Circular No. 12/2020/TT-BTTTT guides the determination of costs for leasing information technology services using state budget funds according to the cost calculation method.

MINISTRY OF INFORMATION AND COMMUNICATION COMMUNICATION --------	SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness ---------------
Number: 12/2020/TT-BTTTT	Hanoi, May 29, 2020

CIRCULAR

GUIDELINES FOR DETERMINING THE COST OF LEASING INFORMATION TECHNOLOGY SERVICES USING STATE BUDGET FUNDS ACCORDING TO THE COST CALCULATION METHOD

Pursuant to the Law on Information Technology dated June 29, 2006;

Pursuant to Decree No. 17/2017/NĐ-CP dated February 17, 2017, issued by the Government, on the functions, tasks, powers, and organizational structure of the Ministry of Information and Communications;

Pursuant to Decree No. 73/2019/NĐ-CP dated September 5, 2019 of the Government on management of investment in application of information technology using state budget funds;

At the request of the Director of the Information Technology Agency,

The Minister of Information and Communications issues this Circular to guide the determination of costs for leasing information technology services using recurrent budget funds according to the cost calculation method prescribed in Decree No. 73/2019/NĐ-CP dated September 5, 2019 of the Government on management of investment in application of information technology using state budget funds (hereinafter referred to as Decree No. 73/2019/NĐ-CP).

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

Article 1. This Circular guides the determination of costs for leasing information technology services not available on the market using recurrent budget funds according to the cost calculation method prescribed in Decree No. 73/2019/NĐ-CP.

Article 2. The determination of costs for leasing information technology services available on the market shall be carried out in accordance with Clause 1, Article 52 of Decree No. 73/2019/NĐ-CP.

Article 3. The subjects applying this Circular are agencies, organizations, and individuals participating in or related to the activity of leasing information technology services using recurrent budget funds.

Article 4. It is encouraged for agencies, organizations, and individuals involved in leasing information technology services using other sources of funds to apply the provisions of this Circular.

Article 2. Interpretation of Terms

Article 1. Cost of leasing information technology services not available on the market (hereinafter referred to as custom service) includes all necessary costs for leasing information technology services throughout the lease period, including components such as service costs; management and operation costs of the service; maintenance costs of the service and other costs related to providing the service.

Article 2. Cost of developing and forming custom services includes all anticipated costs to form custom services, including costs for establishing new, expanding, or upgrading technical infrastructure systems, software, and databases (installation and construction costs; costs for purchasing information technology equipment; installation costs of equipment; software installation; testing, calibration of equipment and software).

Article 3. Management and operation costs of the service include all necessary costs to ensure that custom services operate smoothly without interruption throughout the lease period.

Article 4. Maintenance costs of the service include all necessary costs for hardware maintenance, software maintenance, updating, and database maintenance to ensure that the overall custom service operates smoothly without interruption throughout the lease period (including activities to modify software to correct errors, improve performance or attributes, functions of the software, or make the software run optimally in the operational environment based on system configuration adjustments according to the original design; excluding activities to establish new, expand, or upgrade the software system).

Article 3. Principles for calculating the cost of leasing custom services

1. Ensuring the objectives and effectiveness of leasing custom services.

2. Ensuring accurate and complete calculation of all necessary costs for leasing custom services.

3. The cost of leasing custom services is determined in accordance with either advance or final payment. settlement. Depending Article 2. Effectiveness of enforcement conditions, capital balancing capacity, budget allocation, agencies, organizations hiring services according to specific requirements select the method for determining service costs within the cost of hiring services according to specific requirements as detailed in this Circular.

