Guide to fundamental terminology in bidding
Within the context of increasing push for integration in the economy of Vietnam, bidding activities have taken a vital and decisive role for the transparency, efficiency, and success of any public investment and government procurement project. With the promulgation of Law on Bidding No. 22/2023/QH15, the regulations have been standardized and organized more clearly, thereby requiring the participants to have comprehensive understanding of specialized terminology.
A comprehensive and accurate understanding of the definitions on the entities, forms, methods, and document types would not only facilitate compliance with the laws, but also serve as a foundation for effective competition strategies.
In this article, we shall analyze and categorize the fundamental terminology, thus providing readers with a comprehensive view of the matter
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Important entities in bidding activities
| Term | Law on Bidding 2023 | Simplified Interpretation |
| Employer | An authority or organization that has their own funds or borrowed funds or to whom funds are allocated to execute the project; a state budget-funded unit; a budget estimate unit that directly uses funding included in off-budget procurement cost estimate; or a centralized procurement unit. | The entity with the highest decision-making authority over the management of the project and fund sources. Responsible for the approval of the planning, content of the documents, and the approval of the contractor selection result. |
| Procuring entity | The competent authorities that approve investment guidelines or decide to conduct bidding for investor selection; units assigned by such competent authorities to organize the investor selection. | The entity that responsible for the organization and implementation of the process. Responsible for the issuance of the documents, receipt, management, and evaluation of the bidding document. |
| Contractor | An organization or individual or a group of organizations or individuals coming together under a consortium agreement that acts as a tenderer, has their name specified in the tender letter, and will directly sign and execute the contract once selected. | The entity that provides solutions, services, or goods. Such entities have to compete with each other for the rights to implement the packages. |
Prominent forms of contractor selection
| Term | Law on Bidding 2023 | Simplified Interpretation |
| Competitive Bidding | A form contractor selection whereby there is no limit on the number of bidders. | Any contractor meeting the preliminary requirement could participate. This form of contractor selection brings about the greatest degree of competitiveness, ensuring the equality and economic efficiency. |
| Limited Bidding | A contractor selection form whereby only bidders meeting the requirements of the package are invited to submit bids. | Only invite contractors who have been determined to be qualified, often applicable in packages that are particular in natures or require special experience. |
| Direct Contracting | Direct contracting is only applicable to the scenarios specified in Article 23 of Law on Bidding 2023 | A contractor selection form where the Procuring entity choose a specific contractor to participate in the bidding and perform contract.
Only applicable in special circumstances as specified in the laws. |
| Shopping | Shopping is applicable to packages whose value do not exceed 05 billion dong as specified in Article 24 of Law on Bidding 2023. | Applicable in small and common procurement packages where speed is of high priority.
The Procuring entity shall request the contractors to submit quotation. Subsequently, a comparison shall be made so that the most reasonable offer shall be selected. |
| Direct procurement | Direct procurement applies to packages for purchase of similar goods of projects or procurement cost estimates of the same employer or another employer, provided that the requirements laid down in Clause 2 of Article 25 of the Law on Bidding 2023 are satisfied | Procurement of addition goods/services directly from the contractor who have previously signed contracts, whenever.
Applicable to package for procurements of goods/construction whose bidding was won by the contractor through either competitive or limited bidding. |
| Self-performance | An employer that directly manages and uses goods/services of a package of a project or procurement cost estimate may themself execute that package if meeting all of requirements specified in Law on Bidding 2023. | The employer organizes the implementation of the works under the package using their own personnel, equipment, or assign these works to subsidiary unit, or department and division under that organization. |
Bidding methods
| Term | Law on Bidding 2023 | Simplified Interpretation |
| Single stage – one envelope | Bidders submit bids or proposals in one envelope containing both the technical proposal and the financial proposal in accordance with the requirements laid down in the tender documents or request for proposal. | One-time submission, one-time evaluation: The contractor submit the technical documents together with the financial documents. The Procuring entity shall open and evaluate both at the same time. |
| Single stage – two envelope | Bidders submit the technical proposal and the financial proposal at the same time but separately in accordance with the requirements laid down in the tender documents. | One-time submission, two-time evaluation: The technical documents shall be evaluated first, afterward, only those whose technical documents are considered qualified would have their financial documents evaluated. |
| Two-stage – one envelope | At the first stage, bidders shall submit their technical proposals, without bid prices, which are prepared in accordance with the requirements laid down in the tender documents and on the basis of fundamental designs or specifications of the package. shall be invited to the second stage.
