New Bidding regime under Decree 23/2024/ND-CP on selecting investors to implement projects

On February 27, 2024, the Government promulgated Decree 23/2024/ND-CP. Decree 23/2024/ND-CP. This Decree details several articles of the Bidding Law 2023 on selecting investors to implement projects that require bidding according to the regulations of law on industry and field management. In the article below, Viet An Law Firm will analyze some notable contents in the new regulations on the new Bidding regime under Decree 23/2024/ND-CP on selecting investors to implement projects.

Overview of Decree 23/2024/ND-CP

Promulgated date

27/2/2024

Effective date

27/2/2024

Replaced documents

• Decree 31/2021/ND-CP guiding the Investment Law
• Decree 25/2020/ND-CP guiding the Bidding Law on selecting investors

Guidelines document

Circular 03/2024/TT-BKHDT prescribing the form of bidding documents for selecting investors to implement projects in cases that require bidding

The content details the Bidding Law of Decree 23/2024/ND-CP

The new Bidding regime under Decree 23/2024/ND-CP on selecting investors to implement projects is a progressive regime. Decree 23/2024/ND-CP guiding the Bidding Law on selecting investors to implement projects, including detailed regulations on selecting investors to implement projects which require bidding to select investors according to the regulations of law on industry and field management, including:

Regulations on selecting investors to implement projects that require bidding according to the regulations of law on industry and field management

Projects that require bidding to select investors

According to Decree 23/2024/ND-CP, fields and projects that require bidding to select investors according to the regulations of law on industry and field management include the following cases:

• International football betting business project;
• Investment projects to build domestic solid waste treatment works;
• Dredging projects in seaport waters and inland waterways combined with product recovery;
• Projects for specialized aviation services at airports and aerodromes;
• Specialized road traffic service projects include mixed-function areas serving public purposes and commercial business purposes;
• Investment projects to renovate and rebuild apartment buildings;
• Investment projects to build water supply projects, investment projects to build water supply systems;
• Projects subject to held bidding when there are 02 or more interested investors registering to implement, include: Projects in the fields of education, vocational training, health, culture, sports, and environment, horse and greyhound racing projects, including the business of betting on horse racing and greyhound racing; projects for the construction of social housing.

The project’s requirements that require bidding to select investors

Projects that require bidding to select investors according to the regulations of law on industry, field management, and use land must fully meet the following requirements:

• Subject to the case the land zone where the project is to be implemented has a land parcel managed by the State, the State shall appropriate the entire project area (including land areas managed by the State within the project scope).
• Be not eligible for auction of land use rights, not eligible for auction of public assets in accordance with law on land and law on management, use of public assets.

Guidance regulations on ensuring competitiveness on selecting investors

Article 6 of the Bidding Law 2023 stipulates ensuring competitiveness on selecting investors. Accordingly, the new point in Article 6 is the addition of the following regulations:

• When submitting their expression of interest (EOI) or prequalification application, a bidder is required to display their legal and financial independence from the project management and supervision; consultants on preparation, verification, and appraisal of design and cost estimation documents; consultants on preparation and appraisal of survey and design tasks.
• When submitting their bid, a bidder is required to display their legal and financial independence from the project management consultants, supervision consultants; and consultants on preparation and appraisal of survey and design tasks;
• To legislate criteria for evaluating the legal and financial independence of bidders.

In order to guide the regulations in Article 6 of the Bidding Law 2023, in Article 4 of Decree 23/2024/ND-CP, there are specific regulations on ensuring competitiveness on selecting investors as follows:

• Regulations that the investor that submits an application for registration to implement an investment project must be legally independent and financially independent from the parties;
• Regulations in case the investor participating in the bidding may not have shares or capital contributions with the consultants;
• Regulations to determine the capital ownership ratio in case the investor submits a project registration application and participates in the bidding as a joint venture; in case of a joint venture investor or joint venture consultant.
• Regulations for submitting registration applications for the investor having a parent-subsidiary structure.

Regulations on incentives for selecting investors

Clause 6, Article 10 of the Bidding Law 2023 stipulates entities eligible for incentives and incentives on selecting investors. Article 5 of Decree 23/2024/ND-CP specifically guides this content as follows:

Entities eligible for incentives and incentive rates

Investors that have solutions to apply advanced technology, high technology, environmentally friendly technology, and the best available techniques to minimize environmental pollution to the projects that pose a high risk of adverse environmental impacts are entitled to a 5% incentive when having bids evaluated;

Investors that commit to making the transfer of technologies included in the List of priority high technologies as prescribed by the law on high technologies or the List of technologies of which the transfer is encouraged to transfer are entitled to a 2% incentive when having bids evaluated.

