Amidst the new strides in economic and commercial development in Vietnam, the Procurement Law has consistently played a pivotal role in establishing a competitive, ethical, and effective environment for commercial transactions. The year 2023 marks a significant turning point as Vietnam’s Procurement Law undergoes a series of substantial revisions, aiming to adapt to emerging industry trends and promote transparency and fairness throughout the procurement process.
In this analysis, ASL LAW will outline the noteworthy changes introduced by the Procurement Law 2023 in Vietnam. Through dissecting the amendments in regulations, we will grasp their significance in shaping a level playing field for businesses and ensuring transparency and resource optimization.
The Procurement Law 2023, numbered 22/2023/QH15, (“Procurement Law 2023“) is anticipated to come into effect on January 1, 2024, encompassing a total of 10 chapters with 96 articles. Several key points of interest within the Procurement Law 2023 include:
Ensuring Competition in Procurement
Bidders submitting expressions of interest and prequalification dossiers must maintain legal and financial independence from the following parties:
a) Consultants preparing expressions of interest, prequalification dossiers, project management, supervision; consultants preparing, examining, and evaluating design dossiers, cost estimates; consultants preparing and evaluating survey and design task assignments;
b) Consultants evaluating expressions of interest, prequalification dossiers;
c) Consultants appraising the results of the call for interest, prequalification results;
d) Investors, inviting parties, except when the bidder is a public entity under the state management agency with functions and tasks suitable for the nature of the package of works of that state management agency or is a subsidiary, affiliate company of a state-owned corporation with a principal industry or business in line with the nature of the package of works of that state-owned corporation.
Independent Legal and Financial Status of Bidders
Bidders are considered legally and financially independent when they meet the following criteria:
a) Not under the direct management of the same agency or organization as public entities;
b) Bidders and investors or inviting parties do not hold more than 30% of each other’s capital shares or contributed capital;
c) Bidders and investors or inviting parties do not hold more than 20% of each other’s capital shares or contributed capital in cases of restricted bidding;
d) Bidders participating with consultants for the same package of works do not hold capital shares or contributed capital with each other; they do not jointly hold more than 20% of capital shares or contributed capital with other organizations or individuals.
Independent Legal and Financial Status of Investors
Investors participating in bidding must demonstrate legal and financial independence from the following parties:
a) Competent authorities, inviting parties;
b) Consultants preparing, evaluating bidding documents; consultants assessing bidding documents; consultants appraising the results of investor selection until the signing date of the investment business contract.
Supplementing Regulations on Contractor Selection Preferences
Article 10 of the Procurement Law 2023 specifies the specific entities entitled to preferences in contractor selection, including:
- Goods originating from Vietnam.
- Environmentally-friendly products and services as defined by environmental protection laws.
- Domestic contractors producing goods originating from Vietnam, matching the tender invitation documentation.
- Foreign contractors forming a joint venture with domestic contractors, where the domestic contractor assumes 25% or more of the contract value.
- Domestic contractors participating independently or in a joint venture with other domestic contractors in international bidding.
- Contractors classified as micro or small enterprises under small and medium-sized enterprise support legislation.
- Innovative startup enterprises as defined by legal provisions.
- Contractors employing a workforce of 25% or more women; a workforce of 25% or more disabled individuals; a workforce of 25% or more ethnic minorities.
The preferences in contractor selection encompass:
a) Higher ranking for contractors falling under the entitled entity category in cases where these contractors are on par with non-entitled entities in evaluation.
b) Additional points added to the evaluation score of entitled entity contractors in the case of fixed price methods, combining technical and price aspects for comparison and ranking.
c) Extra amounts added to the bidding price or evaluation price of non-entitled entity contractors when applying the lowest price method or evaluation price comparison and ranking method.
d) Priority in the assessment of capabilities, experience, and other criteria during the tender documentation evaluation process.
e) Construction packages valued at no more than 5 billion VND reserved for micro or small enterprises to participate in the bidding. In the event that no micro or small enterprises meet the requirements in a bid already organized, a re-bid can be conducted, allowing other enterprises to participate.
The organization of international bidding for contractor selection is carried out when meeting one of the following conditions:
a) Project fund sponsors or lending agreements for the project require international bidding under international conventions.
b) The procurement package involves advisory services, non-consulting services, construction, mixed offerings that domestic contractors are incapable of fulfilling, or the package has been pre-selected, received interest, or widely tendered domestically with no participating contractors.
c) Advisory service packages that competent authorities deem necessary for foreign contractor participation to enhance the quality of the project.
d) Procurement of goods not domestically producible or not meeting technical, quality, and price requirements. In the case of commonly imported goods available for sale in Vietnam, international bidding is not required.
Prohibited Activities in Procurement Operations
Prohibited activities in procurement operations include:
- Offering, receiving, or mediating bribes.
- Abusing positions and powers to influence, unlawfully intervene in procurement activities in any form.
- Failure to ensure fairness and transparency.
- Disclosing documents and information related to the contractor selection process, investor, except as provided for in the Procurement Law 2023.
- Transferring contracts.
- Organizing contractor selection without determining funding sources as stipulated in Article 39(3) of the Procurement Law 2023.
Cancellation of Procurement
Cases of procurement cancellation for contractor selection include:
a) All expression of interest documents, prequalification documents, bidding documents, proposal documents not meeting the requirements of the expression of interest documents, prequalification documents, bidding documents, request documents.
b) Changes in investment objectives, scope in the approved investment decision leading to changes in workload, evaluation criteria stated in the expression of interest documents, prequalification documents, bidding documents, request documents.
c) Expression of interest documents, prequalification documents, bidding documents, request documents not complying with the provisions of the Procurement Law 2023, other related laws resulting in the selected contractor not meeting the requirements to fulfill the procurement package. d) Winning contractors engaging in prohibited activities as prescribed in Article 16 of the Procurement Law 2023.
e) Other organizations or individuals, apart from the winning contractor, engaging in prohibited activities as stipulated in Article 16 of the Procurement Law 2023 resulting in a distortion of the contractor selection outcome.
Cases of procurement cancellation for investor selection include:
a) All bidding documents not meeting the requirements of the bidding documents.
b) Changes in investment objectives, scale, location, investment capital, project implementation period for reasons beyond control, leading to changes in evaluation criteria in the issued bidding documents.
c) Bidding documents having one or more contents not adhering to the provisions of the Procurement Law 2023, other related laws resulting in a distortion of the investor selection outcome or the selected investor no longer meeting the requirements to carry out the business investment project.
d) Winning investors engaging in prohibited activities as prescribed in Article 16 of the Procurement Law 2023.
e) Other organizations or individuals, apart from the winning investor, engaging in prohibited activities as stipulated in Article 16 of the Procurement Law 2023 resulting in a distortion of the investor selection outcome.
Suspension of Bid, Non-recognition of Contractor and Investor Selection Results
When there is evidence that organizations or individuals participating in procurement activities have engaged in behaviors stipulated in Article 16 of the Procurement Law 2023 or have violated provisions of related laws resulting in a lack of competitiveness, fairness, transparency, and economic efficiency, or distorting the contractor and investor selection results, the authorized person shall implement one or more of the following measures:
a) Suspend the tender to temporarily halt contractor and investor selection activities to promptly rectify the violations that have occurred. The suspension of the tender is carried out during the contractor and investor selection process until the approval of the contractor and investor selection results.
b) Not recognize the contractor and investor selection results during the contractor and investor selection process and the contract execution process.
c) Address violations in the procurement process as stipulated in Article 87 of the Procurement Law 2023.