Tag: government

Applicable Legal Framework and Reforms Update
1. Which is the entity that conducts procurement for the authority that owns the majority of roads in Vietnam ?
The Ministry of Transport
2. Are you aware of any change (in practice or in laws/regulations/procedures) related to public procurement between June 1, 2017 and May 1, 2018? For example: amendments to applicable public procurement laws, enactment and/or implementation of new regulations, implementation or improvement of e-procurement platforms, changes to the bid security and performance guarantee framework, etc.
Yes. Law on supporting small and medium enterprise issued by the National Assembly on 12 June 2017, taking effect from 01 January 2018
3. Please provide a list of the laws, regulations and other binding materials (including mandatory standard procurement documents and contracts) that regulate public procurement in Vietnam. Please include legislation or other binding materials promulgated at the national/federal level as well as any additional legislation that is applicable to the procuring entity described in Section 1.
The Civil Code of Vietnam No. 91/2015/QH13 by the National Assembly of Vietnam dated 24 November 2015 (“Civil Code”);
Construction Law No. 50/2014/QH13 by the National Assembly dated 18 June 2014 (“Construction Law”);
Law on Bidding No. 43/2013/QH13 by National Assembly dated 26 November 2013 (“Bidding Law”);
Law on Public Investment No. 49/2014/QH13 of the National Assembly dated 18 June 2014 (“Law on Public Investment”);
Commercial Law No. 36/2005/Qh11 by the National Assembly dated 14 June 2005 (“Commercial Law”);
Decree No. 63/2014/ND-CP by the Government dated 26 June 2014 guiding Law on Bidding (“Decree No. 63/2014/ND-CP”);
Decree No. 37/2015/ND-CP by the Government dated 22 April 2015 on detailing construction contracts (“Decree No. 37/2015/ND-CP”);
Decree No. 46/2015/ND-CP by the Government dated on 12 May 2015 on managing the quality and maintenance of construction works (“Decree No. 46/2015/ND-CP”);
Decree No. 30/2015/ND-CP by the Government dated 17 March 2015 on detailing certain provisions of the Law on Bidding on selection of bidders (“Decree No. 30/2015/ND-CP”);
Decree No. 15/2015/ND-CP by the Government dated 14 February 2015 on public-private partnership investment (“Decree No. 15/2015/ND-CP”);
Circular No. 04/2017/TT-BKHDT by the Ministry of Planning and Investment dated 15 November 2017 on detailing the selection of bidders via the national biding portal (“Circular No. 04/2017/TT-BKHDT”);
Circular No. 26/2016/TT-BXD by the Ministry of Construction dated 26 October 2016 on detailing certain provisions on management of quality and maintenance of construction works (“Circular No. 26/2016/TT-BXD”);
Circular No. 10/2016/TT-BKHDT of the Ministry of Planning and Investment on detailing the supervision, following up and examination of bidding activities (“Circular No. 10/2016/TT-BKHDT”);
– Circular No. 23/2015/TT_BKHDT by the Ministry of Planning and Investment dated 21 December 2015 on detailing the making the evaluation report on bidding documents (“Circular No. 23/2015/TT-BKHDDT”);
– Circular No. 10/2015/TT-BKHDT of the Ministry of Planning and Investment dated 26 October 2015 on detailing the plan for bidder selection (“Circular No. 10/2015/TT-BKHDT”);
– Circular No. 01/2015/TT-BKHDT by the Ministry of Planning and Investment dated 14 February 2015 on detailing the preparation of Invitation dossier for Concern, Invitation Dossier for Bidding, and Request dossider for consultancy services (“Circular No. 01/2015/TT-BKHDT”);
– Circular No. 17/2010/TT-BKH by the Ministry of Planning and Investment dated 22 July 2010 detailing a pilot online bidding program (“Circular No. 17/2010/TT-BKH”);
– Official Letter No. 5356/BKHDT-QLDT by the Ministry of Planning and Investment dated 18 August 2014 on registration of bidder’s information on national bidding network system;
– Official Letter No. 4962/BKHDT-QLDT by the Ministry of Planning and Investment dated 31 July 2014 on the implementation of Law on Bidding No. 43/2013/QH13 regarding investors selection;
– Official Letter No. 4054/BKHDT-QLDT by the Ministry of Planning and Investment dated 7 June 2014 on implementation of Law on Bidding No. 43/2013/QH13 and Decree No. 63/2014/ND-CP;
– Official Letter No. 5186/BKHDT-QLDT by the Ministry of Planning and Investment dated 11 August 2014 guiding to carry out to provide and publish bidding information in the transitional period.
