Section 1: Case Study Assumptions
BidCo
Is one of the companies participating in the call for tender and
meets all solvency, technical and administrative requirements to
compete;
Is a privately and domestically-owned medium-sized Limited
Liability Company (or its most common legal equivalent);
Operates in Ho Chi Minh City;
Is up to date with all regulations and is in good standing with all
relevant authorities, including those related to taxes;
Has all licenses and permits needed to operate in this technical
area;
Has already responded to a public call for tender and is already
registered with the procuring entity defined below.
Contract
Entails resurfacing 20 km of a flat two-lane road (not a highway
and not under concession), connecting Ho Chi Minh City to another
city within Vietnam (and within the same state, region or province
as Ho Chi Minh City, if applicable), with an asphalt overlay of 40
to 59 mm (or its most common equivalent in Vietnam);
Value: USD 2.5 Million (equivalent to VND 56,996,865,534);
Does not include any other work (such as site clearance, subsoil
drainage, bridgework or further routine maintenance).
Procuring Entity
Is the agency in charge of procuring construction works for the
authority that owns the road described above;
Is the sole funder of the works, has budget for the works and is
solvent.
Procurement Process
Is an open, unrestricted, and competitive public call for tender
for resurfacing a road like the one described above;
Is completed without complaints/challenges/protests from interested
parties;
Ends with the awarding of the contract to BidCo, whose bid
satisfied all technical and administrative criteria and offered the
best value for money.
1. What is the entity that conducts procurement for the
authority that owns the majority of roads comparable to the one
described above?
Directorate for Roads of Vietnam within the Transport Ministry
("Procuring Entity")
2. How many open, unrestricted and competitive public
calls for tenders for road work contracts were completed in the
last 5 years by the Procuring Entity you selected in
Q.1?
11-51
3. Please provide a list of the laws, regulations and
other binding materials (including guidelines and manuals) that
regulate public procurement in Vietnam.
– Civil Code of Vietnam no. 91/2015/QH13 by the National
Assembly of Vietnam dated 24 November 2015
– Construction Law no. 50/2014/QH13 by the National Assembly
dated 18 June 2014
– Law on Bidding no. 43/2013/QH13 dated 18 June 2014
– Commercial Law no. 36/2005/QH11 dated 14 June 2005
– Decree no. 63/2014/ND-CP dated 26 June 2014
– Decree no. 37/2015/ND-CP dated 22 April 2015
– Decree no. 46/2015/ND-CP dated 17 March 2015
– Decree no. 25/2020/ND-CP dated 28 February 2020
– Decree no. 63/2018/ND-CP dated 4 May 2018
– Circular no. 04/2017/TT-BKHDT dated 15 November 2017
– Circular no. 26/2016/TT-BXD dated 26 October 2016
– Circular no. 10/2016/TT-BKHDT dated 22 July 2016
– Circular no. 23/2015/TT-BKHDT dated 21 December 2015
– Circular no. 10/2015/TT-BKHDT dated 31 October 2015
– Circular no. 01/2015/TT-BKHDT dated 15 April 2015
– Circular no. 11/2019/TT-BKHDT dated 16 December 2019
4. Please list any mandatory standard tender documents
and/or standard contract terms that the Procuring Entity must use
for a contract like the one described in Section 1.
Contract terms must specify:
a/ Applied legal bases;
b/ Language used in the contract;
c/ Content and volume of work;
d/ Quality, technical requirements of work; pre-acceptance test and
handover;
dd/ Contract performance duration and schedule;
e/ Contract price, advance payment, currency used in payment, and
payment for the contract;
g/ Contract performance security, contract advance guarantee;
h/ Adjustment of the construction contract;
i/ Rights and obligations of the parties to the construction
contract; k/ Liability for violations of the contract, rewards and
fines for violations of the contract; l/ Suspension and termination
of the contract;
m/ Settlement of disputes over the contract;
n/ Risks and force majeure events; o/ Settlement and liquidation of
the contract;
p/ Other contents.
