Proposals and resolutions during the bidding period

To protect the rights and interests of anyone affected, contractors or investors have two options: proposal mechanisms during the bidding process OR legal proceedings through a court of law at any time – whether in the process of resolution or post resolution results have been obtained[1].

2 mechanisms to protect the rights and interests of contractors and investors during bidding

With respect to making proposals and resolving recommendations during bidding, the 2013 Bidding Law, Decree No. 63/2014 and its applicable documents also provide specific provisions for investors, for each bidder, and the Advisory Council for the resolution of petitions having the legal authority to settle petitions made by contractors, in which the investors bid for during the bidding process to select contractors and investors.

Specifically, the 2013 Bidding Law stipulates: A proposal is a request by a bidder or investor participating in a bid to reconsider the results of contractor selection, results of investor selection, and issues related to the process of selecting contractors and investors when their rights and interests are adversely affected.[2]

Detailed provisions on recommendations and resolution of proposals in bidding undoubtedly ensure that the process of selecting contractors and investment contractors is competitive, fair, transparent, and effective.[3]

To clarify this matter, please refer to: Article 91.1 (a), 2013 Law on Bidding, which also stipulates:

To clarify this matter, please refer to: Article 91.1 (a), 2013 Law on Bidding, which also stipulates:

“1. When it is evident that the contractor’s and/or the investor’s legal rights and interests are adversely affected, they have the legal right to:

a) Propose to the bid solicitor, investor, or competent authority on matters in the process of selecting contractors and/or investors; on the results of contractor and/or investor selection according to the process of petition settlement prescribed in Article 92 of this Law.

As a result, “protests and resolution of protests in Bidding”:

  • How many phases?
  • Protocol?
  • Duration?
  • Responsibility for managing proposals of contractors and investors??
  • Legal consequences?
  • Potential issues?
  • Required forms?

The primary elements described by Executive Lawyer, Le The Hung – Managing Partner of CNC Counsel, Vietnam.

Potential issues in protest and protest resolution in bidding

Phases of Protests and Protest Resolution in Bidding

The 2013 Bidding Law clearly defines 2 phases of settlement for petitions and resolutions of bidding, which are:

  • petition period for issues occurring during the selection of contractors and/or investors and [4]
  • petition period for the result of contractor and investor selection [5]

Two phases in the process of protest and protest resolution in Bidding

For petitions and resolutions of petitions in bidding, the “announcement of contractor and/or investor selection”/”announcement of bid winning” serves as a landmark, as it finalizes Phase 1: recommendations on issues that occurred during the process of contractor and/or investor selection, as well as the announcement there of. It also serves as the beginning of Phase 2: recommendations relative to contractor and/or investor selection.

“Responsibilities and meaning of the Letter of Tender is attached here.”

Determining the appropriate phase of the petition and responding to the petition in bidding is important for determining appropriate authority, duration for resolution, and various important legal consequences.

Especially note that protesting in the wrong phase, invalidates the protest and authorities are exempt from replying to the protest. This declaration is clarified in Article 92.5, 2013 bidding law: “If a tenderer or investor sends a written protest directly to the competent person without observance within the processes of resolution of protests specified in this Article, such written protest shall not be considered for settlement.

1st Phase:

The process of protesting and protest resolution during the selection of tenderer and investor

The proposal and resolution of the contractor’s recommendations, during the process of bid selection, are implemented through 4 steps and 2 levels of resolution [6]:

  • investors, procuring entity; and
  • the level of competent person.

The process of protesting and protest resolution during selection of tenderer

The process of protest and protest resolution pertaining to issues during investor selection

Similarly, the process of protest resolution of investors is also completed through 4-steps and 2-references, including: (i) level of bid solicitor and (ii) level of competent person.

The process of protest and protest resolution issues during investor selection

As illustrated in the flow chart above, the duration for which a bid solicitor may reply to a protest during investor selection is longer than the same procedure for tenderer selection (15-business days and 7-business days, respectively). It is also the basic difference between the bidding selection process of investor and tenderer.

2nd Phase

The process of protesting and protest resolution concerns related to tenderer selection results

The process of protesting the result of tenderer selection has 5-steps and 3-references, as follows:

  • level of investor, bid solicitor
  • level of consulting council for protest resolution and
  • level of competent person.

