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Q: Under what conditions can power projects be awarded without
Government tender?
A: Power projects can be awarded directly without Government
tender if the projects are not:
a. Investment projects for development using state funding by
state agencies;
b. Investment projects for development of state-owned
enterprises;
c. Investment projects for development other than those in a)
and b) which are financed by the state; has 30% or more of total
investment capital contributed by state-owned enterprises ; or less
than 30% but more than VND 500 billion of the total investment
capital of the project;
d. Procurement projects using state funding to provide public
goods and/ or services; or
e. Investment projects using land.
Q: Under which circumstances is direct appointment of an
investor applied?
A: Direct appointment of an investor applies in the following
cases:
a. There is only one investor registering the project’s
implementation;
b. There is only one investor being able to implement the
project as the project is related to intellectual property,
commercial secret, technologies or capital arrangement;
c. The investor who proposes the project satisfies requirement
of implementing the project with the highest feasibility and
efficiency in accordance with regulations of the Government.
However, please note that direct appointment of an investor is
still a part of a Government tender, meaning that this applies only
when the abovementioned cases occur in the Government tender
process.
Q: Under which circumstances is direct appointment of a
contractor applied?
A: Direct appointment of a contractor applies in the following
cases:
a. An event of force majeure such as disasters, war, change of
the state policies … which are objective, unpredictable and
cannot be solved despite using all necessary measures within
one’s own capacity. Vietnam is likely to face energy crisis
in the coming years due to significant growth in energy demand.
Thus, this is a good chance and foreign energy investors and
companies should be prepared.
b. Bid packages need to be performed to ensure national secrets.
National secrets are information in politics, national defence,
security, foreign affairs, economics, science, technology sectors
and other sectors that has not been disclosed or will not be
disclosed by the state, and if disclosed, it will cause damage to
the country.
c. Urgent bid packages need to be carried out to protect
national sovereignty, national borders, and islands;
d. Bid packages of providing advisory services, non-advisory
services, procurement of goods which must be purchased from
previous contractors to ensure the compatibility of technologies
and copyright which are unable to be purchased from other
contractors; bid packages with research and testing nature;
purchase of intellectual property right;
e. Bid packages of providing advisory services for making
feasible study reports, construction designs which have been
appointed to authors of designs of architectural works who won in a
selection or are selected when authors have full capability in
accordance with regulations; bid packages of constructing statues,
reliefs, monumental paintings, art works in association with author
right from the creation stage to construction stage of the
works;
f. Bid packages of relocating technical infrastructure works
directly managed by a specialized unit for site clearance;
g. Bid packages of providing public goods and services, bid
packages with bid package price ranging from VND 500 million to VND
1 billion depending on types of projects.
Q: How is government procurement addressed under the
Comprehensive and Progressive Trans-Pacific Partnership Agreement
(“CPTPP”) and the EU – Vietnam Free Trade
Agreement (“EVFTA”)?
A: Vietnam opens its government procurement market for suppliers
from EU and CPTPP members who meet all 03 conditions on (i)
Procuring entity; (ii) Value of the procurement; and (iii) Goods
and services with some exceptions. These exceptions are related to
(i) certain purposes; (ii) certain types of goods; (iii) certain
types of services; (iv) construction services; (v) offsets; and
(vi) other exceptions.
The government procurement chapters of both the CPTPP and EVFTA
are based, to a large extent, on the legal texts and market access
schedule structure of the Government Procurement Agreement under
the WTO. The EVFTA and CPTPP differ mainly in terms of the scope of
commitments. In the CPTPP, Vietnam commits to open its procurement
market by 21 ministries and central branches but not by sub-central
government entities and corporations. However, in the EVFTA,
Vietnam commits to opening procurement for both central and
sub-central government entities, namely 20 ministries, central
branches and some subordinate agencies under the Ministry of
Defense (except for goods and services serving the national
security and defense objectives); localities in Hanoi, Ho Chi Minh
City; Vietnam Electricity; Vietnam Railways; 34 hospitals belonging
to the Ministry of Health; Vietnam National University –
Hanoi, Vietnam National University – Ho Chi Minh City and
some central institutes. The Ministry of Public Security is not
included in the EVFTA, resulting in the fact that the EVFTA covers
less than one central government entity compared with the CPTPP. On
the whole, the market accession commitments undertaken by Vietnam
under the EVFTA are broader than those undertaken under the
CPTPP.
Q: How to appeal Government tender decision?
A: The CPTPP and the EVFTA make it possible that foreign
investors could sue Vietnam Government for its tender decisions
according to the dispute settlement by arbitration rules. The
violating party must take all necessary measures to promptly comply
with the arbitral decision. In case of non-compliance, as in the
WTO, the CPTPP and the EVFTA allow temporary remedies
(compensation) at the request of the complaining party.
Enforcement of arbitral awards
The final arbitral award is binding and enforceable without any
question from the local courts regarding its validity. This is an
advantage for investors considering the fact that the percentage of
annulled foreign arbitral awards in Vietnam remains relatively high
for different reasons.
If you would like to have a legal concept for direct awards or
detailed guidance on this topic please contact Dr. Oliver Massmann
under: [email protected]. Dr. Oliver Massmann is the
General Director of Duane Morris Vietnam LLC.
Disclaimer: This Alert has been
prepared and published for informational purposes only and is not
offered, nor should be construed, as legal advice. For more
information, please see the firm’s
full disclaimer.