All standards are listed in Bidding Law and Article 141
Construction Law.
5. Are you aware of any change (in practice or in
laws/regulations/procedures) related to public procurement between
May 2, 2019 and May 1, 2020?
Yes, the issuance of Circular no. 11/2019/TT-BKHDT dated 16
December 2019 to replace Circular 07/2015/TTLT-BKHDT-BTC dated 8
September 2015
6. If one or several electronic procurement portal(s)
(i.e., an official website(s) specifically and exclusively
dedicated to public procurement) are in operation, please mark
which platform would most commonly be used by the Procuring
Entity.
http://muasamcong.mpi.gov.vn
7. Which information about road works contracts procured
by the Procuring Entity is made publicly available?
Estimated cost/length/completion time – as calculated by the
Procuring Entity at the time of advertising the procurement
opportunity.
Contract cost/length/completion time – as agreed upon in the
contract signed by the Procuring Entity and the contractor.
8.According to the legal framework, when the Procuring
Entity prepares to advertise a new procurement opportunity for a
contract like the one described in Section 1, which tools are used
to estimate the contract value and projected length of works?
.
-Market analysis
-Standardized unit cost
-Project-specific technical drawings, Feasibility study
-Similar projects from previous years
-Price evaluation result by authorized state agency or price
evaluation enterprise for assets, goods and services subject to
price evaluation under the Law on Price.
Legal basis: Article 11.2 Circular No. 58/2016/TT-BTC
9. In practice, is the estimated contract value/budget
published in the tender notice/tender documents?
Yes
10. Is the Procuring Entity required to have already
allocated budget to a specific project before
tendering?
Yes, there is a specific budget allocator
11. How often does the Procuring Entity award a contract
without having all the necessary funds?
Occasionally (between 25-50%)
12. 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
Legal basis: Section 1, Chapter 2, Bidding Law
13. According to the legal framework, can the Procuring
Entity require bidders to participate in a prequalification process
specific to that contract before being able to submit their
economic offer?
Yes
Legal basis: Article 22 and 24 of Decree 63/2014/ND-CP
a. If "Yes", how often would this happen for a
contract?
Rarely (between 10-25%)
b. In practice, how many days would be necessary for BidCo to
receive a decision on its prequalification from the moment it
submitted all the necessary documents?
30 days
c. According to the legal framework, must the contractor be
registered with the Procuring Entity in order to bid for a contract
like the one described in Section 1? Yes
14. 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 in
practice.
15. Does the legal framework define the situations in
which each procurement method should be used?
Yes
Legal basis: Section 2, Bidding Law
16. Does the legal framework prohibit dividing contracts
to circumvent thresholds for open tendering?
Yes
Legal basis: Article 89.6.k Bidding Law
In practice, how often does this happen?
Often (between 50-90%)
17. Which materials need to be made publicly available
by the Procuring Entity?
Tender notices, Tender documents and technical specifications,
notice of award/bidding results
18. Which aspects of subcontracting is regulated by the
applicable legal framework?
Features – the legal framework regulates the administrative
process to subcontract, the limits of subcontracting, the
authorizations required, etc.
Disclosure – the legal framework regulates when and how
companies should inform the Procuring Entity of their intent to
subcontract.
Liability – the legal framework regulates liability of the
contractor and subcontractor in case of poor performance.
Legal basis: Article 128 of Decree 63/2014/ND-CP
19. According to the legal framework, 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?
Inform the procuring entity and seek its approval
20. According to the legal framework, how clarification
requests from potential bidders should be addressed?
The procuring entity will answer, but it is not always required to
communicate the answer to all other bidders.
Legal basis: Article 11 Circular 11/2019/TT-BKHDT
21. According to the legal framework, is BidCo required
to provide a form of bid guarantee?
Yes
Legal basis: Article 11.1 of Law on Bidding
If bid guarantee is not required by law, would it usually be
requested in practice by the Procuring Entity for a contract like
the one described in Section 1?
Yes
22. In practice, which instrument would BidCo most
commonly used as a bid guarantee?
