Summary of contracts with contractors according to the Law on Procurement of Vietnam

Summary of contracts with contractors according to the Law on Procurement of Vietnam

1. What is contract with contractor?

Pursuant to Clause 32, Article 4 of the Law on Procurement 2013, the contract is stipulated as follows:

Contract means a document signed between the investor and the selected bidder in performance of package under project; between Procuring Entity and the selected bidder in recurrent procurement;

Between the centralized-procurement units or unit with procurement need with the selected bidder in the centralized procurement;

Between competent regulatory body with the selected investor or between the competent regulatory body and the selected investor and project enterprise in the investor selection.

2. Types of contracts with contractors in Vietnam

Article 62 of the Law on Procurement 2013 stipulates the type of contract in Vietnam as follows:

2.1. Lump-sum contract in Vietnam

- 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 Section 2.2 and 2.3, 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.

2.2. Unit price contract in Vietnam

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.

2.3. Adjustable unit rate contract in Vietnam

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.

2.4. Time-based contract in Vietnam

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.

Ngoc Nhi

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE