On February 6, 2025, the Government issued Decree No. 17/2025/ND-CP (“Decree 17”) amending and supplementing several provisions of the decrees detailing the implementation of the Law on Bidding. Some notable new points include:
1. Adjustment of principles for handling and applying sanctions in cases where a joint venture contractor member violates the contract, loses capacity to continue performing the contract, and severely affects the progress, quality, and efficiency of the bidding package:
Under the previous regulations in Decree No. 24/2024/ND-CP guiding the Law on Bidding ("Decree 24"), all members of the joint venture were jointly liable for a violation committed by any one member. Specifically, they would be subject to contract penalties and forfeiture of performance security. While this aimed to enhance the responsibility of joint venture contractors, it also presented certain inadequacies and inconsistencies.
Decree 17 has adjusted this provision in a way that ATA assesses to be more appropriate and reflective of practical realities while ensuring the rights of joint venture members. The revised provisions specify:
a) Contract penalties shall be applied as stipulated in the contract.
b) The performance security of all joint venture members will only be forfeited if the remaining work of the violating member is separated into a new bidding package under Clause (đ). If the remaining work is assigned to the other joint venture members under Clause (d), only the violating member’s performance security will be forfeited.
d) The work of the violating member may be assigned to the remaining members if they have the necessary capacity and experience.
Accordingly, Decree 17 no longer requires penalties to be applied to all joint venture members unless otherwise specified in the contract. Additionally, the performance security of non-violating members will only be forfeited if they refuse or lack the capacity to undertake the violating member’s remaining work, forcing the investor to separate it into a new package and conduct a new selection process. If the remaining work is assigned to the existing joint venture members, only the violating member’s performance security will be forfeited.
2. Clarification of bid cancellation cases due to changes in workload and evaluation criteria in pre-bid tendering:
Decree 17 clarifies the circumstances under which an investor may cancel a bid due to changes in workload and evaluation criteria as stipulated in Article 17 of the Law on Bidding:
- For construction, non-consulting services, and consulting service packages under pre-bid tendering: A project approval that results in an increase of 30% or more in the bidding package price (or cost estimate) or changes in key technical evaluation criteria or construction classification stated in the issued bidding documents.
- For procurement of goods under pre-bid tendering: A project approval that increases the workload by 20% or more or changes the type of goods specified in the issued bidding documents.
If the increase in package price or workload does not reach these thresholds or does not involve substantial changes, the investor may amend the workload and proceed to contract signing with the selected contractor.
3. Additional cases where a contractor’s reputation will be evaluated when participating in bidding:
To prevent fraudulent behavior, such as intentionally submitting high bid prices to inflate the winning price and then withdrawing or refusing to execute the package, Decree 17 introduces four situations in which a contractor’s reputation will be assessed: Failure or refusal to (i) negotiate, (ii) sign negotiation documents, (iii) finalize the contract, or (iv) sign the contract. Contractors listed under this evaluation will be required to provide bid security at three times the standard amount for two years from the last occurrence of such behavior.
Decree 17 adds four new cases where a contractor’s reputation will be assessed:
- Withdrawing a bid dossier or proposal after the submission deadline and during the validity period of the bid or proposal.
- Failing to submit the original bid security as required by the investor or procuring entity or failing to provide a cash deposit, certified check, bid guarantee letter, or insurance certificate as per bidding regulations.
- Failing to provide performance security.
- Refusing or failing to confirm acceptance of the contract award within three working days from the date of notification on the National E-Procurement System for streamlined online bidding.
4. Supplementary provisions on investor selection in special cases:
Previously, the 2023 Law on Bidding and its subordinate regulations only provided guidance on contractor selection in special cases, such as drug and vaccine procurement, legal services for protecting State interests, and political tasks assigned by the Party and the State.
Decree 17 expands regulations on investor selection in special cases for certain projects, including:
- Projects that require safeguarding national interests or fulfilling political tasks assigned by the Central Committee of the Communist Party, the Politburo, the Secretariat, or key State leaders, where open or restricted bidding is not feasible.
- Projects requiring national defense, security, foreign relations, or border protection as determined by the Ministry of National Defense, the Ministry of Public Security, or the Ministry of Foreign Affairs, where open or restricted bidding is impractical.
- Projects with specific investment, land allocation, or business conditions, such as:
- Offshore wind power projects.
- Urgent projects that must be implemented immediately as directed by Government Resolutions, Decisions, Directives, or official instructions from the Prime Minister, where open or restricted bidding would not meet the deadline.
- Projects requiring immediate execution to ensure connectivity and synchronization between project components as directed by the Government, where open or restricted bidding would not guarantee effective management, operation, and exploitation.
- Other projects with special investment procedures, land allocation, or investor selection conditions that cannot be conducted through open or restricted bidding.
Decree 17 takes effect on February 6, 2025.
Comment: