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Vietnam NATIONAL PUBLIC PROCUREMENT SYSTEM ASSESSMENT REPORT Department of Public Procurement Ministry of Planning and Investment Government of Vietnam December 2006

Vietnam: National Public Procurement System Assessment Report

TABLE OF CONTENTS

INTRODUCTION.................................................................................................................... 1 APPROACH AND METHODOLOGY ............................................................................................ 1 GENERAL SCOPE AND LIMITATIONS ........................................................................................ 3 RELEVANT DOCUMENTS AND REFERENCES ............................................................................ 3 TEAM MEMBERS AND PARTICIPANTS ...................................................................................... 3

BIS ASSESSMENT .................................................................................................................. 4 ASSESSMENT RATINGS ............................................................................................................ 4 COMMENTS ............................................................................................................................. 4

General Points of Consideration ....................................................................................... 4 Pillar I – The Legislative and Regulatory Framework ...................................................... 6 Pillar II – Institutional Framework and Management Capacity ....................................... 7 Pillar III – Procurement Operations and Market Performance ........................................ 9 Pillar IV – Integrity and Transparency of the Public Procurement System .................... 10

POSSIBLE NEXT STEPS ..................................................................................................... 12 SHORT TERM RECOMMENDATIONS ....................................................................................... 12 MEDIUM TERM RECOMMENDATIONS .................................................................................... 15 LONG TERM RECOMMENDATIONS ......................................................................................... 17

ANNEXES ........................................................... ERROR! BOOKMARK NOT DEFINED.


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Introduction Approach and Methodology The assessment of the public procurement system of the Government of Vietnam (GOV) was conducted using the Baseline Indicators System (BIS) for measuring the quality of a country’s procurement policies and institutional capacity, which was developed by the joint World Bank and the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) Procurement Roundtable.1 This Round Table among developing countries and bilateral and multilateral donors developed the BIS to provide guidance for improvements in procurement systems and the results they produce, and led to the December 2004 adoption of the “Johannesburg Declaration,” including a commitment for the adoption of the BIS as the agreed international standards for assessment of national procurement systems. In line with this and in recognition of the intention to use the BIS as a common tool by which developing countries and donors assess the quality and effectiveness of national procurement systems,2 this assessment adopted the methodology proposed in the User’s Guide (Version 4) issued by OECD on July 17, 2006. This is the first BIS assessment to be conducted in Vietnam, and it comes at a critical juncture in the country’s reform program, as a new omnibus law was recently passed by the National Assembly (effective April 1, 2006), and it is now crucial for GOV to map out its internal strengths and weaknesses, its external opportunities and threats, and determine the appropriate strategy to push the reforms forward toward full implementation and cascade these down to the provinces, cities, wards and communes. On October 17, 2006, GOV – through its Ministry of Planning and Investment (MPI), Department of Public Procurement (DPP) – conducted a technical focus group discussion/workshop to present the BIS and to work on an internal assessment, with representatives from key line ministries such as Industry, Justice, Agriculture and Rural Development, Trade, Transportation, Construction, State Inspectorate, State Auditing; including state-owned enterprises (SOEs), such as Electricity of Vietnam, Posts and Telematics, Petro Vietnam, Vietnam Airlines; and provinces. In order to provide guidance and an international perspective for the assessment, the external assessor explained the rationale and principles behind the BIS, provided inputs during the technical workshop, and conducted a parallel external assessment of the GOV public procurement system vis-à-vis internationally recognized standards. With the external assessment report on hand, as well as inputs from the October 17, 2006 technical focus group discussion/workshop, the DPP then conducted an internal BIS assessment from October to November 2006 to validate the findings of the external assessor. In this internal assessment/validation exercise, the DPP distributed the BIS Rating Sheet to various members of its staff for their consideration and feedback. Answers were provided in terms of tagging appropriate 1 The World Bank (Operations and Country Services), Increasing the Use of Country Systems in Procurement, p. 5 (March 2005). 2 OECD/OCDE, Methodology for Assessment of National Procurement Systems, p. 2 (July 17, 2006).


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checkboxes for each Sub-Indicator found in the BIS Rating Sheet – similar to the method used by the external assessor. The domestic consultant then gathered their answers and averaged these to reflect a single score for each Sub-Indicator. Both the external and DPP internal assessments were then consolidated into one (1) BIS report, reflected herein. The end result is a self-assessment by GOV of its procurement system to determine strengths and weaknesses, so that the resulting information can be used to monitor the performance of its system and the success of the reform initiatives in improving performance. This assessment was undertaken on the basis of four (4) key areas called “Pillars,” which are composed of twelve (12) Indicators that have been identified as the core components of a public procurement system. These twelve (12) Indicators are, in turn, composed of Sub-Indicators that are considered the desirable standards against which the existing elements of GOV’s public procurement system may be assessed. For this particular assessment, it was agreed that varying weights were not to be assigned to each Sub-Indicator, Indicator and Pillar. Rather, the methodology suggested in the OECD User’s Guide was utilized, so that each Sub-Indicator was scored from 0 to 3 depending on how it conformed to the relevant criteria and standards specified therein. As weights were not assigned to each Sub-Indicator, for purposes of graphing the areas where minimal to substantial differences exist between the country’s public procurement rules, processes and practices, on one hand, and international standard and practices, upon the other, the scores garnered for each Sub-Indicator factored in each Indicator through the form of percentages that were then divided by the number of Sub-Indicators contained in each Indicator. This eliminated the need to discuss and agree on the distribution of weights. Instead, with this methodology, GOV may use the BIS assessment results to make a judgment on areas that – in its view – would have to be strengthened, and would thus have to be prioritized in the short, medium and long term. A review of Vietnam’s public procurement legislative, regulatory and institutional frameworks had to be undertaken. It involved a study of the relevant procurement and investment laws and decrees, a consideration of the findings in the latest Country Procurement Assessment Report (CPAR) as inputs primarily for the findings on procurement operations and performance, and on the integrity and transparency of the system, coupled with interviews with the MPI/DPP technical staff, a technical focus group discussion/workshop, and current newspaper reports. For reference purposes, the BIS Qualitative Assessment Table used by the external assessor is attached hereto as Annex “A,” and it provides for the descriptive analysis of the scores and ratings as to where, how and why GOV fully, substantially, partially or fails to achieve the standards set by the Baselines. It contains: (i) the Pillars; (ii) the Indicators; (iii) the Sub-Indicators; (iv) the criteria for each Sub-Indicator; (v) the findings on the level of adherence of each Sub-Indicator to the pertinent criteria; and (vi) the external assessor’s comments. It should be noted that the findings in Annex “A” were subsequently validated by the MPI/DPP, and that the final results are reflected in Annex “B” of this Report. As such, the official BIS Ratings for this Report are attached hereto as Annex “B-1.” Annex “B-2” provides


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for comparative graphs reflecting both the external and internal assessments. Purely for reference purposes, the BIS Ratings of the external assessor are attached hereto as Annex “C.” General Scope and Limitations This Report seeks to provide a general overview of the state of existing frameworks and systems in the public procurement regime of Vietnam. As such, this Report is limited to a national level assessment of the current state of Vietnam’s public procurement system, and neither involves a detailed assessment of agency-level practices, nor an assessment of specific projects or transactions. The agency-level assessment will be covered by another activity utilizing agency procurement performance indicators. In the assessment, emphasis was placed on the legal and organizational aspects, as well as the core components of Vietnams public procurement system, that are covered by the BIS Pillars and its set of Indicators and Sub-Indicators. Broadly defined recommendations are provided in the Report with the intention of providing GOV various avenues to take for possible next steps. Relevant Documents and References This review considered the following major documents:

1. The Law on Procurement – Law No. 61/2005/QH11, passed by the National Assembly, Legislature XI, 8th Session, effective April 1, 2006 (the “Procurement Law”);

2. The Decree Implementing the Procurement Law – Decree No.

111/2006/ND-CP, dated September 29, 2006 (the “Procurement Decree”);

3. The Law on Investment – Law No. 59-2005-QH11, passed by the

National Assembly, Legislature X, 10th Session, effective July 1, 2006 (the “Investment Law”);

4. Existing Bidding Documents; and 5. The CPAR for Vietnam, dated October 2002, and its Update, dated

August 2004. Team Members and Participants The members of the team for the BIS assessment are: 1. Mr. Nguyen Viet Hung – Director General and Project Director, DPP 2. Mr. Nguyen Xuan Dao – Deputy Director General, DPP 3. Ms. Nguyen Dieu Phuong – Coordinator, DPP 4. Mr. Nguyen Dang Truong – Officer, DPP 5. Mr. Jose Luis Syquia – International Consultant/External Assessor


