Bidding of domestic contractors in international construction bidding

providing consulting services, purchasing goods, and construction and installation for bidding packages belonging to the following projects: 1. Projects using 30% or more of state capital for development investment purposes, including: a) Investment projects for new construction, upgrading and expanding projects that have been invested in construction; b) Investment projects for purchasing assets including equipment and machinery that do not require installation; c) Regional development planning projects, industry development planning, urban and rural construction planning; d) Scientific research projects, technology development, technical support; e) Other projects for development investment purposes;…” . Therefore, the nature of bidding is the process of selecting contractors that meet the requirements of the inviting party to implement bidding packages belonging to projects using state capital. The result of the selection is a signed contract with terms detailing the responsibilities of the two parties. One party is the contractor who must perform the tasks as stated in the Bidding Documents (which can be consulting services, providing goods or being responsible for constructing a project...), the other party is the investor who is responsible for supervising, inspecting, accepting and making payment. Thus, the essence of the bidding process in Vietnam for projects using state capital is a process of spending and using state money.

Each transaction method in the market has its own characteristics. These characteristics will create their own characteristics, determining the process of organizing the signing and implementation of related contracts. Therefore, thoroughly researching and developing these characteristics is an indispensable task for those participating in bidding. Bidding activities have the following characteristics:

* In the market there is only one buyer and many sellers:

Buyers in the market are mostly organizations, agencies, investors who are financed by the Government to purchase goods, services, and construct regular works. However, there are also cases where buyers lack capital and have to borrow money, and the conditions require bidding. Due to difficulties in terms of business operations and experience, they have to take advantage of competition.

between contractors to choose the most suitable seller and have the most optimal trading conditions. On the contrary, contractors providing goods and services are free to compete with each other to win the right to supply and the result of that competition has made the price closer to the real price on the market, which is what any buyer expects.

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* Bidding is conducted according to the following pre-determined conditions:

Although free to compete for the right to supply, contractors must comply with the conditions set by the Inviting Party. In other words, there is only one buyer, but they have set out very strict conditions that contractors must comply with. In bidding, financial conditions and technical conditions are often stated in the Bidding Documents. Contractors must best satisfy the conditions set by the Inviting Party to have hope of winning the bid. In some cases, contractors have fully satisfied the technical, financial and reputational conditions, but because they could not find a joint venture or association partner, they did not win the contract. And there are also contractors who could not find a contractor according to the regulations, so they did not win the bid. For the above reasons, in bidding, the market belongs to the inviting party, they are "both passive and active".

* The special nature of bidding is also reflected in determining the time and place of bid opening and other related issues.

The time for bid opening must be specified in advance, usually it is carried out after the announcement of the invitation to bid a certain number of days. This time period is estimated but must be calculated reasonably. The date, time and location will be specifically determined in the Invitation to Bid. When opening bids, bidders must usually be present to listen to the announcement of the validity of the bid and sign a pre-prepared record. The inviting party will publicly announce some basic criteria of the Bid.

* In bidding, in addition to the Inviting Party and the contractor, there is also the presence of a third party, which is the consultant.

FIDIC, WB, ADB all believe that “consulting engineers” are the ones who ensure to minimize the negative impacts. Collusion and compromise cause losses to the project owner, so consulting engineers must have the qualifications and professional capacity to help the project owner resolve technical issues with contractors.

With a market economy, bidding activities are really necessary, especially in the construction and installation perspective, an activity that accounts for a large part of the country's investment value, which needs a carefully regulated legal framework. The concept of bidding is stipulated in the Bidding Law No. 61/2005/QH11 dated November 29, 2005 of the National Assembly of the Socialist Republic of Vietnam and the Law amending and supplementing a number of articles related to basic construction investment of the Construction Law No. 38/2009/QH12, dated June 29, 2009 of the National Assembly of the Socialist Republic of Vietnam, giving us an overview of the nature of bidding activities.

