What are the instructions for adjustment of contract price due to inflation and deflation in Vietnam under the Decree 24/2024/ND-CP?
What are the instructions for adjustment of contract price due to inflation and deflation in Vietnam under the Decree 24/2024/ND-CP?
Pursuant to Article 107 of Decree 24/2024/ND-CP, there are instructions for adjustment of contract price due to inflation and deflation. Specifically:
Contract price adjustment due to inflation and deflation (hereinafter referred to as contract price slippage adjustment) for adjustable unit price contracts is carried out as follows:
(1) The application of price slippage adjustment must be specified in the bidding documents or RFPs and be finalized during the contract negotiation process (if any) and contract finalization. The contract must stipulate the principles and time for calculating adjustments; input database to calculate adjustments; time to calculate the price index or original price as a basis for determining the difference due to price slippage for each contract instalment.
The content of the contract price must include a provisional price slippage value calculated on the basis of expected price slippage and legal regulations on cost management as a basis for payment. The management and payment of price slippage according to the terms and conditions already in the contract, does not require signing a contract modification document; if price fluctuations cause subsequent instalments and total contract price to exceed the originally fixed budget, the employer must seek approval from the competent person. If approved by the competent person, the parties sign a contract modification document before making payment.
(2) Contract price slippage is determined according to the following methods:
- Direct compensation method;
- Adjustment method using adjustment formula based on application of price index. The price index used as a basis for calculating price slippage is determined according to the bidding documents, RFPs, detailed contract negotiation (if any) and contract finalization. The index source can be specified according to the price index announced by the General Statistics Office of Vietnam or the construction price index announced by the Ministry of Construction and the Provincial People's Committee. For foreign-sourced cost items subject to price slippage adjustments, the price index published by the independent statistical agency in the foreign country where the cost incurs may be applied. Determining the method and formula for calculating price adjustments must be based on a scientific basis, consistent with the nature of the package, and specific regulations on price slippage risk management in the contract. Employers can apply adjustment formulas that are widely applied in the international market, including regulatory templates of the Fédération Internationale des Ingénieurs Conseils (FIDIC), and guidance from the World Bank ( WB), Asian Development Bank (ADB) and other templates;
- Other adjustment methods specified in Points a and b of Clause 3, Article 107 of Decree 24/2024/ND-CP.
Note: For time-based contracts, output-based contracts, contract price slippage can be applied to contracts with long performance periods or in market situations with large price fluctuations.
What are the instructions for adjustment of contract price due to inflation and deflation in Vietnam under the Decree 24/2024/ND-CP?
Vietnam: What do contract documents signed with a contractor include?
Pursuant to the provisions of Article 65 of the Law on Bidding 2023, the contract documents signed with a contractor shall include:
- Contract agreement;
- Contract appendices, including the activity schedule, price schedules, and execution schedule (if any);
- Decision on approval of contractor selection result.
Depending on the scale and nature of each package, the contract documents may, in addition to the contract documents signed with a contractor, include one or some of the following documents:
- Contract completion record;
- Contract negotiation record (if any);
- Written agreement made by the parties on conditions of the contract, including general conditions of contract and special conditions of contract;
- Bid or proposal of the successful bidder and clarifications thereof;
- Bidding documents or RFP and addenda thereto;
- Other relevant documents.
What are the requirements of members of the expert team and appraisal team in Vietnam?
Pursuant to the provisions of Article 19 of Decree 24/2024/ND-CP, members of the expert team and appraisal team must meet the following requirements:
- Have a professional certificate in bidding, except for the cases:
+ Individuals who evaluate the overall contractor selection plan and specific contractor selection plan according to assigned tasks (not including bidding consultants) are not required to have a professional certificate in bidding
+ In case the opinion of specialized experts is needed, these experts are not required to have a professional certificate in bidding.
- Obtain at least a bachelor’s degree;
- Have active legal capacity as per the law; not being prosecuted for criminal liability;
- Have at least 3 years of work in one of the fields related to the legal, technical, financial aspect of the package: have experience or perform technical-related tasks stated in the EOI request, prequalification document, bidding document, RFP or financial- or legal-related tasks.
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