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6. Mr. Tran Hung – National Consultant The representatives present during the technical focus group discussion/workshop held on October 17, 2006, are listed in Annex “D” of this Report. The names of the staff members who participated in the DPP internal assessment/validation are listed in Annex “E” of this Report. BIS Assessment Assessment Ratings The Assessment Ratings per Indicator shown below were used to determine the Level of Achievement of Vietnam in order to provide a mapping of its existing public procurement system. The Assessment Ratings are based upon the scores garnered for each Sub-Indicator. Level of Achievement:

0 – 19% of Indicator




NA PA SA FA Legend: NA – Not Achieved (Less than 20% of Baseline elements achieved) PA – Partially Achieved (At least 20% but less than 70% of Baseline elements

achieved) SA – Substantially achieved (At least 70% but less than 90% of Baseline

elements achieved) FA – Fully Achieved (90% to 100% of Baseline elements achieved) Comments

General Points of Consideration A look at Annexes “B-1,” “B-2” and “C” (especially “B-2”) would show that, although some differences exist between the ratings of the external assessment and the internal assessment/validation, except for one Indicator (Indicator 6), none of these are more than twenty percent (20%) of each other (Indicator 6 reflects a difference of 22%). In particular, based on the DPP validation exercise, the following major clarifications were made upon the external assessor’s findings: Indicator 1 - On advertising, the current Procurement Bulletin published by the

MPI/DPP is widely and easily accessible to the general public, and may be considered as an effective transparency tool, in lieu of a newspaper of general nationwide circulation. Furthermore, on participation, the GOV has recently been experiencing increasing levels of participation in its public biddings.


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Indicator 3 - On procurement planning and budgeting, the regular planning exercise

that is practiced and instituted by law starts with the preparation of multiyear plans for government agencies, from which annual operating plans are derived, and culminates in the annual budget formulation. As such, budget preparation and appropriation are based on agency budget proposals that are supposed to reflect a 5-year Master Plan. What is simply lacking is the Annual Procurement Plan. Furthermore, while the law requires certifications of availability of funds before solicitation of tenders takes place, the DPP clarified that, in practice, biddings are sometimes conducted by some agencies even without such a certification.

Indicator 6 - On capacity building, although a comprehensive public procurement

capacity building and training-of-trainers program would still have to be developed, this does not mean that trainings are not being undertaken. In fact, members of the DPP staff are oftentimes tasked to conduct field trainings on procurement.

Indicator 7 - On access to the procurement market, the DPP clarified that it has

been observing increasing levels of competition from the private sector. All taken, it has been agreed that the official DPP assessment and the external assessment do not reflect substantial differences and, in fact, complement each other so that the following general observations/trends may be made: 1. GOV has significant strengths in Pillar I (Legislative and Regulatory

Framework) and Pillar II (Institutional Framework and Management Capacity), and these strengths would even increase when the rating in Indicator 5 (The country has institutional development capacity) improves with the full development of the comprehensive procurement capacity building program, complemented by standard procurement forms and a generic procurement manual.

2. Although the ratings of Indicators 6 to 8 under Pillar III (Procurement

Operations and Market Performance) are consistently below fifty percent (50%), these are expected to improve once the new law begins to take root within line agencies, and especially when it is complemented by further measures to cascade the successes in legislation down to actual procurement operations and implementation. GOV could leverage upon its strength in Indicator 4 (The country has a functional normative/regulatory body) to implement these measures so that: (i) the objectives of the legal framework are obtained in the country’s procurement operation and practices; (ii) access to the procurement market is further opened to the public; and (iii) contract administration in line agencies is strengthened.

3. While GOV has gained much ground in its fight against corruption and in

further granting access to information; to ensure sustainability and effectiveness – at least in the field of procurement – it may be time to begin looking at efforts toward strengthening internal audit and control within


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agencies, as well as its appeals mechanism for aggrieved parties (both reflected in Indicators 9 and 10, respectively).

To be more precise, specific observations are provided below:

Pillar I – The Legislative and Regulatory Framework GOV’s strengths in Pillar I relies heavily on the fact that it now has an omnibus public procurement law, passed by its National Assembly, supported by an implementing decree issued at the appropriate level. The Procurement Law also provides for open bidding as the preferred mode of procurement, and there is a special bulletin for procurement information that is regularly published by the MPI/DPP. A procurement website also exists as a source of information on all laws and regulations on procurement, as well as on procurement opportunities and other relevant information. Other positive aspects of the legal framework are that international competitive bidding is provided for, and there are appropriate procedures for pre-qualification for highly specialized or technical projects. These developments are a step on the right direction, but are fairly recent – the Procurement Law took effect only on April 6, 2006, while Procurement Decree was issued only on September 29, 2006. As such, it would be quite understandable that this strength would not still be fully complemented on the aspects of implementation and operations. Moreover, the following areas may need to be strengthened further: 1. Although public bidding is the preferred mode of procurement, the provisions

for alternative methods of procurement provide high value thresholds for Direct Appointment (roughly US$62,500 for goods and works in investment development projects, and US$31,250 for consulting services) and Shopping (roughly US$125,000), vis-à-vis those normally set by donor institutions. These may water down the positive effects that are intended to be institutionalized through the preferred mode of public bidding.

2. One important transparency feature of the new Procurement Law is that it

requires publication of public procurement opportunities to be done in a special bulletin. This is a laudable feature as the special bulletin is of nationwide circulation, and may be further complemented by a requirement to advertise all opportunities in a newspaper of general nationwide circulation. The difference between a national bulletin and a nationwide newspaper is that, while both may be available nationwide, the former has a more limited readership than the latter, given its technical nature, and is available only on limited stands/sources; whereas the latter is more available to the public in all localities and easier to access in more sources outside government institutions. As the special bulletin is not available in an international language, there are efforts to come up with an English version. Moreover, a procurement website is currently being operated, but would need to be updated more regularly. The procurement website is also currently not available in an international language. If procurement were to be effectively open to foreign bidders, it is necessary for the special procurement bulletin and website to be published in an international language.


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3. There is no specific requirement for a generic procurement manual to be used

by all agencies and during procurement training courses. 4. Although the Procurement Law provides for the preparation of standard

bidding documents, these are still being drafted. However, these documents are expected to be issued soon, and so it is also expected that their release would greatly strengthen both the legal and regulatory framework, as well as the institutional framework and management capacity. The contract forms should also be a part of these standard documents.

5. Although a “pass/fail” criteria is provided in the Procurement Law, this is

merely discretionary and an agency may still opt to use the Merit Point System, even for goods and civil works. It has already been established through international experiences that the use of the point system for the procurement of goods and civil works opens the door to abuse of discretion,

Pillar II – Institutional Framework and Management Capacity The most notable strengths of GOV in this Pillar are the existence of a normative/regulatory body that is covered in the legislative framework, is sufficiently located at a high level, and is appropriately detached from direct procurement operations – the MPI/DPP; as well as a centralized information system. This information system does not currently contain all necessary data and does not perform all the functions of a fully operational and networked system, but is the appropriate nucleus for such. In particular, the system – which is mostly being undertaken manually by the MPI/DPP – collects data on estimates and awards for major projects, and disseminates information on invitations to bid, requests for proposals, contract awards and procurement regulations. However, it currently relies on submissions by agencies, is not yet fully supported by an information system (online or otherwise) that is able to track prices and is able to appropriately link budget appropriations with expenditures, among others. Other strengths in this area are the utilization of a project procurement plan that is subject to appraisal and approval by higher authorities, and a system that seeks to establish checks and balances in the procurement process through the process of prior reviews during the entire procurement procedure. Aspects that may require further strengthening are the following: 1. Although procurement plans are prepared, these are merely project related

plans, and no annual procurement plan is required to be prepared. The way the process works is that budget allocations for agencies are based on a 5-year Master Plan, annual operations plans and budget proposals, and project procurement plans are required to be prepared by agencies and submitted for appraisal and approval – sometimes all the way up to the Prime Minister – to determine if these are consistent with the multiyear plan and the operations plan. However, while a system of checks and balances appears to exist with regard to projects and the investment plans, and although an agency may have an annual operating plan; there is no strong linkage between budget


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appropriation/allocation and expenditures, and the annual operating plan is not supported by an annual plan for the procurement of goods, works and services to implement such plan. Therefore, while budget preparation and appropriation may be based on agency budget proposals that are supposed to reflect a 5-year Master Plan, there is no direct link between an agency’s budget estimates for the proposal and its actual disbursements during that year. This is probably the reason behind the observation in the 2004 CPAR Update that provinces frequently commit more funds than appropriated through the budget process for procurement purposes, and require contractors to wait long periods of time for payment. More discipline may be required on the part of implementing agencies, and the Annual Procurement Plan would go a long way in fostering this discipline.

