Ten new points of Law on Bidding 2023

On June 23, 2023, National Assembly have passed Law on Bidding No.22/2023/QH15 (“Law on Bidding 2023”) to replace Law on Bidding No.43/2013/QH13 (“Law on Bidding 2013”). The Law on Bidding 2023 takes effect from January 1, 2024.

In comparison with Law on Bidding 2013, Law on Bidding 2023 has a number of new points as follows:

First, Law on Bidding 2023 supplements certain subjects to the applicable scope, specifically:

  • Firstly, the purchase of drugs, chemicals, test supplies, medical equipment; hire preservation of national reserves;
  • Secondly, in addition to the investment project of State-owned Enterprise, Law on Bidding 2023 supplements the investment project of subsidiaries that are 100% owned by State-owned Enterprise;
  • Thirdly, in addition to projects, scientific research topics, technology development, technology applications, technical assistance, basic investigation of State-owned enterprises, bidding packages equipped with facilities – engineering, machinery and scientific and technological development equipment of State-owned enterprises is also covered by Law on Bidding 2023.

Second, the selection of investors to implement investment projects in PPP mode, land-use investment projects will be applied in accordance with relevant specialized laws rather than Law on Bidding.

According to Law on Bidding 2013, the selection of investors to implement investment projects in PPP mode, land-use investment projects are also under Law on Bidding and other Decrees guiding the Law on Bidding regarding investor selection, such as Decree No.30/2015/ND-CP dated March 17, 2015 and Decree No.25/2020/ND-CP dated February 28, 2020.

However, these investor selection activities are no longer covered by Law on Bidding 2023, instead, relevant specialized laws such as the laws on PPP or the laws on land shall be applied.

Third, the selection of oil and gas service contractors, goods serving petroleum activities in accordance with the oil and gas contract will no longer comply with Law on Bidding, the enterprise is entitled to make their decision based on its own basis ensure publicity, transparency, economic efficiency and accountability.

Pursuant to Law on Bidding 2013, the selection of contractors to sign oil and gas contracts (regarding exploration search, mine development and oil and gas production) are implemented in accordance with the laws on oil and gas. Law on Bidding 2023 upholds this guideline.

The selection of remaining contractors in the oil and gas sector (such as contractors providing oil and gas services, goods serving petroleum activities in accordance with petroleum contracts) are implemented in accordance with Law on Bidding 2013. However, from the date after Law on Bidding 2023 takes effect (1/1/2024), the enterprise is entitled to make their decision in selecting contractors regarding these activities on the basis of ensuring openness, transparency, economic efficiency and accountability. 

Fourth, the conditions of eligibility when participating in the bidding of the Business Households are clarified

The eligibility of a business households in bidding activities is not specifically specified in the Law on Bidding 2013.

Law on Bidding 2023 has supplemented specific provisions regarding the eligibility of contractors as business households, including:

  • Firstly, having certificate of registration of business households in accordance with the laws;
  • Secondly, not being in the process of terminating or revoking a business household registration certificate; not having business heads being rescued criminal liability;
  • Thirdly, being named on the National Bidding Network System;
  • Fourthly, complying with competition assurance conditions in bidding;
  • Fifthly, not being in the time of being banned from bidding;
  • Sixthly, being named in the short list for selected cases is short list.

Fifth, the conditions to apply incentives for green, small and micro enterprises, innovative startups enterprises are supplemented.

In order to comply with state's policies and strategies in promoting the consumption of Vietnamese goods; supporting green manufacturing enterprises, micro and small businesses, creative startups, the Law on Bidding 2023 has supplemented many cases of incentives in the selection of contractors for this subject, including:

  • Firstly, goods of Vietnamese origin (point a, clause 1, Article 10);
  • Secondly, environmentally friendly products and services in accordance with the laws on environmental protection (point b, clause 1, Article 10);
  • Thirdly, domestic contractors producing goods of Vietnamese origin in accordance with bidding documents (point c, clause 1, Article 10);
  • Fourthly, the contractor being a microenterprise, small business (point e, clause 1, Article 10);
  • Fifthly, the contractor being an innovative startup enterprise (point g, clause 1, Article 10);
  • Sixthly, contractors employing the number of ethnic minority workers of 25% or more (point h, clause 1, Article 10).

If the contractor satisfies one of the above-mentioned cases above, they will receive incentives in one of the forms specified in Clause 2, Article 10, including:

  • First, a higher ranking is given to contractors eligible for incentives in case the contractors eligible for incentives and contractors not eligible for incentives are evaluated equally;
  • Second, points will be added to the evaluation score of contractors eligible for incentives in case the fixed price method, based on technique, combining technique and price to compare and rank are applied;
  • Third, an amount of money is added to the bid price or to the evaluation price of contractors who are not eligible for incentives in case the lowest price method or evaluation price method is applied to compare and rank;
  • Fourth, they are given priority in evaluating capacity, experience and other criteria during the bid evaluation process;
  • Fifth, regarding construction and installation bidding packages with a bidding price of no more than 05 billion VND, if a bid has already been organized and no micro or small businesses are present that fit the criteria, the bid may be reorganized, and other businesses may participate.

