Lawyer in Vietnam Oliver Massmann

- “World Bank asking Duane Morris on Public Procurement in Vietnam"

- Here are the answers !

I. Bidding for a Public Procurement Tender in Vietnam

1. Laws and regulations governing public procurement

Law on Bidding No. 43/2013/QH13 by National Assembly dated 26 November 2013

("Law on Bidding");

Law on Public Investment No. 49/2014/QH13 of the National Assembly dated 18 June

2014 ("Law on Public Investment");

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. 15/2015/ND-CP by the Government dated 14 February 2015 on public-

private partnership investment ("Decree No. 15/2015/ND-CP")

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 dossier 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.

2. Procurement portal in Vietnam

Muasamcong.mpi.gov.vn serves as the e-procurement platform in Vietnam, which is operated at

the procuring entity/ ministry level. It is a platform centralizing information, supporting e-

tendering and procurement contracts management. Via the procurement portal, suppliers can

access public procurement laws and regulations; notices of invitations to tenders; tender

documents; guidelines to participate in a tender; and notice of award/ bidding results. They can

also ask a question to the procuring entity via such platform. Vietnam Government is buiding up

an e-tendering system. Circulars and relevant guidances in this regard are being drafted and

expected to be passed in 2015.

3. Information on public procurement opportunities

Article 8 of Decree No. 63/2014/ND-CP requires that procuring entities publish their procurement

plan. They are published at the notice board of the procuring entity, city council or ministry; in

local or national newspapers; in the Internet (e-procurement portal or website of the procuring

entity; or broadcast on television or radio.

In the case of open tendering, procuring entities must publish notices of invitations to tender on

the internet (e-procurement portal). Annexes 4, 11 and 15 to Circular No. 20/2010/TTLT-BKH-

BTC dated 21 September 2010 by the Ministry of Planning and the Ministry of Finance provides

a list of elements that procuring entities must always include in such notices. Moreover, Articles

12.2, 12.7, 12.8, and 23.2 of Decree No. 63/2014/ND-CP also provide a list of elements that

procuring entities must always include in tender documents in case of an open tender. Articles

12.3(a), 12.3(b), 12.4(a), 12.4(b) of Decree No. 63/2014/ND-CP requires the minimum content to

include the technical and financial requirements in order to participate in the tender as well as the

criteria and method of assessment that will be used by the procuring entity to access bids (Articles

12.2- 12.8 of Decree No. 63/2014/ND-CP).

Access to tender documents

Suppliers can access tender documents by downloading the documents from the internet (E-

procurement portal or website of the procuring entity) or in Bidding Newspaper and other public

media. Based on the size and nature of the contracts, procuring entity decides the selling price of

one set of bidding documents and dossier of requirements (taxes included) for the domestic

bidding, including the maximum price of VND 2,000,000 for the bidding invitation document and

VND 1,000,000 for the dosier of requirements; as for the international bidding, such selling prices

shall adhere to the international bidding practices (Article 9.1 of Decree No. 63/2014/ND-CP).

Tender documents can be obtained upon payment.

Circular No. 01/2015/TT-BKHDT promulgates the standard bidding documents. However,

technical specifications do not follow international or national industrial standards (for instance,

reference to standards of the International Organization for Standardization or the United Nations

Standard Products and Services Code classification).

4. Accessing public procurement opportunities and preparing a bid

Legally speaking, there is no provision allowing suppliers to submit a question for clarification to

the procuring entity on the notice of invitation to tender or tender documents. However, in

practice, suppliers can contact the procuring entity for clarification of the tender.

5. Participating in the bidding process

Submitting a bid

Article 5.1(d) of the Law on Bidding requires suppliers to register on a national or local registry

of suppliers before they can submit their bids. In order to do that, suppliers must submit an

application dossier for an igital certificate and use the digital certificate for online register. It

would take 03 (three) calendar days and no cost. The Ministry of Planning and Investment

("MPI") issued an Official Letter No. 5356/BKHDT-QLDT dated 18 August 2014 to provide

guidance on bidder registration.

Article 12.1(e) of the Law on Bidding stipulates a minimum 20 calendar days for domestic

bidding and 40 calendar days for international bidding that the procuring entity must grant to

suppliers to submit their bids. Suppliers can submit their bids online or in person without any fee.

