What Is intra-group procurement? Latest regulations on intra-group procurement

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What is Intra-group Procurement?

According to Clause 1, Article 4 of Decree No. 95/2020/ND-CP, as amended by Clause 3, Article 1 of Decree No. 09/2022/ND-CP, intra-group procurement is stipulated as follows:

1. When selecting contractors for bid packages falling within the scope of this Decree, the procuring entity shall conduct intra-group procurement in accordance with Clauses 2 and 3 of this Article, except where the competent authority determines that international bidding is necessary to achieve greater efficiency for the project or bid package.

In simple terms, intra-group procurement is a procurement method conducted among intra-group contractors for certain bid packages as prescribed by law. The application of this method depends on the scope of regulation and the specific requirements applicable to each bid package.

What is an Intra-group Contractor?

The definition of an intra-group contractor is provided in Clause 6, Article 3 of Decree No. 95/2020/ND-CP as follows:

An intra-group contractor means an organization established under the laws of a Member State or an individual holding the nationality of a Member State participating in bidding activities in Vietnam.

In this context, a "Member State" refers to a country or territory that is a party to international trade agreements containing government procurement commitments to which Vietnam is a member, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Accordingly, intra-group contractors are not limited to Vietnamese contractors but may also include organizations and individuals from member countries of the relevant agreements. Whether a contractor qualifies as an intra-group contractor is determined based on its nationality or the law governing its establishment, in accordance with the provisions of the applicable agreement and Vietnamese law.

Example: An enterprise established under the laws of Japan (a CPTPP member) or an enterprise established under Vietnamese law may both be considered intra-group contractors when participating in bid packages governed by the corresponding agreement.

Note: Many people tend to confuse an "intra-group contractor" with a "domestic contractor." In practice, the scope of an intra-group contractor is broader, as it includes contractors from member countries covered by the applicable agreement, rather than only Vietnamese enterprises.

Distinguishing intra-group contractors from domestic contractors

Although both may participate in bid packages in Vietnam, intra-group contractors and domestic contractors are two distinct concepts in terms of scope of application and eligible participants.

In summary, the differences between an intra-group contractor and a domestic contractor are as follows:

• A domestic contractor is an organization established under Vietnamese law or an individual holding Vietnamese nationality. An intra-group contractor is an organization or individual from countries or territories that are members of the applicable agreement, including Vietnam.

• All domestic contractors may qualify as intra-group contractors if Vietnam is a member of the relevant agreement. However, not all intra-group contractors are domestic contractors, as intra-group contractors also include contractors from other member countries.

• The concept of an intra-group contractor is commonly used in regulations relating to international commitments on government procurement, whereas the concept of a domestic contractor is widely used in bidding activities in Vietnam.

Latest regulations on intra-group procurement

Current regulations provide detailed provisions on intra-group procurement, ranging from the language used in the procurement process to the scope of application for different types of bid packages. The following are key regulations that should be noted.

Language used in Intra-group procurement

Pursuant to Clause 1, Article 11 of Decree No. 95/2020/ND-CP, the language used in intra-group procurement is prescribed as follows:

1. For intra-group procurement, the language used in the procurement process shall be Vietnamese or both Vietnamese and English.

Accordingly, the language used in intra-group procurement is Vietnamese or both Vietnamese and English.

Cases where intra-group procurement must be applied

According to Clauses 2 and 3, Article 4 of Decree No. 95/2020/ND-CP, as amended by Clause 3, Article 1 of Decree No. 09/2022/ND-CP, intra-group procurement is regulated as follows:

2. In the case of intra-group procurement for service packages, the procuring entity shall proceed as follows:

a) For service packages specified in Appendix I attached to this Decree, the procuring entity shall permit intra-group contractors to participate in the bidding process;

b) For service packages specified in Appendix II attached to this Decree, the procuring entity may decide either to permit intra-group contractors to participate in the bidding process or to allow only contractors from CPTPP member states to participate;

c) For service packages specified in Appendix III attached to this Decree, the procuring entity may decide either to permit intra-group contractors to participate in the bidding process or to allow only contractors from EU Member States, the United Kingdom and Northern Ireland to participate;

d) For service packages classified under CPC 75231 (data network services), CPC 75232 (electronic information and messaging services), and CPC 84 (computer and related services) specified in Appendix II attached to this Decree, the procuring entity may decide either to permit contractors from CPTPP member states to participate or to allow only domestic contractors to participate.

