INTER-MINISTERIAL CIRCULAR No.02/TTLB OF FEBRUARY 25, 1997 GUIDING THE IMPLEMENTATION OF THE REGULATION ON BIDDING (Issued together with Decree No.43-CP of July 16, 1996 of the Government) The Regulation on Bidding was issued together with Decree No.43-CP of July 16, 1996 of the Government with a view to ensuring the objectivity, fairness and uniformity of bidding activities nationwide in such fields as selection of consultants, procurement of materials and equipment and construction and installation carried out on the territory of the Socialist Republic of Vietnam. In furtherance of Article 3 of Decree No.43-CP and Article 46 of the Regulation on Bidding, the Ministry of Planning and Investment, the Ministry of Construction and the Ministry of Trade hereunder jointly provide guidance concerning a number of main contents of the Regulation on Bidding for the uniform execution by the ministries, branches, localities and establishments. Part I GENERAL PROVISIONS 1. Scope of regulation The Regulation on Bidding shall apply to objects defined in Article 2 of the Regulation. The following concrete guidances are provided for its implementation: (a) Investment projects ratified by the agency competent to decide the investment in accordance with the Regulation on the Management of Investment and Construction issued together with Decree No.42-CP are projects with State allocated capital, projects belonging to State enterprises and projects using capital from ODA sources as provided for in Decree No. 20-CP of March 15, 1994 of the Government. (b) Joint venture investment projects in which the contributions of Vietnamese enterprises represent at least 30% of the prescribed capital are projects which have been granted investment licenses by competent agencies in accordance with current regulations. (c) With regard to bidding for the selection of partners for joint venture and business cooperation projects, wholly foreign-invested projects, BOT projects or BT projects, separate regulations shall apply. (d) For projects other than the above-mentioned projects, the application of the Regulation on Bidding is encouraged, though not compulsory. 2. Forms of bidder selection (a) Unrestricted bidding: This form of bidding is encouraged so as to achieve high competitiveness through participation of many bidders. However, its application depends on each specific project to be carried out within a locality, region, an inter-region or on national or international scale. (b) Restricted bidding: This form of bidding shall be applied in the following cases: - Where only a number of bidders meet the tendering dossier’s requirements, but there must be at least 3 potential participants in the bid. - Where the sources of capital require restricted bidding. - Where it is so required by the tempo of the project execution as approved by the person(s) competent to decide the investment. (c) Appointed bidding: This form shall have to comply with Article 30 of the Regulation on the Management of Investment and Construction issued together with Decree No.42-CP of July 16, 1996 of the Government. 3. Prequalification of bidders (a) The prequalification of bidders shall apply to construction and installation bidding packages valued at 100 billion VND and more; bidding packages for the procurement of materials and equipment valued at more than 200 billion VND or with complicated technologies. For bidding packages of lesser value than the above-prescribed levels, the tenderer may conduct prequalification, if necessary. Prequalification steps taken by the tenderer shall comply with Article 26 and Part A (Appendix III) of the Regulation on Bidding. With regard to construction and installation bidding packages opened for international bids, foreign bidders must make a written commitment to have at least one Vietnamese bidder in partnership. The prequalification dossier may be elaborated by the tenderer(s) or by the hired agencies specialized in bidding and bidding packages or consultancy organizations which have business permits or operating licenses. The tenderer shall have to submit the prequalification dossier to the person(s) competent to decide the investment or the authorized level(s) for ratification before announcing the prequalification. (b) With regard to bidding packages of lesser value than the above-prescribed levels, though prequalification is not required, the tenderer must request the bidders to submit all documents on bidding conditions as stipulated in Article 6, Item 2 of the Regulation on Bidding and to declare their capabilities and experiences based on forms No. 2, 3, 4, 5, 6, 7, and 8, 9 (if any) in Appendix III (Part A) attached to the Regulation on Bidding which shall serve as basis for considering the bids administratively and juridically as well as the bidders’ capability to perform the contract before the evaluation and classification of the bids. Regarding form No. 3, it shall be readjusted according to Section VII, Clause 2.4, Point (d) of this Circular so as to conform with the current accounting regime. 4. Privileges for domestic bidders Domestic bidders who participate in an international bid organized in Vietnam and win the bid shall be entitled to privileges in accordance with special provisions of the State. 5. Price for bid consideration With regard to bidding for construction and installation, the tenderer shall have to use the price for bid consideration as basis for the evaluation of the bids. This bidding price must be decided by the person(s) competent to decide the investment or the authorized level(s) after the deadline for the bid submission and before the bid opening. With regard to bidding for procurement of materials and equipment or for selection of consultants, the tenderer may use a price for bid consideration depending on the concrete conditions of each project. The price for bid consideration shall be determined on the following bases: - Requirements and instructions stated in the tendering dossier. - The total cost estimate or the ratified cost estimate. - The total investment capital of the project, if the total cost estimate or the ratified cost estimate is not available. The price for bid consideration must be included in the total cost estimate or the ratified cost estimate and must not exceed the ratified total investment capital of the project. The winning bidding price must not exceed the price for bid consideration already ratified. 