4. Guide the method for calculating the cost of hiring services according to specific requirements as prescribed in this Circular to determine the budget estimate, tender package price for hiring services according to specific requirements, and payment periods. In cases where the budget estimate, payment period, and payment time for hiring services according to specific requirements have been approved according to the guidance in this Circular but during the process of selecting contractors, factors arise necessitating changes to the payment period and payment time, the agency, organization hiring services according to specific requirements, and the contractor may negotiate to re-determine the payment period and payment time but must ensure that the service rental price does not exceed:

a) The bid price (after correcting errors, adjusting discrepancies, deducting discount value if applicable);

b) The budget estimate or tender package price when converted to the same cost calculation method based on the negotiated payment period and payment time.

Chapter II

METHOD FOR CALCULATING THE COST OF HIRING SERVICES ACCORDING TO SPECIFIC REQUIREMENTS

Article 4. Contents of costs constituting the cost of hiring services according to specific requirements

1. Service costs are calculated as prescribed in Article 6 of this Circular.

2. Management and operation costs of the service (if any) are calculated as prescribed in Clause 2, Article 8 of this Circular.

3. Maintenance costs of the service (if any) are calculated as prescribed in Clause 1, Article 8 of this Circular.

4. Other related costs for providing the service (such as database creation costs; standardization, conversion costs for data entry; data entry implementation costs for the database; training and usage guidance costs; system management and operation staff training costs; installation and leased line rental costs; domain registration and maintenance costs; hosting rental costs; server placement rental costs; storage rental costs; notification message costs; call center support costs) are calculated as prescribed in Clause 2, Article 8 of this Circular.

Article 5. Method for calculating the cost of hiring services according to specific requirements

The cost of hiring services according to specific requirements is determined by the formula:

of_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.} = G_tdv + of_v + G_{+ bt} + G_k

Where:

: bid price after corrections and adjustments, minus any discount (if applicable) of the lowest bidder among those detailed financial evaluations;_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.}: cost of hiring services according to specific requirements (VND)

: bid price after corrections and adjustments, minus any discount (if applicable) of the lowest bidder among those detailed financial evaluations;_tdv: service cost (VND)

: bid price after corrections and adjustments, minus any discount (if applicable) of the lowest bidder among those detailed financial evaluations;_v: management and operation cost of the service (VND)

: bid price after corrections and adjustments, minus any discount (if applicable) of the lowest bidder among those detailed financial evaluations;_{+ bt}: maintenance cost of the service (VND)

: bid price after corrections and adjustments, minus any discount (if applicable) of the lowest bidder among those detailed financial evaluations;_k: other related costs for providing the service (VND)

Article 6. Method for calculating service costs (G_tdv)

1. Service costs are determined by the formula:

of_{tdv =} of_dv * n

Where:

: bid price after corrections and adjustments, minus any discount (if applicable) of the lowest bidder among those detailed financial evaluations;_dv: Service cost per payment period is determined according to the methods specified in Clauses 2 and 3 of this Article.

- n: Number of payment periods during the period of hiring services according to specific requirements.

2. In cases where the service cost per payment period is paid equally at the end of each period, the determination formula is as follows:

ofdv =	Tđ * F * (1 + F)For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract. - S * r	* (1 + GTGT)
	(1 + F)For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract. - 1

Where:

- T_đ: Pre-tax construction and development costs forming the service (VND). Construction and development costs forming the service are calculated as prescribed in Article 7 of this Circular.

- r: Rental interest rate per payment period (%). F is determined:

N |||: Average interest rate of domestic Vietnamese dong deposit rates for a one-year term and the corresponding term with the number of years of hiring services according to specific requirements (in cases where there is no corresponding term, it is taken from the nearest lower term with the number of years of hiring services according to specific requirements) as listed by three reputable commercial joint-stock banks in Vietnam at the closest point within six months prior to the approval of the hiring service plan according to specific requirements. : Number of payment periods in one year of hiring services according to specific requirements

k: Remaining value of assets forming the service of.

- The Office of Legal Document Supervision (Ministry of Justice);the lessor at the end of the hiring service period according to specific requirements after depreciation as prescribed (using the straight-line depreciation method) (VND). : Value Added Tax.