2. There appears to be no serious problem on the commitment and

appropriation of budget funds, as it was reported in the 2002 CPAR that the State Treasury normally releases funds in accordance with the approved plan and allocations, and that delays only sometimes occur due to late budget approvals. This positive finding may be due to the fact that project procurement plans are subject to higher level appraisals and approvals prior to the bidding process. However, delays in payment were reported to be common in the 2002 CPAR, as progress payments may take thirty (30) to sixty (60) days. It has also been reported that final account for works normally suffers much more serious delays, mainly due to cumbersome procedures. This problem still appears to persist, as it was further reported in the 2004 CPAR Update that the long payment process have tended to create a preference for companies, such as SOEs or well established private companies, who have the resources to pre-finance contracts in the medium term. A step in the right direction would be the establishment of an Annual Procurement Plan, as this would ensure that agencies have thought through their procurement activities at least for the coming fiscal year, have drafted their budget proposals on the basis of these plans, and would be bound by a plan during its actual operations. In turn, this would help agencies keep track of their expenditures so that all their activities are sufficiently covered by their budget, and would assure contractors that their projects have been sufficiently planned and budgeted in advance.

3. At present, the country has no running comprehensive procurement capacity

building program, but it was reported that this would soon be developed with assistance from the Like-Minded Donor Group (LMDG). Once this program comes into full swing, great improvements in terms of procurement capacity in the implementing agencies is expected. It should be noted that this program should also consider the auditors, as they are tasked to review procurement activities, and it would lessen conflicts in practices and reviews if both the procurement practitioners and auditors are of one mind. The program may also cover contract administration skills and include the private sector among its targeted participants, considering that it is a key player in the entire process. It should also be complemented by quality control standards to evaluate staff performance so that improvements in practices (hopefully brought about by the training program) may be monitored, and that capacity development trends and issues may be identified and addressed.


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Pillar III – Procurement Operations and Market Performance As mentioned earlier, when a public procurement reform program is fairly recent, it is common to see major opportunities for improvements in the implementation and operational aspects, as bulk of the initial reform efforts naturally focus on the legislative and institutional frameworks. Vietnam is not an exception, and the BIS assessment findings reflect this. In other words, as the appropriate legal requirements have already been established, GOV would now have to focus its efforts at building the practice and pushing for the implementation of its reforms down to the smallest locality – a task that is certainly not less daunting than drafting the law. For this reason, GOV may consider focusing on the following areas that would need strengthening: 1. The 2002 CPAR reports that there is a serious shortage of procurement

training capacity, that most procurement staff are appointed on an ad hoc basis to serve a project or a particular procurement, and that there is no systematic training on procurement. However, as noted above, a comprehensive procurement training program is well on its way to address this deficiency and provide for a standard on the procurement trainings that are already being conducted by members of the DPP staff. To help build a truly professionalized procurement practice in government, the capacity building program should include or be complemented with an institutionalized skills matching for procurement staff. This should be no problem for GOV, as the Procurement Law already contains provisions on the rights and duties of the procuring entity and the Procurement Specialist Team, as well as conditions for membership in the latter. This program should also address the training needs of the private sector.

2. The Procurement Law has no provision that encourages partnership with the

private sector so as to effectively galvanize its views and input these to further policy and operational reforms. It was reported in the 2002 CPAR that GOV does not hold regular meetings with the business community, but recent development indicate that this may be happening soon, especially given recent moves in Vietnam to build a stronger and more conducive environment for investments. The Competition Law was also enacted in July 2005, and it has been reported that this law could improve the competitive environment, but its impact would still have to be established, given its recent issuance. Opening the doors to constant dialogue between GOV and the private sector would have a positive impact on the level of competition for public sector contracts, because it would give a strong signal that the government is serious about reforming public procurement, that it is open to ideas and initiatives from the private sector, and because it would provide inputs from the key stakeholders on how to effectively address hindrances to competition, such as the dependent nature of SOEs and the capabilities of small and medium-sized companies.

3. There are sufficient laws that address the need to make reports and preserve

confidentiality of documents in public procurement. However, there are no


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specific provisions that clearly specify what the relevant procurement documents/records are, the responsible office where these shall be kept, the length of time that procurement records would have to be kept, accountabilities, and, most importantly, there appears to be no guidelines dealing with the systematic management of recorded information.

4. The Procurement Law and related laws provide for delegated authority and

appropriate accountabilities for decision-making. However, the 2002 CPAR reported that major contracts are subject to a lengthy and cumbersome approval process. This may be the result of the appraisal and prior review mechanism discussed above. For example, although Article 31 of the Procurement Law provides for a maximum appraisal duration of twenty (20) days (30 days for the Prime Minister), this procedure occurs three (3) times during a bidding – procurement plan, bidding documents and bidder selection result – and so the period can actually run to a total of sixty (60) days in a single bidding activity (90 days for the Prime Minister) – in addition to the period to undertake the bidding itself.

5. It was reported in the 2002 CPAR that, in general, project and contract

management capabilities of project implementing agencies are inadequate, and that under-inspection of goods, and cost and time overruns in works contracts, are common. This indicates a need to strengthen contract administration capabilities. While the Procurement Law is not lacking in terms of mandatory requirements, efforts would have to be taken so that the model contracts/forms that will be issued include adequate provisions on quality control procedures and requirements.

6. There appears to be no Arbitration Law yet, arbitration does not seem to be a

common practice used in public procurement, and local contract conditions for dispute resolutions are reportedly inadequate. Moreover, courts are still generally regarded as a mechanism of last resort, and a winning party may find it difficult to have its contract enforced through the courts. It was reported in the 2002 CPAR that local contract conditions are usually poor in respect of dispute resolution, and are not well developed to clearly reflect the rights and obligations of parties, so that local suppliers and contractors are usually in a weak position to make any major claim.

Pillar IV – Integrity and Transparency of the Public Procurement System It seems that much effort has recently been undertaken to improve transparency and anti-corruption measures in Vietnam. This appears to have positively affected both the investment climate, in general, and public procurement, in particular. Some notable strengths are the increased transparency in public procurement through the Procurement Law that requires all relevant procurement information to be posted in the special procurement bulletin and in a website managed by MPI/DPP, and the clear provisions of the Procurement Law on ensuring competition, avoiding conflicts of interest, prohibited acts of procurement, and the penalties for violations. Moreover, it specifically provides that individuals whose acts in violation of the Procurement Law constitute crimes shall be dealt with in accordance with the


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Criminal legislation. These appear to form part of a comprehensive anti-corruption program of GOV to prevent, detect and penalize corruption in government. There is also a new provision under the State Auditing Law that requires the State Auditing Agency to make information public, and there exists a Code of Ethics in the form of the 1998 Ordinance on Civil Servants, which require them to respect the people, to be honest, to avoid bureaucracy and corruption, to use public resources with economy, and to avoid abuse of their position. Even local media have constantly been reporting on the efforts of the President to fight corruption, thus showing a high level of sincerity and concern on the part of government. Partly a strength, but also a weakness, is the creation of the Consulting Council on Complaint Settlement under the Procurement Law. This is partly a weakness of the system, because its procedures have the danger of creating a conflict between administrative and judicial procedures. However, it is also a strong point of the public procurement regime, because it provides for the rudiments for an effective review or appeals mechanism. The following areas may have to be strengthened: 1. As mentioned above, the Consulting Council on Complaint Settlement

appears to be a strong feature of the Procurement Law, because it can be developed further into an effective review or appeals mechanism. This body is outside the regular courts and includes a representative from the relevant professional association. However, there appears to be no enforceability or finality in its decisions, because an aggrieved party has the discretion to either sue in court or go through the complaint settlement process. And even if the party opts for the latter, it can always go to the courts if it is not satisfied with the outcome. In short, the potential impact of the Consulting Council appears to be watered down by two things: (i) it merely acts on a consultative capacity; and (ii) an aggrieved party can always negate the entire proceedings by going to court if it is not satisfied with the outcome. Moreover, this discretion may create a conflict between administrative and judicial processes, because the appeal process is not clearly established.

2. Although the role of the State Auditing Agency has been strengthened to

include compliance procurement audit as part of its responsibilities, the 2002 CPAR reported that audits are not regular and usually conducted only when there is a major complaint against a procuring entity, and these are not complemented by any institutionalized internal audit and control mechanism through the establishment of Internal Audit Units with clearly defined functions and procedures. The Procurement Law provides for an appraisal system and mandates the MPI to lead and coordinate with agencies in conducting oversight and inspection for procurement nationwide. As this oversight currently appears to take the form of prior reviews, it may be improved to look into procurement performance and outcomes. These indicate that audit recommendations are more reactive than proactive, and may tend to address specific transactions rather than broader systemic issues on operations and practices by agencies. This is probably the reason why, as reported by the State Auditing Agency, GOV experienced a budget loss of VND 4.5 Trillion in 2005, and that some major causes for this loss were inappropriate spending decisions, particularly spending on basic construction projects, and


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misconducts at all stages from the planning stage to the delivery stage (practically covering the entire procurement cycle).3

3. As mentioned earlier, it is important to train auditors on procurement

procedures and practices, because they are tasked to review the actions and decisions of procurement practitioners, and both should thus have the same understanding of the legal provisions and requirements.