E-procurement Platforms
4. If one or several electronic procurement portal(s) (i.e., an official website(s) specifically and exclusively dedicated to public procurement) are in operation in Vietnam, please mark at which level such portals are available.
National level – Link: www.muasamcong.mpi.gov.vn
5. If multiple electronic procurement platforms are available, which one would most likely be used for a tender like the one describled in Sections 1?
6. If a procurement portal is used by the procuring entity, how many works contracts are procured through the portal?
Less than 25%
7. If electronic procurement portals are available, please indicate which of the following actions can be performed through each portal:
Accessing notices on procurement opportunities: Procuring entity and bidders
Accessing tender documentation: Procuring entity and bidders
Accessing tender documentation: Procuring entity and bidders
Asking the procuring entity for clarifications: Bidders
Submitting tenders: Bidders
Submitting bid security: Bidders
Opening bids: Procuring entity
Notifying decisions (clarification, award,etc.): Procuring entity
Accessing award decisions: Procuring entity and bidders
Accessing explanations of award decisions: Procuring entity and bidders
Submitting performance guarantees: Bidders
Signing the contract: Procuring entity and bidders
Phases of the Procurement Process
The rest of this questionnaire follows the chronological evolution of a procurement cycle, starting with the process the procuring entity undertakes to assess its needs and secure the budget. The questionnaire then explores the steps that a local company would have to undertake in order to: (i) secure a government contract; (ii) deliver the agreed-upon works; and (iii) obtain payment. The following section focuses on planning and budget.
Phase 1: Budgeting and Needs Assessment
For the definition of “procuring entity”, please refer to Section 1.
8. When the procuring entity prepares to advertise a new procurement opportunity, does it estimate the contract value?
Yes. Article 35 of the Bidding Law
a. How is the contract value estimated for the case like the one described in Section 1:
It is determined based on the total invested capital or estimated budget (if any) for project. All expenses are included, including reserve expenses, charges, fees and taxes.
b. Who prepares these estimates?
The procuring entity or the investor of the project
c. Is the estimated contract value published in the tender notice / tender documents?
Yes. Article 35 of the Bidding Law
9. Is the procuring entity required to have already allocated budget to a specific project before tendering?
Yes. Article 35 of the Bidding Law
Phase 2: from Advertisement to Bid Submission
The following questions relate to the initial phase of the procurement process, focusing on how the procurement method is chosen, how the tender is published, and how bids are collected from the private sector. For the definition of “procuring entity”, please refer to Section 1.
Procurement Method
10. According to the legal framework, would open tendering (i.e., the process in which any business can submit a bid) be the default method of procurement in Vietnam for a contract like the one described in Section 1?
No, Section 1, Chapter 2 of the Bidding Law
11. In practice, what is the most common method of procurement for a contract like the one described in Section 1?
Open tendering is not the default, but remains the most common for a case comparable to the case study.
12. Does the legal framework define the situations in which open tendering must be used (including thresholds)? If the legal framework regulates exceptions to open tendering, please list them.
Yes. Article 20 of the Bidding Law. Exceptions to open tendering are cases under restrictive tendering, direct award, competitive dialogue, direct procurement, self implementation, community’s and participation selection of bidders in some special cases (Articles 21¬27 of the Bidding Law)
13. Does the legal framework prohibit dividing contracts to circumvent thresholds for open tendering?
Yes. Article 89.6 (k) of the Bidding Law
a. In practice, how often does this happen?
Very rarely (< 10% of cases)
14. What are the commonly used strategies to circumvent the rules and thresholds on open procurement?
The procuring entity sets out very high technical specifications
15. Which of the following materials need to be made publicly available by the procuring entity?
By law and Publicly available in practice
Procurement plans: Article 8.1 of the Bidding Law
Tender notices: Article 8.1 of the Bidding Law
Tender documents and technical specifications: Article 8.1 of the Bidding Law
Notices of award / bidding results: Article 8.1 of the Bidding Law
16. Where are the above materials published?
Internet – Link: http://muasamcong.mpi.gov.vn/
Newspapers
Other: websites of ministries, local sectors, provinces or other public mass media
Tender Notices & Tender Documents
17. According to the legal framework, is there a minimum time limit between the advertisement of the tender notice and the submission deadline for an open tendering procedure like the one described in Section 1?
