Contractor selection regulation in Vietnam from Decree 24/2024

On February 27, 2024, the Government issued Decree 24/2024/ND-CP, which provides guidance on the contractor selection process. The Decree aims to clarify the provisions of the Procurement Law 2023, assisting organizations and individuals participating in the bidding process to clearly understand and comply with the correct procedures, principles, and relevant requirements. In the article below, Viet An Law Firm will summarize the new points of the contractor selection regulation in Vietnam from Decree 24/2024.

Basic Information about Decree 24/2024/ND-CP

• Date of issuance: February 27, 2024
• Effective date: February 27, 2024
• Signatory: Tran Hong Ha

Notable points of the contractor selection regulation in Vietnam from Decree 24/2024

Scope of application

According to Clause 1, Article 1 of Decree 24/2024/ND-CP, the Decree has expanded the scope of regulation to include other funding sources that are legally required to undergo a bidding process. This demonstrates greater flexibility and inclusiveness in managing various funding sources, not just limited to projects using state funds and Official Development Assistance (ODA).

Compared to Decree 63/2014/ND-CP, which only applied to projects using state funds, loans, and ODA, as well as preferential loans, the expansion under Decree 24/2024/ND-CP ensures stricter management of investment funds, guaranteeing that all funding sources are used transparently and effectively, thereby enhancing the quality of investment projects.

In medical bidding

The Contractor Selection Regulation in Vietnam from Decree 24/2024 includes several important adjustments in the selection of contractors in the healthcare sector, aimed at addressing issues and obstacles in the bidding process. Some notable new points include:

• Allowing multiple winning contractors: Previously, a bidding package typically had only one winning contractor, leading to risks if the contractor could not fulfill the contract. Now, Decree 24/2024/ND-CP allows for the selection of multiple winning contractors to ensure that if the highest-ranked contractor is unable to supply, the investor can immediately sign a contract with the next ranked contractor.
• Clear regulations on direct contracting in urgent cases: To ensure that hospitals can promptly purchase medicines in urgent situations such as emergencies or epidemic prevention, the Decree permits direct contracting without going through the usual bidding procedures, thereby saving time (as stipulated in Article 94 of Decree 24/2024/ND-CP).
• Allowing the selection of the highest quotation: In the healthcare sector, when there is more than one quotation, the investor is allowed to choose the highest quotation that matches their financial capacity and professional requirements as the bidding package price, instead of only taking the average value of the quotations (as stipulated in Point d, Clause 2, Article 16 of Decree 24/2024/ND-CP).
• Addressing the issue of drug shortages in centralized bidding: The Decree also stipulates that in cases of centralized bidding where a contractor has not yet been selected or the framework agreement has expired, hospitals can make purchases according to the notice from the unit tasked with centralized procurement for a maximum period of 12 months, and the health insurance fund will pay according to the contract price (as stipulated in Clause 2, Article 94 of Decree 24/2024/ND-CP).

These adjustments are expected to provide flexibility and proactivity for hospitals in the procurement of medicines and medical supplies, contributing to improving the efficiency and quality of public healthcare services.

Regulations on costs in contractor selection

Article 12 of Decree 24/2024/ND-CP introduces several new points and changes regarding costs in contractor selection compared to Decree 63/2014/ND-CP. Below are some key changes:

Costs for preparing and appraising documents

Under Decree 24/2024/ND-CP, the cost for preparing or appraising the overall contractor selection plan is specified in Clause 3, Article 12, calculated as 0.5% of the cost for preparing the feasibility study report, with a minimum of 5 million VND and a maximum of 40 million VND. The costs for preparing and appraising bidding documents and request documents are calculated as a percentage of the bidding package value, with specific minimum and maximum limits.

In contrast, the previous Decree 63/2014/ND-CP also prescribed these costs as a percentage but did not specify minimum and maximum limits as Decree 24/2024/ND-CP does.

Costs for maintaining names and capacity profiles on the National Bidding Network system

Decree 24/2024/ND-CP sets a maintenance fee of 330,000 VND per year (including VAT), applicable from the second year after registration (as stipulated in Point a, Clause 11, Article 12 of Decree 24/2024/ND-CP). Previously, Decree 63/2014/ND-CP did not have specific regulations regarding the cost of maintaining names and capacity profiles on the National Bidding Network System.

Costs for resolving complaints

Regarding the resolution of complaints, Clause 8, Article 12 of Decree 24/2024/ND-CP stipulates that the cost for the Advisory Council on Complaint Resolution is calculated as a percentage of the bid price of the complaining contractor, with different rates depending on the bid value. This differs from Decree 63/2014/ND-CP, which also regulated the cost of complaint resolution but did not provide specific and detailed percentages as Decree 24/2024/ND-CP does.

Costs for submitting bids

According to Clause 1, Article 12 of Decree 24/2024/ND-CP, the proceeds from the sale of electronic bidding documents and request documents are managed and used according to the financial mechanism of the investor if the bidding package does not use state budget funds. The specific fees related to this issue are as follows:

• Costs for preparing documents: The cost for preparing bidding documents and request documents is calculated as 0.2% of the value of the bidding package, with a minimum of 3 million VND and a maximum of 60 million VND.
• Costs for appraising documents: The cost for appraising these documents is calculated as 0.1% of the value of the bidding package, with similar minimum and maximum limits.
• Costs for submitting documents online: The cost for submitting documents for each bidding package on the National Bidding Network System is 330,000 VND for open and limited bidding, and 220,000 VND for competitive offers.

Overall, the regulations outlined above are designed to facilitate bidding activities, ensuring transparency and efficiency in the contractor selection process.

Criteria for assessing the capacity, resources, and experience of investors

According to Clause 2, Article 15 of Decree 24/2024/ND-CP, the assessment of an investor’s capacity, resources, and experience for conducting bidding activities includes the following:

Capacity to implement the contractor selection process

The investor must be capable of effectively executing the entire contractor selection process, from developing the overall contractor selection plan (if applicable) to managing contracts. This includes ensuring that all stages of the bidding process are carried out professionally and in compliance with regulations.

Performance in bidding activities

The evaluation criteria include:

• Average savings rate.
• The average number of contractors participating in different forms of bidding such as open bidding, limited bidding, competitive offers, and online price quotations following the standard procedure.
• The percentage of bidding packages with only one bidder compared to the total number of packages.
• The percentage of packages with complaints about the bidding documents.
• The percentage of packages with complaints regarding other aspects during the contractor selection process and the results of contractor selection.
• The number of times the investor failed to respond to requests for clarification of bidding documents, or to complaints about the bidding documents and other issues during the contractor selection process.

Experience in implementing similar projects

This includes handling complaints in contractor selection, addressing grievances, and dealing with other arising issues. This ensures that the investor has practical experience in managing and resolving issues related to the bidding process.

Other Factors

In addition to the main factors mentioned above, there may be other supplementary factors, if any, to provide a comprehensive assessment of the investor’s capacity, resources, and experience.

This evaluation helps ensure that the investor can execute projects effectively and transparently, thereby enhancing the quality and competitiveness of the bidding process.

Compared to Decree 63/2014/ND-CP, Decree 24/2024/ND-CP introduces several new and improved points. The financial criteria have been elevated with stricter standards to ensure the investor’s financial stability. The evaluation of human resources has also become more detailed, with a focus on the qualifications and experience of key personnel.

If you need consultation on bidding laws, civil law, criminal law, or related amended decrees, please contact Viet An Law Firm for the best support.