Contractors bound under Law on Bidding

The policies under which construction contractors have to work in public investment projects pose several potential risks. These policies fall under the Law on Bidding, which many believe needs immediate amending to make it more suitable for completion of public investment projects and bring ease to contractors.

For several months the Ministry of Transport opened bids for many public investment projects, such as expressways, but contractors showed no interest in them, which then forced the ministry to select and directly appoint contractors.

Tender disagreement

A story doing the rounds about the inadequacies in bidding is on the controversy surrounding the bidding criteria for the package, Engineering Procurement and Construction (EPC) of Nhon Trach 3 and Nhon Trach 4 Power Plants of PetroVietnam Power Corporation (PVPower), which occurred last year. At that time, PVPower believed that the project's EPC bidding documents were competitive, transparent, and fair, while Siemens Energy Company, which is a foreign contractor, asserted that PVPower made inappropriate regulations, restricting contractors from participating. Such an incident was also caused by the monopoly position of the Original Equipment Manufacturer (OEM) and General Electric (GE).

After being approved by the competent authority, the PVPower Branch and the Power Project Management Board opened an international bid for the above package at a price of nearly VND24,148 bln. However, after the investor issued the bidding documents, some bidders petitioned to clarify doubts about the inconsistency of this bidding document. In the petition sent to the Government and the Ministry of Planning and Investment, Siemens Energy Company stated that PVPower had raised a barrier to not allow the 60Hz turbine of their company's 9000HL gas turbine to participate in the Nhon Trach 3 and 4 bidding packages. Therefore, only one or two other manufacturers could participate in the bidding. The competitiveness of the project would now be severely affected, leading to higher electricity costs for the people.

After receiving the contractor's views on the above bidding package, a PV Power representative replied in writing to the relevant agencies that the bidding document was valid because it ensured publicity, competition, transparency, and full compliance with the provisions of the Bidding Law and Decrees. PVPower affirmed that the criteria for inviting bids for EPC packages for Nhon Trach 3 and Nhon Trach 4 Power Plants were valid because they ensured publicity, competition, transparency, and full compliance with the provisions of the law.

Increase in monopoly

Articles 73 and 78 of the Law on Bidding 2013 stipulates the responsibilities of Party A as competent person, investor, bid solicitor, expert group, and appraisal organization, in developing and approving the bidding documents to select contractors.

The competent person is one who approves the project or decides to purchase according to the law, as explained in Clause 34 in Article 4, and is responsible as in Article 73. This regulation almost governs all bidding activities of the investor, such as approving the contractor selection plan; organizing the inspection, supervision, and monitoring of the bidding work; adjusting the tasks and authority of the investor; and handling bid cancellations.

At a lower level as stated in Article 74, is the investor or the organization owning the capital or the organization assigned on behalf of the owner of the capital, or the borrowing organization that directly manages the project implementation process, according to Clause 4 of Article 4. This party is responsible for approving the contents in the contractor selection process; signing or authorizing the conclusion and management of contract performance with contractors; and deciding on the establishment of a bid solicitor with personnel who meets the conditions prescribed by the Bidding Law.

Hence the bid solicitor which is an agency or organization with expertise and capacity to carry out bidding activities, according to Clause 3 in Article 4, has responsibilities as stated in Article 75. These call for the selection of contractors to implement the bidding packages under the project; organize contractor selection; evaluate dossiers of expression of interest; dossiers of pre-qualification; bid dossiers and dossiers of proposals; decide to establish expert groups; and take responsibility before the law and the investor for the contractor selection process.

As stated in Article 76, the expert group has the responsibility to evaluate the dossiers of expression of interest, dossiers of pre-qualification participation, bid dossiers, and dossiers of proposals in accordance with requirements, and report to the bidding solicitor. Similarly, the responsibilities of the appraisal organization are specified in Article 78, although regulated to operate independently and comply with the provisions of the Bidding Law and other relevant laws when conducting appraisal.

When the appraisal organization is held responsible for the performance of the tasks at the request of a competent person, the investor for the project, the bid solicitor for regular procurement, concentrated procurement, examination and inspection agency, and state management agency is in charge of bidding activities.

The above regulations inevitably give rise to monopoly and the sole will of Party A in the process of setting up and building the bidding documents. This also means that the disadvantages always belong to contractors and investors. For example, Article 77 stipulates contractors and investors have the right to require the bid solicitor to clarify the request for expression of interest, the dossier of invitation for pre-qualification, bidding dossier, the dossier of requirements during the bidding process, right to petition, complaints and denouncements, and initiate court proceedings when they see that their legitimate rights and interests are affected as in Article 91.

Hoang Son (SGĐTTC)