New guidelines on selecting contractors

Under Decree 63, the contractor and the investor are not allowed to hold over 30% of each other’s shares or capital contribution to ensure fair competition in bidding activities.

Contractors are regarded as independent in legal and financial terms from other contractors; consulting contractors and investors and bid solicitors only when they meet the following conditions: (i) Being not in the same agency or organization directly managing non-business units; (ii) The contractors, the investors and the bid solicitors do not hold over 30% of one another’s shares or equity (currently regulated as over 50%); (iii) The contractor does not hold over 20% of each other’s shares or equity when participating in the same bid package in cases of limited bidding (currently set at over 50%); and (iv) Bidding contractors and consulting contractors for such bid package do not hold each other’s shares or capital contributions with each party further not holding over 20% of the same shares or equity of an organization or individual.

Decree 63 provides for the following preferential principles for selecting a contractor:

(i) After application of the preference, if the bidding dossiers are given equal ranking, then priority is given to contractors which incur the greater domestic cost or use more local employees (calculated on the value of paid salaries and wages).

(ii) If a bidding contractor falls into the category of subjects entitled to more than one type of preference, such contractor is entitled to only the type of highest incentive in accordance with the bidding documents or offering documents upon application of the preference.

(iii) As for a combination package, application of the preference is based on all the contractor's proposals in such work parts as consultancy, supply, construction and installation. Contractors are entitled to incentives when proposing the domestic costs (including consultancy, goods and installation) of 25% or more of the package value.

In particular, for the procurement of goods, domestic goods are entitled to preferential treatment only when the bidder can prove that the cost of domestically produced goods accounts for 25% or more in commodity prices.

In addition, the contractor’s bidding, offering documents indicate that the total workforce of women or war invalids, disabled people accounts for 25% or more and they sign a labour contract for at least three months;

The contractor as a small enterprise subject to preferential treatment is ranked higher than those which are non-preferential in cases where the contractors’ bidding and offering documents are given an equal evaluation.

In the new spirit of the Bidding Law, the Government allowed selection of the contractors to be conducted online with respect to such tenders as consulting service, non-consulting service, procurement, construction and combination types by selecting contractors through open tendering, limited tendering, competitive offers, direct procurement and appointment of contractors. Costs in the contractor selecting process

Decree 63 also adds regulation on the costs for establishing, evaluating the bidding, tender call documents in which the costs for establishing are calculated at 0.1% of the bid package price, otherwise at VND1,000,000 at a minimum and at VND50,000,000 at a maximum; (ii) the costs for evaluating are calculated at 0.05% of the bid package price, otherwise at VND1,000,000 at a minimum and at VND50,000,000 at a maximum.

The Decree shall take effect from August 15 2014, superseding Decree No. 85/2009/ND-CP dated 15 October 2009; No. 68/2012/ND-CP dated 12 September 2012 and Decision 50/QD-TTg dated 9 November 2012./.