Sixth, Law on Bidding 2023 supplements the eligibility for incentives and incentive form in investor selection, including:

  • Firstly, investors have technology application solutions to minimize environmental pollution
  • Secondly, the investor has a technology transfer commitment under the List of technologies prioritized for investment and development or List of technologies encouraged for transfer.

If the investor satisfies one of the two cases mentioned above, they will be favored in one of the forms specified in Clause 5, Article 10, including:

  • Firstly, higher rank for investors who are subject to preferential treatment in case the investor is subject to preferential treatment and the investor is not dependent statues of entitlements are assessed equally;
  • Secondly, they are granted points to the total score for comparison and ranking.

Seventh, the regulation on bid guarantee is amended:

Bid guarantee is when the contractor uses its assets or other financial instruments to ensure its obligations in the process of bidding. In comparison with Law on Bidding 2013, Law on Bidding 2023 has changed the forms of bid guarantee, namely as follows:

  • Firstly, eliminate one form of bid guarantee which is deposit;
  • Secondly, supplementing one form of bid guarantee which is submission of a certificate of guarantee insurance of a domestic non-life insurance enterprise, foreign non-life insurance business branch established under the laws of Vietnamese.

Besides, Law on Bidding 2023 also adds a circumstance on which the contractor will not be reimbursed for bid guarantee. Specifically, the contractor does not conduct or refuse to negotiate the contract (if any) within 05 working days for domestic bidding and 10 working days for international bidding from the date of receipt of the notice of contract invitation or the contract was drafted but refused to finalize, sign a draft contract minutes, except for force majeure.

Eighth, certain prohibited behaviors in bidding are supplemented.

Law on Bidding 2023 has made certain amendments regarding prohibited behavior in bidding, including:

  • Firstly, supplement the bid-rigging behavior "forcing one or more parties to prepare bids or withdraw bids so that one party wins the bid" (point a, clause 3, Article 16). This amendment is required because, in practice, bid-rigging can result through threats or coercion from one or more parties as well as from the collaboration or agreement of the parties.
  • Secondly, supplement the bid-rigging behavior "Competent and experienced contractors, investors attended the bid and met the requirements of the bid invitation but intentionally did not provide documents to prove competence, experience when requested by the bid solicitor to clarify bids or when required to collate documents to facilitate a party's bid".
  • Thirdly, supplement obstructive behavior "violation of the laws on network safety, cybersecurity to intervene, hinder online bidding". This addition is intended to improve the efficiency of online bidding.

Ninth, provisions regarding additional purchase options are supplemented.

Law on Bidding 2023 has supplemented the provision regarding additional purchase option; accordingly, the Owner and the Contractor may agree that the Owner is entitled to purchase an additional volume of goods, consulting services, non-consulting services of bidding packages in addition to the volume stated in the contract.

The additional purchase option mechanism is only applied when all the conditions specified in point c, clause 8, Article 39 are met, including:

  • Firstly, the contractor has won the bid through extensive bidding, price negotiations;
  • Secondly, the additional purchase volume does not exceed 30% of the corresponding item volume stated in the contract;
  • Thirdly, there is an approved estimate for the additional purchase volume;
  • Fourth, the unit price of goods and services purchased must not exceed the unit price of the goods and services respectively in the contract; applying only during the validity of the contract.

Tenth, specific cases of incentives for drug purchase packages are supplemented.

Similar to Law on Bidding 2013, Law on Bidding 2023 also sets out specific incentives related to the bidding package for drug purchases in the event that at least 3 domestic manufacturers meet technical requirements pursuant to the laws. Specifically as follows:

  • Firstly, for drugs produced by at least 03 domestic carriers that meet the technical criteria prescribed by the Ministry of Health and in terms of quality, the price, the investor decides to ask the contractor to offer drugs having domestic origin for this item (point a, clause 1, Article 56);
  • Secondly, for drugs published by the Ministry of Health and produced by at least 03 domestic companies having a drug production line that meets (i) the principles, standards of EU-GMP or equivalent EU-GMP, (ii) technical criteria prescribed by the Ministry of Health and (iii) quality, price, the ability to provide, the bidding documents and requirements documents must be stipulated that the contractor will only bid for drugs having domestic origin(point b, clause 1 Article 56).

Nguyen Hoang Duc Uy - Junior Associate (ATIM LAW FIRM)

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