Improving the quality of bidding for construction of traffic works in Vietnam

through serving the cause of industrialization and modernization of the country. Chapter two also shows that the outstanding achievements in the organization, management and practice of bidding for construction of traffic works in Vietnam in recent times are very admirable. However, the thesis also points out the shortcomings in the bidding for construction of traffic works in recent times which are still heavily formalistic, in a large number of bids there are still negative aspects, compliance with the Law is serious but lacks impartiality, objectivity and impartiality.

The thesis used 3 examples for review and analysis and more specifically, the author of the thesis conducted a sociological investigation as a reference document on social assessment of the quality of bidding for construction of traffic works. This is the basis for the author of the thesis to propose solutions and recommendations in chapter 3.

Chapter 3

Solutions to improve the quality of bidding for construction of traffic works in Vietnam

To propose solutions and recommendations to improve the quality of bidding.

In order to effectively bid for the construction of traffic works in Vietnam, the researcher first wishes to mention the important requirements that serve as the ideological foundation for the solutions and recommendations in this chapter.

3.1. Requirements to be thoroughly understood in the process of quality improvement

Bidding for construction of traffic works in Vietnam.

3.1.1. Thoroughly understand and strictly enforce the laws of the State in

Bidding for construction of traffic works

The implementation of bidding for construction of traffic works in the coming time must continue to ensure the requirement of understanding and following the laws issued by the State at all levels on project management and bidding.

First of all, the bidding parties need to regularly update the latest knowledge of the State law in the field of project management and bidding to avoid violations of the law in bidding. In fact, due to unprofessionalism and lack of information updates , the Bidding Regulations have been issued and effective for nearly a year, but the main unit

Investing in a traffic construction project is still bid according to the old regulations.

Some circulars guiding bidding and construction management, due to lack of updated information, still have many points of contradiction with each other. For example, two legal documents issued very close to each other have many points of inconsistency with each other, causing confusion for those who implement them. That is Decree 16/2005/ND-CP of the Government dated February 7, 2005 on management of construction investment projects and Law 61/2005/QH11 passed by the National Assembly of the Socialist Republic of Vietnam on November 29, 2005 and effective from April 1, 2006. These two documents still have some points of inconsistency, causing difficulties.

for the implementer. For investors, on the one hand, due to not updating information on legal documents, on the other hand, due to the lack of consistency in regulations, it leads to the phenomenon of bidding in the direction that is more suitable for them. Compliance with the principle that higher legal documents are more effective than lower legal documents, the latest documents have higher legal value than existing documents that have not been complied with, has made bidding activities quite diverse with different bidding packages.

The phenomenon of each bidding party (investor) only organizing bidding for one or several bidding packages for many consecutive years has led to a lack of professionalism in bidding. The phenomenon of each place applying in a different way has weakened legal regulations. Thoroughly grasping this viewpoint requires solutions that somehow ensure the fastest updating of legal documents and ensure the most scientific application of those regulations.

For contractors, understanding the current law allows them to maximize their competitive advantage and create high chances of winning bids. Understanding the Bidding Law 61/2005/QH11 this time has fundamental differences with previously issued Decrees such as Decree 88/1999/ND-CP and Decree 88/1999/ND-CP.

Decree 66/2003/ND-CP of the Government will help contractors exercise their rights and obligations in the best way. According to the provisions of Law 61/2005/QH11, contractors have the right to complain and denounce violations of the bidding party, participating contractors and the responsibility of the authorities when receiving complaints from qualified contractors. Lack of understanding will limit the authority of contractors and therefore, they will lose their own rights.

Ensuring strict law enforcement requires effective management and supervision mechanisms. That requires solutions and recommendations from all levels, sectors, and researchers to revolve around the axis of how to

to best enforce the laws of the State.

3.1.2. Ensure successful implementation of the road traffic construction investment plan until 2010 with a vision to 2020

One of the important requirements that must be thoroughly understood during the bidding and research process is to successfully implement the goals, plans, and transportation development plans set forth by the Party and State in accordance with the socio-economic development goals of our Party.

