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Scope of application and procurement thresholds
The Government has issued Decree 374/2026/ND-CP, providing detailed regulations on contractor selection for procurement packages covered by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EU-Vietnam Free Trade Agreement (EVFTA) and the UK-Vietnam Free Trade Agreement (UKVFTA).
The decree applies to procurement packages that meet prescribed requirements concerning their value, procuring entities, covered goods and services, and applicable exclusions.
Its scope is detailed in three annexes. Annex I covers procurement packages falling under all three agreements, while Annex II applies to packages covered only by the CPTPP. Annex III covers packages falling under the EVFTA and UKVFTA but not the CPTPP.
The decree also specifies how procurement package values are calculated to determine whether the relevant thresholds are met.
Accordingly, the estimated value must reflect the maximum total value of a package over its entire duration, including remuneration, fees, charges, commissions, returns and other receipts that may be paid under the contract. Where a contract includes an option to purchase additional quantities, the estimated value of that option must also be taken into account.
Contractor status and eligibility requirements
Under the Bidding Law, domestic and foreign contractors are distinguished according to the law under which they are established.
Foreign-invested enterprises established under Vietnamese law are classified as domestic contractors, regardless of the proportion of foreign capital in their ownership structure.
For corporate groups comprising a foreign parent company and a subsidiary established in Vietnam, the status of each entity is determined separately. A subsidiary incorporated under Vietnamese law is considered a domestic contractor, while a parent company established abroad is classified as a foreign contractor if it submits a bid in its own name.
However, domestic-contractor status does not automatically establish eligibility to participate in every procurement package.
Contractors must meet the requirements prescribed by the Bidding Law, including those concerning independent financial accounting, competitive independence and restrictions on bidding participation.
For packages governed by Decree 374, contractors must also meet additional eligibility conditions, including not being subject to a bidding ban imposed by a competent authority in any country or territory.
Eligible contractors may participate independently or as members of a consortium, subject to the applicable procurement requirements.
Intra-bloc bidding and equal treatment
Decree 374 regulates both intra-bloc and international bidding under Vietnam’s commitments in the three trade agreements.
Intra-bloc bidding is restricted to eligible contractors from the relevant treaty parties, including organisations established under the laws of member countries and individuals holding their nationality.
Procuring entities may choose between intra-bloc and international bidding in accordance with the decree. The categories of contractors permitted to participate depend on the applicable agreement and the type of procurement package.
For certain data-network, electronic messaging and computer services listed in Annex II under the CPTPP, procuring entities may choose to open bidding to contractors from CPTPP member countries or restrict participation to domestic contractors.
The decree also maintains the principle of equal treatment among domestic contractors, regardless of foreign investment.
Procuring entities must treat domestic contractors equally, without discrimination based on foreign capital contributions or organisational dependence on foreign entities.
This principle was previously established under Decree 95/2020/ND-CP and is retained in the new regulations, subject to exceptions involving permitted domestic preference measures.
Domestic preference measures
Decree 374 allows procuring entities to apply various domestic preference measures to eligible procurement packages, subject to specified conditions.
These include requiring contractors to offer goods of domestic origin where domestic production can meet the prescribed technical, quality and price requirements. Procuring entities may also require foreign contractors to form consortiums with domestic contractors or use domestic subcontractors. Other measures include requiring foreign contractors, when awarded a contract in Vietnam, to transfer technology and support research and development, as well as priority for Vietnamese contractors where they and foreign contractors are assessed as the best bidders and rank equally.
The decree also provides preferences for individuals or groups offering their own innovative products and incorporates other preference measures available under the Bidding Law and relevant regulations on contractor selection.
The applicable conditions vary according to the nature of the procurement package, the contractor and the goods or services being offered.
In particular, the origin of goods is determined under the law on rules of origin, rather than by the ownership structure or place of incorporation of the enterprise supplying them.
The Bidding Law also identifies several categories eligible for preferences, including goods of Vietnamese origin, domestic contractors producing goods of Vietnamese origin and domestic contractors participating in international bidding.
Under the Bidding Law preference rules incorporated by Article 10 of Decree 374, foreign contractors in a consortium with domestic contractors may qualify for preferences in international bidding for services, construction or mixed packages if a domestic member undertakes at least 25 per cent of the package’s work value.
The applicable forms of preference depend on the type of procurement package and bidding procedure. For example, domestic contractors participating independently or jointly with other domestic contractors may qualify for preferences in international bidding for consultancy, non-consultancy, construction and mixed procurement packages.
As a general rule, the Bidding Law requires foreign contractors participating in international bidding to form consortiums with domestic contractors or use domestic subcontractors, subject to government-prescribed exceptions.
For procurement packages covered by Decree 374, eligible contractors may participate independently or as members of a consortium. A requirement for foreign contractors to use domestic partners may nevertheless be applied as a domestic preference measure where the prescribed conditions are met.
Time limits for application of domestic preferences
The decree establishes a phased timetable for applying domestic preference measures, with different deadlines depending on the procurement packages covered by its annexes.
For packages under Annexes I and III, the total value of domestic preferences in a year must not exceed 40 per cent of the total contract prices of covered procurement packages from November 14, 2026, to January 13, 2029.
The ceiling will fall to 30 per cent from January 14, 2029, to July 31, 2038. Domestic preferences will cease to apply to these packages from August 1, 2038.
For packages under Annex II, the annual ceiling will also be 40 per cent until January 13, 2029, before falling to 30 per cent from January 14, 2029, to January 13, 2044.
Domestic preferences for these packages will cease to apply from January 14, 2044.
These percentages represent limits on the annual aggregate value of domestic preferences, rather than automatic discounts or preference rates granted to individual bidders.
Preferences for contractors and goods from treaty parties
Decree 374 also provides for preferences for goods and contractors from treaty parties in international bidding.
These measures may be applied where domestic preferences are not applied to a procurement package and the procuring entity decides to grant the relevant treaty-party preferences.
For goods to qualify, at least 50 per cent of their production costs must be incurred in member countries. For service and mixed packages, intra-bloc contractors may qualify independently or together with other intra-bloc contractors. A consortium may also qualify where an intra-bloc member undertakes at least 50 per cent of the package’s work value. For mixed packages, proposed costs from member countries must also reach 50 per cent of the package’s work value.
The relevant preference measures and eligibility conditions must be specified in the bidding documents.
Transitional arrangements and effective date
Decree 374 takes effect on November 14, 2026, replacing Decree 95/2020/ND-CP, as amended by Decrees 09/2022/ND-CP and 17/2025/ND-CP.
It also sets out transitional arrangements for procurement packages at different stages of contractor selection.
For packages whose contractor selection plans have been approved but whose procurement documents have not yet been issued when Decree 374 takes effect, any provisions inconsistent with the new regulations must be revised.
If procurement documents have already been issued but the deadline for submitting bids falls after the effective date, any inconsistent provisions must also be amended. Following such amendments, bidders must be given reasonable time to prepare their submissions.
For packages where bids have already been opened before November 14, 2026, contractor selection, contract signing and contract management will continue under Decree 95/2020/ND-CP, as amended.
The decree also provides that contractor selection through the national e-procurement system for intra-bloc bidding will begin on March 1, 2027.
- (VLLF)