3. In the case of intra-group procurement for goods packages, the procuring entity shall proceed as follows:

a) For goods packages specified in Appendix I attached to this Decree, the procuring entity shall only allow intra-group contractors offering goods originating from Member States to participate in the bidding process;

b) For goods packages specified in Appendix II attached to this Decree, the procuring entity may permit intra-group contractors offering goods originating from CPTPP member states, EU member states, the United Kingdom and Northern Ireland to participate, or only permit contractors from CPTPP member states offering goods originating from CPTPP member states to participate;

c) For goods packages specified in Appendix III attached to this Decree, the procuring entity may permit intra-group contractors offering goods originating from CPTPP member states, EU member states, the United Kingdom and Northern Ireland to participate, or only permit contractors from EU member states, the United Kingdom and Northern Ireland offering goods originating from those jurisdictions to participate.

Accordingly, the application of intra-group procurement depends on each category of bid package prescribed under Decree No. 09/2022/ND-CP. The procuring entity will determine the scope of eligible participants, which may include intra-group contractors, domestic contractors, or contractors from CPTPP member states, EU member states, the United Kingdom and Northern Ireland, depending on the specific circumstances.

Distinguishing intra-group procurement from other contractor selection methods

Intra-group procurement is a special contractor selection mechanism applied within the scope of international commitments on government procurement. Therefore, many people often confuse it with common contractor selection methods under the Law on Bidding. The basic distinctions are as follows:

In summary, intra-group procurement differs from common contractor selection methods in the following key aspects:

• Intra-group procurement is a mechanism applied pursuant to international commitments, under which the scope of participating contractors may be restricted according to specific agreements such as CPTPP, the EU, the United Kingdom, and Northern Ireland.

• Open bidding is the contractor selection method with the highest level of competition, allowing all eligible contractors to participate.

• Direct contracting is a method whereby a contractor is selected directly without a competitive process.

FAQ - Frequently asked questions about intra-group procurement

Below is a compilation of frequently asked questions about intra-group procurement. If you need further assistance, please visit the Support Center of the Bidding Ecosystem to receive guidance from the AI Bidding Consultant (see instructions HERE) or bidding experts.

1. Is a domestic contractor considered an intra-group contractor?

No, not entirely. Domestic contractors include only Vietnamese organizations and individuals, whereas intra-group contractors include both Vietnamese contractors and contractors from member countries of the applicable agreement.

2. Can intra-group contractors participate in international bidding?

Possibly, depending on the requirements of each bid package and the scope of application of the relevant international agreement. However, participation must comply with the specific provisions stated in the bidding documents.

3. What language is used in intra-group procurement?

The language used in intra-group procurement is Vietnamese or both Vietnamese and English, depending on the requirements specified in the bidding documents and the nature of the bid package.

4. Is intra-group procurement applicable only to Vietnamese enterprises?

No. Intra-group procurement applies not only to Vietnamese enterprises but also to contractors from countries or territories that are parties to international trade agreements containing government procurement commitments to which Vietnam is a party.

However, the scope of eligible contractors depends on the type of bid package and the provisions of the applicable agreement. In some cases, the procuring entity may allow only intra-group contractors, contractors from CPTPP member states, or contractors from the EU, the United Kingdom, and Northern Ireland to participate in the bidding process, in accordance with the law.

Conclusion

Intra-group procurement is a special contractor selection mechanism associated with the international commitments to which Vietnam is a party. Understanding its concept and relevant regulations helps contractors and procuring entities apply the rules correctly and minimize errors during implementation.

In addition to staying updated on legal knowledge, contractors should regularly monitor procurement notices, contractor selection plans, and newly issued legal documents. With DauThau.info, users can quickly search for bid package information, bidding documents, and legal regulations on a single platform. In particular, the VIP1 and VIP2 software packages provide automatic filtering and email notifications for relevant bid packages, helping businesses avoid missing potential business opportunities.

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