Legal Provisions on Contracts with Contractors
Types of Contracts
1. Lump-sum Contract
a) A lump-sum contract applies to a package where, at the time of contractor selection, the scope of work, technical requirements, and implementation schedule are clearly defined, with little likelihood of changes in volume, technical requirements, or unforeseeable conditions; or where the package cannot yet determine the exact quantity or unit price, but the parties are able to determine risk management capacity, manage arising changes, or define the nature and characteristics of the output product, including EPC contracts and turnkey contracts.
b) When applying a lump-sum contract, the bid price considered for evaluation and award shall include contingency costs for risks related to workload and price escalation that may arise during contract performance, corresponding to the risk management responsibilities assigned to the contractor. The bid price must include all costs for such risks corresponding to the contractor’s responsibilities in performing the package.
c) The contract price shall remain unchanged throughout the contract performance period with respect to the scope of work, technical requirements, and contractual terms, except in cases of force majeure or changes to the scope of work leading to contract price adjustments.
d) Payments shall be made based on percentages of the contract price or the price of the work, work items, or workload corresponding to each payment stage as agreed in the contract, without requiring detailed confirmation of completed quantities.
2. Fixed-unit Price Contract
a) This type of contract applies to packages where the nature of the work can be clearly defined at the time of contractor selection, but the exact quantity or volume of work cannot be determined. The initial contract price is based on estimated quantities, fixed unit prices, and contingency costs for possible additional quantities, determined in accordance with law.
b) The unit prices shall remain unchanged throughout the contract performance period. The contractor shall be paid according to the accepted quantity of work and the fixed unit prices specified in the contract.
3. Adjustable-unit Price Contract
a) This type of contract applies to packages with long implementation periods and risks of price fluctuations in input costs, which may negatively affect contract performance if fixed unit prices are applied. The contract unit prices and contract price may be adjusted based on agreements in the contract. The initial contract price is based on the estimated necessary quantities with base unit prices and contingency costs for possible additional work and price escalation. The contract must specify the method of calculating price escalation and contingency costs as prescribed by law.
b) The contractor shall be paid according to the accepted quantity of work and the unit prices specified in the contract or adjusted unit prices (if any).
4. Time-based Contract
A time-based contract may apply in emergency situations; for repair or maintenance of works, machinery, equipment; or consultancy services where the scope and duration of services are difficult to determine. The contract price is calculated based on agreed unit prices for time (hourly, daily, weekly, or monthly rates) and reimbursable reasonable expenses.
5. Cost-plus Contract
This contract applies to work or services where, at the time of contractor selection, the scope of work and input requirements cannot be sufficiently determined. Upon signing, the parties agree on management costs, overheads, profit, and methods for calculating direct costs, which form the basis for reimbursement.
6. Performance-based Contract
This contract applies where payments are based on results accepted in terms of quality, quantity, and other factors. The contract must clearly state the required outputs, inspection and evaluation methods, levels of compliance, deductions, price adjustments (if any), and other implementation terms.
7. Percentage-based Contract
This contract only applies to construction insurance packages, where the contract value is precisely determined based on the actual value of the insured works accepted.
8. Mixed Contract
A mixed contract combines elements of the contract types specified in Clauses 1–7 of the Law on Procurement. It must clearly define the scope of work under each type of contract and related adjustments when multiple contract types are applied to the same package. Payments must comply with the payment provisions applicable to each contract type for the relevant scope of work.
Contract Documents with Contractors
1. A contract dossier with a contractor includes:
a) The contract document;
b) Appendices specifying the detailed scope of work, pricing schedules, and performance schedule (if any);
c) The decision approving the contractor selection result.
2. Depending on the package’s scale and nature, the contract dossier may also include:
a) Minutes of finalization of the contract;
b) Minutes of contract negotiation (if any);
c) Written agreements on general and specific contract conditions;
d) The selected contractor’s bid, proposal, and clarification documents;
đ) The bidding documents, request dossiers, and amendments or supplements;
e) Other relevant documents.
Conditions for Contract Conclusion
1. At the time of signing, the selected contractor’s bid or proposal must remain valid. For centralized procurement under framework agreements, the framework agreement must remain valid.
2. At the time of signing, the contractor must meet the required technical and financial capacity.
3. The project owner must ensure conditions for advance and payment funds, construction site availability, and other necessary conditions for timely implementation.
Signing Contracts with Selected Contractors
1. Each package shall be implemented under one contract; within one contract, one or multiple contract types may apply. For centralized procurement or divided packages, one package may be implemented under multiple contracts corresponding to parts thereof. Where multiple contract types apply, the specific type must be specified for each scope of work.