However, online bidding system seems not to be completed at the moment. We assume that

online tendering will apply after the issuance of upcoming implementing documents.

Securing a bid and submitting alternate bids

According to Article 11.2 of the Law on Bidding, bidders must conduct measures for bidding

guarantee prior to bidding closure for bidding dossiers; in case of applying method of two-phase

bidding, bidders must provide a bidding guarantee during the second phase.

For bidder selection, value of bidding guarantee is stipulated in bidding dossiers, dossier of

requirements under a defined amount of between 1% and 3% of the bidding package price based

on the scale and nature of each particular tender package. For investor selection, this amount is

between 0.5% - 1.5% of the total investment amount based on the scale and nature of each

particular project (Article 11.3 Law on Bidding).

Procurring entities are not legally required to propose a guanratee instrument different than a bid

security bond (or other instrument generating a cost for suppliers) that would not generate a cost

for bidders upon submitting their bids. Alternate bids are also not allowed.

Accessing information on the award of the public procurement contract

Article 8.1 of the Law on Biding requires the procuring entity to publish the award notice. It is

published on the e-procurement portal, in local or national newspapers, at the notice board of the

procuring entity or city council or broadcasr on television or radio. The procuring entity is also

required to notify unsuccessful bidders in person with reasons why they are not selected.

Additional information

There is no incentives to increase procurement of goods and services from women-owned

enterprises. Actually, a bidder who employs female employees of 25 % or more of laborer

quantity will be entitled to preferential treatment in domestic bidding to supply advisory services,

non-advisory services, construction and installment. (Article 14.3(a) Law on Bidding). A bidder

as a small enterprise will also be entitled to preferential treatment in domestic bididng.

Preferential treatment includes:

Add more points to the assessment point of tenderers subject to preferential

treatment; or

Increase the bidding price or assessment price of tenderers not subject to preferential

treatment.

(Article 14.4, Law on Bidding)

Reforms related to public procurement

Government's Decree on Public Private Partnership ("PPP") was adopted on 14 February 2015.

Decree on investor selection in PPP project; Circular guiding Government's Decree 63/2014/ND-

CP on conducting bidding online and bidding in procurement, construction and installment and

advisory sectors are expected to be adopted before June 1, 2015. Meanwhile, Government's

Decree guiding the Law on Bidding regarding bidder selection is expected to come later this year.

6. Recommendation to the Government

We would recommend the government to expedite the adoption of detailed guidance for the

procedure of bidder registration on the National bidding network system so that procurement

activities may be conducted in a more effective and economic manner. Moreover, it is necessary

to take advantage of the negotiations of a free trade agreement between Vietnam and E.U and

Trans-Pacific Partnership Agreement between Vietnam and US and other Asian-Pacific countries

to require Vietnam to comply with major principles on government procurement and bidding

under WTO’s Agreement on Government Procurement. Vietnam is also urged to sign the WTO’s

Agreement on Government Procurement as soon as possible since it would appease the minds of

foreign investors.

II. Integrity of the Public Procurement Process in Vietnam

1. General legal safeguards applicable to the overall procurement process

Financial disclosure obligations of procurement officials

Public officials involved in public procurement are not mandated to submit a financila disclosure.

Protecting bidders from situations of conflicts of interest

Under Vietnam laws, situations of conflict of interest of procurement officials are considered as

failure to ensure the fairness and transparency in bidding -- which are prohibited acts (Article.

89.6 of Law on Bidding). A bidder can report a situation of conflict of interest affecting a

procurement official. Please find below the section on Complaints for detailed procedures for

such report.

Articles 90.1, 90.2 provides that a procurement official in a situation of conflict of interest should

be suspended, removed excused or disqualified from pariticipating in the procuremnt process.

Under Vietnam laws, a bidding shall be cancelled in case there is an evidence on bribery, abuse of

position and/or power to interfere illegally in bidding activities that lead to the falsified result of

bidder selection. (Article 17.4 Law on Bidding). However, the Law on Bidding is silent on who

may report such evidence and the relevant procedures accordingly.

The bidding supervising entities in charge shall send written reports on the violations against the

law on bidding to the competent persons for consideration to ensure the effectiveness of the

bidder selection (Article 126.5(d) of Decree No. 63/2014/ND-CP). There is no regulatory

framewoek to protect the reporting officials from retaliation.

