[what you need to know] DRAFT LAW ON PROCUREMENT

The draft aims to achieve better competitiveness, fairness, transparency, and economic efficiency in the management of the State budget. The selection methods of bidders and investors will be amended as well as the process and procedures to select bidders and investors.

 

After nearly eight years of applying the Law on Procurement No. 43/2013/QH13 dated 26 November 2013 and coming into effect on 01 July 2014 (Current Law on Procurement), the Ministry of Planning and Investment (MPI) issued the revised Draft Law on Procurement (Draft Law) together with official letter No. 3975/BKHĐT-QLĐT on 15 June 2022 for public comments. The draft aims to achieve better competitiveness, fairness, transparency, and economic efficiency in the management of the State budget.


In this update, we set out the core points in relation to the above-mentioned Draft Law.


1. Scope

Under the Draft Law, the scope of application has been expanded to add the selection of investors to implement business investment projects, including:


Construction investment projects: urban areas; civil works with one or more functions such as commercial houses, headquarters, working office; commercial and service works; and


Other investment projects must organise bidding sessions as stipulated by law.


Besides, for ease of application, the Draft Law also sets out a list of procurement activities that are not subject to the Draft Law.


2. Subjects and Principles of Application of the Law

If organisations or individuals, whose procurement activities are not subject to the Law on Procurement, choose to apply this Draft Law, they must specify the specific articles, clauses and points that shall comply with the provisions of the Draft Law.


The principle of the Draft Law lies in prioritising the application of the provisions of the Law on Procurement over other laws for the selection of bidders and investors.


3. Selection Methods of Bidders and Investors

In general, some adjustments will be made to most forms of bidder and investor selection. However, this update only elaborates on those that will be significantly modified.


3.1 Selection of Bidders or Investors in Special Cases

The Draft Law provides the general principle for applying the procedure for the selection of bidders or investors in special cases. These are the cases where the Prime Minister will decide to apply this procedure, and the application dossier to submit to the Prime Minister for such decision.


3.2 Direct Procurement

To prevent investors’ abuse of the regulations on direct procurement under the Current Law on Procurement imposing high prices in direct procurement causing losses and waste, the Draft Law proposes the following: (i) remove the regulations on direct procurement, or (ii) amend such regulations to avoid the disadvantages of the same. In the latter option, the Draft Law proposes to add more conditions for direct procurement, one of which is that the plan for the previous bidding package must have an additional purchase option and specify the value of the additional purchase option. The provision on the additional purchase option aims to make the procurement process more efficient from a time and financial point of view as well as more competitive. The content of the additional purchase option is also specified in several Free Trade Agreements such as the CPTPP the EVFTA, and the UKVFTA and some Government Decree guiding the implementation of procurement according to the provisions of the Free Trade Agreements.


3.3 International and Intra-regional Bidding

For international and intra-regional bidding, the Draft Law maintains the provisions of the Current Law on Procurement and supplements regulations on international bidding and intra-regional bidding in accordance with the provisions of the Free Trade Agreements to which Vietnam is a party. Accordingly, international bidding and intra-regional bidding are applied when