4. The law does not institutionalize a participative or collaborative process

whereby various stakeholders, including non-government organizations (NGOs) and civil society organizations (CSOs), are consulted on public procurement policies and are made partners in procurement transparency by, for example, requiring that they be invited during public biddings.

Possible Next Steps Although the BIS assessment shows several areas in the GOV public procurement system where improvements may be had, this does not necessarily mean that all these areas would have to be addressed at this point. As such, this Report will make a distinction among short term (within 1 year), medium term (within 3 years), and long term (within 5 years) recommendations for next steps, in order to identify those areas of the procurement system that may be prioritized, and those that may be attained realistically within a short period. Needless to say, these recommendations take the aforementioned strengths and weaknesses of GOV’s public procurement system into account, and are intended to assist it move forward with its overall public procurement reform strategy. Short Term Recommendations It has been noted that there are procurement reform initiatives in the pipeline which, once fully operational, would greatly enhance the impact of GOV’s public procurement system. As such, it is best to focus most of the efforts in the short term to ensuring that these initiatives are effectively implemented in such a way as to improve on the BIS assessment results. In particular, the following may be recommended: 1. Develop and implement a comprehensive procurement capacity building

program (to impact Indicators 5, 6, 7 and 9). This initiative would cut across several indicators if the capacity building program would be structured in such a way as to address and cover the following:

1.a. It has to be self-sustaining.

1.b. The content should not only focus on procurement procedures, legal and administrative requirements, but also on modules dealing with procurement planning, cost estimation, budgeting, record keeping, and with ethical and performance standards and professionalism.

3 See Vietnam Financial Times, Shocking Losses: Interview with Mr. Mai Vinh, Deputy Director of the State Budget Audit Department II, p. 17 (September – October 2006).


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1.c. It should address both the concerns of line agencies dealing with high profile projects, as well as those of provinces and small agencies/procuring entities undertaking smaller projects, and so it has to have case studies on both large infrastructure projects and small procurement activities.

1.d. It should not only address the procurement gaps and training needs of the public sector, but also of the private sector. The private sector is a key player in public procurement, and ensuring a common understanding of the law and that bidders are appropriately trained on the new procurement law would increase competition, minimize failures of bidding, and thus improve the success of the bidding exercise.

1.e. State auditors should be included in the list of targeted participants, along with the procurement, budget and finance officers, to ensure that a common understanding of the procurement rules and procedures exist among all key public sector stakeholders. This common understanding would also minimize negative findings by the State Auditing Agency on procurement activities due to different interpretations.

2. Develop and issue the Standard Bidding Documents and contract forms

(to impact Indicators 2, 8 and 12). The standard documentation for procurement are currently being developed by GOV, and this is normally part of the next critical steps in procurement reforms after the release of the implementing rules and regulations, as these documents would establish the appropriate bidding and contract provisions to govern specific bidding procedures, rights and responsibilities of the parties during bidding and contract implementation, contract administration, dispute resolution and unacceptable practices. As mentioned above, efforts would have to be taken so that the model contracts/forms would have adequate provisions on quality control procedures and requirements. Additionally, it should be noted that these documents have proven to be key instruments in harmonization efforts with donor procurement guidelines, and so it may be appropriate to consolidate the drafting of the standard bidding documents and contract forms with ongoing harmonization work. Consideration may also be made for standard documents for small procurements and simplified procedures. Finally, once issued, the Comprehensive Capacity Building Program may include a module to discuss the nature of the standard bidding documents and how to accomplish these.

3. Develop and issue a Generic Procurement Manual (to impact Indicators

2, 5, 6 and 8). This recommendation would cut across one-third (1/3) of the indicators for a couple of reasons. First of all, it would greatly enhance the comprehensive procurement capacity building program by providing the substantive course/reading materials in the form of a user’s guide. Secondly, it can clearly outline how procurement procedures should be undertaken, provide practical tips and elaborate on acceptable performance standards for procurement staff. The manuals can also be the venue to discuss the appropriate norms for records management and expound on the various roles and responsibilities during contract administration. However, to be effective, the manuals have to be drafted in a manner that is easy to understand, it


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should be easy to apply, and should address the situation of each critical player in the procurement process.

4. Provide an international language version of the Procurement Bulletin

and Website, and ensure that the Procurement Website is fully implemented and regularly updated (to impact Indicators 5 and 7). The Procurement Bulletin and Website are very strong transparency tools, and are currently being managed by the MPI/DPP. These media are not only intended for the posting of procurement opportunities and results, but are also meant for the posting of procurement plans, the list of debarred companies, and to inform the public about the latest rules, regulations and official issuances on public procurement. Considering that the Procurement Law has provisions on International Competitive Bidding, there have to be versions of the bulletin and website in at least one (1) international language, to cater to potential international bidders. Transparency and competition would also be enhanced if procurement opportunities are mandated to be published in newspapers of nationwide general circulation. As indicated earlier, a nationwide newspaper is more available to the public in all localities and is easier to access in more sources outside government institutions.

5. Establish consultative or collaborative partnerships with the private

sector and civil society (to impact Indicators 7 and 12). Undoubtedly, there have been numerous reported instances where GOV has consulted and met with key private sector organizations, such as the Chambers of Commerce, to discuss various concerns and initiatives to increase investments and market access. The main concern now is to reflect the achievements in this broad area to public procurement reforms, so that both the private sector and civil society are partners on both policy and operational concerns. At the policy level, additional initiatives may be developed to further enhance competition for government contracts and to increase the competitiveness of small and medium enterprises. These and similar reform measures would certainly need continuous and regular dialogue with the private sector. Involving NGOs and CSOs, particularly as bidding observers and for project monitoring, would also greatly enhance both the transparency of the entire system and public confidence on GOV’s sincerity to fight corruption on public procurement.

6. Review thresholds for Direct Appointment and Shopping (to impact

Indicator 1). It should be noted that Direct Appointment and Shopping are normally utilized primarily based on the existence of justifying grounds or situations. For example, Direct Appointment may be justified for purposes of standardization of equipment, emergency situations, or protection of Intellectual Property Rights (IPR), or Shopping may be appropriate only when relating to off-the-shelf goods or standard specification commodities of small value. Although these conditions are also indicated in the Procurement Law, the high thresholds would make it easier for implementing agencies to focus more on the value than on the justifying circumstances. On the other hand, while Repeat Order is appropriately justified in the Procurement Law, and is capped with a time limit of six (6) months and a limitation on the unit price, it has no limit with regard to quantity and overall value. As such, it may be


15

legally possible for an agency to undertake a repeat order for twice or even thrice the original quantity – a situation that should be avoided by proper planning. While on this point, it is may also be recommended that a provision dealing with threshold values would best be found in an implementing decree to provide for more flexibility, as these amounts may have to be revised to reflect changes in prevailing circumstances and environments.

7. Mandate the “pass/fail” system for the procurement of goods and civil

works (to impact Indicator 1). As mentioned earlier, international experience has shown that the use the Merit Point System has opened the doors to abuse of discretion, at least for the procurement of goods and works. This danger is multiplied if an agency were given the discretion to actually choose between a “pass/fail” system and a merit point system, because standardization and predictability of practices is threatened. This also complicates the bidding procedure and may cause confusion for both the procurement officers and the bidders, thus increasing the possibility of bidding failures.

8. Provide for alternative dispute resolution (to impact Indicator 8). Given

recent successes to increase foreign investments in the country, GOV would surely have to strengthen its provisions and practices on Alternative Dispute Resolution (ADR). One step forward would be to clearly provide for ADR provisions in both the Procurement Decree and the standard contracts.

