Decree 95: 04 Types of Procurement Contracts Under the CPTPP Agreement

Decree 95: 04 types of procurement bidding contracts according to the CPTPP Agreement (Illustration)

Decree 95/2020/ND-CP stipulates 04 types of procurement bidding contracts according to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). To be specific, the types are:

1. Lump-sum contract: A lump-sum contract is a contract with a fixed price throughout the contract implementation. Payment can be made multiple times or once upon contract completion. The total amount paid by the investor to the contractor until the contractor fulfills the obligations under the contract is exactly the price stated in the contract.

When applying a lump-sum contract, the package price used as a basis for bid approval must include costs for potential risks during contract implementation and cost escalation reserves. The bid price must encompass all costs for potential risks and cost escalations that may occur during contract implementation.

For construction service packages, a lump-sum contract has a fixed price throughout the implementation period according to the approved design. The actual volume of work done by the contractor to complete according to the design (whether more or less than the volume of work stated in the contract) does not affect the payment amount to the contractor. The total amount the contractor is paid until the contract obligations are met (completed according to the approved design) is exactly the price stated in the contract.

2. Fixed unit price contract: A fixed unit price contract is a contract with unit prices that do not change throughout the implementation period for all contents of the work in the contract. The contractor is paid based on the quantity and volume of work actually accepted in accordance with regulations based on the fixed unit prices in the contract.

3. Adjustable unit price contract: An adjustable unit price contract is a contract with unit prices that can be adjusted according to the agreements in the contract for the complete contents of the work in the contract. The contractor is paid based on the quantity and volume of work actually accepted in accordance with regulations based on the unit prices stated in the contract or the adjusted unit prices.

4. Time-based contract: A time-based contract is a contract applicable to consulting service packages. The contract price is calculated based on working time measured in months, weeks, days, hours, and other costs beside remuneration. The contractor is paid based on actual working time on the basis of the remuneration rates corresponding to the roles and tasks stated in the contract.

Details can be found in Decree 95/2020/ND-CP which takes effect on August 24, 2020.

Ty Na

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