Since the early years of the 21st century, our Party and State have paid great attention to investing in transport development, especially road transport development. This is demonstrated by the Prime Minister's approval of Decision No. 162/2002/QD-TTG dated November 15, 2002 on approving the planning for the development of Vietnam's road transport sector.

by 2010 with a vision to 2020.

According to the planning approved by the Prime Minister, in the years 2010 to 2020, our State will focus on prioritizing investment in road traffic development to create the premise and driving force for socio-economic development, serving the cause of industrialization and modernization of the country. In particular, our Party and State "Pay attention to maintaining, consolidating, and upgrading to maximize the capacity of existing traffic infrastructure, while investing in the construction of new works that are really needed; focus on upgrading traffic infrastructure in key economic areas, urban areas, and external traffic axes, increasing the capacity to ensure smooth road traffic on the North-South route."[51, 1].

In the master plan, along with prioritizing investment in developing road traffic infrastructure, our State also prioritizes investment in developing rural traffic infrastructure. The Master Plan clearly states that in the years 2010-2020, "developing rural traffic, especially traffic in mountainous areas, remote areas, revolutionary base areas, border areas, effectively supporting the hunger eradication and poverty reduction program, socio-economic development in these areas" is one of the priorities that the Party and State have put into the guiding viewpoint for planning, construction and development of traffic nationwide. [51, 1].

Regarding capital mobilization for development investment, our State advocates “Promoting internal resources, implementing solutions to create domestic investment capital sources suitable to actual conditions. At the same time, maximizing foreign investment capital in the forms of official development assistance (ODA), direct investment (FDI) and Build-Operate-Transfer (BOT) contracts... organizations and individuals directly or indirectly using road traffic infrastructure are responsible for paying fees and charges to reimburse investment capital for construction and maintenance of works.” [51, 1].

In that spirit, investment in road traffic development in Vietnam in 2010 with a vision to 2020 focuses on investment, construction, and upgrading:

a) National Highway System: The State will focus on investing in restoring and upgrading the North-South axis with the most important routes in the system.

Vietnam's roads: National Highway 1A and Ho Chi Minh Road; Restoring and upgrading national highways in key economic areas in the North such as: National Highways 5, 10, 18, 38, 39, Central region such as: 7, 8, 9, 12, 14D, 14E, 19, 24, 25,

26, 27, 27B, 28, 29, 40, 48, 49, Southern region such as: National Highway 13, 20, 22,

22B, 51, 55, and the Southwest region such as: National Highway 30, 50, 54, 57, 60, 61, 62,

63, 80, 91. [51].

b) Provincial Road System: “The provincial road system is developed with the following orientations:

+ Upgrade some important Provincial Roads to National Roads, at the same time upgrade some important District Roads to Provincial Roads, reroute or open some new routes in necessary areas. [51].

+ Restore, upgrade or upgrade with the goal of achieving level IV road standards in the plains; level IV and V road standards in the mountains; and sections through towns achieving level III road standards. [51].

+ The asphalt rate reached 60% in 2005; 100% in 2010; by 2020, the district road system will be basically renovated and upgraded.”[51, 5].

c) Urban road traffic: The Prime Minister's Decision has indicated the direction of investment in developing urban traffic infrastructure in key cities such as Hanoi and Ho Chi Minh City. The general spirit for the

This city is: "Period 2010 - 2020, Completion, diversification and modernization

modernization of transport infrastructure.”[51].

d) Rural traffic: By 2010, the planning will eliminate most monkey bridges; increase the proportion of roads made of hard materials to 95%, ensuring that rural roads can be used in both seasons at 90%. [51]

Table 3.1 : Estimated total development investment

Road infrastructure 2001 – 2010

Unit: Billion VND

Status

Transport infrastructure	Total amount for 2001 - 2010	Annual average
1	National Highway	139,420	13,942
2	Provincial Road	50,000	5,000
3	Urban transport (Hanoi only) and Ho Chi Minh City in the period 2001 - 2005)	53,653	10,610
4	Rural transport	86,500	8,650

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Source: Decision 162/2002/QD-CP dated November 15, 2002.