Medium Term Recommendations 1. Require an Annual Procurement Plan (to impact Indicators 3 and 7). The

importance of a plan that outlines the proposed procurement activities of an implementing agency for the fiscal year has been discussed above, and its relevance to establishing a strong link between budgeting, procurement and spending cannot be overemphasized. Roughly, the annual procurement plan may be crafted by an agency during budget preparation, as it would serve as an input to and justification for the budget proposal, and would thus have to consider the 5-year Master Plan. Through this document, the procuring entity is able to support its annual operating plan with a plan for the procurement of the goods, works and services necessary to implement it. As this annual procurement plan would have to be approved by either the MPI or the Ministry of Finance, agencies would be motivated to exercise discipline in their procurements during the year, as they would be required to follow the approved plan, and may only deviate therefrom when duly authorized under exceptional circumstances. Proper planning and its tie up with allocation of resources could indeed ensure that the overall goal of the particular project will be achieved. It is also an effective means by which limited public resources are divided over varied competing priorities. For these reasons, an annual procurement plan can actually prevent unnecessary and wasteful use of public money and lead to possible accumulation of savings that can be generated by consolidating requirements. With this measure in place, the VND 4.5 Trillion loss reported by the State Auditing Agency would hopefully lessen. Moreover, if discipline exists in spending decisions, more funds would be assured for legitimate projects, thereby lessening delays in payment. In


16

turn, as projects are appropriately funded and payments are released on time, the practice of pre-financing contracts would be lessened, and a barrier to competition is removed – as small and medium enterprises would be encouraged to participate and compete for government contracts.

2. Strengthen Records Management (to impact Indicators 5 and 6). While

there are general provisions on the confidentiality of procurement related documents, and although there exists a general Archiving Ordinance, there have to be specific policies and guidelines providing for the creation, identification, classification, receipt and transmission, storage and protection, retrieval, disposition and preservation, and sharing of information and records. These will ensure a systematic records management, and will positively impact any initiative from the central government to monitor procurement practices, because the records management system will link to any tool that would be utilized for monitoring agency performance – such as the Agency Procurement Performance Indicators (APPI). Without clear and specific provisions for the development of an adequate procurement records management system within an agency, there is a high possibility that varied procurement documents would be maintained, that there would exist a non-uniform approach in keeping track of the transaction and document flow, and that monitors and evaluators would be confronted with inconsistent practices in keeping records – which are usually dependent on the initiative of the record custodian.

3. Regular procurement performance audits complemented by the

establishment of Internal Audit Units within procuring entities (to impact Indicators 5 and 9). It has been reported that the new State Auditing Law has improved the quality of audits by the State Auditing Authority and has provided an incentive for agencies to comply with requirements, because the information has now been declassified and is open to the public.4 This is an encouraging development, as the groundwork now exists for further efforts toward the conduct of regular procurement audits. These efforts can then be complemented by the establishment of Internal Audit Units within procuring entities, as well as internal control measures. These Internal Audit Units would help ensure that the management of a procuring entity is able to make procurement decisions that are well-informed and based on grounded estimates. It also moves the procurement system from a reactionary approach, where audits are undertaken on a transactional case-to-case basis, to a proactive stance, as appropriate controls are established within the agency to ensure that appropriate measures and systems exist and that the quality of procurement is maintained. The State Auditing Agency may consider entering into a joint effort with MPI on the conduct of procurement performance audits so that procurement outcomes are constantly evaluated, the performance of the procurement staff are constantly monitored, and gaps in the training program may be identified in advance and addressed. Tools may be used for this initiative, such as the APPI. Once this partnership is established, and once a law or decree is passed to legally establish the

4 Id.


17

Internal Audit Units, pilot testing may initially be considered in a few agencies, to determine proper operating structures and networks.

4. Study to strengthen the Consulting Council on Complaint Settlement (to

impact Indicator 10). This body is ideally situated to address and settle procurement complaints, because it is composed of several members, including a representative from the private sector. However, as mentioned earlier, its potential impact is lessened by the fact that it merely exists as a consultative body, and that the entire procedure in which it functions may be negated by a party who later opts to go to court. For this reason, it may be given a stronger role by providing it with the authority to render final and enforceable decisions. Of course, its decisions may still be appealed to a higher judicial body, but at least it functions as part of a process that first exhausts administrative due process before resorting to the courts, and its relevance would not depend wholly upon the discretion of a party.

5. Institutionalize alternative dispute resolution (to impact Indicator 8).

Once the Procurement Decree and the standard contracts open the doors to ADR, the next step is to institutionalize this practice by ensuring that centers not only exist – such as the Vietnam Chamber of Commerce – but that these are properly capacitated and are being utilized. This requires building up the confidence of both the local and international community on ADR in Vietnam. Moreover, it would also require confidence in the private sector that decisions would be respected and enforced. Although Vietnam is a member of the New York Convention on Enforcement of International Arbitration Awards, local conditions need to be such that both local and foreign contractors/suppliers are confident that their contractual rights and obligations would be respected. There is a need to establish predictability, so that a party is assured that a decision would be rendered and enforced based on the presence or absence of relevant facts. This would require initiatives that go beyond procurement and into realm of judicial reform – and may thus run well into the long term.

Long Term Recommendations 1. Fully implement the regular performance audits and the establishment

of Internal Audit Units (to impact Indicators 5 and 9). Once the legal foundations are developed and GOV has successfully pilot tested and fine tuned the operating structures and networks among the Internal Audit Units in selected agencies, MPI and the State Auditing Agency, the next step would clearly be to replicate these to other agencies, then to cascade these to the provinces, cities, wards and communes.

2. Establish administrative due process in procurement (to impact

Indicators 8 and 10). If GOV is comfortable with granting more authority to the Consulting Council on Complaint Settlement, it may consider institutionalizing its role as a decision-making body, in particular, and revising the procurement complaints/appeals process, in general, so that parties are required to first exhaust all administrative remedies within the agency, leading up to an administrative appeals body, before resorting to judicial intervention.


18

This may free the judicial branch from procurement cases, which may be too technical at times.

ANNEX “A”

A-1

VIETNAM: BIS QUALITATIVE ASSESSMENT TABLE December 2006

Notes: This assessment was initially undertaken by an external assessor by reviewing the country’s new law on procurement, related laws and decrees, and other relevant documents, such

as the 2002 Country Procurement Assessment Report (CPAR) and its 2004 Update, vis-à-vis international practices. Subsequent validation of the findings below was undertaken by the MPI/DPP, and the final results are reflected in Annex “B” of the Report.

PILLAR I – THE LEGISLATIVE AND REGULATORY FRAMEWORK Indicators Sub-Indicator Check

Box Assessor’s Comments

• Indicator 1 – Public procurement legislative and regulatory framework achieves the agreed standards and complies with applicable obligations

(a) Scope of application and coverage of the legislative and regulatory framework The law and regulations are adequately recorded and organized hierarchically, so that there is a high-level law and there are administrative regulations that provide detailed interpretations and procedures for implementation

/ The Law on Procurement, Law No. 61/2005/QH11, passed by the National Assembly, Legislature XI, 8th Session, effective April 1, 2006 (the “Law on Proc.”), and the Decree implementing the Law on Proc., No. 111/2006/ND-CP, dated on Sept. 29, 2006 (the “Decree”)

All laws and regulations are published and easily accessible to the public at no cost

/

The law covers all areas of procurement (goods, works and consulting services)

/

(b) Procurement Methods The high-level law provides for allowable procurement methods, these are clearly defined, there are conditions for applicability, and there is a requirement for approval by an accountable official

/ The Investment Owner identifies the method of procurement in the procurement plan, which is then approved by the Competent Person (Art. 6, of Law on Proc.). Preference is provided to domestic bidders (51% ownership or 30% domestic production) in international bidding, but the law respects international treaties/agreements on the matter (Art. 3, Law on Proc.). Art. 13 of the Law on

Competitive procurement is the default method of public procurement

/

Splitting/fractioning of contracts to limit competition is strictly prohibited

/

ANNEX “A”

A-2



Appropriate standards for international competitive tendering are specified and are consistent with international standards

Proc. refers to a required volume and value to be committed by a successful foreign bidder for Vietnamese joint venture members or subcontractors. Also, the thresholds for Direct Appointment in Art. 20 (dd) are quite high, particularly for consulting services (roughly US$31,250) and for goods and works in investment development projects (roughly US$62,500). The threshold for shopping is also high under Art. 22 (roughly US$125T), vis-à-vis the thresholds normally set by donor institutions. Finally, there is no limit to the amount of Repeat Order. These could have the effect of lessening the impact of open bidding as the preferred mode under the law.

(c) Advertising rules and time limits Competitive biddings are publicly advertised / Publication is done on a special bulletin

published by MPI/DPP, not on a newspaper of nationwide general circulation. This is not available in an international language, but there are efforts to come out with an English translation. There is also a website for procurement information, but this is only a pilot phase, and currently does not act as an online bulletin board. Mass media

Minimum time limits for bidders to obtain documents and submit tenders are consistent with the method of procurement, national conditions and international requirements

/

Publication of competitive biddings is mandated to be made in at least a newspaper of nationwide general circulation or in a dedicated Internet official website (where all public procurement opportunities are posted), and these are easily accessible

ANNEX “A”

A-3



Content of publication includes sufficient information to enable potential bidders to determine their capability and interest in bidding

publication is discretionary. (See Art. 5, Law on Proc.) MPI/DPP is tasked to issue guidelines on publishing procurement information (Art. 7, Decree on Proc.), but this is still being undertaken. The issuance of these guidelines would improve access to procurement information by potential bidders. At any rate, the current procurement bulletin appears to be widely available to public access.

