Decree No. 50/2021/ND-CP Amending and supplementing some articles of Decree No. 37/2015/ND-CP dated April 22, 2015 of the Government detailing construction contracts

DECREE

Amending and supplementing certain articles of Decree No. 37/2015/NĐ-CP dated April 22, 2015 of the Government detailing construction contracts

The Government promulgates this Decree amending and supplementing certain articles of Decree No. 37/2015/NĐ-CP dated April 22, 2015 of the Government detailing construction contracts.

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||| Pursuant to the Law on Organization of the Government dated June 19, 2015;

Pursuant to the Law on Organization of Local Administration dated June 19, 2015;

Pursuant to the Law Amending and Supplementing Several Provisions of the Law on Organization of the Government and the Law on Organization of Local Administration dated November 22, 2019;

Pursuant to the Law on Construction dated June 18, 2014; the Law Amending and Supplementing Certain Provisions of the Law on Construction dated June 17, 2020;

Pursuant to the Law on Public Investment dated June 13, 2019;

Pursuant to the Public-Private Partnership Investment Law dated June 18, 2020;

Pursuant to the Law on Bidding dated November 26, 2013;

Pursuant to the Law on Management and Use of State Capital for Investment in Production and Business Activities at Enterprises dated November 26, 2014;

At the proposal of the Minister of Construction,

Article 1. Amending and supplementing certain articles of Decree No. 37/2015/NĐ-CP dated April 22, 2015 of the Government detailing construction contracts as follows:

"2. This Decree applies to organizations and individuals related to the establishment and management of implementation of construction contracts under investment projects using public funds, state capital outside public investment, and construction contracts between project companies PPP and contractors implementing packages within PPP projects (short for Public-Private Partnership projects).

1. Amending and supplementing Clause 2 of Article 1 as follows:

Organizations and individuals shall refer to the provisions of this Decree to establish and manage construction contracts for projects using other capital."

2. Amending and supplementing certain points of Clause 1 and Clause 2 Article 3 as follows:

a) Amending and supplementing Point c of Clause 1 as follows:

"c) A procurement contract for materials and equipment is a contract for purchasing materials and equipment to be installed in construction works according to technological design; a general procurement contract for materials and equipment is a contract for purchasing materials and equipment for all works of an investment construction project."

b) Amending and supplementing Point đ of Clause 1 as follows:

"đ) An engineering-procurement contract (in English, Engineering - Procurement, abbreviated as EP) is a contract for performing design work and purchasing materials and equipment to be installed in construction works according to technological design; a general engineering-procurement contract for materials and equipment is a contract for design and purchasing materials and equipment for all works of an investment construction project."

c) Amending and supplementing Point e of Clause 1 as follows:

"e) A procurement-construction contract (in English, Procurement - Construction, abbreviated as PC) is a contract for performing procurement of materials and equipment and construction of works, sub-works; a general procurement-construction contract for materials and equipment is a contract for procurement of materials and equipment and construction of all works of an investment construction project."

d) Amending and supplementing Point g of Clause 1 as follows:

"g) An engineering-procurement-construction contract (abbreviated as EPC contract) is a contract for performing tasks from design, procurement of materials and equipment to construction of works, sub-works and trial operation, acceptance, handover to the contracting party; a general engineering-procurement-construction contract (EPC) is a contract for design, procurement of materials and equipment, and construction of all works of an investment construction project.

The EPC contract is prioritized for complex projects with high technical and technological requirements and must strictly comply with the synchronization and consistency from the design phase to the provision of equipment, construction, and technology transfer training. Before deciding to apply the EPC contract, the investor decision-maker is responsible for organizing an assessment of technical and technological requirements, shortening the project implementation time, synchronization from the design phase, provision of equipment, construction of works to the operation training and handover of the works to meet the project's approved objectives and ensure the feasibility of applying the EPC contract compared to other types of contracts."