2. Specific safeguards applicable during the different steps of the procurement process

Pre-tendering case

Consultation with the private sector, if organized by the procuring entity, is not publicly

advertised.

A bidder participating in the tender must be independent on legal and financial status of the

consultancy bidder. (Article 6.2(b) Law on Bidding).

Also, a bidder is not allowed to join a bidding of goods procurement or construction for which

such bidder previously provided consultancy services. (Article 89.6(dd) Law on Bidding).

Article 16 of the Law on Bidding require public officials in charge of drafting the technical

specifications receive technical tranining, specifically:

Individuals participating in bidding activities must possess certificate of training on bidding

and have professional expertise, capability, experiences, language appropriate to the

requirements of the bidding package, project, except for individuals belonging to bidders.

Individuals who directly participate in making dossiers of invitation for expression of interest,

dossiers of invitation for pre-qualification, bidding dossiers, dossiers of requirements;

assessment of dossiers of expression of interest, dossiers of pre-qualification participation, bid

dossiers, dossier of proposals of professional bidding organizations, enterprises, units

operating in advisory for bidding, professional management board of projects must have

certificate of practicing on bidding operation.

The law does not prohbit the inclusion of technical specifications that could influence the award

of the contract (for example, details of origin, reference to a specific trademark or patent). The

law does not require the procuring entity for technical specifications similars to the ones requested

either.

Tendering phase

Article 14.4(a) of Decree No. 63/2014/ND-CP provides that within one (1) hour from the closing

of bidding submission, the procuring entity must proceed to bid opening. In practice, it may take

longer, but the bid opening still takes place on the same date as the closing of bidding submission.

Bid-opening session shall be conducted in the witness of legal representatives of bidders who

attend the bid-opening session, regardless of the presence or absence of bidders. I.e. The

participating bidders are allowed to attend the bid opening session. However, Vietnam Law is

silent if other subjects are permitted to attend such opening or not. All information of the whole

bid opening must be recorded. Records on the bid opening must be countersigned by

representatives of procuring entities and bidders who participate in the bid opening session. Such

records must be delivered to the participating bidders.

The law does not probibit the public officials in charge of conducting the needs assessment and

drafting the technical specifications from participating in the bid evaluation. Criteria for

evaluation of bid dossier generally include: criteria for evaluation on capability, experiences;

criteria for evaluation on technical aspect; and criteria for evaluation on financial aspect.

However, current law does not expressly require that procuring official(s) to strictly and solely

comply with such criteria. Official in charge will flexibly apply the general principles as the case

may be.

Post-tendering phase

A bid award receiver cannot sign the procurement contract on an e-procurement platform or

another online system. Actually current law has built up a separate chapter with regard to

“selection of bidder online”. (Chapter VIII Law on Bidding). As such, electronic transaction

documents and information posted on the national bidding network system are considered original

and as valid as paper documents, which are the basis for evaluation, verification, inspection, audit,

and disbursement (Article 85.5 Law on Bidding). However, current law is silent on the procedure

to sign and amend the procurement contract online. We should wait for further implementation

guidances issued by Ministry of Planning and Investment (Article 88.7 Law on Bidding).

The procuring entities are also not required to publish the procurement contract. Any expenditure

arising or changing in the implementation of procurement contracts must be reported to the

competent authorities for consideration and appendices which serve as a basis for the

implementation must be added. Also, an e-tendering system is being prepared by Ministry of

Planning and Investment and is expected to be soon applied in 2015 for monitoring such

implementation.

The procuring entity must process the payment of supplies in accordance with the timing as

agreed in the procuring contract. If an investor makes the payment later than the stipulated time in

the procuring contract, such investor shall be subject to the late payment interest under the term of

the contract. In Vietnam, the law allows payment in cash, through bank transfer or other payment

methods as agreed by parties. However, in practice, payment in cash and through bank transfer

should be preferred.

III. Filing a Complaint in Vietnam

1. Regulatory framework

Article 91 of the Law on Bidding No. 43/2013/QH13 by National Assembly dated 26 November

2013 ("Law on Bidding") stipulates mechanisms governing bidders’ complaints.

