Contract types with contractors under the Law on Procurement in Vietnam

What are the contract types with contractors under the Law on Procurement in Vietnam? - Ngoc Hue (Can Tho, Vietnam)

Contract types with contractors under the Law on Procurement in Vietnam (Internet image)

Regarding this issue, LawNet responded as follows:

1. Contract types with contractors under the Law on Procurement in Vietnam

According to Article 62 of the Law on Procurement 2013, the types of contracts with contractors in Vietnam are as follows:

(1) Lump-sum contract:

- Lump-sum contract means contract with fixed price during performance for all work contents in contract. Payment for lump-sum contract shall be performed many times during implementation or once upon finishing contract.

Total amounts paid to contractor until finishing obligations under contract shall be equal to the price stated in contract;

- When applying the lump-sum contract, prices of packages as the basis for consideration for recommendation as the winning bidder must include expenses associated with risk elements which may happen during the course of implementation of contract, reserve expenses associated with slippage in price.

Bid Price must include all expenses associated with risk elements and expenses associated with slippage in price which may happen during the course of implementation of contract;

- Lump-sum contract is type of basic contract. When deciding on application of contract types defined at (2) and (3), the person approving the plan on bidder selection must ensure that such contract types are more appropriate than lump-sum contract.

For packages of simple consulting service provision, and non-consulting service provision; packages for goods procurement, works, mixed packages with small scale must apply form of lump-sum contract;

- For packages of works, during the course of negotiating and finalizing contract, the relevant parties need review the table of work volume under the approved design;

If the bidder or the Procuring Entity detects that the tables of work quantity and volume are not exact in comparison with design, the Procuring Entity shall report to the investor for consideration to decide on adjustment of the work volume in order to ensure the conformity with design;

- When applying the lump-sum contract, the investor for project, the Procuring Entity for recurrent procurement, the centralized procurement units or units with need of procurement for the centralized procurement shall be responsible for the accuracy of work quantity and volume.

In case of using consulting bidder to make dossier of design, Bid, Request for Proposals, in contract between investor, Procuring Entity, centralized procurement unit or unit which has need of procurement with the consulting bidder must have provisions on responsibilities of parties in handling or compensation in case of calculating wrongly the work quantity and volume.

(2) Unit price contract:

Unit price contract means contract with unit price not changeable during performance of all work contents in contract. The contractor will be paid according to the practical work quantity and volume which are tested for acceptance as prescribed on the basis of the fixed unit price in contract.

(3) Adjustable unit rate contract:

Adjustable unit rate contract means contract with changeable unit price based on agreements in contract for all work contents in contract. The contractor will be paid according to the practical work quantity and volume which are tested for acceptance as prescribed on the basis of the unit price in contract or the modified unit price.

(4) Time-based contract:

Time-based contract means contract which is applied to packages providing consulting service. The Contract Price is calculated on the basis of working time according to month, week, day, hour and costs other than remuneration.

The contractor will be paid according to the practical working time on the basis of remuneration corresponding to the title and work stated in contract.

2. Contract Documents with contractors in Vietnam

Contract documents with contractors according to Article 63 of the Law on Procurement 2013 are as follows:

- Contract Documents include:

+ Contract Agreement;

+ Contract Addenda, including the detailed list of work scope, price table, and time for performance (if any);

+ Decision on approving the result of bidder selection.                                             

- Apart from documents specified at Clause 1 of this Article, depend on scale, nature of package, Contract Documents include one or a number of the following documents:

+ The contract finalization record;

+ The written agreement of parties about contractual conditions, including general conditions and particular conditions;

+ Bid, Proposal and documents to clarify these dossiers of the selected bidder;

+ Bid, Request for Proposals and documents amending and supplementing these dossiers.

+ Relevant documents.

- When having changes of contents within contract, parties must sign Contract Addenda.

3. Conditions for signing contract with contractors in Vietnam

Conditions for signing contract with contractors according to Article 64 of the Law on Procurement 2013 are as follows:

- At time of signing, the Bid or Proposal of the selected bidder is still valid.

- At time of signing, the selected bidder must ensure to meet requirements on technical and financial capability for implementation of the package.

In necessary case, the investor for a project, the Procuring Entity for recurrent procurement, the centralized procurement unit or unit with need of procurement for the centralized procurement may conduct verification of information on capability of bidder, if the bidder still satisfies requirements for performance of package, parties will sign contract.

- The investor for a project, the Procuring Entity for recurrent procurement, the centralized procurement unit or unit with need of procurement for the centralized procurement must ensure conditions on funding for advance payment, payment funding, ground for implementation and other necessary conditions for carrying out the package on the schedule.

Quoc Dat

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