đ) Supplementing Point i1 after Point i of Clause 1 as follows:

"i1) A simple construction contract with small scale is a construction contract for implementing tender packages and has a value not exceeding the limit of small-scale tender packages as prescribed by the law on bidding, while the content of the work under the contract has a simple technical nature and is easy to implement."

e) Supplementing Points d1, d2 after Point d of Clause 2 as follows:

"d1) A cost-plus contract;

d2) Other construction contracts."

g) Amending and supplementing Point đ of Clause 2 as follows:

"đ) A combined price contract is a construction contract using a combination of the types of contracts mentioned from Point a to Point d2 of this clause."

3. Supplementing Clause 5 after Clause 4 Article 4 as follows:

"5. Prior to signing an EPC contract, the parties must agree on the following main contents:

a) The scope of work expected to be performed under the EPC contract;

b) The location of construction, route direction of the works, type, grade of the works; scale, capacity, and selected product scheme; operational capability;

c) Information about documents and data on natural conditions, geological conditions, hydrogeological, hydrological conditions of the area where the works are constructed;

d) Requirements for construction design and some initial design parameters;

đ) Technical and engineering solutions, equipment, and commercial aspects; origin of equipment, products; technical connection solutions adapting to existing systems (if any);

e) Infrastructure connection solutions inside and outside the works' scope; fire prevention and explosion protection solutions within the EPC package scope;

g) Construction solutions and major materials used;

h) Requirements for construction quality management, testing, trial operation, warranty, and maintenance of the works;

i) Architectural solutions, layout, cross-sections, elevation of the works, key dimensions, and structural components of the construction works within the EPC package scope;

k) List and extent of application of technical standards used in design, supply of equipment, and construction of the works;

1) Technical guidelines for materials, equipment, technical services; operation procedures for individual and overall parts of the works within the EPC package scope;

m) Environmental protection requirements, safety assurance, fire prevention and explosion protection, and other issues;

n) Requirements related to approval procedures; number of types of documents and materials and deadlines for submission to the contracting party."

n) Requirements related to approval procedures; the quantity of types of files, documents to be submitted to the tenderer, and deadlines for submission;

0) Schedule of progress plans and completion milestones for major works and the entire project to be put into operation and use;

p) Allocation of responsibilities between the contracting party and the contractor regarding the provision of electricity, water, communication services, internal transportation routes, and other available services on the construction site, as well as the handling of interfaces between different contracts within the same construction project.

4. Add Clause 7 following Clause 6 of Article 7 as follows:

"7. For EPC contracts:

a) Prior to purchasing materials and equipment for the EPC contract, the contractor must prepare technical specifications, technology, and origin requirements to submit to the contracting party for approval before procurement if such matters are agreed upon in the contract. The approval of the contracting party does not reduce the responsibility of the contractor for the procurement of materials and equipment for the EPC contract. In cases where there is no agreement in the EPC contract, the contractor shall comply with the approved design documents and the technical specifications, technology, and origin of the equipment specified in the EPC contract.

b) The contractor may directly procure or subcontract for the procurement of materials and equipment for the EPC contract."

5. Add some points to Clause 3 and Clause 5 of Article 15 as follows:

a) Add Point d1 following Point d of Clause 3 as follows:

"d1) A cost-plus contract price is a contract price that has not been determined at the time of signing the contract, the parties only agree on management costs, common costs, and profit due to insufficient basis to determine the scope of work and direct costs to perform the contract tasks.

The level of management costs, common costs, and profit is agreed upon by the parties as a percentage or a specific value based on reasonable and legitimate actual direct costs necessary to perform the contract tasks confirmed by the parties;

The level of management costs, common costs, and profit is fixed or variable (increasing or decreasing with or without maximum and minimum limits) depending on the actual direct costs agreed upon by the parties in the contract to ensure the interests of both parties."

b) Add Point d1 following Point d of Clause 5 as follows:

"d1) For cost-plus contracts,

The cost-plus contract price applies only to packages where, at the time of signing the contract, the parties do not have sufficient basis to determine the scope of work and the necessary requirements for material, labor, machinery, and construction equipment needed to perform the anticipated contract tasks."

6. Add a point to Clause 4 and a clause following Clause 5 of Article 18 as follows:

a) Add Point a1 following Point a of Clause 4 as follows:

"a1) For simple and small-scale contracts, the investor shall consider and decide on the implementation of interim payment guarantees in accordance with the nature of the contract tasks and reduce unnecessary procedures."

b) Add Clause 5a following Clause 5 as follows:

"5a. For simple and small-scale contracts, the interim payment or non-interim payment shall be considered and agreed upon by the contracting party and the contractor according to the proposal of the contractor to ensure compliance with the requirements of the package and reduce unnecessary procedures."