- GTGT3. In cases where the service cost per payment period is paid equally at the beginning of each period, the determination formula is as follows:

Where: The quantities are determined similarly as prescribed in Clause 2 of this Article.

4. An example of calculating service costs is presented in the Appendix issued together with this Circular.

4. An example of calculating the service fee is set out in the Appendix attached to this Circular.

Article 7. Method for calculating construction and development costs to form services (T_đ)

1. Construction and development costs to form services shall be calculated according to stipulating of the Ministry of Information and Communications on establishing and managing cost estimates for This Circular takes effect from August 1, 2022./. investment in information technology applications.

2. In cases where service rental plans are specifically requested and anticipated to use previously used technical infrastructure equipment, then the construction and development costs to form services shall be calculated based on the remaining value of the equipment after depreciation according to regulations (using the straight-line depreciation method).

Article 8. Method for calculating management and operation costs of services (Gv), maintenance costs of services (Gbt), and other related costs for providing services (G_k)

1. Maintenance costs of services shall be determined based on market prices ensuring compatibility with the specific requirements of the agency or organization renting the service : Number of payment periods in one year of hiring services according to specific requirements

2. Management and operation costs of services and other related costs for providing services shall be determined according to one of the following methods:

a) Based on market prices ensuring compatibility with the content of each type of cost.

b) Preparing a budget based on the volume of work performed for each type of cost and unit price, standard rate as prescribed (if applicable) to carry out that workload.

The preparation of the budget shall be carried out according to the provisions a) Providing testimonies and expert opinions for the case for which they have been summoned; of the Ministry of Information and Communications on establishing and managing cost estimates for This Circular takes effect from August 1, 2022./. investment in information technology applications.

c) Combining the methods.

3. The content of management and operation work of services and maintenance services shall be implemented according to the regulations of the Ministry of Information and Communications on management, operation, and maintenance for products of information technology application investment projects using state budget funds.

Chapter III

IMPLEMENTING PROVISIONS

Article 9. Effectiveness and transitional provisions

1. This Circular takes effect from July 14, 2020.

2. Activities of renting services according to specific requests, which have been approved for budgeting before this Circular takes effect and are currently being implemented, shall continue to be implemented according to the regulations at the time of approval until the completion of the rental activities, acceptance, and settlement of the signed contracts.

Article 10. Responsibility for Implementation

1. The E-Government Department of the Ministry of Information and Communications shall be responsible for promoting, organizing guidance, and monitoring the implementation of this Circular.

2. During the implementation of this Circular, if there are any issues, agencies, organizations, and individuals should promptly report them to the Ministry of Information and Communications (E-Government Department) for consideration and resolution./.

Place of Receipt: - Prime Minister (for signature); - Deputy Prime Ministers (for comments); - Central Party Office; - National Assembly's Office; - President's Office; - Central agencies of mass organizations; - Supreme People's Court; - Supreme People's Procuracy; - State Audit Agency; - Ministries, agencies equivalent to ministries, and government agencies; - People's Committees of provinces and centrally governed cities; - Specialized units for Information Technology of Ministries, agencies equivalent to Ministries, and agencies under the Government; - Provincial Departments of Information and Communications; - Legal Documents Supervision Bureau (Ministry of Justice); - Official Gazette, Government Portal; - Ministry of Information and Communications: Minister and Deputy Ministers; agencies and units under and directly under the Ministry; the Ministry's electronic portal; - To be filed: VT, THH(250).

THE MINISTER Nguyen Manh Hung

ANNEX

EXAMPLE OF CALCULATING SERVICE COSTS

 (Attached to Circular No. 12/2020/TT-BTTTT dated May 29, 2020 of the Minister of Information and Communications)

Example: Party A intends to rent an information technology service not available on the market for three years. Party A determines the cost to build and develop the service before VAT is 3 billion VND. Calculate the service cost in the case where the rental payment is evenly distributed over each payment period is: 01 year (12 months) and six months.