1.1.2. Concept of domestic contractor

Law on Bidding No. 61/2005/QH11 dated November 29, 2005 of the National Assembly of the Socialist Republic of Vietnam and Law amending and supplementing a number of articles related to capital construction investment of the Construction Law No. 38/2009/QH12, dated June 29, 2009 of the National Assembly of the Socialist Republic of Vietnam in Clause 18, Article 4, provide the concept of domestic contractor "Domestic contractor is a contractor established and operating under the laws of Vietnam" and the concept of foreign contractor in Clause 19, Article 4 "Foreign contractor is a contractor established and operating under the laws of the country of which the contractor is a national" . From the two concepts mentioned above, it is clear that domestic contractors are different from foreign contractors in terms of legal entity nationality. However, reviewing the concept of contractor according to the Law on Bidding and the Law on amending the Law on Bidding does not fully cover the subject of bidding participation as domestic contractors because contractors participating in bidding according to the provisions of Article 8 of the Law on Bidding: The valid status of a contractor is an individual "A contractor is an individual with the status of

valid when meeting all of the following conditions: 1. Full civil act capacity according to the law of the country of which the individual is a citizen; 2. Registered to operate legally or has a suitable professional certificate issued by a competent authority; 3. Not being prosecuted for criminal liability." , the above concept of domestic contractor only refers to the contractor as an organizational contractor, lacking the group of individual subjects, because when bidding, the open bidding form is a form of selecting contractors without limiting the participating bidding subjects. In this form of contractor selection compared to the concept of domestic contractor given in the Bidding Law, we can see the contradiction in the concepts of the Law, leading to difficulties in applying the law and the purpose of bidding activities being limited: Ensuring competitiveness, fairness, and transparency. However, with the existing concepts, although not completely unified, they have provided researchers with the most necessary knowledge about the nature of the problem.

1.1.3. Concept of international construction bidding

Currently, we read and re-read the Law on Bidding and other related Law documents, whether at a simple or in-depth level, but we cannot find any line that specifically stipulates what is: International construction bidding. This is understandable because the Law on Bidding in our country stipulates general regulations on bidding activities and bidding fields, whether procurement, consulting or construction, the bidding process is still the same and depending on the nature of the bidding package, the Ministry of Planning and Investment will issue regulations on the accompanying sample documents (Circular No. 01/2010/TT-BKH dated January 6, 2010 of the Ministry of Planning and Investment promulgating the Sample Bidding Documents for Construction; Circular No. 02/2010/TT-BKH dated January 19, 2010 of the Ministry of Planning and Investment detailing the preparation of Bidding Documents for small-scale construction packages). This is a limitation, creating confusion for readers and researchers of the document. With the purpose of the research being to deeply understand the bidding law of domestic contractors in international construction bidding, the important thing that the thesis wants to mention is the concept of

"International construction bidding" to study the bidding of domestic contractors in international construction bidding accurately and describe the nature of this issue.

To understand what "International Construction Bidding" is, we first need to learn about "Construction Bidding" and what "International Construction Bidding" is?

Construction bidding: is work related to construction of works, construction items; installation of electrical and water systems of works or construction items. Construction contractors are the main decision makers for the project. In other words, Construction bidding is the process of selecting contractors that meet the requirements for construction and installation of equipment of works and construction items of the Inviting Party on the basis of competition between construction contractors.

The essence of construction bidding is the application of the method of considering economic efficiency in selecting construction organizations. This method requires comparison between construction organizations on the same aspect (such as technical or financial) to choose a contractor with sufficient capacity and then compare again. The final result will find a construction organization that best meets the requirements of the investor.

Construction bidding has some characteristics that are different from bidding in other fields. Specifically:

* The product of construction production has the characteristic of being unique, the project is located at a fixed location, serves a specific purpose, a management and usage policy, is not a common commodity bought and sold on the market, the amount of material, capital consumed, the number of workers participating in the production process is many times larger than products in other fields, a project has many industries and organizations participating.