Yes. Article 12.1 of the Bidding Law
a. In practice, how many days would pass between the advertisement of the tender notice and the submission deadline for a case like the one described in Section 1?
30 -40 days
18. Does the legal framework establish the minimum content of the tender notice and tender documents? If "Yes", please list the requirements.
Yes. Articles 218- 219 of the Commercial Law. The tender notice must include: a/ Name and address of the procuring entity; b/ Brief description of bidding contents; c/ Time limit, place and procedures for receipt of bid documents; d/ Time limit, place and procedures for submission of bid documents; e/ Guidance on seeking clarification of the tender documents.
Tender documents must include: a/ Tender notice; b/ Requirements on procuring goods or services; c/ Methods of evaluation, comparison, ranking and selection of bidders; d/ Other instructions related to bidding.
a. In practice, which of the following are NOT usually included in the tender notice and/or tender documents?
– Grounds for exclusion of bidders
– Main terms and conditions of the contract
– Payment schedule under the procurement contract
Subcontracting
19. Does the legal framework regulate subcontracting?
Yes. Article 128.2 of Decree No. 63/2014/ND-CP
20. According to the legal framework, is the procuring entity allowed to establish that a share of the contract must be performed by the original contractor and cannot be subcontracted? For example, 25% of the contract must be performed by the company that is awarded the bid.
Yes. There is no requirement on a specific share.
21. According to the legal framework, are bidders required to disclose their intent to subcontract portions of the contract when submitting their bid?
Yes. Article 4.36 of the Bidding Law, Article 128.2 (b) of Decree No. 63/2014/ND-CP
22. If the intent to subcontract was not disclosed in the bid, what is the contractor who decides to subcontract after the contract is signed required to do?
None of the above
23. Can the subcontractor be held liable by the procuring entity for low work quality? If the subcontractor can only be held liable in certain circumstances, please list them.
No. Article 128.2(a) of Decree No. 63/2014/ND-CP
Clarifications
24. When a potential bidder seeks clarifications on the tender documents from the procuring entity, what is the most common way of addressing them?
The procuring entity addresses all clarifications in a public meeting
The procuring entity will answer, and it is always required to communicate the answer to all other bidders too – Legal basis: Article 14.2 (c) of Decree No. 63/2014/ND-CP

25. In practice, are clarifications used as an opportunity to negotiate with the procuring entity?
No.
26. Does the legal framework prohibit informal meetings between the procuring entity and a bidder during the tendering process?
No. Article 89 of the Bidding Law
a. In practice, how often do these meetings happen?
Rarely (between 10-25%)
Bid Security
27. Does the legal framework require BidCo to provide a form of bid guarantee?
Yes. Article 11.1 of the Bidding Law
28. In practice, which instrument would BidCo most commonly use as a bid guarantee?
Bid security deposit – Please specify the amount: VND 55 million – VND 170 million
29. If BidCo is required, what is the most common instrument of bid security deposit?
Cash
Bank guarantee / letter of credit
Phase 3: from Bid Opening to Contract Signing
The following questions relate to bid opening, bid evaluation, exclusions and contract signing. When answering these questions, please continue to refer to the case study assumptions outlined in Section 1. For the definition of “procuring entity", please refer to Section 1.
Time (calendar days)
30. Does the legal framework establish a timeframe for the procuring entity to proceed to bid opening once the deadline for bid submission has been reached?
Yes. Article 14.3(b) of Decree No. 63/2014/ND-CP
a. In practice, does the procuring entity proceed to bid opening immediately (i.e., at the precise day and time of the deadline for bid submission)?
Yes.
b. If not immediately, how many calendar days after the deadline on average?