2. The contract signed must conform to the bidding/request dossier, bid/proposal, negotiation results (if any), and contractor selection approval, and must specify the scope for special subcontractors (if any) and the maximum value for subcontractors (excluding special subcontractors).
3. For joint ventures, all members must sign and stamp (if applicable) the contract. In centralized procurement with framework agreements, either all members sign with the purchasing entity or the designated member signs with the end-user in accordance with the joint venture agreement.
Performance Security
1. Contractors must provide one of the following forms of performance security:
a) Deposit;
b) Bank guarantee issued by a licensed domestic credit institution or a branch of a foreign bank in Vietnam;
c) Insurance guarantee certificate issued by a licensed domestic or foreign non-life insurance company in Vietnam.
2. Performance security applies to selected contractors, except:
a) Consulting service contractors;
b) Contractors selected through self-performance or community participation;
c) Packages awarded by direct contracting within the prescribed threshold.
3. Performance security must be provided before or at the same time the contract becomes effective.
4. Based on the package’s scale and nature, the performance security value is determined in the bidding/request dossier, ranging from 2% to 10% of the contract price.
5. The validity of performance security covers from contract effectiveness until completion of contractual obligations or commencement of warranty obligations (if any). If contract duration is extended, performance security must be extended accordingly.
6. Performance security shall not be refunded in the following cases:
a) Refusal to perform a contract already in effect;
b) Breach of contract terms;
c) Delay in performance due to contractor’s fault with refusal to extend performance security validity.
Principles of Contract Performance
1. The parties must comply with the signed contract.
2. Ensure honesty, cooperation, and compliance with the law.
3. Respect the interests of the State, the community, and the lawful rights of organizations and individuals.
Contract Amendments
1. Contract amendments refer to agreed changes to one or more terms of a signed contract. Amendments may only be made during the validity of the contract and must comply with Clause 2, Article 70 of the Law on Procurement. Amendments apply to all contract types specified in Article 64 of the Law on Procurement and must be formalized in writing.
2. The parties may agree on amendment procedures under Point a, Clause 1, Article 70 of the Law on Procurement in cases such as:
a) Policy or legal changes directly affecting contract performance;
b) Force majeure events;
c) Changes in transport methods, delivery locations, or related services for goods procurement packages;
d) Additional quantities under optional purchase beyond the initial scope. In this case, the amendment must specify the additional quantity, value, delivery schedule, or completion date, and related conditions. Optional purchases may be exercised multiple times but not exceed the maximum approved in the procurement plan;
đ) Approved design changes;
e) Proposals for innovations or improvements by either party yielding greater benefits for the project owner;
g) Schedule adjustments as per Clause 3, Article 70 of the Law on Procurement;
h) Other cases under law or agreed by the parties, including scope, price, and other contents.
3. Where price indices and other factors fluctuate as guided by the Ministry of Construction, the project owner and contractor may amend the contract for works under the Construction Law, consistent with civil law provisions on changed circumstances.
4. Amendments extending contract duration without exceeding project duration or approved package value (including contingency) but not exceeding total investment or procurement estimate may be decided by the project owner. The adjusted contract price must not exceed the total investment or procurement estimate.
5. Cases of adjustments already stipulated in the contract that do not require formal amendments include:
a) Price adjustments for inflation/deflation under adjustable unit price, time-based, or performance-based contracts in accordance with Decree 24/2024/ND-CP;
b) Volume changes under fixed or adjustable unit price contracts. For goods or non-consulting services, additional quantities under optional purchase are handled by contract amendment;
c) Adjustments of time for time-based contracts; direct cost changes for cost-plus contracts; base cost changes for percentage-based contracts; deduction or increase in payment values for performance-based contracts;
d) Other cases prescribed by law or agreed by the parties.
If such changes fail to meet the conditions under Clause 5, Article 70 of the Law on Procurement, approval by the competent authority is required.
Legal Basis
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Clause 37, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Procurement, the Law on PPP Investment, the Law on Customs, the Law on Value-Added Tax, the Law on Import and Export Duties, the Law on Investment, the Law on Public Investment, and the Law on Management and Use of Public Assets.
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Article 106, Decree No. 24/2024/ND-CP, detailing implementation of the Law on Procurement regarding contractor selection.
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Chapter VIII, Decree No. 24/2024/ND-CP, detailing implementation of the Law on Procurement regarding contractor selection.
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Clause 37, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Procurement, the Law on PPP Investment, the Law on Customs, the Law on Value-Added Tax, the Law on Import and Export Duties, the Law on Investment, the Law on Public Investment, and the Law on Management and Use of Public Assets.