* The time to complete the project is long, once steps such as investment preparation, construction preparation... have been carried out, it cannot be easily changed or suspended.

postponement. That proves that basic construction is a complex and diverse production process with long-term effects and consequences. The larger the scale of the project, the more complex the relationship with other sectors and fields, and the greater the impact on the redistribution of production forces and population, the impact on the environment and other technical infrastructure. Therefore, the application of bidding in basic construction must not only meet the standards of a project with low cost and high quality, but must also be placed in the overall development of the socio-economy.

International construction bidding: The international element in this concept is defined by the Bidding Law as a common identifying feature that the bidding participants include foreign contractors (Clause 6, Article 4 - Bidding Law "International bidding is the process of selecting contractors that meet the requirements of the bidding party with the participation of foreign contractors and domestic contractors"). Thus, the bidding participants are the most basic key to distinguish between domestic construction bidding and international construction bidding.

In summary , construction bidding is a bidding activity that complies with general regulations on conducting bidding to select contractors to implement construction packages, the subject of this bidding activity is construction. International construction bidding is the subject participating in bidding for a broader construction package besides Vietnamese contractors, the participating subject is a foreign contractor.

From the above research, international construction bidding can be defined as follows:

International construction bidding is the process of selecting contractors who meet the requirements for construction and equipment installation of works and construction items of the Inviting Party on the basis of competition between domestic and foreign construction contractors.

In general, international construction bidding is a bidding for a specific subject, so it has the common characteristics of bidding mentioned above.

Part 1.1.1; characteristics of construction bidding and it has the following specific characteristics:

* International construction bidding is conducted on the basis of free competition according to the regulations stated in the bidding documents.

When participating in international bidding, contractors will freely use all their abilities to satisfy the conditions of the bidding documents. They must use their own abilities to compete with other contractors, and the winner in that competition is the strongest. Those with economic, technical, and prestigious potential will be the ones with the advantage. In that competition, they take full advantage of the competitive factor, but the competition of contractors must comply with the conditions set by the bidding party in advance. To bind the contractors, the bidding party also stipulates the amount of bid deposit and contract performance guarantee, which is not a small amount for some companies in Vietnam as well as in the world. Contractors must also pay close attention to formal regulations on documents and papers. This can also be the basis for reducing the work in the bidding process, saving unnecessary costs.

* International construction bidding is legally binding regarding borrowing and use of capital.

Projects in international bidding are often large projects and funded by many sources of capital, the largest of which is ODA. ODA is the capital that developed capitalist countries allocate to finance poor countries in economic development, in the form of refunds or non-refundable. Although it is aid money, the countries receiving the funding will also have to endure many strict conditions. For example, Japan's ODA capital for lending countries, including Vietnam, must go through a very complicated process of negotiating, signing agreements and implementing, sometimes taking up to a year. On the other hand,

To use the above funds, we must conduct international bidding according to the OECF Bidding Guidelines issued in December 1997… [1].‌

1.2 Legal regulations on construction bidding (international construction bidding)

1.2.1. History of formation and development of Vietnamese law in regulating bidding relations in general and international construction bidding in particular

The law on construction bidding is a synthesis of legal norms regulating the relationships formed in construction bidding activities of domestic and foreign organizations and individuals participating in construction bidding activities.

In the late 30s and early 40s, along with the development of the capitalist economic market in many fields, the auction regime was required to be widely applied. However, auctions did not have enough basis to be implemented in specific fields such as technology transfer, basic construction, etc., so bidding was born. The birth of the law on bidding in general and construction bidding in particular was an objective necessity. The development process of the law on construction bidding can be summarized through the following stages:

The period before the Bidding Regulations issued with Decree 43/CP of the Government issued on July 16, 1996

During this period, construction bidding in general and international construction bidding in particular did not have a system of official legal documents to regulate. These bidding activities took place due to other documents regulating the reference. International construction bidding was almost non-existent because the conditions and circumstances of our country at that time were purely self-reliant and self-enjoying. In Vietnam from 1988 and before, the process of basic construction investment was carried out according to the Basic Construction Regulation issued under Decree No. 232/CP dated June 6, 1981, construction enterprises followed the method of self-made and delivery.

Bidding of domestic contractors in international construction bidding - 2

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