Contractors benefit from new bidding mechanism

26-Aug-2014 Intellasia | VOV | 6:00 AM Print This Post

There are high expectations the new bidding mechanism will make great strides in the difficult process of assessing and selecting high quality contractors.

Some new detailed regulations of the Bidding Law stipulated in the newly-issued government Decree No 63 effective as of mid-August are also expected to provide a good opportunity for domestic contractors to better compete in the bidding process.

A Radio Voice of Vietnam (VOV) reporter interviewed the Ministry of Planning and Investment (MoPI) Bidding Management Department Head Le Van Tang about this issue.

Following are key excerpts from the interview:

Reporter: One of the major new features of the 2014 Decree No. 63 on the selection of contractors is the revised solutions for rejecting contractors with weak capacity. Many contractors deliberately submit a bid at low prices in order to win contracts. Could you please elaborate on this new bidding method?

Tang: To eliminate contractors with weak capacity, contractors are now required to tender documents in two separate packages. The first bid package includes documents regarding technical experience, capacity, quality and rate of progress and the other covers financial capacity and bidding price.

The first package is to review the contractors’ technical experience and qualifications. For qualified bidders in terms of technical levels, ability and experience, the second package will then be opened to factor in financial considerations and decide on the next steps to select the winning contractor. For contractors who fail to meet technical requirements, there is no need to open the second package.

For bidders who satisfy financial requirements, their financial document packet will be considered in terms of bidding prices and the project’s life cycle. By doing so, incapable contractors giving low bidding prices will have no chance of winning.

Reporter: Vietnamese contractors often lose out to foreign bidders on the home turf due to their failure to compete on the bid price. So do new legal bidding regulations alter the situation?

Tang: The 2013 Bidding Law has engendered the opportunity for Vietnamese contractors to win contracts. Specifically, when participating in international bidding activities, domestic contractors and consultants enjoy incentives. In addition, the law also clearly regulates that domestic goods receive more incentives than foreign goods. In particular, bidding packages valued at less than $5 billion are allocated to small-scale contractors.

Reporter: Could you tell about the weaknesses of domestic contractors compared to foreign ones? What Vietnamese contractors should do to seize the opportunity from this new bidding mechanism?

Tang: Vietnamese contracts reveal some weaknesses. The first is inferior financial capability. The second is unprofessional participation in the bidding process. Foreign contractors are better than domestic bidders in this regard.

Preparations for tender documents made by foreign contracts are also better than those done by domestic contractors. For international bidding packages, Vietnamese contractors often commit unnecessary mistakes due to limited language skills and expertise.

The Vietnamese market will open its door wider after the Trans Pacific Partnership Agreement (TPP) and a Free Trade Agreement (FTA) with the EU are signed by the end of this year. As a result, contractors from 28 European countries and 12 countries in the TPP can fully participate in Vietnam’s bidding packages.

Vice versa, Vietnamese contractors can also get involved in the above nations’ bids. However, our contractors need to broaden their knowledge about bidding activities, technical regulations, corporate governance and construction quality to better themselves in international competitions. If they do not make greater efforts in this process, incentives for them will remain in vain.

Reporter: Thank you very much.


Category: Economy

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