Regulations on handling the remaining bidding package when the contractor violates the contract in Vietnam

Some projects, after being bid and under construction, happened to be in breach of contract by contractors, leading to delays in the project's progress. So what are regulations on handling the remaining bidding package when the contractor violates the contract in Vietnam?

Regulations on handling the remaining bidding package when the contractor violates the contract in Vietnam (Source: Internet)

1. Who is the contractor?

According to Clauses 35, 36, 37, 38, Article 4 of the Law on Procurement 2013, the definitions of terms related to contractors are as follows:

- Contractor means a bidder liable for its participation in bidding which gives its name to a tender, and which directly signs in and implements a contract if selected. Contractor may be an individual contractor or JV’s Party.

- Subcontractor means a contractor performing part of the work of a package on the basis of a contract signed with the Contractor. The special Subcontractor means a Subcontractor performing special works of a package proposed by the Contractor in Bid, Proposal on the basis of requirements stated in Bid, Request for Proposals.

- Foreign Contractor means an organization established under foreign law or an individual of foreign nationality making a bid in Vietnam.

- Domestic Contractor means an organization established under Vietnamese law or individual of Vietnamese nationality making a bid.

2. Conditions for contractors to be eligible in vietnam

According to Article 5 of the Law on Procurement 2013, the eligibility of contractors and investors is as follows:

- A bidder or investor being an organization shall be deemed to be eligible when it satisfies the following conditions:

+ Having registration for establishment and operation issued by the competent authority of country where it is operating;

+ Keeping independent accounting records;

+ Not undergoing dissolution process, are not thrown into bankruptcy, and do not incur bad debts as prescribed by law.

+ Having registered on National E-procurement System;

+ Ensuring the competitiveness in bidding as prescribed in Article 6 hereof;

+ Not being banned from bidding;

+ Its name is stated in short list for case where the short list has been selected;

+ Being in a joint venture with domestic contractors or employment of domestic subcontractors in case of a foreign contractor making an international bidding in Vietnam, unless the domestic contractor cannot acquire the competencies necessary to perform any portion of the package.

- A bidder or investor being an individual shall be deemed to be eligible when it satisfies the following conditions:

+ Having full legal capacity as per the law of the country of which such individual is a citizen;

+ Having an appropriate professional certificate as prescribed by law;

+ Having lawful registration for operation as prescribed by law;

+ Not facing a criminal prosecution;

+ Not being banned from bidding.

3. Handling the remaining bidding package when the contractor violates the contract

According to Clause 11 Article 117 of Decree 63/2014/ND-CP stipulating

- If the contractor violates the contract or is ineligible to continue executing the contract, which seriously affects the progress, quality and effectiveness of the contract: 

The investor shall request the competent persons consider approving the cancellation of the contract with such contractor. The remaining work shall be applied the no-bid contract of methods of selection of another contractor provided that the quality and progress of the contract is ensured.

The value of the remaining work given to the new contractor is calculated by subtracting the value of the completed work from the contract value. 

In case of no-bidding contract awarding, the competent persons must ensure that the contractor must be qualified enough to carry out the remaining work.

- If the contractor is not responsible for the delay in conducting the contract, the contract signed with such contractor shall not be cancelled.

- In case the contract signed with the delinquent contractor must be ended:

The investor must send a report to the Ministry of Planning and Investment of Vietnam for consideration and announcement of such delinquent contractor on the national bidding system and the Vietnam Public Procurement Review Journal within 05 working days from the issuance of Decision on the contract cancellation;

Such report must specify the reasons for the contract cancellation, method of selection of new contractor and appointed contractor in case of no-bidding contract awarding.

 

In case of application of the form of contractor appointment, the competent person must ensure that the appointed contractor has the capacity and experience to meet the requirements for performing the remaining work of the bidding package.

Thus, if the contractor commits a breach of contract, the bidding package and the remaining work will be assigned a contractor or other forms of contractor selection on the basis of ensuring the quality and progress of the bidding package in accordance with law in Vietnam.

Quoc Dat

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