Challenges to provisions in the tender documents do not need to be submitted prior to the due date

for tender submisisons. However, a written complaint must be submitted prior to the bidder

selection result. The law provides the review mechanism as follows: (i) First tier review by

procuring entity and appeal to independent body (if any); and (ii) court proceedings. Step of court

proceedings may be conducted at any time, notwithstanding during or after step of review by

procuring entity/independent body. However, in case conducting step of court proceedings first, a

bidder is no longer allowed to precede step of review by procuring entity/independent body. If

bidders conduct court proceedings during the resolution of protest by procuring entity/independent

body, the resolution of protest shall be terminated immediately. Under Vietnam laws, review body

will be procuring entity and independent administrative review body with the support of Protest

Resolution Consultancy Council (Article 92 Law on Bidding).

2. Complaints before the conclusion of the contract

Only suppliers that have submitted a bid have standing to file a complaint. The complanining

party does not have to show that it suffered a loss of right, monetary damages or injury as a results

of the tender or is not subject to any condition to be eligible to file a complaint. Law only requires

the complaining party to submit a written complaint without any standard form (Article 92.1(a)

Law on Bidding). However, we understand that this written complaint must at least explain the

reason of the protest as well as how the complaining party's lawful rights and benefits are

affected.

The complaining party has two options to files its complaint under current law: (i) to the

procuring entity and/or (ii) to a judicial court. Regarding (i), if procuring entity does not respond

to the protest or the complaining bidder disagrees with the resolution, the bidder has the right to

submit the written protest to an independent second-tier review body. We are aware that almost

bidders commonly submit the written protest to procuring entity first instead of conducting the

court proceedings (Article 91.1 Law on Bidding). Written complaint must be submitted to

procuring entity prior to the bidder selection result. The procedure to file a complaint is not listed

on a government-supported website. Moreover, the complaining party is not required to hire a

legal counsel to engage in the proceedings before the first-tier review body. The complaint does

not trigger a suspension of the procurement process, except for necessary circumstances or the

application of interim injunctive relief.

When the complaint is filed, the first-tier review body (the procuring entity) will review the claim.

It however does not conduct hearings. Within 9 calendar days (7 working days) from the date of

receipt of bidder's complaint, the procuring entity must resolve it in writing (Article 92.1(b) Law

on Bidding). In practice, it may take longer. The decision is not required to be published.

The complaining party may appeal to the decision of the procuring entity within 7 calendar days

(5 working day) from (i) the deadline for the procuring entity to respond to bidder's complaint or

(ii) the date of receipt of procuring entity's complaint resolution. The procurement process will

not be suspended until the complaining party’s right of appeal expires or during the appeal

proceedings except in necessary circumstances.

Neither the complaining party nor the second-tier review body is required to notify the procuring

entity of the appeal. Within 7 calendar days (5 working day), the second-tier review body must

issue a decision.

3. Post-award complaints

The award decision can be subject to a two-tier review. Article 92.2 of the Law on Bidding

provides a 10 calendar day period between the announcement of the winning bidder and the

beginning of the contract for unsuccessful bidders to challenge the decision. Only parties that

have submitted a bad are allowed to challenge the award the contract.

The process of filing a post-award complaint before procuring entity (first-tier review body) is the

same as the one for filing a pre-award complaint. However, for the seoncd review, the Complaint

Resolution Consultancy Council will support. This Council may request the procuring entity to

provide information where necessary. Suspension of the procurement during the review process

may also be requested. In case the complaining bidder submits the written complaint to the

Complaint Resolution Consultancy Council, fee equal to 0.02% of such bidder's participation fee

will be charged, but not less than VND1,000,000 and not more than VND50,000,000 (Article 9.8

of Decree No. 63/2014/ND-CP).

4. Recommendation to the Government

Suspension of procurement (where necessary) may be request at all steps of complaining

procedure (i.e. first-tier review and second-tire reviews, pre-award and post-award complaints) to

protect the lawful rights and benefits of the complaining bidder.

Complaining bidder as well as its authorized representation should have the right to see all and/or

any submission from the procuring entity to the second-tire review body/ Protest Resolution

Consultancy Council

Which types of remedies that the second-tire review is entitled to grant to complaining bidder

should be clarified in detail.

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Please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com if you

have any questions on the above. Oliver Massmann is the General Director of Duane Morris

Vietnam LLC.

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THANK YOU VERY MUCH!