(d) Rules on participation Fair, predictable and defined rules for participation based on qualifications, or in accordance with international standards, requires the use of “pass/fail” criteria to the extent possible, and limits domestic price preferential clauses – if any – to a reasonable amount (e.g. 15% or less)

Under Art. 29 of the Law on Proc., although “pass/fail” criteria is provided, this is merely discretionary and an agency may still opt to use the Merit Point System. Registration does not seem to be an issue affecting competition. Art. 11 of the Law on Proc. requires that a bidder shall be institutionally, financially independent, and not subject to the same managing body as the Investment Owner. However, it has been observed in the 2002 CPAR and its 2004 Update that, although SOEs appear financially, managerially and legally independent, they are still within the domain of the implementing agency. This means that while the rules on SOE participation have improved, much effort is still needed to level the playing field in actual practice.

If registration is required, it does not constitute a barrier to participation in tenders, and does not require mandatory association with other firms

/

Provides for administrative debarment and exclusions for criminal or corrupt activities, including prohibition of commercial relations, subject to due process and appeal

/

Rules for the participation of state-owned enterprises promote fair competition

/

(e) Tender documentation and technical specifications

ANNEX “A”

A-4



The legal framework provides for the minimum content of the tender documents and requires that content is relevant and sufficient for tenderers to be able to respond to the requirement

/ There is no provision requiring the agency to specify, as far as possible, internationally accepted standards such as those issued by the International Standards Organization. The legal framework requires the use of neutral specifications with

reference to international standards when possible

Requires the recognition of standards which are equivalent when neutral specifications are not available

/

(f) Tender evaluation and award criteria The evaluation criteria are relevant to the decision and specified in advance in the tender documents so that the award decision is made solely on the basis of the criteria stated in the tended documents

/ Agencies are allowed to exercise discretion on the choice of “pass/fail” criteria or the Merit Point System (Art. 29, Law on Proc.)

A clear methodology for evaluation of tenders is based on price and other fully disclosed factors expressed in monetary terms or pass/fail criteria is required

The evaluation of proposals for consulting services gives adequate importance to the quality and regulates how price and quality are considered

/

During the evaluation period, information relating to the examination, clarification and evaluation of tenders are not disclosed to the participants or to others not involved officially in the evaluation process

/

(g) Submission, receipt and opening of tenders Public opening of tenders in a defined and regulated proceeding, immediately following the closing date for bid submission

/ There are no clear requirements under the Law on Proc. to keep records of bid opening proceedings. There is, however, a requirement for a bidder selection report.

There is a clear requirement to maintain records of proceedings for bid openings and to make them available for review

Security and confidentiality of bids is maintained prior to bid opening, and disclosure of specific sensitive information during debriefing is prohibited

/

The mode of submitting bids and receipt by the government is well defined to avoid unnecessary rejection of tenders

/

(h) Complaints Participants have the right to have decisions in a procurement process reviewed

/ There exists a Consulting Council on Complaint Settlement, but its function is

ANNEX “A”

A-5



There are provisions to respond to a request for review at the procuring entity level, with administrative review by another body independent from the procuring entity that has the authority to grant remedies, including the right for judicial review

merely consultative to the Competent Person. (Art. 72, Law on Proc.)

The matters that are subject to review are established / Timeframes for issuance of decisions by the procuring entity and the administrative review body are established

/

• Indicator 2 – Existence of Implementing Regulations and Documentation

(a) Implementing regulation that provides defined processes and procedures not included in higher level legislation The implementing regulations are clear, comprehensive and consolidated, available in a single and accessible place

/ Most recent IRR was issued as a Decree on September 2006, through the proposal of the MPI and the Minister of Construction, to implement the Law on Proc.

The implementing regulations are updated regularly / The responsibility for maintaining and updating the implementing regulations are defined, and there are no important omissions or inconsistencies with the law

/

(b) Model tender documents for goods, works and services There are model invitation and tender documents provided for use for the procurement of a wider range of goods, works and services; or at the very least there is a set of mandatory clauses for inclusion in the tender documents

Art. 32 of the Law on Proc. provides that the bidding documents shall be prepared in accordance with the standard bidding documents prescribed by the Government. However, these standard bidding documents are still being drafted, and would still have to be issued.

There is a standard and mandatory set of clauses or templates that are reflective of the legal framework, for use in documents prepared for competitive tendering

The documents are kept up to date with responsibility for preparation and updating clearly assigned; and the use of the documents are mandatory or regulated

/

(c) Procedures for pre-qualification Procedures exist to provide for limitations on the content of pre-qualification criteria that are based on the needs of the specific procurement

/

The procedures specify the use of a pass/fail criteria for application of qualification criteria

/

The procedures provide guidance on when to use pre-qualification / (d) Procedures suitable for contracting for services or other requirements in which technical capacity is a key criterion

ANNEX “A”

A-6



The legal framework and its implementing regulations provide for conditions under which selection based exclusively on technical capacity is appropriate and when price and quality considerations are appropriate

/

The legal framework and its implementing regulations provide for clear procedures and methodologies for assessment of technical capacity and for combining price and technical capacity under different circumstances; or at the very least, the implementing regulations provide for the possibility of using technical capacity in selection (even if neither the law nor the regulations do not elaborate on the procedure)

/

(e) User’s guide or manual for contracting entities [choose one] There is a unique procurement manual detailing all procedures for the correct administration of procurement regulations and laws, and these are updated regularly by an agency whose duty to update it is clearly established

The Law on Proc. contains no provision on the development of procurement manuals.

There is no unique procurement manual, but there is a requirement for procuring entities to have and maintain one that is regularly updated

There is no manual and no obligation to have a manual, but many procuring entities have an internal manual for administration of procurement

/

(f) General Conditions of Contract (GCC) for public sector contracts covering goods, works and services consistent with national requirement and, when applicable, international requirements [choose one] There are GCC for the most common types of contracts and their use is mandatory; and the content of the GCC is generally consistent with internationally accepted practice

Arts. 42 and 47 of the Law on Proc. make references to the Form Contract, but the Standard Bidding Documents and contract forms would still have to be issued. There is an existing set of standard bidding documents, but these only cover procurement of goods, and would have to be updated in light of the new law.

There are GCC for the most common types of contracts, consistent with international practice, but their use is not mandatory

There are GCC for the most common types of contracts, but they do not conform to internationally accepted practice, whether or not their use is mandatory

There are no GCC and individual agencies use the form of contract of their choice

/

ANNEX “A”

A-7

PILLAR II – INSTITUTIONAL FRAMEWORK AND MANAGEMENT CAPACITY

Indicators Sub-Indicator Check Box

Assessor’s Comments

• Indicator 3 – Public procurement legislative and regulatory framework achieves the agreed standards and complies with applicable obligations

(a) Procurement planning and data on costing are part of the budget formulation process and contribute to multiyear planning [choose one] There is a regular planning exercise instituted by law or regulation that:

• Starts with the preparation of multiyear plans for the government agencies, from which annual operating plans are derived;

• Followed by Annual Procurement Plans and estimation of the associated expenditures; and

• Culminates in the annual budget formulation

Budget allocations for agencies are based on a 5-year Master Plan. Moreover, under Arts. 10 and 11 of the Decree, the Investment Owner is required to submit the procurement plan to the relevant appraisal organization or body for appraisal and approval (this can involve submission to the Prime Minister). This implies a system of check and balance to ensure that procurement plans are consistent with the multiyear plan. The project owner should follow a planning and budgeting process required by the State Budget Law. However, the procurement plans that are required to be prepared only pertain to individual projects, and do not involve an annual procurement plan for the agency. This means that although an agency may have an annual operating plan, this is not supported by a plan for the procurement

The majority of procurement plans are prepared based on the annual and multiyear operating plans independently from budget allocation, but they are revised to meet the forward budget estimates for the sector or agency allocations before expenses are committed

Procurement plans are normally prepared based on the annual and multiyear operating plans. Links with budget planning are weak and plans are not required to match the budgetary allocation available before expenses are committed

/

ANNEX “A”

A-8

PILLAR II – INSTITUTIONAL FRAMEWORK AND MANAGEMENT CAPACITY Indicators Sub-Indicator Check


There is no integrated procurement and budget planning of the nature described above. Procurement plans are drawn without obvious and direct connection with the budget planning exercise, and there is no requirement to match procurement plans with availability of funds before expenses are committed

of goods, works and services to implement such plan. As such, budget preparation and appropriation are based on agency budget proposals that are supposed to reflect a 5-year Master Plan, and these culminate in the annual budget formulation. What is simply lacking is the Annual Procurement Plan to directly link budgeting and spending, as well as an agency’s budget estimates and its actual disbursements during that year. It is probably because of this that, in the 2004 CPAR Update, it was reported that provinces frequently commit more funds than appropriated through the budget process for procurement purposes, and require contractors to wait long periods of time for payment. More discipline may be required on the part of implementing agencies, and the Annual Procurement Plan would go a long way in fostering this discipline.