Time: Main reasons for delay
31. In practice, in a case comparable to the case study scenario, how many days would pass between bid opening and public notice of award (i.e., the moment in which all tenderers, participants and relevant parties are notified of the award decision), considering that no complaints/challenges/protests have been filed? In this estimate, please include the time to evaluate the bids, notify all bidders of the decision and notify the winner of the award. If there is no public notice, please indicate the time until notification of BidCo.
Time: 45 – 60 days. Main reasons for delay: The bidder selection result must be verified or there needs some amendments to the bidding dossiers/ documents.
32. Is there a standstill (or pause) period between public notice of award and contract signing to allow unsuccessful bidders to challenge the award decision?
Yes. Length: 10 days
33. In practice, in a case comparable to the case study scenario, how many days would pass on average between public notice of award and contract signing? Please include the time for the winner to submit relevant documents and the time to sign the contract.
Time: 20 – 25 days. Main reasons for delay
34. In practice, how many days would pass on average between contract signing and receipt of a notice to proceed with the works?
Time: 0 days or upon receipt of the performance security by the procuring entity.
Main reasons for delay: No receipt of the performance security
35. If works permits or other administrative authorizations are required to begin the works, how long does it take on average to obtain them once the contract has been signed? Please indicate “0 days" if the permits and authorizations are automatically granted to the contractor or not required.
Time: 0 days
Main reasons for delay
Evaluation & Award
36. Does the legal framework regulate how members of the selection committee are chosen?
Yes. Article 116, Decree No. 63/2014/ND-CP
37. Are employees of the procuring entity required to follow a mandatory code of conduct or ethics that includes topics like screening procedures, conflict of interest, training requirements, etc.?
No. Not mentioned in the laws
38. According to the legal framework, what would be the award criterion considering a case like the one described in Section 1?
Price – Legal basis: Article 39.1 of the Bidding Law
Price and other qualitative elements (i.e., best value for money or the most advantageous combination of cost, time to completion, quality and sustainability, or the most economically advantageous tender) – Legal basis: Article 39.2 of the Bidding Law
Other, please explain: Combination of technical and price assessment (Article 39.3 of the Bidding Law)
39. Does the legal framework require all non-price evaluation criteria to be objective and quantifiable?
No. Not mentioned in the laws
40. In practice, in which order would the selection (technical, financial, procedural, etc.) criteria and award criteria be evaluated in a tender like the one described in Section 1?
The company's compliance with the selection criteria is checked first (perhaps even during a pre-qualification procedure) and, only if satisfactory, the tender is evaluated based on the award criteria
41. In practice, how often is the award decision based solely on price and not on best value for money?
Rarely (between 10-25%)
42. In practice, how often do the tender documents contain an evaluation criteria granting preference to companies that have already worked with the procuring entity?
Very rarely (< 10% of cases)
43. In practice, how often is a bid disqualified solely because of an error/formality (for example, a missing document, formatting of the bidding documents, etc.)?
Rarely (between 10-25%)
44. In practice, in these cases would the bidder be given the opportunity to rectify such error before disqualification?
Yes. Article 14.3 (c) of Decree No. 63/2014/ND-CP
45. According to the legal framework, can the procuring entity unilaterally change some of the tendering requirements after the bid is opened, but before the contract is siqned? If "Yes", please specify under which conditions the procuring entity can do so.
No.
a. In practice, how often do such changes occur?

Very rarely (90%)
Exclusion
47. When a bidder is unsuccessful (either because of exclusion or loss), is it provided with an explanation of the reasons for the exclusion/loss in writing?
Yes, by law the bidder must always be provided with an explanation in writing – Legal basis and timeframe: Article 20.6 (b) of Decree No. 63/2014/ND-CP; within 5 workings days from the time the bidding result is approved.
a. If “Yes”, is the bidder usually told early enough so that it can challenge the exclusion/loss in a timely manner?
Yes
Phase 4: Contract Management
The following questions relate to performance guarantee, contract renegotiation, underperformance and termination. When answering these auestions, please continue to refer to the case study assumptions outlined in Section 1. For the definition of “procuring entity”, please refer to Section 1.
Performance Guarantee
48. According to the legal framework, is BidCo required to provide a performance guarantee deposit that ensures a source of compensation in case of failure to perform its contractual obligations?
Yes. Amount: 2%- 10% of the bid winning price.
Articles 66 & 72 of the Bidding Law.