6. Head of the competent agency The Head of the competent agency is the person of the level stipulated in Article 7 of the Regulation on the Management of Investment and Construction issued together with Decree No.42-CP of July 16, 1996 of the Government, who shall have the responsibilities and powers defined in Point 4, Article 42 of the Regulation on Bidding. Part II BIDDING ORDER I. Preparation for the bid Contents of preparation for the bid include: - The bidding plan. - Personnel. - Tendering dossier. - Criteria for the evaluation of the bids 1. Bidding plan The overall contents of the bidding plan stipulated in Article 5 of the Regulation on Bidding shall comply with the following detailed guidances: 1.1. Division of bidding packages - Bidding packages shall serve as basis for the organization and consideration of the bids. The division of a project into bidding packages must be reasonable and must, first of all, be based on technology, characteristics or performance process of the project. Bidding packages must have reasonable sizes and ensure the uniformity of the project. The project owner must not divide the project into too small bidding packages (except for some special cases) so as not to diminish the rationality of the project and increase cost of the bid. - The estimated value of each bidding package must not exceed the cost estimate (if the bidding package is part of the project) and the total value of bidding packages must not exceed the total investment or the total cost estimate (if any) which has already been ratified. - With regard to the selection of consultants, the estimated value of each bidding package shall be determined on the basis of the estimated level, compared with the total investment already ratified. 1.2. Mode of contract performance The selection of a mode for contract performance must be based on the characteristics, size and duration of the performance of each bidding package. (a) Package contract (with package price): For bidding packages which allow exact determination of the quality, volume and price at the moment of bidding, the mode of package contract shall apply. In the process of the contract performance, the price already agreed upon in the contract must not be changed. For any changes not initiated by the bidder, they must be approved in writing by the person(s) competent to decide the investment or the authorized level. (b) Contract with price readjustment : b.1. Scope of application: - Bidding packages that cover jobs or parts of the project which have no conditions to determine or cannot determine the volume or quantity exactly at the time of the bidding. - Bidding packages which shall be executed for at least 12 months and which suffer from fluctuations of prices in major elements, namely materials and raw materials, equipment and labor. b.2. Principles of application: - The tenderer can only apply the mode of contract with price readjustment to bidding packages which have been ratified in the bidding plan or approved by the person(s) competent to decide the investment. - This mode shall apply only to the changes in quantity or volume (increase or decrease) not caused by the bidder, certified by the related parties and permitted by the person(s) competent to decide the investment. Any quantity or volume change due to the bidder’s fault shall not be considered. - The readjusted value of the contract must not exceed the total cost estimate or the ratified cost estimate. The readjusted value of the whole project must not exceed the total investment amount already ratified. b.3. Conditions and formula for readjustment: The tendering dossier must clearly specify the conditions for the price readjustment, parts of the work or parts of the project eligible for price readjustment, the limit and formula thereof. (c) Turn-key contracts: With regard to projects the whole of which is offered for bidding, if the project owner cannot manage it, the mode of turn-key contract shall apply, provided that it is allowed by the person(s) competent to decide the investment. Depending on concrete conditions and characteristics of each project, the project owner may apply the mode of package contract or contract with price readjustment in accordance with the stipulations in Points (a) and (b) above. 1.3. The time frame of the bidding plan Besides the overall bidding plan for the whole project, with regard to projects for which the bidding must be conducted within at least 24 months (2 years), detailed bidding plans for each year or for every two years at most should be determined one by one to serve as basis for the submission and approval. 1.4. Submission and ratification of the bidding plan The bidding plan elaborated by the tenderer must be ratified by the person(s) competent to decide the investment: + For projects using State capital: The person competent to decide the investment is stipulated in Item 1, Article 7 of the Regulation on the Management of Investment and Construction. As for bidding packages of Group A projects, the stipulations in Article 42 of the Regulation on Bidding shall apply. + For joint venture projects (to which a Vietnamese enterprise contributes at least 30% of the prescribed capital): The bidding plan shall be ratified by the Managing Board of the joint venture enterprise on the basis of a written agreement of the Ministry of Planning and Investment. 2. Personnel 2.1. Person(s) competent to decide the investment The responsibilities and powers of the person(s) competent to decide the investment are stipulated in Article 42 of the Regulation on Bidding. 2.2. Tenderer The tenderer may be the project owner or his/her lawful representative who is responsible for bidding activities. The responsibilities and powers of the tenderer are stipulated in Article 40 of the Regulation on Bidding. 2.3. Group of specialists or consultants assisting the tenderer For projects without bidding for the selection of consultants, only a group of specialists or consultants shall assist the tenderer. In cases where there is a requirement to hire consultants (instead of appointing a group of assisting specialists) for the performance of the work mentioned in Point 1, Article 40 of the Regulation on Bidding, if the cost is 500 million VND or more, the tenderer shall have to organize a bid in accordance with the provisions of the Regulation on Bidding and provisions on the selection of consultants in this Circular. 