(b) Budget law and financial procedures support timely procurement, contract execution and payment Budget funds are committed or appropriated within a week from the award of the contract to cover the full amount of the contract (or amount to cover the portion of the contract to be performed within the budget period)

/ There appears to be no problem on the commitment and appropriation of budget funds. The 2002 CPAR reports that the State Treasury normally releases funds in accordance with the approved plan and allocations, and that sometimes there are delays due to late budget approval or inadequate budget revenue. This may be due to the fact that project procurement plans are subject to appraisal and

There are published business standards for processing of invoices by the government agencies that meet obligations for timely payment stated in the contract

ANNEX “A”

A-9



Payments are authorized within 4 weeks following approval of invoices or monthly certifications for progress payments

approval prior to undertaking the bidding process. Unfortunately, delays in payment are reported to be common (2002 CPAR), as progress payments may take 30 to 60 days. It has also been reported that final account for works normally suffers much more serious delay mainly due to cumbersome procedures. This problem still persists. In fact, the 2004 CPAR Update reported that provinces frequently commit more funds than appropriated through the budget process for procurement purposes, thus requiring contractors to wait long periods of time to receive payment. It was further reported that these financial practices have created a preference for companies, such as SOEs or well established private companies, who have the resources to pre-finance contracts in the medium term.

(c) Procurement actions are not initiated until budget appropriations have been made The law requires certification of availability of funds before solicitation of tenders takes places

/ Although the Law on Proc. has no provision on the requirement of a Certificate of Availability of Funds, the control feature that this requirement seeks to establish exists by virtue of the appraisal requirement in Art. 6. No procurement may be undertaken without the approval of the procurement plan and the appraisal report. However, upon validation of MPI/DPP, it was determined that actual practice shows that biddings are sometimes conducted even without a certification of availability of funds.

There is a system in place (e.g., paper or electronic interface between the financial management and the procurement systems) that ensures enforcement of the law

/

The law on prior certification of fund availability is fully enforced /

(d) Systematic preparation and completion of reports for certification of budget execution and for reconciliation of delivery with budget programming [choose one] The procurement system is sufficiently integrated with the financial management and budgetary system to provide information on the completion of all major contracts

All agencies are required to submit information on their procurements for the previous year to the DPP, by March of the

ANNEX “A”

A-10



Information on completion of the majority of large contracts is submitted as described above

/ succeeding year. The DPP is then able to process these data and issue the necessary report within 1 month. However, not all procuring entities are able to fully comply with this submission requirement. At any rate, this is an impressive task that is being performed by the MPI/DPP, and it would be a good area to develop further, so that more information on contracts may be captured with better links between budget estimates, awards, releases and contract performance – eventually leading to a stronger public financial management system.

Information on the completion of contracts is erratic or is normally submitted with considerable delay after the fiscal budgetary period

The procurement system does not generally provide this information

• Indicator 4 – The country has a functional normative/regulatory body

(a) The status and basis for the normative/regulatory body is covered in the legislative and regulatory framework [choose one] There is a normative or regulatory body, or the functions are clearly assigned to various units within the government which is specified in the legal and regulatory framework in an unambiguous way without gaps or overlaps

/ The MPI/DPP is tasked with the responsibility for setting procurement policy, overseeing the establishment of effective procurement practices, and settling procurement complaints within the scope of its jurisdiction. Art. 73 of the Law on Proc. also establishes the Consulting Council on Complaint Settlement to help settle procurement complaints.

There is a regulatory body or functional designation to various units within government, but it is not established as part of the legal and regulatory framework, and there are gaps or overlaps of regulatory responsibilities

Only part of the functional responsibilities of a regulatory body are assigned throughout the government, leaving significant parts of the work unassigned

Separate functional responsibilities to regulate the procurement system are not recognized as part of the legal and regulatory framework and are not effectively performed

(b) The normative/regulatory body has a defined set of responsibilities that do not overlap with other agencies, and these responsibilities include, but are not limited to the following: Providing advice to contracting entities / Drafting amendments to the legislative and regulatory framework, and implementing regulations

/

Monitoring public procurement / Providing procurement information / Managing statistical databases /

ANNEX “A”

A-11



Reporting on procurement to other parts of government / Developing and supporting implementation of initiatives for improvements of the public procurement system

/

Providing implementation tools and documents to support training and capacity development of implementing staff

/

(c) The normative/regulatory body’s organization, funding, staffing, and level of independence and authority (formal power) to exercise its duties should be sufficient and consistent with the responsibilities [choose one] The regulatory body (or the assignment of responsibilities for the regulatory function, if there is no body) is at an adequate level in government, and financing is secured by the legal/regulatory framework

/

The body is at an adequate level, but financing is subject to administrative decisions and can be changed easily

The level of the body is too low, or financing is inadequate for proper discharge of its responsibilities

The level of the body is too low, financing is inadequate, and the body has little or no independence to perform its obligations

(d) The responsibilities should also provide for separation and clarity so as to avoid conflict of interest and direct involvement in the execution of procurement transactions [choose one] The normative/regulatory body is not responsible for direct procurement operations, and is free from other possible conflicts (e.g., by being member of evaluation committees, etc.)

/

The body does not meet the requirement as stated above • Indicator 5 – The

country has institutional development capacity

(a) The country has a system for collecting and disseminating procurement information, including tender invitations, requests for proposals, and contract award information [choose one] There is an integrated information system that provides as a minimum, up-to-date information on procurement plans, specific advertisements or notices of procurement opportunities, publication of contract awards, and rules/regulations on procurement, and is easily accessible to all interested parties at no or minimum cost. Responsibility for its management and operation is clearly defined

There is a Bulletin on Public Procurement issued by the MPI/DPP (1st issued on Dec. 14, 2004), and this is available for 4,000 Vietnamese Dong. This Bulletin was first mandated by CP66/2003 for advertising procurement opportunities and other procurement related information including relevant legislation, award results, list of debarred bidders and related sanctions. However, it is only currently available in Vietnamese. There is also a website on relevant procurement information, but it would have to be

There is an integrated system with the characteristics described above that provides up-to-date information for the majority of contracts at the central government level, but access is limited

/

There is a system buy it only provides information on some of the contracts, whether or not access is limited

ANNEX “A”

A-12



There is no procurement information system except for some individual agency systems. Entities keep information on contract awards and some statistics

regularly updated, and it is also only currently in Vietnamese.

(b) The country has systems and procedures for collecting and monitoring national procurement statistics There is a system in operation to collect data, at least for procurement undertaken using central budget funds

/ There is a system to collect data on both locally funded and ODA procurement, but although the data is routinely analyzed and submitted as a report to the Prime Minister, it would need further development to generate information on specific procurement concerns, like unit prices for common types of goods/services, levels of participation, and duration of specific stages of the procurement cycle. The data would also have to be verified through audits.

The system collects data on procurement by method, duration of different stages of the procurement cycle, awards of contracts, unit prices for most common types of goods and services, and other information that allows analysis of trends, levels of participation, efficiency and economy of the purchases and compliance with requirements

Reliability of the information is high (verified by audits) Analysis of the information is routinely carried out, published and fed back into the system

/

(c) The country has a sustainable strategy to provide training, advice and assistance to develop the capacity of government and private sector participants to understand the rules and regulations and how they should be implemented There is a training and capacity building strategy that provides substantive permanent training programs for the needs of the procurement system

The curriculum for the Public Procurement Training Project with a training of trainers would still have to be developed. However, upon validation by MPI/DPP, it was determined that although no formal training program exists, the MPI/DPP staff are actually tasked to conduct trainings.

The training programs are of suitable quality and content Evaluation and periodic adjustment is made based on feedback and need There is an advisory service or help desk to address questions by procuring entities, suppliers, contractors and the public

(d) Quality control standards are disseminated and used to evaluate staff performance and address capacity development issues Provides quality assurance standards and a monitoring system for procurement processes and products

In the absence of a comprehensive procurement training program, there is still a shortage of qualified procurement staff, and contract implementation supervision in procuring entities has to be

Provides for a staff performance evaluation process based on outcomes and professional behaviors

ANNEX “A”

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Ensures that operational audits are carried out regularly to monitor compliance with quality assurance standards

strengthened. In the absence of a program, there are still no baselines for developing quality assurance standards for procurement staff. The 2002 CPAR also reports that, although actions by procuring entities are subject to review by higher level agencies, audits are not regularly conducted, and are usually performed only when there is a major complaint against procuring entities.

