How to deal with contractors who win bids but do not perform the contract?

According to the reporter's investigation, the 2024 Bidding Package for Procurement of Testing Materials and Chemicals, with Tan Binh District Hospital as the Investor, is worth VND 11,518,226,482. The bidding package includes 126 items, divided into 48 independent parts (lots).

After the bid opening, the Bidding Package had a total of 31 bidders participating. Of which, Anh Em Biomedical Engineering Joint Stock Company (Anh Em Company) participated in bidding for 8 parts of the Bidding Package as follows:

1. PP2400360854 - RAPID TEST FOR DENGUE FEVER

2. PP2400360855 - HIV RAPID TEST

3. PP2400360856 - MORPHINE QUICK TEST

4. PP2400360857 - SYNTHETIC DRUG TEST

5. PP2400360860 - HELICOBACTER PYLORI RAPID TEST

6. PP2400360861 - RAPID TEST FOR SYPHILIS DIAGNOSIS

7. PP2400360862 - HEPATITIS A RAPID TEST

8. PP2400360863 - HEPATITIS B RAPID TEST

On May 27, 2025, Tan Binh District Hospital issued Notice No. 244/BVTB-TMS to Asia Commercial Joint Stock Bank - Thu Duc Branch ( ACB Thu Duc) regarding "notification of violations by contractors participating in the 2024 Procurement Package of Testing Materials and Chemicals".

According to Tan Binh District Hospital, by the end of May 26, 2025, the Contractor - Anh Em Company had not implemented measures to ensure contract performance for the 2024 Procurement Package of Testing Materials and Chemicals as required by the Inviting Party.

Therefore, Tan Binh District Hospital sent a notice to ACB Thu Duc Bank about the violation of the contractor, Anh Em Company. At the same time, requested to be paid an amount equivalent to the bid security value of the part (lot) PP2400360860 that Anh Em Company won the bid.

Also on May 27, 2025, Tan Binh District Hospital issued Decision No. 90/QD-BVTB on handling the situation of the Bidding Package: Procurement of materials and chemicals for testing in 2024". Accordingly, Tan Binh District Hospital invited the second-ranked contractor to complete the contract and confiscate the contract performance guarantee for the part (lot) that Anh Em Company won the bid but did not perform.

Commenting on this matter, Lawyer Diep Nang Binh - Head of Tinh Thong Luat Office said that Contract performance guarantee is one of the important contents in the contract performance process. The 2023 Bidding Law does not explain the concept of Contract performance guarantee, but according to the 2013 Bidding Law, this concept is detailed in Clause 2, Article 4 as follows:

“Contract performance security is the contractor's or investor's implementation of one of the measures of depositing, escrow or submitting a letter of guarantee from a credit institution or foreign bank branch established under Vietnamese law to ensure the contractor's or investor's responsibility to perform the contract.”

Article 68 of the 2023 Law on Bidding on Contract Performance Security stipulates:

1. The Contractor must take one of the following measures to ensure responsibility for contract performance:

a) Deposit;

b) Submit a letter of guarantee from a domestic credit institution or foreign bank branch established under Vietnamese law;

c) Submit a certificate of insurance guarantee from a domestic non-life insurance company or a branch of a foreign non-life insurance company established under Vietnamese law.

2. Contract performance guarantee is applied to the selected contractor, except in the following cases:

a) Contractor providing consulting services;

b) Contractors are selected by self-implementation or community participation;

c) The contractor implements a bid package with a bid package price within the designated bidding limit specified in Point m, Clause 1, Article 23 of this Law.

3. The selected contractor must implement contract performance security measures before or at the same time the contract takes effect.

4. Based on the scale and nature of the bid package, the value of the contract performance guarantee is specified in the bidding documents and request documents at a level determined from 2% to 10% of the contract price.

5. The validity period of the contract performance guarantee is calculated from the effective date of the contract until the date the parties complete their contractual obligations or the date of transition to warranty obligations in cases where there are provisions on warranty. In case of need to extend the contract performance period, the contractor must be requested to extend the validity period of the contract performance guarantee correspondingly before extending the contract performance period.

6. The Contractor shall not be entitled to return the contract performance guarantee in the following cases:

a) Refusing to perform the contract when the contract has come into effect;

b) Violation of the agreement in the contract;

c) Contract implementation is behind schedule due to the contractor's fault but the contract performance guarantee is refused to be extended.

According to Lawyer Binh, in the case of Tan Binh District Hospital issuing a Decision to handle the situation and notifying the Bank for Anh Em Company, it is necessary to make 2 assumptions:

Firstly, in case the Contractor fails to complete or refuses to sign the contract, the Hospital's handling is in accordance with the provisions of the 2023 Bidding Law and its implementing documents (specifically Decree No. 24/2024/ND-CP dated February 27, 2024 of the Government detailing a number of articles and measures to implement the Bidding Law on contractor selection).

Second, in case the Contractor does not proceed or refuses to complete or refuse to sign the framework agreement, the Hospital needs to reconsider. Because according to the provisions of the Bidding Law 2023 and the implementing documents, not all cases are required to sign a framework agreement.

Therefore, if it is not mandatory to sign a framework agreement and the Contractor agrees to complete, sign and execute the contract but the Hospital invites another Contractor, the Hospital's behavior is not in accordance with the regulations.

If the Contractor is required to sign a framework agreement but does not agree to complete and sign the framework agreement, the Hospital's handling of the case is in accordance with the provisions of the 2023 Bidding Law and its implementing documents, specifically Decree No. 24/2024/ND-CP dated February 27, 2024 of the Government detailing a number of articles and measures to implement the Bidding Law on contractor selection.

Lawyer Binh believes that, in addition to this measure, regarding measures to ensure that the Contractor implements security measures, Lawyer Binh believes that in order to protect the rights of the Investor, the Investor should require the Contractor to implement security measures before reaching an agreement, completing, signing, and performing the contract between the two parties, and this is completely consistent with the provisions of the Bidding Law 2023.

Nguyen Vu

Source: https://baophapluat.vn/xu-ly-nha-thau-trung-thau-nhung-khong-thuc-hien-hop-dong-post551680.html