2.3.1. Appointing a group of specialists or hiring consultants The group of specialists or consultants assisting the tenderer shall be established or hired and have the tasks stipulated in Item 1, Article 40 and responsibilities and powers stipulated in Article 41 of the Regulation on Bidding with the following detailed guidance: (a) With regard to bidding packages belonging to projects of groups A and B in which tenderers are project managing boards or organizations specialized in the management of investment and construction, the tenderer shall have to appoint a group of specialists or hire consultants to assist the bidding. The specialists invited by the person(s) competent to decide the investment to provide consultancy on the evaluation of the bidding results (the evaluation of results shall be submitted by the tenderer) shall have to comply with the stipulations in Article 41 of the Regulation on Bidding. (b) With regard to bidding packages belonging to projects of group C and a number of small-size bidding packages valued at less than 10 billion VND belonging to projects of groups A and B, in which tenderers are non-business or administrative agencies or organizations having little experience in the management of investment and construction, the agency competent to decide the investment shall have to guide the tenderer to set up a group of bid-assisting specialists (including specialists invited by the authority competent to decide the investment) to assist the organization of bidding, the evaluation and classification of bidders. 2.3.2. Structure of the group of specialists or consultants - A member (or group of members) in charge of the technical and technological matters. - A member (or group of members) in charge of the economic-financial matters. - A member (or group of members) in charge of the juridical and other issues (if necessary). The tenderer shall have to appoint a head to manage the activities of the group, sum up the situation and prepare reports of evaluation ... 2.3.3. Criteria for the selection of specialists - Having professional qualifications related to the bidding package. - Having a firm grasp of the contents of the bidding package. - Experienced in practical management or research. - Understanding the order and process of evaluation and selection of the bidding results. - Members of the group of specialists or consultants shall not be entitled to participate in the evaluation of the bidding results. 2.3.4. Responsibilities of members of the group of specialists or consultants (In addition to the stipulations in Article 41 of the Regulation on Bidding) - To respect the specific contents and requirements defined in the tendering dossier as well as the criteria for the evaluation of the bids which have been ratified by the person(s) competent to decide the investment or the authorized level. - Absolutely not to disclose information related to the process of bidding and bid evaluation in any form. - The evaluation and ranking of bidders must be conducted objectively. The ranking shall be based on the general evaluation of standards with sound analysis of each index in each criterion unanimously approved by all the specialists. If in the process of evaluating and ranking bidders, the specialists’ opinions vary with regard to a number of important contents, the person(s) competent to decide the investment shall have to organize the assessment and inspection to clarify the matter. - Not to cooperate with the bidders in any form. - Any member of the group of specialists or assisting consultants who violates the above-said regulations shall be handled in accordance with Article 45 of the Regulation on Bidding. 3. Preparation of the tendering dossier (a) The contents of the tendering dossier have been provided for in the Regulation on Bidding and guided in details in the attached Appendice. More concretely: - Consultancy selection: Article 16 of the Regulation on Bidding and Part B of Appendix I attached to the Regulation on Bidding. - Procurement of materials and equipment: Article 19 of the Regulation on Bidding, Appendix II attached to the Regulation on Bidding. - Construction and installation: Article 27 of the Regulation on Bidding, Part B of Appendix III attached to the Regulation on Bidding. With regard to bidding for construction and installation, special attention should be paid to the following: the designing dossier and the cost estimate must be determined from the technical design for construction (in case of one-step designing) or the blueprint for construction (in case of two-step designing); all technical instructions must be extremely specific and clear. For large-size projects which have no blueprint at the moment of bidding, the cost estimate may be determined on the basis of the technical design. With regard to other cases, if it is allowed by the person(s) competent to decide the investment, the tenderer shall have to make a uniform cost estimate to serve as basis for bidding. With regard to projects designed by foreign parties, the designing dossier must enable the determination of the construction volume of the project. (b) Costs of making tendering dossier and evaluating bids: - In cases where the bid is conducted by the specialized agencies or domestic consultancy organizations, all costs of making tendering dossier and evaluating bids shall comply with Decision No.501/BXD-VKT of September 18, 1996 of the Ministry of Construction. - In cases where the bid is conducted by a foreign consultancy organization, the costs of foreign consultancy shall comply with Item 1, Article 17 of the Regulation on Bidding. 4. Evaluation criteria 4.1. Bidding for the selection of consultants The evaluation of consultancy bids shall be conducted in two steps: (1) Evaluation of the technical solutions dossier, (2) Evaluation of the dossier of financial solutions and contract negotiation. The evaluation of the technical solutions dossier shall be conducted on the basis of the three following criteria: - Experiences. - Solutions and methodology. - Personnel. The personnel proposed for the performance of consultancy services is considered the most important factor. They must have a clear working record and experience suitable to the requirements of bidding packages. The chief consultant (head of the group of consultants) must have enough years of service in branches conforming to the bidding package. All members must make a commitment (with their signatures) that they will have enough time for the execution of bidding package according to schedule. In case of an international bid, the foreign consultancy company must make a written commitment to have a Vietnamese consultancy company in partnership; priority shall be given to proposals on using a large number of domestic consultants. All the above-said commitments must be written in the contract. Guidance is provided for the detailed contents in Section IV, Appendix I of the Regulation on Bidding. 4.2. Bidding for the procurement of materials and equipment a

Joint circular 02/TTLB