The process of protesting and protest resolution relative to the result of tenderer selection[7]

The process of protesting and protest resolution relative to the result of investor selection

With respect to the phase of petition on contractor selection results, the petitions and settlement of petitions are made in 5-steps and 3-levels of resolution, including:

  • level of bid solicitor
  • level of the consulting council for protest resolution and
  • level of competent person[8]:

The process of protesting and protest resolution relative to the result of investor selection

5-step process

Some comparations and notes

  • First, the duration for an investor to submit the protest to the Consulting council and Competent person is calculated in business days, while the duration for the other parties is calculated by calendar days.
  • Second, the duration mentioned in the 2013 bidding law is different from the duration for protest resolution relative to the tenderer selection results. For instance, the bid solicitor has 15-calendar days compared to 7-business days, the Consulting Council for protest resolution has 30-calendar days compared to 20-business days and the Competent person has 10-calendar days and 5-business days.

Responsibilities of The Consulting Council for protest resolution

The Consulting Council plays a key role in the process of protest resolution relative to the tenderer and/or investor selection phase.

Accordingly, The Consulting Council may rightfully:

Competence of The Consulting Council for protest resolution

Competent Person

One of challenges that a tenderer and/or investor may (usually) have during the process of a bid protest according to the 2013 bidding law and Decree No 63/2014 is clarification of the “competent person”.

Respectfully, the definition of Competent person is[9]: A “person who decides on the approval of a project or a person who decides on procurement as prescribed by law” (in the selection of tenderer), or in the selection of investor, the competent person is a “person who is the head of a competent state agency as prescribed by law”.

Competent person

For a clear explanation of this issue, tenderers and investors are advised to consider the information mentioned in the bidding documents.

In detail:

NoBidding packageBased on
1Small-scale construction and installation bidding packages are organized foropen bidding – offering competitive online bids according to the one-phase-at-a-time process.Section 32. Settlement of proposals in bidding – Chapter 1. Instructions for tenderer Section E-CDNT 32 – Bidding data sheet Part 1. Bidding procedure
2Small-scale bidding procurement packages of goods that are organized for open bidding – offering competitive online bids according to the one-phase-at-a-time process.
3Small-scale non-advisory bidding packages are organized for open bidding, offering competitive offers online under the one-phase-at-a-time bidding package process.
 Construction and installation bidding packages are organized for open bidding offering online bids according to the second phase process.Section 34. Protest resolution in Bidding – Chapter I. Instructions for tenderer Section E-CDNT 32 – Bidding data sheet Part 1. Bidding procedure
5Procurement packages for goods are organized for open bidding online according to the second phase process.
6Bidding packages to provide consultancy services are widely initiated onlineSection 31. Protest resolution in Bidding – Chapter I. Instructions for tenderer Section E-CDNT 32, Bidding data sheet Part 1. Bidding procedure
7Bidding packages are organized with competitive offers according to an abbreviated processSection 7. Protest resolution Chapter I. Request Bidding price

Determining a “competent person” to select an investor, the investor can consider Circulars No. 16/2016/TT-BKHĐT on December 16, 2016 to conclude (refer to the table below):

NoProjectBased on
1Land-using investment projects shall organize prequalification to select investorsSection 26. Protest resolution in Bidding Chapter I. Instructions for investor Section CDNĐT 26 – Bidding data sheet Part 1. Pre – qualification procedure
2Investment projects with land use have implemented the prequalification processSection 42. Protest resolution in Bidding Chapter I. Instructions for investor Section CDNĐT 42 – Bidding data sheet Part 1. Investor selection procedure

Instructions for Drafting a Petition

Proposals in bidding require contractors and investors to completely understand the technical provision of the bidding law and relevant legalities, such as the provisions on capital use based on governmental budgets, regulatory organizational structure of government, and regulations on protocols for settling complaints and petitions

Additionally, petition document approval and resolution requires that the petition be drafted to ensure it is comprehendible (able to be clearly read and understood) and logically formatted.

According to Lead Counsel, contractors and investors drafting petitions must be aware of 6-important issues as outlined below.

  • What are the protests – are they necessary?
  • Which phase does the protest belong to?
  • Is the timeframe for submitting a protest appropriate, or not?
  • Which agency/level has authority to resolve issues?
  • Which events describe and support the petition?
  • What is the solution?

