evidentiary requirement. In order to proceed with any of the measures outlined above, the government agency must consider the private counterparty’s submission demonstrating factual circumstances, such as increased procurement costs or shortages of materials, which have resulted in the private counterparty being unable to perform its obligations under the contract.
This requirement may present practical challenges for contractors, as they bear the responsibility of substantiating the extent to which they have been affected by the Middle East conflict. In practice, this may involve demonstrating both causation and quantification of impact, which can be complex.
Contribution Note
This Legal Update is contributed by the Contact Partners listed above, with the assistance of Senior Associate Thanapat Yaemklin.
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For regional Construction, Infrastructure & Projects matters, please see Rajah & Tann Asia’s Regional Construction, Infrastructure & Projects for more information.
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