Directive No. 734/CT-TTg on rectifying management work for EPC contracts

DIRECTIVE

On Rectifying Management of EPC Tender Packages

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In recent years, the application of tender mechanisms, including EPC tender packages for projects using state capital, has contributed to accelerating investment construction progress, shortening project implementation time, enhancing consistency and synchronization, and improving management efficiency. However, the organization and implementation of EPC tender packages have revealed some shortcomings such as weak tender dossier quality; inaccurate project estimates and tender prices compared to market rates; limited capacity and experience of some EPC contractors; insufficient domestic contractor participation opportunities; inadequate foreign labor management; lax owner supervision; prolonged contract execution times... These issues have led to delayed project schedules, substandard quality, particularly delaying power plant construction projects exacerbating electricity shortages, and causing public dissatisfaction with delayed infrastructure projects in major cities, significantly impacting economic and social development plans.

To enhance investment effectiveness in infrastructure projects, ensure energy security, leverage domestic capabilities, and improve the competitiveness of domestic contractors, the Prime Minister instructs:

I. ON IMPLEMENTING EPC TENDER PACKAGES

The Ministers, Heads of ministerial-level agencies, Chairpersons of provincial People's Committees under the central government, and Chairpersons of State-owned enterprise councils shall review and direct the implementation of EPC tender packages within their functions, tasks, and management scope according to the following contents:

1. For ongoing contracts:

a) Strengthen monitoring to ensure contract execution according to the schedule and construction progress committed by the contractor in the tender dossier and signed contract;

b) Strictly handle contract violations related to delays, non-compliance with material and equipment quality standards, etc., as stipulated in the contract and relevant laws on tendering, construction, and other applicable laws;

c) Publicly disclose information on violation handling as required;

d) Report specifically on the causes and economic losses due to delays for contracts of Group A projects that have been delayed by six months or more and not yet settled, to be compiled and evaluated by the Ministry of Planning and Investment.

2. For contracts in the signing phase:

a) Review draft contract conditions; if they are deemed unfeasible or ineffective, refuse to sign the contract;

b) Clearly define sufficient sanctions in the contract to bind the contractor to ensure project progress, quality, and cost control within the total investment ceiling (penalties, suspension, and termination of the contract).

3. For upcoming projects and tender packages:

a) When preparing Feasibility Studies (for construction investment projects), investors must adhere to advanced and modern technology requirements; accurately reflect and forecast price fluctuations of equipment, materials, and goods based on domestic and international market prices;

b) Investors and tenderers must consider dividing EPC tender packages into separate tenders when planning; where possible, divide them into consultancy (E), supply of equipment and materials (P), and construction (C) packages, or into consultancy and supply of equipment and materials (EP) and construction (C) packages to facilitate domestic enterprises' participation and execution. Do not implement EPC tender packages unless truly necessary. If strict synchronization is required for EPC project implementation, the tender dossier must specify minimum technical requirements not lower than 90% of the total points (if assessed by scoring method) or all key criteria must be met (if assessed by pass/fail method);

c) For EPC tender packages where domestic contractors can undertake over 50% of the workload, international tenders shall not be organized but domestic open tenders must be conducted; for parts of equipment and technology not produced domestically, two options may be considered:

- Separating the equipment and technology part into a separate tender for international bidding; in this case, the tender dossier must demonstrate a binding commitment and close cooperation between the foreign manufacturer and the domestic contractor to successfully complete the project and ensure its synchronization;

- Assigning the winning domestic contractor to select special subcontractors to provide advanced and modern equipment and technology; the selection must be approved by the investor.

d) For large-scale EPC tender packages requiring diverse and complex technologies for important sectoral or national projects, the sectoral ministry shall establish economic-technical scientific councils to study and propose methods for evaluating equipment quality (capacity, performance, operating costs, maintenance...) and lifespan throughout the project's life cycle, ensuring comparability of different types of equipment and technology offered by contractors during international bidding for equipment and technology from abroad;

đ) Strictly comply with the use and management of foreign labor as prescribed by laws on tendering and labor.

4. Review the project management board staff and the project sponsors, enhance training on bidding and project management skills to ensure compliance with current professional requirements for sponsors, tenderers, bidding expert teams, and related individuals, while raising awareness of professional ethics and personal responsibility. Increase the use of professional bidding organizations to improve the quality of bidding activities and ensure the selection of contractors with sufficient capacity, experience, and reputation to fulfill the tender packages.

II. RESPONSIBILITIES OF MINISTRIES AND SECTORS

1. The Ministry of Science and Technology shall take the lead and coordinate with the Ministries of Industry and Trade, Natural Resources and Environment, Construction, Transport, Agriculture and Rural Development, Information and Communications to review industry technology standards to prevent the illegal importation of outdated technologies from around the world, accepting only advanced, environmentally safe technologies, and proposing selective solutions that align with WTO commitments.

2. The Ministry of Industry and Trade shall take the lead in summarizing and evaluating the implementation of special mechanisms and policies for power projects pursuant to Decision No. 1195/QD-TTg dated November 9, 2005 of the Prime Minister, and propose adjustments if necessary.

3. The Ministry of Construction shall take the lead and coordinate with sectoral management ministries to review and recommend amendments to relevant regulations concerning sanctions for breach of contract and penalties for violations, aiming to increase penalty levels for contracts and ensuring strict handling of intentional breaches.

4. The Ministry of Labor, Invalids and Social Affairs shall study and propose amendments to the regulation requiring foreign workers employed in enterprises, agencies, and organizations in Vietnam for at least three months to have work permits, changing it to require all foreign workers in such positions to have work permits, and instruct the Provincial Departments of Labor, Invalids and Social Affairs to cooperate with local police to strengthen inspections and supervision of foreign labor usage on construction sites.

5. The Ministry of Public Security shall coordinate with the Ministry of Foreign Affairs to instruct the Immigration Department and diplomatic missions abroad to strictly control the issuance of entry and exit visas for foreigners; when issuing visas for ten or more foreigners to work in Vietnam under any form, the opinion of the investment management agency or sponsor must be obtained.

6. The Ministry of Planning and Investment shall review and recommend amendments to legal provisions on bidding in accordance with the Prime Minister's directive in Document No. 38/TTg-KTN dated September 30, 2010.

III. IMPLEMENTATION

1. The Ministry of Planning and Investment shall take the lead and coordinate with relevant ministries and sectors to monitor, urge, inspect, and audit sponsors and tenderers in their implementation of this Directive; and recommend the Prime Minister to handle strictly cases where the Directive is not followed.

2. Ministers, Heads of ministerial-level agencies, Chairpersons of People's Committees of provinces and centrally governed cities, Chairpersons of State Economic Group Councils, and State Corporation General Directors within their jurisdiction shall direct sponsors and tenderers to strictly adhere to the spirit of this Directive to ensure the effective implementation of important projects and works in their sectors and for the country.