Shall the increase in price be allowed to make the contract price exceed the total funding in the procurement cost estimate in Vietnam?
Vietnam: What is a procurement cost estimate?
Pursuant to Clause 7, Article 4 of the Law on Bidding 2023, there are specific procurement cost estimate as follows:
Definitions
For the purposes of this Law, the following terms shall be construed as follows:
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7. “procurement cost estimate” means an estimate of procurement costs to be covered by funding allocated according to the state budget estimate approved by a competent authority to a regulatory authority, political organization, socio-political organization, socio-political-professional organization, socio-professional organization, social organization, affiliated unit of people’s armed forces, public sector entity or another organization or individual; or an estimate of procurement costs to be covered by lawful funds of a regulatory authority or public sector entity.
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Thus, “procurement cost estimate” means an estimate of procurement costs to be covered by funding allocated according to the state budget estimate approved by a competent authority.
Shall the increase in price be allowed to make the contract price exceed the total funding in the procurement cost estimate in Vietnam?
What is the application for approval of the contractor selection plan for procurement cost estimate in Vietnam?
Pursuant to Article 41 of the Law on Bidding 2023, regulations on approval of contractor selection plans for specific procurement estimates are as follows:
Approving contractor selection plan for a procurement cost estimate
1. An application for approval of the contractor selection plan includes the following contents:
a) Completed tasks, including tasks of packages to be executed in advance with corresponding value and legal grounds thereof;
b) Tasks to which neither of the prescribed contractor selection methods can apply;
c) Tasks included in the contractor selection plan, including tasks and corresponding values constituting the packages to which one of the contractor selection methods specified in Articles 21 through 29 of this Law is applied;
d) Tasks which cannot be included in the contractor selection plan (if any), specific tasks and their values must be specified;
dd) Total value of the tasks stated in Points a, b, c and d of this Clause. This total value shall not exceed total funding in the procurement cost estimate;
e) Other related contents.
2. The competent person shall consider approving the contractor selection plan or authorize the employer or his/her subordinate to do so.
3. Before approving a contractor selection plan, the person that has the power to give approval as prescribed in Clause 2 of this Article shall organize the appraisal of the contents in Article 39 of this Law.
Thus, an application for approval of the contractor selection plan includes the following contents:
- Completed tasks, including tasks of packages to be executed in advance with corresponding value and legal grounds thereof;
- Tasks to which neither of the prescribed contractor selection methods can apply;
- Tasks included in the contractor selection plan, including tasks and corresponding values constituting the packages to which one of the contractor selection methods:
+ Competitive bidding
+ Limited bidding
+ Direct contracting
+ Shopping
+ Direct procurement
+ Self-execution
+ Community participation
+ Price negotiation
+ Contractor selection in special circumstances
- Tasks which cannot be included in the contractor selection plan (if any), specific tasks and their values must be specified;
- Total value of the tasks. This total value shall not exceed total funding in the procurement cost estimate;
- Other related contents.
Shall the increase in price be allowed to make the contract price exceed the total funding in the procurement cost estimate in Vietnam?
Pursuant to Clause 4, Article 70 of the Law on Bidding 2023, regulations on modification of contract are as follows:
Modification of contract
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4. Any modification to the contract resulting in changes in the contract execution schedule or an increase in the approved package price (including contingencies) shall require an approval from the competent person. However, any increase in price shall not make the contract price exceed the total investment or total funding in the procurement cost estimate. In case a project or procurement cost estimate comprises multiple packages, any increase in price shall not make the sum of contract prices exceed the total investment or total funding in the procurement cost estimate.
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Thus, any modification to the contract resulting in changes in the contract execution schedule or an increase in the approved package price (including contingencies) shall require an approval from the competent person
In addition, any increase in price shall not make the contract price exceed the total investment or total funding in the procurement cost estimate.
In case a project or procurement cost estimate comprises multiple packages, any increase in price shall not make the sum of contract prices exceed the total investment or total funding in the procurement cost estimate.
Note: The Law on Bidding 2023 takes effect from January 1, 2024.
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