Circular No. 17/2005/TT-BXD guiding the method for establishing and managing budgeted prices for urban public services

CIRCULAR

Guidelines for Establishing and Managing Budgeted Prices for Urban Public Services

Pursuant to Decree No. 86/2002/NĐ-CP dated November 5, 2002 of the Government stipulating the functions, tasks, powers, and organizational structure of Ministries and ministerial-level agencies;

Pursuant to Decree No. 36/2003/NĐ-CP dated April 4, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Construction;

Pursuant to Decree No. 31/2005/NĐ-CP dated March 11, 2005 of the Government on production and supply of public goods and services;

To enhance the efficiency of state budget capital utilization, improve the quality of urban public services, and encourage organizations and individuals from all economic sectors to participate in providing urban public services, the Ministry of Construction hereby issues guidelines for establishing and managing budgeted prices for urban public services as follows:

I. GENERAL PROVISIONS

1. This Circular applies to the following urban public services:

- Collection, transportation, and landfill disposal of waste;

- Maintenance dredging of drainage systems;

- Maintenance of public lighting systems;

- Maintenance of greenery systems.

2. The budgeted price for urban public services is the necessary social cost estimated to complete part or all of the volume of service products according to the technical procedures approved by competent authorities. The budgeted price for urban public services established in accordance with this Circular is the maximum cost for state authorities to determine the price of urban public services and serves as the basis for negotiation, examination, and decision-making on the actual service prices implemented through bidding, ordering, or assigning plans to organizations and individuals providing urban public services.

3. All organizations and individuals using state budget funds to provide the aforementioned urban public services must comply with the provisions of this Circular.

II. METHODS FOR ESTABLISHING BUDGETED PRICES FOR URBAN PUBLIC SERVICES

The budgeted price for urban public services is determined as follows:

1. Volume of each type of urban public service work.

The volume of each type of urban public service work is determined based on plans for assignment, ordering, or urgent tasks assigned by competent state authorities to implement urban public services.

2. Unit price of each type of urban public service work.

The unit price of each type of urban public service work includes the following cost components: material costs, labor costs, and costs for using machinery and equipment (referred to as direct costs). Specifically as follows:

2.1. Material costs: These are primary and secondary material costs incurred during the provision of urban public services.

The consumption rate of each type of material required to complete one unit of volume of urban public service work according to the budget estimate standard issued by the Ministry of Construction or by the People's Committee of provinces and centrally-administered cities as prescribed; the price of each type of material is set by the competent authority responsible for pricing at the local level or the market price in the locality (material costs included in the unit price do not include value-added tax).

2.2. Labor costs: These are all direct labor costs incurred in providing urban public services.

The consumption rate of working days for each skill level specified to complete one unit of volume of urban public service work according to the budget estimate standard issued by the Ministry of Construction or by the People's Committee of provinces and centrally-administered cities as prescribed.

Daily wage for each skill level, including:

+ Basic salary: Determined according to Wage Scale AI (Urban Construction Workers) issued pursuant to Decree No. 205/2004/NĐ-CP dated December 14, 2004;

+ Allowances including night shift allowance, hazardous work allowance, mobility allowance, responsibility allowance, and other allowances (if applicable). These allowances are determined in accordance with the guidance of the Ministry of Labor, Invalids, and Social Affairs.

2.3. Costs for using machinery and equipment: These are direct costs for using machinery and equipment in providing urban public services.

3. General management costs: These are costs for administrative machinery and auxiliary units; production management service costs; costs for serving workers (excluding direct labor costs); interest payments on bank loans and other financial institutions; meal expenses during shifts; fees, taxes, and other costs. General management costs do not include rental costs for land and workshops (if applicable).

General management costs in the budgeted price for urban public services are determined as a percentage of direct labor costs to complete one unit of volume of urban public service work and are specifically defined in the table below:

TABLE 1

Unit of measurement: Percentage (%).

Type of public service

In the case where the volume of work for urban public service activities with machine and equipment usage costs exceeds 60% of direct costs, the general management cost shall be calculated at 2.5% of the machine and equipment usage costs.

4. The standard profit margin shall be calculated from 4% to 5% on direct costs and common management costs in the budgeted price for providing public services.

III. MANAGEMENT OF BUDGETED PRICES FOR URBAN PUBLIC SERVICES.

1. The budget cost standards for certain types of services prescribed in this Circular shall be issued by the Ministry of Construction and uniformly applied throughout the country; In cases where certain tasks of some types of urban public services mentioned in this Circular and other types of urban public services are not included in the current budget cost standards, the Department of Transport and Public Works shall coordinate with the Department of Construction (for centrally-administered cities) or the Department of Construction (for provinces) to organize research and establish such standards to submit to the People's Committee of the province or city for issuance and application, while reporting to the Ministry of Construction for monitoring and inspection;

2. The People's Committee of the province or centrally-administered city shall establish and issue unit prices for each type of task in urban public services applicable within their respective administrative areas;

3. Based on the guidance on the method of establishing and managing budgeted prices for urban public services in this Circular and the current state policies, the Department of Transport and Public Works (for centrally-administered cities) or the Department of Construction (for provinces) shall organize the establishment and submit for approval by the Chairman of the People's Committee of the province or centrally-administered city the budgeted prices for urban public services;

4. The budgeted price for urban public services is the basis for local authorities to negotiate, consider, and decide on the price of urban public services and select organizations or individuals to enter into economic contracts to provide urban public services through bidding, ordering, or assignment;

In cases where urban public service tasks have established service prices that are relatively stable locally, local authorities may use these prices as the budgeted prices for urban public services;

5. Adjustments to the budgeted prices for urban public services or the prices of urban public services shall be carried out when there are changes in material and labor costs and other relevant policies issued by competent state agencies;

IV. IMPLEMENTATION

1. The Ministry of Construction shall periodically or urgently inspect the implementation of the establishment of budget cost standards, unit prices, and the management of budgeted prices for urban public services in all localities nationwide;

2. The People's Committees of the provinces and centrally-administered cities shall be responsible for:

- Periodically or urgently inspecting the results of the completion of urban public service tasks by organizations and individuals under signed service contracts;

- Organizing the restructuring of State-owned companies performing public service tasks under their management according to Chapter III of Decree No. 31/2005/NĐ-CP dated March 11, 2005 of the Government on the production and supply of public goods and services;

- Establishing preferential mechanisms and incentives for organizations and individuals participating in urban public service tasks to implement the policy of socialization of urban public services at the local level as advocated by the Party and the State;

3. Encouragement is given to investors who invest in constructing new urban areas that have been put into partial or full operation but have not yet been handed over to local authorities for implementation in accordance with this Circular;

4. This Circular shall take effect fifteen days from the date of publication in the Official Gazette and replace Circular No. 05/2002/TT-BXD dated December 30, 2002 of the Ministry of Construction on guiding the establishment and management of costs for implementing urban public services. Transitional measures shall be handled according to the principle: Contracts already signed or budgeted costs (public service prices) already approved by competent authorities shall not be re-approved. Adjustments to budgeted costs (public service prices) due to changes in policies issued by competent authorities shall be implemented in accordance with current regulations;

Any difficulties encountered during implementation should be reported to the Ministry of Construction for guidance and resolution./.