49. If BidCo is required, what is the most common instrument of performance guarantee?
Certificate of deposit
Bank Guarantee / Letter of Credit
Payment retention until satisfactory completion of the contract
50. In practice, how long does it usually take for the procuring entity to return the performance guarantee in full once the certificate of completion of works is issued?
5-10 days
Contract Renegotiations / Amendments
51. Does the legal framework regulate contract renegotiation? If “Yes”, please indicate the relevant provisions.
Yes. Article 67 of the Bidding Law and Article 93 of Decree No. 63/2014/ND-CP
a. If “Yes”, what are the limits to renegotiate each of the aspects below without the need to re-tender?
– Price (for example because of initial underestimation of cost or poor project design): The price is only adjusted in case of contract based on fixed unit price, contract based on modifiable unit price and time-based contract.
– Scope (length, size, etc.): Size of the contract cannot be changed if the increase amount of work is due to the contractor’s subjective fault. Delivery timeline will only be adjusted in case of force majeure, change in scope of work, design, implementation method due to objective reasons, and hand over of ground.
– Technical specifications (materials, etc.): Change of subcontractor (if the subcontractor is not listed in the bididng documents) must be subject to the investor’s approval.
– Delivery timeline
– Contractor/subcontractor
52. How often would a contract like the one described in Section 1 be renegotiated?
Occasionally (between 25-50%)
53. If the contract described in Section 1 were more complex (i.e., lengthier and/or more costly execution, more complex scope or object, etc.), how often would it be renegotiated?
Often (between 50-90%)
54. How often do bidders submit unrealistically low bids to win the contract confident of having a possibility to renegotiate at a later stage?
Rarely (between 10-25%)
55. How often are “emergencies” used as an excuse to renegotiate?
Rarely (between 10-25%)
56. According to the legal framework, is there a percentage of price increase below which the procuring entity is not required to provide a reason for the renegotiation? If “Yes”, please provide the percentage and the relevant legal basis.
No.
57. According to the legal framework, is there a percentage of price increase above which the procuring entity is not allowed to renegotiate and is always required to re-tender? If”Yes”, please provide the percentage and the relevant legal basis.
No.
58. If limits on price renegotiation exist, do they apply to each renegotiation or to all renegotiations combined (for example, if the legal framework imposes that any increase in price shall not exceed 50%, will this limit apply to each modification if several successive modifications occur)?
All renegotiations. Article 67.4 of the Bidding Law
59. Are the results of contract renegotiations made publicly available?
No. Not addressed by law but practically No
60. In practice, what are the commonly used strategies to circumvent the renegotiation rules in the context of re-tendering?
61. Does the legal framework regulate unilateral termination of the contract by the procuring entity (i.e., the termination at will by the procuring entity, including for no reason)? If “Yes”, please indicate the relevant provisions.
Yes. Article 117.11 of Decree No. 63/2014/ND-CP; Article 428 of the Civil Code of Vietnam.
a. In practice, how often would the procuring entity unilaterally terminate the contract despite the contractor properly performing its contractual duties?
Very rarely (< 10% of cases)
62. How often would the contractor bring a case (in court or through alternative dispute resolution) against the procuring entity for damages resulting from unilateral termination not due to the contractor's default?
Very rarely (< 10% of cases)
Phase 5: Payment, Delays and Quality Assessment
The following questions relate to payment and inspections. When answering these questions, please continue to refer to the case study assumptions outlined in Section 1. For the definition of “procuring entity", please refer to Section 1.
Payment
63. According to the legal framework, is there a limit to how much the procuring entity can pay upfront for the contractor to hire workers, buy materials, and start operations, in a contract like the one described in Section 1?
No.
a. In practice, how much would usually be paid upfront for a contract like the one described in Section 1?
Minimum 10% of the contract value, maximum 50% of the contract value.
64. During the execution of the contract, does the legal framework establish a timeframe within which the procuring entity must process the payment once an invoice is received?
Yes. Article 19 of Decree No. 37/2015/ND-CP
a. In practice, how many calendar days will be necessary on average for BidCo to receive payment once the invoice has been delivered to the relevant authority?
Maximum 14 days
b. In practice, how many people would need to authorize payment within the procuring entity before payment is made?

2

c. Does the procuring entity set minimum standards about the completed works that the company must meet to receive payment? If so, please specify what these standards are.
