23 July 2017


Tenders Project Development Legal advice Vietnam

What you need to know about government tenders and impact of TPP

Author: Oliver Massmann, Duane Morris

In his latest post, local law and energy policy expert Oliver Massmann of Duane Morris provides valuable insights into some of the recent developments that are impacting the Vietnamese energy market. In a straightforward Q&A format he presents the vital facts with regards to the direct awarding of public procurement projects and the implications of the Trans-Pacific Partnership Agreement.

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:

  • Investment projects for development using state funding by state agencies;
  • Investment projects for development of state-owned enterprises;
  • 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;
  • Procurement projects using state funding to provide public goods and/ or services; or
  • Investment projects in the form of public-private partnership or 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:

  • There is only one investor registering the project’s implementation;
  • 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;
  • 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:

  • 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.
  • 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.
  • Urgent bid packages need to be carried out to protect national sovereignty, national borders, and islands;
  • 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;
  • 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;
  • Bid packages of relocating technical infrastructure works directly managed by a specialized unit for site clearance;
  • 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 Trans-Pacific Partnership Agreement (“TPP”) ?

A: The TPP on Government Procurement mainly deals with the requirement to open up bidding to companies in other nations when a government buys products or orders a public works project worth over a certain amount. Governments undertake to timely publish information on tender, allow sufficient time for bidders to prepare for and submit bids, maintain confidentiality of tenders. The TPP also requires its Parties assess bids based on fair and objective principles, evaluate and award bids only based on criteria set out in notices and tender documentation, create an effective regime for complaints and settling disputes, etc. These rules require all Parties, especially Vietnam, in the context of China’s bidders predominantly win the bids with cheap offer price but low-quality services, to reform their bidding procedures and protect their own interests by disqualifying tenders with poor performance and low capacity.

Q: How to appeal Government tender decision?

A: The TPP aims at protecting investors and their investment in the host country by introducing requirements on non-discrimination; fair and equitable treatment; full protection and security; the prohibition of expropriation that is not for public purpose, without due process, or without compensation; the free transfer of funds related to investments; and the freedom to appoint senior management positions regardless of nationality.

TPP also includes procedures for arbitration as means of settling disputes between investors and the host state. It is expected to cover new provisions such as transparency in arbitral proceedings, disclosure of filings and arbitral awards, and participation of interested non-disputing parties to make amicus curiae submissions to a tribunal.

Duane Morris are lead content partner for the Solar PV Trade Mission to Vietnam; The 5-day turnkey solution to explore the opportunities for your business in Vietnam.

If you would like to have a legal concept for direct awards or detailed guidance on this topic please contact Oliver Massmann under: [email protected]. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

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