E-Procurement: Difficulty in Political Determination

In the world, online bidding has become an inevitable trend. Besides, in the future, if Vietnam signs or accedes to the Trans-Pacific Partnership Agreement, eight other countries - Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and the United States - also hope to formulation of public e-procurement. Vietnam will facilitate the expansion of space and the extension of time, helping partner countries spend less time and money.

 

According to reports by implementing nations, online bidding reduces expenses by 3-20 percent of procurement value. In Vietnam, the value of bids carried out in accordance with the Law on Tendering equals to 20 percent of the country’s GDP, or over US$20 billion. Therefore, if we can put all bids online, we can save billions of US dollars.

 

For the time being, South Korea is known to have the most modern online electronic procurement brand in the world. Hence, Vietnam is studying the Korea on Line e-Procurement System (KONEPS) to build a pilot electronic public procurement system in Vietnam.

 

According to KONEPS design, the E-Procurement System built by South Korea consists of four components: online bidding, online procurement, online contract signing, and online payment. However, due to limited human and technical resources, the Tendering Management Department built the online government procurement website http://muasamcong.mpi.gov.vn/ with the support of the South Korean Government which was represented by the Korea International Cooperation Agency (KOICA). The total investment capital for online procurement system is over VND3.3 million.

 

Online procurement system had been piloted for three years in Vietnam from late 2009 to 2011. However, if the launch time is taken, this has operated for more than one year. In July 2010, Vietnam issued the Circular 17 on online procurement which took effect at the end of that year. In addition, the online procurement system is now successfully applied in three fields: procurement, construction and consulting services. Three bidding methods include one document set, first phase and second phase. And, three forms of selecting investors on the system consist of open bidding, limited bidding and competitive offer. As this is the pilot stage, there are just over 1,600 offering parties and over 400 contractors registering to use the online procurement system where more than 25,000 notices of tender and above 900 procurement plans are published. After three years of experiment, the country has successfully concluded more than 60 electronic bids in all three fields.

 

However, the deployment of e-procurement system is facing difficulties in capital, technological infrastructure and human resources. Hence, the department chose the public - private partnership (PPP) model at the permit of the Government. In early April 2012, the department selected suitable consulting units for completing the feasibility study report on PPP model-based project and selecting investors for the four-year project (from 2012 to 2015).

 

Indeed, the introduction of electronic procurement system has not achieved best results. There are a lot of reasons. To a certain extent, e-procurement makes participants feel that they lose the power.

 

Previously, Vietnamese contractors bid with “give and take” mechanism and they had to go to offering organisations to take data, etc. Now, they can do it on computers. Another reason is the lack of political determination. Some units with available and ready money sources like Vietnam National Oil and Gas Group (PetroVietnam) join electronic procurement rounds every week. Units using State funds are still timid.

 

Min Hyung Jong, Deputy Director of Korea Public Procurement Service Currently, KONEPS is known as one of the most successful public procurement systems in the world. In South Korea, about 43,000 agencies registered to use this public procurement system and 223,000 enterprises registering to provide services and goods over the system. With KONEPS, South Korea has improved public procurement transparency and reduced contract signing. Remarkably, this method is more effective and economical than conventional procurement method. Each year, it saves as much as US$8.1 billion of transaction costs (including US$6.6 billion for suppliers, and US$1.5 billion for public sector). South Korea needed five years to build KONEPS system. Vietnam needs less time to do it. In my opinion, the remaining matter for Vietnam is how to implement and introduce it to local authorities and enterprises.

Technically, to win an online bid, how have security and digital signature issues resolved?

This is also a major obstacle because Vietnam’s information technology infrastructure is still developing asynchronously. Security and digital signature issues will be resolved step by step if problems occur.

 

In the long run, Vietnam should necessarily stop encouraging localities and businesses to carry out e-procurement as before. In the near future, the department will have more drastic measures to increase e-procurement uses.

 

The Ministry of Planning and Investment has sent documents to 15 ministries and localities to urge their subordinated units to implement this activity. Hanoi People’s Committee, Vietnam Posts and Telecommunications Group (VNPT) and Electricity of Vietnam (EVN) were chosen to effectuate the solutions. Each unit chooses at least five procurement packages, three consulting services, and three construction packages. All three forms of bidding forms are applied.