Latest conditions for signing of contract for contractors in Vietnam

Latest conditions for signing of contract for contractors in Vietnam (Internet image)

1. Latest conditions for signing of contract for contractors in Vietnam

According to Article 66 of the Law on Bidding 2023, the conditions for signing of contract in Vietnam include:

- The bid or proposal of the successful bidder must still remain valid at the time of signing the contract. In case of centralized procurement with use of the framework agreement, the framework agreement must still remain valid at the time of signing the contract.

- At the time of signing the contract, the successful bidder must meet all technical and financial requirements for executing the package in accordance with the requirements laid down in the bidding documents or RFP.

- The employer is requested to provide funding for making advances and payments, premises and other conditions necessary for ensuring the package execution schedule.

2. Latest regulations on signing of contract with successful bidder in Vietnam

According to Article 67 of the Law on Bidding 2023, the signing of contract between the employer and the successful bidder shall be subject to the following provisions:

- Only a single contract will be signed for executing a package. A contract may be prepared applying one or some types of contract prescribed in Article 64 of the Law on Bidding 2023. A centralized procurement package or a package which is divided into smaller parts may be executed under several contracts. Each contract shall cover one or some parts of the package. If different types of contract are employed, the type of contract for each task must be specified;

- Contents of the contract signed by and between the parties must be conformable with contents of the bidding documents, RFP, bids or proposals, contract negotiation results (if any), decision on approval of contractor selection result. The contract should clearly indicate the scope of tasks to be undertaken by specialist subcontractors (if any) and maximum value of tasks to be subcontracted. The maximum value of tasks to be subcontracted shall not include the value of tasks to be undertaken by specialist subcontractors;

- In case of a consortium bidder, the contract agreement must bear signatures and seals (if any) of all members of the consortium. In case of centralized procurement with use of framework agreement, all members of the consortium shall directly append their signatures and seals (if any) to the contract agreement with the entity in need of goods or services or a member of the consortium shall be authorized to do so under terms and conditions of the consortium agreement;

3. Latest regulations on the performance security for contractors in Vietnam

According to Article 68 of the Law on Bidding 2023, the regulations on the performance security for contractors in Vietnam are as follows:

- The successful bidder shall be required to choose one of the following options for ensuring their execution of the contract, including:

+ Pay a deposit;

+ Submit a letter of guarantee issued by a domestic credit institution or foreign bank branch lawfully established under the law of Vietnam; or

+ Submit a certificate of surety bond insurance issued by a domestic non-life insurer or branch of a foreign non-life insurer duly established under the law of Vietnam.

- The performance security must be furnished by the successful bidder, except:

+ Consulting service supplier;

+ The contractor that is selected adopting the self-execution or community participation method;

+ The bidder to be contracted for executing a package whose price does not exceed the price limit prescribed in Point m Clause 1 Article 23 of the Law on Bidding 2023.

- The successful bidder shall furnish the required performance security before or when the contract becomes effective.

- Depending on the scale and nature of each package, the value of the performance security equaling 2% - 10% of the contract price shall be specified in the bidding documents or RFP.

- The validity period of the performance security begins on the effective date of the contract until all contractual obligations are fulfilled by the parties or warranty obligations, if specified in the contract, are taken on. If the duration of the contract needs to be extended for a specified period, the contractor shall be requested to extend the validity of their furnished performance security for a corresponding additional period before the contract is granted extension.

- The performance security shall be forfeited if the successful bidder:

+ refuses to perform the contract that is still effective;

+ violates terms and conditions of the contract; or

+ refuses to extend the validity period of the performance security, in case failure to meet the contract execution schedule is at their fault.

To Quoc Trinh

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