7. Amend and supplement Clause 3 of Article 22 as follows:

"3. The deadline for finalizing the construction contract settlement shall be implemented in accordance with the provisions of Clause 2 of Article 147 of the Construction Law No. 50/2014/QH13 amended and supplemented in accordance with Point c of Clause 64 of Article 1 of Law No. 62/2020/QH14 amending and supplementing certain articles of the Construction Law."

8. Amend and supplement Article 23 as follows:

"Article 23. Liquidation of construction contracts

The liquidation of construction contracts shall be carried out in accordance with the provisions of Clause 3 of Article 147 of the Construction Law No. 50/2014/QH13 and Clause 4 of Article 147 of the Construction Law No. 50/2014/QH13 amended and supplemented in accordance with Point c of Clause 64 of Article 1 of Law No. 62/2020/QH14 amending and supplementing certain articles of the Construction Law."

9. Amend and supplement Point d of Clause 2 of Article 31 as follows:

"d) For EPC contracts established through the selection of an EPC contractor immediately after the basic design is approved: Timely acceptance, review, approval, or submission to the competent authority for review and approval of designs developed after the approved basic design by the investment decision-maker when approving the project in accordance with the law, excluding the construction budget of projects and sub-projects within the scope of the EPC contract.

In case the EPC contract is established through the selection of an EPC contractor immediately after the FEED design is approved: Timely acceptance, review, approval, or submission to the competent authority for review and approval of designs developed after the approved FEED design by the investment decision-maker when approving the project in accordance with the law, excluding the construction budget of projects and sub-projects within the scope of the EPC contract."

10. Amend and supplement Point e of Clause 2 of Article 32 as follows:

"e) For EPC contracts established through the selection of an EPC contractor immediately after the basic design is approved: Preparation of designs developed after the approved basic design by the investment decision-maker when approving the project in accordance with the approved basic design, excluding the construction budget of sub-projects and projects within the scope of the EPC contract.

In case the EPC contract is established through the selection of an EPC contractor immediately after the FEED design is approved: Preparation of designs developed after the approved FEED design by the investment decision-maker when approving the project in accordance with the approved FEED design, excluding the construction budget of sub-projects and projects within the scope of the EPC contract."

11. Amend and supplement Clause 2 of Article 35 as follows:

"2. Construction contracts shall only be adjusted in the cases provided for in Clause 2, Article 143 of the Construction Law No. 50/2014/QH13 and Clause 3, Article 143 of the Construction Law No. 50/2014/QH13 amended and supplemented pursuant to Point c, Clause 64, Article 1 of Law No. 62/2020/QH14 amending and supplementing certain provisions of the Construction Law. In cases where the State changes policies directly affecting the implementation of construction contracts, the adjustment of the contract shall only apply to the portion of work affected by such policy change and shall be implemented in accordance with the regulations and guidance on implementing such policies issued by the competent authority."

12. Amend and supplement Article 36 as follows:

"Article 36. Principles for Adjusting Construction Contracts

1. The adjustment of construction contracts shall only be applied during the period of contract implementation, including any extended implementation periods under the provisions of the law.

2. For fixed unit price contracts, the contract unit price may only be adjusted in the cases provided for in Points b, c, and d, Clause 2, Article 143 of the Construction Law No. 50/2014/QH13.

3. For lump sum contracts, the contract may only be adjusted for additional work volumes outside the scope of the signed contract (for construction works contracts and equipment supply contracts, this means work outside the design scope or tender requirements; for consultancy contracts, it means tasks outside the consultancy scope) and in the cases provided for in Points b, c, and d, Clause 2, Article 143 of the Construction Law No. 50/2014/QH13.

4. If the contract price after adjustment does not exceed the approved tender package price or the approved budget estimate (including contingency costs for that package), the investor has the right to decide on the adjustment; if it exceeds the approved tender package price or the approved budget estimate, approval from the investment decision-making authority or the Minister of the relevant sector, or the Chairman of the People's Committee at the provincial level when delegated for projects decided upon by the Prime Minister before the adjustment is made must be obtained, and sufficient funds must be ensured for payment to the contractor according to the agreement in the contract. Adjustment of the construction budget estimate, tender package price, and tender package price shall be carried out in accordance with the laws on construction cost management and bidding."

13. Amend and supplement Clause 3, Article 37 as follows:

"3. For additional work volumes outside the scope of the signed contract without a specified unit price or method for determining the unit price in the contract, the parties to the contract must agree and unify the unit price or principles and methods for determining the price for performing this work volume before implementation."

14. Amend and supplement some points of Clause 2 and Clause 3, Article 38 as follows:

a) Amending and supplementing point b Clause 2 as follows:

"b) Where the actual quantity of work performed increases or decreases by more than 20% compared to the corresponding quantity recorded in the contract, and simultaneously causes a change of over 0.25% in the contract value and over 1% in the unit price of the work or the additional work volume without a unit price in the contract, the parties shall agree to determine a new unit price for these quantities based on the agreed pricing principle in the contract for settlement.

Where the actual quantity of work performed increases by more than 20% compared to the corresponding quantity recorded in the contract, the new unit price shall only be applied to the actual quantity exceeding 120% of the quantity recorded in the contract.

Where the actual quantity of work performed decreases by more than 20% compared to the corresponding quantity recorded in the contract, the new unit price shall be applied to the entire actual completed and accepted quantity of work."

b) Amending and supplementing Point a Clause 3 as follows:

"a) Methods for adjusting contract prices include direct offsetting methods and adjustment formula methods as stipulated in Point b of this Clause. The application of contract price adjustment methods must be consistent with the nature of the work, type of contract price, currency of payment, and must be agreed upon by the parties in the contract. The price index for adjusting construction contract prices by formula as stipulated in Point b, Clause 3 of this Article is the construction price index."

15. Amend and supplement Article 42 as follows:

"Article 42. Contract Rewards, Penalties for Breach of Contract

The implementation of contract rewards and penalties for breach of contract shall be carried out in accordance with Clause 1, Article 146 of the Construction Law No. 50/2014/QH13 and Clause 2, Article 146 of the Construction Law No. 50/2014/QH13 amended and supplemented pursuant to Point c, Clause 64, Article 1 of Law No. 62/2020/QH14 amending and supplementing certain provisions of the Construction Law."

16. Amend and supplement Clause 2, Article 54 as follows:

"2. The Ministry of Construction shall guide and inspect the implementation of legal provisions on construction contracts; guide the adjustment of construction contracts, methods for adjusting construction contract prices, types of construction contracts, model construction contracts; guide model EPC contracts, simple construction contracts with small scale, and other necessary contents of this Decree to meet the requirements of state management of construction contracts."

Article 2. Transitional provisions

1. Construction contracts already signed and being implemented before this Decree takes effect shall be implemented in accordance with the provisions on construction contracts before this Decree takes effect and the contents of the signed contracts.

2. Construction contracts currently under negotiation but not yet signed, if they contain provisions inconsistent with this Decree, shall report to the investment decision-making authority for examination and decision based on the principle of ensuring the quality, progress, and effectiveness of the construction investment project and not harming the rights and legitimate interests of the parties.

3. The contents of the construction contract in tender documents and request for proposal documents that have been approved but not yet issued must be adjusted if they are inconsistent with the provisions of this Decree; in cases where tender documents and request for proposal documents have been issued but bidding has not yet closed, and there are changes to the contract-related contents to comply with the provisions of this Decree, such changes must be notified to all bidders who have purchased the tender documents and request for proposal documents so that they can adjust their bid documents and proposal documents accordingly; in cases where bidding has already closed, the provisions of Clause 2 of this Article shall be implemented.

Article 3. Effectiveness and Implementation

1. This Decree takes effect from the date of signature.

2. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial People's Committees under the central government, Heads of political organizations, political-social organizations, socio-professional organizations, Chairpersons of State Enterprise Groups' Boards of Directors, State Corporations' Boards of Directors, and related organizations and individuals are responsible for implementing this Decree.