With the planning as presented above, the total investment in developing road traffic infrastructure 2001 - 2010 is summarized in table 3.1.

In the above spirit, the Prime Minister "Assigns the Ministry of Transport to preside over and coordinate with ministries, branches, and People's Committees of provinces and centrally-run cities to organize the implementation of the Vietnam Road Transport Development Plan to 2020."[51].

3.1.3. Strengthening international and regional integration, improving the capacity to organize international bidding.

In the trend of globalization of economic, cultural and social activities taking place strongly all over the world, investment and bidding activities of the transport construction industry in our country need to focus on the requirement of strengthening international and regional integration.

In bidding for construction of traffic works, this spirit is needed.

is shown in many aspects such as how to apply international bidding forms to exploit the strengths of foreign contractors in the cause of industrialization and modernization of the country quickly; how to make domestic contractors quickly have the capacity to participate in bidding activities in the region and reach out to win bids in international biddings...

First of all, the legal regulations on project management and bidding of our country in general, applied to bidding for traffic construction in particular, need to follow the spirit of "openness" and "integration." In Law 61/2005/QH11 passed by the National Assembly of the Socialist Republic of Vietnam on November 29, 2005, our State has focused on complying with the requirements of joining the World Trade Organization WTO that we have.

is being promoted. In that spirit, the eligibility of contractors has been drafted to be more in line with international practices. One of the three conditions for contractors to

are considered valid when they “Independent economic accounting.” The contractor is not financially dependent on any organization. The contractor’s decisions are not influenced by anyone. That is the provision

ensure more fairness for contractors. This requires the country's equitization process to take place more quickly if contractors who are state-owned enterprises want to participate in bidding packages for projects funded by international organizations such as the WB, ADB, and JBIC.

The second issue that needs to be considered when enhancing international integration in

Bidding is the choice of domestic or international bidding; whether or not to give preferential treatment to domestic contractors when participating in bidding for traffic construction packages. International bidding will be an opportunity for the country to find and select contractors with sufficient capacity and experience in implementing traffic projects and thereby promoting the cause of industrialization and modernization of the country. However, international bidding will reduce the opportunity for domestic contractors to implement valuable traffic projects with modern technical requirements. That also

This means that many Vietnamese workers will lose their jobs.

foreigners. Although not wanting to, in order to integrate, our country must expand international exchanges through organizing more and more international bidding packages. This is an objective trend in line with the globalization process.

The problem is, is there any preference for domestic contractors or not?

How much is the preferential treatment? Or conversely, are foreign contractors participating in bidding for packages organized in the form of international bidding in Vietnam required to commit to using Vietnamese subcontractors? Requiring foreign contractors to commit to using domestic subcontractors would not be consistent with international practice, so it has been specified in the Law on Bidding of Vietnam. The problem is how it is applied .

In order to integrate and attract more and more participation of international organizations such as WB, ADB, JBIC,... or many other non-governmental organizations in investing in transport construction in Vietnam, investors must improve their capacity to organize and implement international bidding activities in accordance with the spirit of "publicity, fairness, and transparency" required by international organizations.

This is a requirement that we must take seriously.

One of the shortcomings that reduces the trust of international organizations when funding Vietnam is the common violation of donor requirements when organizing bidding. With the World Bank's rural transport development financing projects, the World Bank conducts many inspections every year and discovers many cases of violations of bidding regulations. The World Bank has suspended the participation of many contractors and notified the Vietnamese partners. According to the notification document of the Project Management Board

Project 18 (PMU18), in 2004 and 2005, the WB decided not to allow dozens of contractors to participate in bidding for transport construction packages funded by the WB. This situation also partly reduced the ability to attract the world's contribution to the cause of industrialization and modernization of the transport construction industry.

Improving the quality of bidding for construction of traffic works in Vietnam - 17

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