The procedures for appointing investors for defense and security projects in Vietnam

The procedures for appointing investors for defense and security projects in Vietnam (Illustration)

According to Article 39 of the Law on Public – Private Partnership Investment 2020, the approach to appointing investors shall be employed in the following cases:

- Projects need to meet the requirements concerning national defence, security and state secret;

- Projects need to immediately select a replacement investor to sign a new PPP project contract in case the PPP project contract is terminated ahead of time to ensure continuity in the project implementation process.

1. Preparation for appointing investor in Vietnam

First, the rules for investor appointment are as follows:

- Contents of the documents for investor appointment are similar to those of competitive bidding. The contents that are state secrets shall be disclosed in accordance with regulations of law on protection of state secrets.

- During the investor appointment process, the procuring entity shall exchange information and documents with the appointed investor. Do not prescribe investor ranking; do not validate and approve the list of technically qualified investors. During bid evaluation, the procuring entity may invite the investor to clarify or revise the bid.

- After bid evaluation is complete, the team of experts shall submit a report to the procuring entity for consideration. The report shall have the following contents:

+ Remarks on the fairness, transparency and efficiency of the investor selection process. In case fairness, transparency or efficiency is not ensured, provide explanation and propose solutions.

+ The contents of the bid that are not conformable with PPP laws and cause ambiguity or conflicting interpretation during execution or may lead to incorrect investor selection result (if any); proposed solutions.

The competent authority responsible for identifying whether investors meet the following requirements:

- Having an establishment and operation registration certificate issued by a competent authority of the country or territory in which that investor is operating;

- Carrying out the independent financial accounting regime; ensuring competitive investor selection;

- Not in the dissolution process; not falling into the case of insolvency in accordance with the law on bankruptcy;

- Not subject to any prohibition against participation in PPP investment activities;

- Enterprises with 100% state-owned capital must enter into partnership with private sector investors to participate in the bidding process;

- Investors established under foreign laws must meet market access conditions when participating in the process of selection of investors in projects in the relevant conditional sectors and trades, subject to the provisions of the law on investment.

2. Organization of investor appointment in Vietnam

Point b, Clause 1, Article 37 of Decree No. 35/2021/ND-CP, stipulates that the organization of investor appointment includes:

- Issuance of bidding documents: bidding documents shall be issued to the investor proposed for appointment;

- Preparing, submitting, receiving, managing, revising, withdrawing bids;

- Opening bids.

3. Bid evaluation in Vietnam

- Check and evaluate the validity of technical proposals (clauses 1 and 2, Article 56 of Decree 35/2021/ND-CP).

- Investors with valid technical proposals, meeting the requirements on capacity and experience, shall be considered and evaluated in detail in technical terms.

- The detailed evaluation of technical proposals shall be carried out according to the methods and standards of technical evaluation stated in the bidding documents.

- Investors whose names are on the list of investors that meet the technical requirements may open financial-commercial proposals.

- Check and evaluate the validity of the financial-commercial proposal

Following the evaluation of bids, the experts shall prepare a report and submit it to the bid solicitor for consideration.

4. Submitting, evaluating, approving, and publicizing the results of investor selection

- Based on the report on the results of bid evaluation, the bid solicitor shall submit the investor selection result to the competent authority and at the same time send it to the appraisal unit, clearly stating the opinions of the ten bidders on the assessment of the expert panel.

- The appraisal unit shall appraise the investor selection results according to Clauses 3, 4.5, and Article 72 of Decree No. 35/2021/ND-CP).

- The agency competent to approve investor selection results is based on the approval submission and the report on investor selection results.

- The bid solicitor is responsible for posting information on investor selection results as prescribed at Point b, Clause 1 and Point b, Clause 2, Article 4 of Decree No. 35/2021/ND-CP.

- The bid solicitor shall send a written notice of the investor selection result to the investor participating in the bid within 10 days from the date the document is issued.

Note: For information on the list of state secrets, the disclosure must comply with the law on protection of state secrets.

5. Contract negotiation, finalization, and signing in Vietnam

Based on the results of investor selection, the winning investor is invited to negotiate and finalize the contract. In the event that the investor does not come or refuses to negotiate and finalize the contract, the investor's bid security will not be refunded, except in force majeure cases as prescribed by law.

Note:

• The negotiation and finalization of the contract must not change the basic content of the bid.

• Investors may not change, withdraw or refuse to perform the basic contents proposed in the bid dossiers which have been assessed by the bid solicitor to meet the requirements of the bidding documents, except for the cases where the changes are caused by: investors' proposals to bring higher efficiency to the project;

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  In case the negotiation and finalization of the contract is unsuccessful, the bid solicitor shall report to the competent authority for consideration and decision to cancel the investor selection result and invite the next ranked investor to negotiate and complete the contract.

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