Calculation of incentives

Incentives in investor selection according to Bidding Law 2023 include:

• In cases where investors are equally evaluated, the investor eligible for incentives shall be ranked higher than those ineligible for incentives;
• Extra points shall be given to eligible investors during the evaluation and ranking of their bids;
• Extra points shall be given to eligible investors during the evaluation and ranking of their bids.

Regulating the procedures for selecting investors to be consistent with investment laws and land laws

The Decree stipulates in detail the procedures for selecting investors from the project announcement and bidding organization to the contract signing and project implementation.

Publish investment projects

The procedures for announcing investment projects shall be carried out synchronously with the procedures for deciding on investment policies following the law on investment, as a basis for competent authorities to prepare dossiers of invitation for expression of interest and bidding dossiers for investor selection.

Procedures for selecting investors

Procedures for selecting investors are stipulated in Article 8 of Decree 23/2024/ND-CP in the methods of bidding, including:

For projects applying open bidding, limited bidding according to the one-stage, one-envelope method, and projects applying competitive bidding according to the one-stage, two-envelope method, the process shall include:

• Publish investment projects;
• Prepare to bid for selecting investor;
• Organize bidding for selecting investors;
• Evaluate bids;
• Submit, appraise, approve, and publish the investor selection result;
• Negotiate, finalize, and sign contracts.

For projects applying open bidding according to the two-stage, one-envelope method, the process shall include:

• Publish investment projects;
• Prepare bidding for selecting investors in the first stage;
• Organize bidding for selecting investors in the first stage;
• Prepare and organize bidding for selecting investors in the second stage;
• Evaluate bids in the second stage;
• Submit, appraise, approve, and publish the investor selection result;
• Negotiate, finalize, and sign contracts.

Regulations on implementation measures for procedures to implement the investment project after signing a contract

Decree 23/2024/ND-CP stipulates implementation measures for procedures to implement the investment project after signing a contract, including procedures for establishing an enterprise of successful investors and procedures for land allocation and land lease, ensuring synchronization with land laws.

Regarding this content, the Decree strictly regulates the successful investor as having the right to manage the project or directly implement the project.

An enterprise established by the investor must have 100% charter capital held by the successful investor, inherit the rights and obligations that the successful investor has committed to in their contract, and fully fulfill financial obligations to the State in case of income generation.

Regulations on methods and criteria for evaluation of bids

According to Clause 2, Article 62 of the Bidding Law 2023, the evaluation of investors’ bids is carried out on the based on the following criteria:

“a) Criteria for evaluation of the investor’s capacity, including financial and funding arrangement capacity, and experience in executing similar investment projects;

b) Criteria for evaluation of the investor’s investment plan, including technical, social, and environmental criteria;

c) Criteria for evaluating efficiency in land use and investments in sectoral or local development.”

Decree 23/2024/ND-CP stipulates detailed standards and specific criteria applicable to each industry and field within the scope of regulation. Specifically:

• Article 45: Evaluation criteria for capacity and experience include: Evaluation criteria for financial capacity and ability to arrange capital; Evaluation criteria for expertise in implementing similar projects based on field; investment scale; duration and level of completion of works and projects; and equity ratio that the investor has participated in similar projects;
• Article 46: Evaluation criteria for investors’ business investment plans include: Technical evaluation criteria; Social evaluation criteria; and Environmental evaluation criteria.
• Article 47: Evaluation criteria for investment efficiency in developing the industry, field, and locality.

Note for the form documents for selecting investors to implement projects in cases that require bidding

To guide documents for selecting investors to implement projects in cases that require bidding according to the regulations of law on industry and field management according to Decree 23/2024/ND-CP, in Circular 03/2024/TT-BKHDT stipulates the form document for selecting investors to implement projects in cases which require bidding according to the regulations of law on industry and field management, including:

• Forms of the Invitation for expression of interest (EOI) and the Request for EOI
• Form of bidding documents (one-stage, one-envelope procedure)
• Form of bidding documents (one-stage, two-envelope procedure)

Clients who have related questions or need legal support for the new Bidding regime under Decree 23/2024/ND-CP on selecting investors to implement projects in Vietnam, please contact Viet An Law Firm for the best support!