Issues to note when drafting petitions

According to Mr. Hung, only when the aforementioned items are effectively acknowledged, will contractors and investors be able to draft valid petitions and protect affected benefits.  Many cases have resulted in failure, to identify the correct timeframe, specification of problems that need to be proposed, or lack of a petition strategy clarification, in which the contractor and investor exhaust the opportunity to select a contractor or choose to be an investor.

Applicable Forms

Commonly used forms applicable to the various stages in the process of protesting and protest resolution:

  • Request for contractor selection problem
  • Proposal of investor selection problems
  • Response to recommendations for contractor selection problems
  • Response to recommendations for investor selection problems
  • Request for contractor selection results
  • Request for investor selection results
  • Response to contractor selection results
  • Sample response to recommendations of investor selection results
  • Clarification of issues outlined in the petition
  • Request for extension of bid validity/bidding guarantee
  • Approval of bidding extension validity

Note in the Petition Process

Confidentiality

According to the 2013 bidding law, recommendations in bidding to select contractors and/or investors, regardless of the phase of implementation, strict confidentiality must be followed – all information must be safeguarded and kept confidential.[10]

Any party failing or neglecting to guarantee and comply with information security, may adversely escalate the situation, and/or cause unnecessary and undesired legal consequences.  Potential legal consequences include, but are not limited to:

Legal consequences associated with failure to ensure confidentiality of petitions and petition resolutions

Approval of Bid Validity and Bidding Guarantees

Actual petitions and resolution of protests will exceed the deadlines specified in the 2013 bidding law and documents of implementation.  Therefore, each party is advised to manage petitions as diligently as possible prior to bid deadlines and bidding guarantee letters.

Extensions of bid validity and guarantees often results in contractors and/or investors subject to answering some important questions:

3 questionsrelativefor extendingbid validity and/orbid guarantees

  • Are bidders and/or investors obligated to extend bid validity and/or letters of bid guarantee?
  • Who is responsible for costs incurred in connection with bid validity extensions and/or letters of bid guarantee?
  • What courses of action are available for investors when bidding prices are no longer guaranteed to perform contracts?

Conclusion

Protests and responses or recommendations for solutions in contractor bidding and investor selection are complicated issues.  Bidding solicitors, investors, advisory councils, competent authorities, contractors and investors are advised to proceed cautiously, diligently, and meticulously when petitioning and settling petitions.

Any oversight can and will lead to serious legal consequences.  Accordingly, the investor, bidding solicitor, and advisory council settling petitions may be administratively or criminally responsible for their decisions.  Conversely, contractors and/or investors found in violation, are completely and legally responsible for such violations and may no longer participate in bidding activities for a specified period of time.

Therefore, it is vitally important that the parties review all provision of the binning law, actual implementation of each specific bidding package or project from which to apply and tak necessary and appropriate action to ensure that the legitimate rights and interests of contractor, investors, and relative parties are protected.  In any event, a spirit of impartiality, transparency, effectiveness, and efficiency is necessary.

Further Consultation and Support

Requests for legal support for and/or general consultation with the bidding solicitor, investor, advisory council, competent person, contractor, and investor may be submitted by email or voice via the contact information below:

Lê Thế Hùng | Managing Partner

T: (+84-28) 6276 9900              

E: hung.le@cnccounsel.com  

CNC© | Law firm specializes in Real Estate and Construction.

The Sun Avenue, 28 Mai Chi Tho Street, An Phu ward, District 2,

Ho Chi Minh City, Vietnam

T: (+84-28) 6276 9900 | H/L: (+84) 916 545 618

cnccounsel.com | contact@cnccounsel.com 

Disclaimers:

This newsletter has been prepared and provided for the purpose of introducing and updating customers about issues and/or the developments of legal statutes in Vietnam. The information presented in this newsletter does not constitute advice of any kind and is subject to change without notice.


[1] Article 91.1, Law of Bidding 2013.

[2] Article 4.33, Law of Bidding 2013.

[3] Article 2.2, Law of Bidding 2013.

[4] Article 92.1 and Article 92.3, Law of Bidding 2013.

[5] Article 92.2 and Article 92.4, Law of Bidding 2013.

[6] Article 92.1, Law of Bidding 2013

[7] Article 92.2, Law of Bidding 2013.

[8] Article 92.4, Law of Bidding 2013.

[9] Article 4.34, Law of Bidding 2013.

[10] Article 74.6, 75.1(g), Article 75.3(g), Article 76.4, Article 78.3, Article 85.2, Law of Bidding 2013.

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