At the second stage, the contractor selection process shall be conducted as follows:
|
Stage 1: Make technical adjustments. The Contractor shall submit the preliminary technical documents so that the Procuring entity could complete the requirements.
Stage 2: Official Bidding. The Contractor submits only one envelope, including both the adjusted technical documents and financial documents for overall evaluation |
| Two-stage – two envelope | At the first stage, bidders shall submit their technical proposals, without bid prices, which are prepared in accordance with the requirements laid down in the tender documents and on the basis of fundamental designs or specifications of the package. shall be invited to the second stage.
At the second stage, the contractor selection process shall be conducted as follows:
|
Stage 1: Make technical adjustments. The Contractor shall submit the preliminary technical documents to fulfill the requirements.
Stage 2: Two-envelope bidding. The Contractor submits two separate envelopes (technical and financial documents). The technical documents shall be evaluated independently prior to the opening of the envelope containing the financial documents. |
Important documents in bidding activities
Documents prepared by the Procuring entity
| Term | Law on Bidding 2023 | Simplified Interpretation |
| Tender documents | All documents used in competitive bidding, limited bidding or shopping, indicating requirements for a project, package or investment project, as the basis for bidders/investors to prepare their bids and for the procuring entity to organize the bid evaluation. | Documents prepared by the procuring entity, whose content include the requirements and conditions so that the bidders could prepare the bidding documents.
Applicable in popular forms such as: Competitive bidding, limited bidding, and shopping. |
| Request for proposal | A set of documents used in direct contracting, direct procurement or price negotiation, indicating requirements for a package, as the basis for bidders to prepare their proposals and for the employer to organize the evaluation of received proposals. | Documents prepared by the procuring party. In which, the content is the “question” given by the procuring that the contractor must “answer” in the bidding documents/bid proposal.
Applicable in simple forms such as: Direct contracting, direct procurement, price negotiation. |
| Request for Expression of Interest (EOI) or prequalification documents | A set of documents which are used in the competitive bidding with EOI request or prequalification applications, indicating capacity and experience requirements to be satisfied by bidders, as the basis for the employer to compile the list of pre-qualified bidders or the list of bidders whose EOI are deemed satisfactory per the requirements of EOI request. In case of investor selection, the EOI request includes all documents used in the project requiring determination of the number of investors who have expressed their interests in accordance with regulations of the Law on land and/or specialized laws, indicating preliminary capacity and experience requirements to be satisfied by investors. | Documents for initial screening. The purpose is to perform a preliminary evaluation of the contractor/ investor’s capacity and narrow down eligible candidates for the official bidding.
Applicable in competitive bidding that involves request for expression of interest or prequalification documents. |
Documents prepared by the Contractor
| Term | Law on Bidding | Simplified Interpretation |
| Expression of interest or prequalification documents | A set of documents prepared and submitted by a bidder to the employer in accordance with requirements laid down in the EOI request or prequalification document. In case of investor selection, the application for project execution includes all documents prepared and submitted by an investor in accordance with requirements laid down in the EOI request. | This could be considered the “response” of the contractor, prepared and submitted to the procuring entity under the requirements of the request for expression of interest or prequalification documents.
Furthermore, regarding the investors, they have to prepare documents for registration of project implementation under the requirement of the request for expression of interest. |
| Bidding documents/ Bid proposals | A set of documents prepared and submitted by a bidder or investor to the employer in accordance with requirements laid down in the tender documents or request for proposal. | This could be interpreted as the “answer” prepared by the bidders and submitted to the procuring entity. Accordingly, these documents must meet the requirements laid down by the procuring entity |
A correct interpretation and firm understanding of the fundamental terminologies on the entity, forms, methods, and bidding documents in the spirit of Law on Bidding 2023 is an indispensable beginning step for entities who participate in the market to achieve the highest efficiency.
At CNC, we would be honored to be a reliable partner who provide in-depth and comprehensive legal advice on the field of bidding, public procurement, and project management. With elite and experienced team of legal staffs, we are committed to accompanying Client throughout all the stages of the package, which include:
We shall not only assist our Clients with regard to the knowledge about the laws, but also turn these knowledges into practical competitive advantages that help our Clients to achieve business objectives. We are always ready to become our Clients’ strategic partner and aid them in the success of any package, regardless of the complexity and challenges.
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Nguyen Le Anh Thu | Legal Assistant
Phone: (84) 932 705 676 Email: thu.nguyen@cnccounsel.com |
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Disclaimers:
This article is prepared or used for the purposes of introducing or updating the clients on the issues and/or developments of the legal perspectives in Vietnam. The information contained in this article shall not constitute an advice of any kind, and could be subject to change without prior notice.
