(Chinhphu.vn) –When applying a package contract, the price of a bidding package to serve as a basis for considering the bid winning must include expenses for risk factors that may occur in the process of contract performance and provision cost.

Mr. Nguyen Quoc Viet’s Company  participates in bidding for a bidding package with a contract in the form of package price. The company refers to Clause 3, Article 5 of the Circular No. 03/2015 / TT-BKHĐT, which stipulates that for package contracts, contractors must calculate and allocate provision expenses into bid price; not separate the provision expenses that contractors have allocated in bid price for consideration and evaluation in the process of evaluating financial and commercial bids.

According to the explanation of the project management unit(the procuring entity), due to the allocation of provision expenses into the bid price, when there is no risk, the contractor will be entitled to this part of the cost. Therefore, in order to avoid loss of fund for the State, the procuring entity clearly invites the provision cost of 5% of the construction cost and the general item cost, clearly stated in the bidding documents as well as in the terms of payment. Contract payments are part of this provision which is only used when the workload has not been accurate compared to the design during construction.

Mr. Viet would like to ask, can the above tender offer be accepted (because this is a good thing facilitated  for the State budget)?

Regarding this issue, The Ministry of Planning and Investment has the following opinions:

Points a, b and c, Clause 1, Article 62 of the Bidding Law No. 43/2013 / QH13 stipulates:

Lump-sum contract means contract with fixed price during performance for all work contents in contract.

Payment for lump-sum contract shall be performed many times during implementation or once upon finishing contract. Total amounts paid to contractor until finishing obligations under contract shall be equal to the price stated in contract;

When applying the lump-sum contract, prices of bidding packages as the basis for consideration for recommendation as the winning tenderer must include expenses for risk elements which may happen during the course of implementation of contract, provision expenses for slippage in price. Bidding price must include all expenses for risk elements and expenses for slippage in price which may happen during the course of implementation of contract;

Clause 2, Article 5 of the Circular No. 10/2015 / TT-BKHĐT dated October 26, 2015 of the Ministry of Planning and Investment guides,

The procurement price is determined on the basis of total investment in the project.

If a cost estimate has been approved before the contractor selection plan is made, the cost estimate shall be the basis for determination of the procurement price. The procurement price must be sufficient to cover the expenses of the procurement including cost contingency (against inflation, additional works, and other temporary amounts (if any)), fees, charges, and taxes.

If the contract duration is short without risks or inflation, cost contingency is zero. Cost contingency shall be determined by the investor depending on the characteristics of the procurement within the limits prescribed by law. The procurement price shall be updated 28 days before the bid opening date if necessary.

With the type of lump sum contract, the bidding package price and bid price must comply with the above provisions and the bidding documentforms for the type of package contract issued by the Ministry of Planning and Investment. Accordingly, it is not necessary to separate provision expenses in bidding package prices when approving contractor selection plans.