Certificate of deposit, Bank Guarantee/Letter of Credit, Payment
retention until satisfactory completion of the contract
23. 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
Legal basis: Article 14/3(b) Decree 63/2014/ND-CP
In practice, how many days after the deadline for bid submission
does the Procuring Entity proceed to bid opening? – Zero
24. In practice, 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?
Time: 45-60 days
Main reasons: the bidder selection result must be verified or
amendments to the bidding dossier/documents are required
25. Selection committee – Which characteristics
are regulated by the applicable legal framework?
The professional requirements of members of the committee,
according to Article 116 of Decree No. 63/2014/ND-CP of 2014.
26. According to the legal framework, which award
criterion would be used for a contract like the one described in
Section 1?
This is at the discretion of the Procuring Entity, according to
Articles 39.1, 39.2 and 39.3 of Law on Bidding No. 43/2013/QH13 of
2013.
27. 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, according to Articles 66 and 72 of Law on Bidding No.
43/2013/QH13 of 2013.
If a performance guarantee is not required by law, would it usually
be requested in practice by the Procuring Entity for a contract
like the one described in Section 1?
Yes
28. In practice, which instrument would BidCo most
commonly used as a performance guarantee?
Cash / Certified check IEI Certificate of deposit
Bank Guarantee / Letter of Credit
29. In practice, how long does it usually take for the
Procuring Entity to return the performance guarantee in full once
the works have been completed and accepted by the Procuring
Entity?
Within 20 days
30. In practice, how often are the works delivered
within the original deadline?
Occasionally (between 25-50%)
31. In practice, if delays are common, what are the main
reasons?
Weather shocks (natural disasters, flooding, etc.)
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
Change of project scope
32. In practice, how often are the works delivered
within the original budget?
Occasionally (between 25-50%)
33. 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.)
Political events (elections, lack of security in project areas,
national referendums, etc.)
Weather shocks (natural disasters, flooding, etc.)
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
Change of project scope
34. How often are the following strategies used by the Procuring Entity to circumvent public procurement rules?
Strategy Frequency
Not advertise procurement opportunities long enough to minimize
competition. Very rarely (< 10% of cases)
Prioritize projects without sufficient motivation just to benefit a
particular bidder. Very rarely (< 10% of cases)
Use non-competitive procurement methods instead of open tendering
to restrict market entry. Very rarely ( 90%)
Hold informal meetings with individual bidders. Very often (>
90%)
Unilaterally change some of the tendering requirements after the
bid is opened, but before the contract is signed. Very rarely (<
10% of cases)
Biased interpretation of the selection criteria. Occasionally
(between 25-50%)
Change the award criteria after the bids are opened. Very rarely
(< 10% of cases)
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. Very rarely (< 10% of
cases)
Delay payments to the contractor to request other works not
included in the tender documents. Very rarely (< 10% of
cases)
Delay the certification of completion of the contract to obtain
other works/goods/services not previously included in the tender
documents. Very rarely (< 10% of cases)
Unilaterally and arbitrarily terminate the contract. Very rarely
(< 10% of cases)
35. How often are the following strategies used by private sector companies to circumvent public procurement rules?
Strategy Frequency
Collusion between bidders Very rarely (< 10% of cases)
Collusion with the Procuring Entity, to negate market entry to
other competitors. Often (between 50-90%)
Submission of recklessly low bids to win the tender. Rarely
(between 10-25%)
Falsification of documents or failure to disclose essential
information in the bidder's offer. Rarely (between
10-25%)
Informally paying public officials. Often (between 50-90%)
Abuse the renegotiation process to increase the price or the scope
of the project without another competitive process. Often (between
50-90%)
Delay the execution of the contract to coerce the Procuring Entity
to award other contracts to the same company. Rarely (between
10-25%)
Execute the contract with less quality or with different technical
specifications than were submitted during the tender process. Often
(between 50-90%)
Employ subcontractors that were neither properly selected nor
disclosed during the tender process. Rarely (between 10-25%)
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.