Among which, the property constituting the information technology service not available on the market has a depreciation period of five years.

Calculation method:

1. Determine the input quantities Cost to build and develop the service before tax

a) : T3 billion VND_đ = Number of payment periods during the rental service period according to specific requests.

b) (n): - In the case of a payment period of one year: n = 3 years/1 year = 3 periods;

- In the case of a payment period of six months: n = 3 years * 12 months/6 months = 6 periods.

Number of payment periods in one year of rental service according to specific requests

c) (k) - In the case of a payment period of one year: k = n/number of rental years = 3/3 = 1;:

- In the case of a payment period of six months: k = n/number of rental years = 6/3 = 2.

Average interest rate (N):

For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;) Portable gas fire extinguisher with a capacity of no less than 3kg or portable water-based fire extinguisher with a capacity of no less than 6 liters Deposit interest rate for Vietnamese dong

Banks	Average interest rate		Average average interest rate	Term of one year
	Term of three years	Vietcombank
BIDV	6,5%	6,7%	6,6%
Vietinbank	6,6%	6,8%	6,7%	6,7%
Therefore, N = 6.7%.	6,7%	6,9%	6,8%

Rental interest rate per payment period

đ) (r): - In the case of a payment period of one year: r = N/k = 6.7%/1 = 6.7%;

- In the case of a payment period of six months: r = N/k = 6.7%/2 = 3.35%.

) G

Average loan repayment period is 10 years;Remaining value of the property constituting the serviceAverage depreciation rate of the asset (straight-line method) (Provincial People's Committees set specific prices):

Original cost of fixed assets	=	600 million VND/year	=	3.000.000.000 VND	=	Depreciation periodTherefore, S = 600 million VND/year * 2 years = 1.2 billion VND
		2. Calculate the service cost		5 year

In the case where the service cost per payment period is evenly paid at the end of the period

a) Service cost per payment period of one year

2.1. Annual service cost:

= 762,536,789 VND/period (excluding VAT).

Therefore, the service cost G

ofdv =	3.000.000.000 * 6,7% * (1 + 6,7%)3 - 1.200.000.000 * 6,7%
	(1 + 6,7%)3 - 1

of_dv is: 762,536,789 VND/period * 3 periods =

VND (excluding VAT)._tdv b) Service cost per payment period of six months 2.287.610.367 Service cost per six-month period:

= 376,340,233 VND/period (excluding VAT).

is: 376,340,233 VND/period * 6 periods =

ofdv =	3.000.000.000 * 3,35% * (1 + 3,35%)6 - 1.200.000.000 * 3,35%
	(1 + 3,35%)6 - 1

of_dv In the case where the service cost per payment period is evenly paid at the beginning of the period

VND (excluding VAT)._tdv = 714,654,910 VND/period (excluding VAT). 2.258.041.398 Service cost per six-month period:

2.2. is: 714,654,910 VND/period * 3 periods =

= 762,536,789 VND/period (excluding VAT).

Therefore, the service cost G

ofdv =	3.000.000.000 * 6,7% * (1 + 6,7%)3 - 1.200.000.000 * 6,7%
	(1 + 6,7%) * [(1 + 6,7%)3 - 1]

of_dv = 364,141,493 VND/period (excluding VAT).

VND (excluding VAT)._tdv is: 364,141,493 VND/period * 6 periods = 2.143.964.730 Service cost per six-month period:

= 376,340,233 VND/period (excluding VAT).

is: 376,340,233 VND/period * 6 periods =

ofdv =	3.000.000.000 * 3,35% * (1 + 3,35%)6 - 1.200.000.000 * 3,35%
	(1 + 3,35%) * [(1 + 3,35%)6 - 1]

of_dv = 364,141,493 VND/period (excluding VAT).

VND (excluding VAT)._tdv is: 364,141,493 VND/period * 06 periods = 2.184.848.958 Service cost per six-month period: