Cases of Preparing Financial Resource Requirements for a bidding package

Monday, 27 November 2023 2:31 PM
Previously, had published an article detailing what financial resources for a bidding package are and what contractors need to prepare. However, some contractors still do not fully understand this content, leading to confusion during the implementation process. Today's article on will analyze in more detail the cases of using financial resources to prove for a bidding package, so stay tuned for the article.
Cases of Preparing Financial Resource Requirements for a bidding package
Cases of Preparing Financial Resource Requirements for a bidding package

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Financial Resources for the bidding package

The basic contents of financial resources for the bidding package were already carried out by in a previous article, which contractors can view HERE. Essentially, the requirement to prove financial resources for implementing a bidding package arises when the investor/bid solicitor wants the contractor to demonstrate that their business/company has the ability to mobilize a certain amount of money, A (value according to the proportion stipulated for each bidding document), intended for the contractor to have funds to deploy the bidding package.

Proving Financial Resources for the bidding package

To prove financial resources for the bidding package, contractors can perform this in several different ways, here are some common methods:

  • Bank credit commitment: This is the most common and simplest method applied, where the contractor just needs to carry out with the bank they transact with to provide a credit commitment with a deadline (as required by the bidding document).
  • Bank Deposits: These can be in the form of savings accounts or the balance in the bank account. Documentation of these accounts can be captured to serve as evidence.
  • Securities Convertible to Cash: Securities that can be sold and converted into a larger amount of money than required by the bidding document.
  • Trade receivables within 1 year.
  • Short-term financial receivables within 1 year.
  • Available bank credit limit: Usually, contractors annually sign with one or more banks to provide a credit limit, however, if using this tool, the contractor needs to further prove the total credit limit granted, the amount already granted, and the remaining available amount, if larger than the required amount, it will meet the requirement.

Among these methods, the most common is the use of bank credit commitments, which will specifically mention the amount of money and the duration for that particular bidding package, so the contractor does not have to declare monthly resources used for other contracts if using the tools below.

Some Situations Related to Financial Resources for the bidding package

Question 1: In the contractor's bid document, if no documents proving financial resources to implement the bidding package are submitted, can the contractor supplement documents to prove they have sufficient financial resources to implement the bidding package and are these financial resources considered the essence of the contractor?
Answer: Yes, the contractor can supplement documents to prove they have enough financial resources to carry out the bidding package. If the contractor does not submit the bank's credit commitment, then the contractor's declared documents can be considered to determine financial resources.

Question 2: According to the requirements of the Bidding documents, the contractor must have financial resources (commercial receipts, short-term financial receipts). Currently, our company has signed a contract with another Investor for supplying some goods and has fully performed the obligation of supply and installation (specifically, we have proceeded with supply, signed acceptance minutes and are conducting settlement procedures). However, the Investor has not paid us for the above contract. Can our company use this financial resource that the Investor will pay within a certain period to prove financial resources?
Answer: Yes, this receivable from the investor can be used to declare as a financial resource for the bidding package, however, the contractor should declare it adequately according to the monthly financial resource template for contracts in progress (Form 08C) in this case.

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Financial Resource Declaration Template for Bidding

Question 3: Project Management Board X is selecting contractors for a construction and installation package of a District General Hospital project. In the financial resource requirements for the bidding package, the Bidding documents stipulate that the contractor must prove financial capability for the bidding package with an amount of 3.5 billion VND, and one of the ways to prove is to submit a bank's credit commitment, a legal credit institution. Contractor A participates in the aforementioned bidding package and proves their financial resources with a credit commitment from the bank and a credit limit exactly matching the amount required in the Bidding documents. However, the credit commitment states the following: The bank commits to provide credit if the contractor meets all conditions for credit according to legal regulations and bank regulations.
Question: In this case, is the credit commitment submitted by the contractor considered valid?
Answer: In the case above, when participating in the bidding, if the contractor provides a credit commitment from a legally operating credit institution in Vietnam with a value meeting the requirements of the Bidding documents, it is considered to meet the content. An obvious reality is that the implementation of the bank's credit commitment to the contractor must comply with legal regulations on credit, including binding and conditions between the two parties. Therefore, in practice, banks will not provide unconditional credit commitments for contractors to submit with their bid documents.

The above article by has analyzed in more detail the cases of preparing financial resource requirements for a bidding package. If there are contents that need consultation, please contact through our channels.

 Tags: bidding

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