Yes. Standards: Based on the actual completed amount of work by the contractor
d. In practice, how often will BidCo receive payment within the timeframe established by the legal framework?
Often (between 50-90%)
e. If rarely, what are the main reasons for delay?
N/A
f. Are payments usually spread out equally throughout the course of the work?
No. Articles 95-98 of Decree No. 63/2014/ND-CP Based on the actual completed amount of work by the contractor.
g. According to the legal framework, is the company entitled to claim interest on late payments if the procuring entity does not pay within the legally – established timeframe?
Yes. Article 94 of Decree No. 63/2014/ND-CP
h. If so, in practice how often would such interest be paid to the company?
Often (between 50-90%)
65. Assuming that BidCo delivers works complying with the quality standards agreed-upon in the contract, within budget and on time, what strategies, if any, does the procuring entity use to delay or avoid payment?
The procuring entity has certain financial difficulties
a. In practice, how often does the procuring entity not pay?
Very rarely (< 10% of cases)
b. If non-payment is common, how often would BidCo resort to informal payments to obtain payment?
Very rarely ( 90%)
68. Upon completion of the works, does the legal framework require BidCo to guarantee the works for a certain period of time?
Yes. Articles 35-36 of Decree No. 46/2015/ND-CP
69. If BidCo is required, what is the most common instrument of post-completion guarantee?
Bank guarantee / Letter of credit
Payment retention
70. In practice, how long after completion of the works is BidCo required to maintain the instrument that guarantees them?
12- 18 months
Delays & Overruns
71. In practice, how often are the works delivered within the original deadline?
Often (between 50-90%)
72. In practice, if delays are common, what are the main reasons for them?
Burdensome administrative processes within the procuring entity
Capacity of the procuring entity (staff/skills/budgetary constraints)
Capacity of the contractor (technical/financial/managerial/human capital constraints)
Poor planning on the procuring entity’s side (poorly designed project specifications, etc.)
Poor planning on the contractor’s side
73. In practice, how often are the works delivered within the original budget?
Occasionally (between 25-50%)
74. In practice, if cost overruns are common, what are the main reasons for them?
Market conditions (changes in input prices, fluctuations in exchange rate, etc.)
Burdensome administrative processes within the procuring entity
Capacity of the contractor (technical/financial/managerial/human capital constraints)
Poor planning on the procuring entity’s side (poorly designed project specifications, etc.)
Poor planning on the contractor’s side
Research – Criticalities of the Procurement Process
75. How often are the following strategies used by the procuring entity to circumvent public procurement rules?
Not advertise procurement opportunities long enough to minimize competition: 10-25%
Prioritize projects without sufficient motivation just to benefit a particular bidder. : 10-25%
Prioritize non-competitive tenders to restrict market entry. : 10-25%
Define technical specifications to benefit a specific bidder. : 10-25%
Irregularities during the bidding process. : 10-25%
Biased interpretation of the selection criteria.: 25-50%
Add specific obligations in the contract that were not previously incorporated in the tender documents, and by doing so impose unnecessary burdens on the contractor.:<10% of cases
Delay payments to the contractor to request other works not included in the tender documents. .:<10% of cases
Delay the certification of completion of the contract to obtain other works/goods/services not previously included in the tender documents. .:<10% of cases
Unilaterally and arbitrarily terminate the contract. .:<10% of cases
76/ How often are the following strategies used by private sector companies to circumvent public procurement rules?
Collusion between bidders (cover bidding, bid suppression, bid rotation, market allocation). .:<10% of cases
Collusion with the procuring entity, to negate market entry to other competitors: 10-25%
Submission of recklessly low bids to win the tender. 10-25%
Falsification of documents or failure to disclose essential information in the bidder's offer. 10-25%
Informally paying public officials: 50-90%
Abuse the renegotiation process to increase the price or the scope of the project without another competitive process. .: 50-90%
Delay the execution of the contract to coerce the procuring entity to award other contracts to the same company. 10-25%
Execute the contract with less quality or with different technical specifications than were submitted during the tender process. .: 50-90%

Employ subcontractors that were neither properly selected nor disclosed during the tender process. 10-25%

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If you have any question on the above, please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.com . Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Thank you very much!