Procurement Law 2013: Transparent and Tight

10:37:42 AM | 8/14/2014

Construction is the sector with the basic investment capital which requires strict inspection of construction contracts and the input and output of capital. To create an open environment and announce new regulations on the mechanism of state management on this issue, the Ministry of Planning and Investment (MPI) recently, in collaboration with the Ministry of Construction and Vietnam’s Association of Construction Contractors (VACC), organised a workshop "New bidding mechanism - the basis for winning contracts in construction activities".
Many new contents
According to MPI Deputy Minister Nguyen Van Hieu, Procurement Law 2013 and Decree 63/2014/ND-CP have significant progress, creating clear legal framework, with intelligent bidding mechanism to ensure consistency between the legal documents, minimize the administrative procedures, and enhance the transparency. Also, in the process of formulating and revising the law, the Procurement Law Drafting Committee always appreciated the opinions of relevant authorities, the voice of the business community because they are the main object affected largely and directly by the new Procurement Law. Deputy Minister Hieu also said that this workshop is to answer questions as well as instruct new rules related to contractors and businesses. The new sanctions updates in this Procurement Law will create conditions for contractors seeking solutions to increase their competitiveness, actively participating in the public procurement market, increasing the chances of winning at home and reaching out to the world market.
Giving further analysis of the content of the new Procurement Law, Le Van Tang, Director of Procurement Management under the MPI introduced radical changes of the Procurement Law 2013 compared to that of 2005. Specifically, on the building progress of the guiding texts, Le Van Tang said there would be 2 guiding decrees, among which is Decree 63/2014 / ND-CP detailing a number of articles of the Procurement Law on choosing contractors dated June 26th 2014 and becoming effective from August 15th 2014. In the near future, the MPI will issue circulars of bidding documents (BD) sample. One thing worth noting is that the international donors have appreciated Procurement Law 2013. In addition, some donors such as World Bank, Asian Development Bank (ADB), French Development Agency (AFD) have agreed to create the same BD for donors in consistence with the Procurement Law of Vietnam to create favourable conditions for the implementation because previously, some localities as well as investors had faced many difficulties using different BDs for different donors. It is expected that later this year, the MPI will issue new BD sample.
Also, according to Director Le Van Tang, Procurement Law 43/2013 / QH13 has effect from July 1st 2014 replacing Procurement Law 61 // 2005 / QH11, and repealing Section 1, Chapter VI of Construction Law 16/2003 / QH11 and Article 2 of Law 38/2009/QH12 amending and supplementing a number of articles of the Laws concerning capital construction investment. Regarding the structure, this law includes 13 chapters with 96 articles. The scope of this law regulates the state management of procurement and responsibilities of stakeholders and procurement activities, including: Selection of contractors providing consulting services, non-consulting services, goods, construction for development projects funded by the State agency, development investment project of state-owned enterprises; providing products, public services, buying for national reserve; buying drugs, medical supplies, etc.
On contracts in procurement activities, the Procurement Law 2013 regulates that for bidding packages of the scope, contract type must be specified in the contractor selection plan and include 4 types of contracts: package contract, fixed price contract, contract under adjusted price and contract over time. A new feature in Procurement Law 2013 is that the rejection of stipulating form contracts under percentage.
About the prohibited activities in bidding, Procurement Law 2013 stipulates 9 groups of prohibited acts including: giving and receiving bribes; abusing positions and powers to intervene illegally in procurement activities; Bid-rigging; Fraud; Obstructing; Failing to ensure fairness and transparency; Disclosing and receiving documents about the contractor and investor selection process; Transferring bidding; Organizing contractor selection when capital for bidding package has not been determined.
Restricting incompetent bidders
According to Dr Duong Van Can, Deputy Chairman and General Secretary of VACC, the issue of general applicable mechanism for tenders under Procurement Law 2013 is an inevitable requirement for extensive integration trend today. Under current regulations, profiling bidding construction package follows the form prescribed in Circular 01/2010 / TT-BKH of the MPI. However, the Circular applies only to the package using the state capital under Procurement Law 2005 and does not apply to the loan package using loan or support aid of institutions such as the World Bank and ODA loans. Profiling bidding documents for the loan package using loans of WB "foreign contractor" and ODA currently follows the WB own guidelines. According to international donors such as World Bank, Asian Development Bank (ADB), EU, Japan International Cooperation Agency (JICA), the new Procurement Law 2013 is in accordance with basic international norms and regulations of the contractors.
Mr Nguyen Quoc Hiep, Chairman of VACC said that the new regulations in Procurement Law 2013 would limit incompetent contractors. Specifically, in the case of Chinese contractors, though they have weak capacity but still win many big packages in Vietnam. The reason for this situation is because in the past time, Vietnam used to put price element on top. Taking advantage of this loophole, the Chinese contractors found ways to draw out "nice profile" with lower bid prices from 20-25 percent to win the biddings. But then they found reasons to delay implementation to force investors to increase prices to offset the discount when bidding. Therefore, the price of the package was not reduced by 20-25 percent, but that's just their trick to win. In the next step, Chinese contractors put the investors into the dilemma. Without additional funds, the project cannot be completed and put into use. If investors want to liquidate the contract, in case the workload is in progress, it is a difficult problem to solve, Mr Hiep analysed.
Dr Pham Sy Liem, former Deputy Minister of Construction, also proposed establishing three bidding centres in Northern - Central – Southern regions. Mr Liem said that the construction projects funded by the state capital must pass through the examination of the professional procurement centre. If you do this, it will minimize the situation that many units do not have the expertise but still organize bidding. Organizationally, the bidding centres are under the management of the MPI, directly managed by the Department of Procurement Management. However, the position of standing deputy director should be appointed by the Ministry of Construction as this is procurement activity in the construction sector and also to create a mechanism of transparent information. Besides, when investors submit projects for the centre there will be supervision of the bidding organization. Thus, it will then create mechanisms for cross monitoring, limiting the negative.
Anh Phuong