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Legal Update

Decree 85 on Tendering and Selection of Construction Contractors

8 December 2009
Mayer Brown JSM Legal Update


The Government issued Decree No. 85/2009/ND-CP on 15 October 2009 providing guidelines for the implementation of the Law on Tendering and the Law on Amendment to a Number of Articles of Laws concerning Investment in Capital Construction and on selection of construction contractors pursuant to the Law on Construction ("Decree 85").

Full Update

Decree 85 provides detailed regulations on tendering plans, prequalification of tenderers, open tendering or limited tendering applicable to tender packages for consultancy services, tender packages for procurement of goods or for construction and installation, direct appointment of contractors, decentralisation of responsibility for evaluation and approval in tendering, resolution of protests and dealing with breaches of the Law on Tendering.

Decree 85 will officially take effect from 1 December 2009 and replace Decree No. 58/2008/ND-CP dated 5 May 2008 making detailed provisions for implementation of the Law on Tendering and for selection of construction contractors pursuant to the Law on Construction ("Decree 58") and Decision No. 49/2007/QD-TTg dated 11 April 2007 on special cases of appointment of contractors pursuant to Article 101.1(dd) of the Law on Construction.

To ensure competitiveness in tendering, Decree 85 requires that tenderers be independent from each other by satisfying two conditions:

  • Tenderers must be separate enterprises operating pursuant to the Law on Enterprises and not managed by one agency or entity.
  • Tenderers must not hold 30% or more capital in the other's enterprise.

Management of Foreign Contractors

If a foreign contractor is selected to carry out a tender package in Vietnam, the investor will have to report such selection in writing or via email within 15 days from the date of signing a contract with foreign contractor. The report should be made to the Ministry of Planning and Investment with a copy to the management ministry of the relevant sector (in the case of a project belonging to a ministry) or to the Ministry of Construction (in the case of a construction tender package) or to the local Department of Planning and Investment (in the case of a project under local management) for supervision.

Validity of Tender

The period of a tender's validity must be stipulated specifically in the tender invitation documents, and must not exceed 180 days past the tender closing date. In necessary cases a tenderer may request extension of the tender validity period on one or more occasions, but the total of extension periods must not exceed 30 days.

Direct Appointment of Contractor

Cases for direct appointment of a contractor stipulated in Decree 85 include:

  • Tender packages for consultancy services with a tender package price less than VND 3 billion and tender packages for the procurement of goods with a tender package price less than VND 2 billion .
  • Tender packages for construction and installation and tender packages for selection of general construction contractors (except for selection of general design contractors) with a tender package price less than VND 5 billion and belonging to the development investment projects stipulated in Article 1.1 of the Law on Tendering.
  • Tender packages for procurement of assets priced less than VND 100 million for the maintenance of regular activities of State bodies and organisations.

Dealing With Breaches of the Law on Tendering

Any organisation or individual who acts in breach of the Law on Tendering shall, depending on the seriousness of the breach, be subject to a disciplinary penalty or one or more of the following penalties: a warning, a fine, prohibition from participating in tendering activities, cancellation or suspension of the tender or non-recognition of the contractor selection results.

With respect to fines, Decree 85 does not stipulate specific fine levels as were set out in Decree 58. Administrative sanctions in respect of planning and investment will apply.

For inquiries related to this Client Alert, please contact:

Dao Nguyen ( )

Thinh Dan ( )

Learn more about our Vietnam offices and Real Estate practice.

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