What is bidding? Information to know when participating in a procurement bidding package

Main Contents:

1. What is bidding?
2. Why is bidding necessary?
3. Concepts and terms in bidding
4. Is bidding exclusively for the government (public procurement)?
5. What is public procurement?
6. Should one participate in state bidding/public procurement?
7. How can businesses participate in government bidding?
8. Guide to participating in bidding for businesses new to the process!

What is Bidding?

According to the Bidding Law (No. 43/2013/QH13) in 2013: Bidding is the process of selecting a contractor to sign and execute contracts for consulting services, non-consulting services, procurement of goods, construction; selecting an investor to sign and implement investment projects under the form of public-private partnership, investment projects using land to ensure competitiveness, fairness, transparency, and economic efficiency.

In simple terms, bidding is the process where the inviting party selects a contractor (or investor) that meets its requirements. After the bidding process, the contractor will be notified of the bid result by the inviting party if the contractor wins that bidding package. Winning the bid means the contractor is chosen by the inviting party to sign the contract.

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Why is Bidding necessary?

The inviting party conducts bidding to make contractors (or investors) compete against each other. The goal of this process is to find contractors (or investors) who meet their technical and quality requirements at the lowest cost. Therefore, bidding is a sophisticated business practice in the developing market economy, bringing significant benefits to the investor and the overall national economy.

For contractors using state budgets, participating in bidding will be mandatory compliance with the Bidding Law (No. 43/2013/QH13) in 2013.

For private procurement bidding, not falling within the regulatory scope of the bidding law, the inviting party still has the right to choose whether to apply the bidding law (or not), depending on the needs of the inviting party. In this article, we will focus on introducing government bidding (public procurement). If businesses are interested in private procurement, please learn more here: https://dauthau.net/en/about/general-introduction.html

Thus, from the contractor's perspective, participating in bidding is the only way for contractors to enter the massive and enticing government procurement market.

As bidding creates competition, this vast market is highly competitive. However, businesses find it challenging to overlook because it is the dominant business method for large enterprises. Moreover, with abundant capital and the particularly large scale of this market, it will always be attractive to businesses seeking opportunities.

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Concepts and Terms in Bidding

• Main contractor: The contractor responsible for participating in bidding, submitting bids, and directly signing and implementing contracts if selected. The main contractor can be an independent contractor or a member of a joint venture.
• Inviting party: The organization with professional competence and capacity to conduct bidding activities.
• Bidding dossier: The entire set of documents used for open bidding, restricted bidding, including requirements for a project, bidding packages, serving as the basis for contractors and investors to prepare bidding documents and for the inviting party to evaluate bid documents to select contractors or investors.
• Bidding documents, proposal documents: The entire set of documents prepared and submitted by contractors or investors to the inviting party according to the requirements of the bidding dossier, request dossier.
• Bid submission: The way contractors submit price or personnel capacity bids to the inviting party to demonstrate their capability and competitiveness for a specific bidding package.
• Bid withdrawal: The way contractors/investors submit bid prices (bid/withdrawal) when participating in bidding.
• Winning bid: The result of selecting a contractor after opening bids, indicating that the contractor is chosen to execute the bidding package."
• ...

Is bidding only for the state (public procurement)?

Due to the characteristics of Vietnam's business environment, which has opened up to private enterprises in the past few decades, bidding in Vietnam is primarily associated with the state (the inviting party is mainly state-owned enterprises, government agencies, using state budget). And this market is referred to as the public procurement market.

In reality, it's not just the public procurement market that uses the bidding method. Large private enterprises (such as Lotte, Vingroup, for example) also have to go through bidding procedures when seeking partners. Even internationally, bidding methods are not much different from Vietnam; it's just that the procedures are simpler and the systems are more modern (for example, 100% online bidding, no issues of lobbying the investor or having to share a percentage with the inviting party if awarded the contract).

Are you only interested in participating in bids for private projects?
In Vietnam, the trend of private enterprises engaging in professional procurement through bidding is becoming increasingly popular. If your business only wants to participate in the private procurement market, not interested in public procurement, or if you are a private enterprise looking to invite bids for your project, please visit: http://dauthau.net/en - The first bidding network for private enterprises in Vietnam - to learn more information!

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What is Public Procurement?

Public Procurement, also known as Government Procurement, is the process of acquiring goods or services by government organizations. Accounting for 12% of the global GDP in 2018, government procurement plays a significant role in the global economy.

In Vietnam, public procurement is regulated by the Bidding Law (No. 43/2013/QH13) in 2013 and the Law on Management and Use of Public Assets in 2017. The majority of public procurement activities in Vietnam are conducted through competitive bidding, in accordance with the Bidding Law. Within the framework and scope of operations carried out by DauThau.INFO, all the data analyzed by the DauThau.INFO software is sourced from the government's public procurement website in Vietnam.

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Should one participate in state bidding/public procurement?

As analyzed above, bidding is a sophisticated business practice in the context of a developing market economy. Bidding in Vietnam has its drawbacks, primarily due to insufficiently transparent information and the dominance of state-owned enterprises in inviting bids. This is a result of our recent history (having opened up just 30 years ago, with about the same period witnessing the emergence of private enterprises), and it takes time for such dynamics to change. The landscape is evolving rapidly, as the number of state-owned enterprises in Vietnam has decreased from over 12,000 to 5,655 by 2001 and further down to 718 by October 2016. According to the Vietnamese government's plan, by 2020, there will only be 103 state-owned enterprises primarily in industries like defense, publishing, irrigation, public services, and some major conglomerates crucial to the economy in sectors with natural monopolies such as Oil and Gas, Electricity, and Viettel.

In the future, the business environment in Vietnam is expected to improve, and the market economy will continue to develop. With the implementation of online bidding and increasingly stringent bidding regulations, especially with regards to transparently managing and analyzing information through bidding information analysis software, state bidding will become more transparent and align with its true nature.

While the private sector in Vietnam is relatively new, it is growing rapidly. As more large private enterprises emerge, the transparent and equitable competition through the bidding process to participate in the public procurement market within this sector will become increasingly common and less dependent on favoritism. This is an inevitable trend in a market economy. In a developed market economy, if your business cannot participate in bidding, it likely indicates a lack of professionalism because all professional businesses, whether in Vietnam or abroad, regardless of the industry or scale, will not overlook the government's public procurement market if they have the capability.

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How to participate in state bidding (as a contractor) and stay ahead of these trends?

In this article, we will discuss bidding as per the Bidding Law (No. 43/2013/QH13) in 2013. Therefore, contractors looking to join this dynamic and competitive arena first need to read the Bidding Law (No. 43/2013/QH13) in 2013 to understand the procedures and legal regulations related to bidding.

For each bidding package, the inviting party will specify criteria regarding the contractor's capabilities and other requirements related to providing consulting services, non-consulting services, procurement of goods, construction, etc. Therefore, businesses (contractors) need to accumulate capabilities, experience, and competitive skills to be ready to participate in bidding. It is advisable for businesses to start with smaller bidding packages and gradually approach larger ones to enhance their capabilities. Additionally, forming partnerships and collaborations with entities possessing stronger capabilities can be beneficial for businesses to elevate their overall capacity.

To participate in bidding and aim for winning contracts, contractors must improve themselves on all fronts, including accessing and analyzing bidding information. To maximize proactive engagement in seeking bidding opportunities, utilizing bid tracking software like DauThau.info can automate the search process and gather bidding information faster, more accurately, and at a lower cost!

Businesses must enhance their management aspects, elevate the capabilities of management personnel involved in bidding, and implement technology throughout various stages, from budgeting to design, production/construction, management, supervision, and customer care (e.g., using CRM, ERP software). This approach helps boost economic efficiency, enabling businesses to submit lower bids while still achieving high profits.

Finally, take the initiative to bid for a few contracts to gradually gain experience, starting with smaller projects within the business's capabilities. Subsequently, pursue larger contracts through partnerships with other contractors, and ultimately step into the big arena by undertaking major bidding packages.

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Guide for businesses new to the public procurement market

• Guide on Payment of Registration Fees, Name Maintenance Fees, Online Bidding Participation Fee
• Video: Guide to Registering an Account for Contractors on the National Bidding Network Syste
• Video: Guide to Setting Up the Environment and Online Bidding Softwar
• Video: Guide to Participating in Bidding on the National Bidding Network Syste
• Guide for Contractors to Find Prices for Any Bidding Package, Including Hidden Price Package
• Guide for Contractors to "Hunt" Bidding Packages from Investors They Want to Pursu
• Guide for Contractors to Set Alerts for Bidding Packages They Are Pursuing (Before They Are Posted on the National Bidding Network)

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Learn more about bidding: 

• What are the 3 bidding forms out of the total of 8 forms for selecting contractors and investors?
• What are the 4 bidding methods (contractor selection and investor selection)?
• 45 terms used in bidding according to the Bidding Law