ANNEX “A”

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PILLAR III – PROCUREMENT OPERATIONS AND MARKET PERFORMANCE



• Indicator 6 – The country’s procurement operations and practices are efficient

(a) The level of procurement competence among government officials within the entity is consistent with their procurement responsibilities There are defined skill and knowledge profiles for specialized procurement jobs

/ Art. 9 and Ch. IV of the Law on Proc. contain provisions on the rights and duties of the procuring entity and a Procurement Specialist Team, and there are conditions for membership in the Procurement Specialist Team. However, in the absence of a procurement profession in Vietnam, or even a comprehensive capacity building program, there is still no institutionalized skill matching for procurement staff, who remain to be on the same government structure as other civil servants. As such, there is still a shortage of qualified procurement staff. The 2002 CPAR also reports that, in addition to the serious shortage of procurement training capacity, most procurement staff are appointed on ad hoc basis to serve a project or a particular procurement, and this is not supported by systematic training on procurement. Further work is required in this area.

There is systematic matching of skill against requirements for competitive recruitment

Staff who are required to undertake procurement activities on an ad hoc basis have the knowledge they need to undertake the activity, or have access to professional staff that can provide this knowledge

(b) The procurement training and information programs for government officials and for private sector participants are consistent with demand The training programs’ design is based on a skills gap inventory to match the needs of the system

A comprehensive procurement capacity building program still has to be developed. It may do well to include the private sector as well. At any rate, MPI/DPP clarified that the staff are at times tasked to conduct trainings.

Information and training programs on public procurement for private sector are offered regularly either by the government or by private institutions

The waiting time to get into a course (for public or private sector participants) is reasonable (e.g., 2 quarters)

(c) There are established norms for the safekeeping of records and documents related to transactions and contract management The legal/regulatory framework establishes a list of the procurement records that must be kept at the operational level and what is available for public inspection, including conditions for access

Art. 39 of the Law on Proc. provides for a report on the bidder selection results to be submitted to the Competent Person

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PILLAR III – PROCUREMENT OPERATIONS AND MARKET PERFORMANCE Indicators Sub-Indicator Check


The records should include: public notices of bidding opportunities, bidding documents and addenda, bid opening records, bid evaluation reports, formal appeals by bidders and outcomes, final signed contract documents and addenda and amendments, claims and dispute resolutions, final payments, and disbursement data (as required by the country’s financial management system)

and the appraisal body/organization. Ch. IV of the same law also provides for the duty to preserve the confidentiality of procurement-related documents by the Investment Owner, Procuring Entity, Procurement Specialist Team and the Appraisal Body. There is a general Archiving Ordinance where agencies are required to keep records for 5 years. However, there have to be provisions that clearly specify what these procurement documents/records are, the responsible office where these shall be kept, the length of time for record-keeping, accountabilities, and which of these are available for public inspection.

There is a document retention policy that is compatible with the statute of limitations in the country for investigating and prosecuting cases of fraud and corruption, and with the audit cycles

There are established security protocols to protect records, either physical or electronic

(d) There are provisions for delegating authority to others who have the capacity to exercise responsibilities [choose one] Delegation of decision making authority is decentralized to the lowest competent levels consistent with the risks associated and the monetary sums involved, this is regulated by law, and accountability for decisions is precisely defined

The Law on Proc. and related laws provide for delegated authority and appropriate accountabilities for decision-making. However, the 2002 CPAR has reported that major contracts are subject to a lengthy and cumbersome approval process. This may be due to the appraisal system. Although Art. 31 of the Law on Proc. provides for a maximum appraisal duration of 20 days (30 days for the Prime Minister), this procedure occurs 3 times during a bidding – procurement plan, bidding documents and bidder selection result – and so the period can actually run to a total of 60 days in a single bidding activity (90 days for the Prime Minister). Also, experience on compliance with this period by the procuring entities would still have to be established, given the recent issuance of the law.

The law establishes delegation and accountabilities, but the system concentrates decisions at a high level, creating congestions and delays

/

Delegation is regulated in very general terms, creating a need to clarify accountability for decision making

Delegation is not regulated by law, and is left at the discretion of the procuring entity. There is lack of clarity on accountability

• Indicator 7 – Functionality of the public procurement

(a) There are effective mechanisms for partnerships between the public and private sector The government encourages open dialogue with the private sector and has several established and formal mechanisms for open dialogue through associations or other means

The Law on Proc. does not have any provision that encourages a private sector partnership that is able to effectively

ANNEX “A”

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market The government has programs to help build capacity among private companies, including for small businesses, and training to help new entries into the public procurement marketplace

galvanize the views of the private sector as inputs to policy or operational reforms. As it was reported in the 2002 CPAR, the government does not hold regular meetings with the business community, but recent developments show that it may well be on its way. For instance, the Competition Law was enacted in July 2005, and it has been reported that this law could improve the competitive environment. At any rate, the impact of this law would still have to be established, given its recent issuance. An institutionalized mechanism for dialogue with relevant professional organizations, such as the Chambers of Commerce, may be established to improve findings in this area.

The government encourages public/private partnerships and the mechanisms are well established in the legal framework to make possible such arrangements

/

(b) Private sector institutions are well organized and able to facilitate access to the market [choose one] The private sector is competitive, well organized and able to participate in the competition for public procurement contracts

Based on the 2002 CPAR and its 2004 Update, there appear to be 2 perennial problems that hinder the development of a competitive private sector. First, delays in payment create a preference for SOEs and large

There is a reasonably well functioning private sector, but competition for large contracts is concentrated in a relatively small number of firms

The private sector is relatively weak and/or competition is limited owing to monopolistic or oligopolistic features in important segments of the market

/

ANNEX “A”

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The private sector is not well organized and lacks capacity and access to information for participation in the public procurement market

companies that are able to pre-finance contracts. This restricts the ability of small and medium-sized private companies to compete for state contracts. Second, the dependant nature of SOEs and the procuring entity. Although a new SOE Law took effect on July 1, 2004, allowing the creation by SOEs of market-based commercial entities operating under the Enterprise Law, the 2004 CPAR Update still observed strong evidence of preferential treatment for the SOE sector. The Law on Proc. already has a provision in Art. 11 that bidders participating in biddings for procurement packages shall be institutionally, financially independent and not subject to the same management as the Investment Owner. This appears to prohibit the type of conflict of interest indicated above, but then the same Article also provides for a 3-year period for this to be effective. As such, the impact of Art. 11 still has to be established. Furthermore, it has been reported as well that the presence of numerous public sector affiliated consulting organizations constitutes an obstacle to high quality competition-driven services and to the formation of independent and viable private consulting firms. In turn, all the above indicate a need to improve the level of competitiveness and performance on the part of local contractors and suppliers, especially since the private sector is still small and needs further development.

(c) There are no major systemic constraints (e.g., inadequate access to credit, contracting practices, etc.) inhibiting the private sector’s capacity to access the procurement market [choose one] There are no major constraints inhibiting private sector access to the public procurement market

The 2 above-mentioned factors still appear to inhibit private sector access to

ANNEX “A”

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There are some constraints inhibiting private sector access to the public procurement market, but competition is sufficient

the public procurement market. As such, although bid, performance and advance payment securities can be easily obtained locally, and the requirements for securities and other bidding requirements appear to be reasonable, increased competition from the private sector still has to be realized. In time, it is hoped that the new Law on Proc. will help improve this area of concern. The DPP clarified, however, that it has been observing increasing competition from the private sector.

There are multiple constraints inhibiting private sector access to the public procurement market which often affect competition levels

/

There are major constraints that discourage competition, and the private sector firms are generally reluctant to participate in public procurement

• Indicator 8 – Existence of contract administration and dispute resolution provisions

(a) Procedures are clearly defined for undertaking contract administration responsibilities that include inspection and acceptance procedures, quality control procedures, and methods to review and issue contract amendments in a timely manner Procedures for acceptance of final products and for issuance of contract amendments are part of the legal/regulatory framework, or are incorporated as standard clauses in contracts

/ The Law on Proc. has provisions on adjustments to contract and supervision of performance, acceptance and close-out of contract (Art. 57 and 59). However, although the adjusted value is not allowed to exceed the cost estimate, Art. 57 allows the Competent Person the discretion to allow additional tasks beyond the scope of the bidding documents – even if this proves to be a substantial amendment to the contract and may ultimately considerably increase the contract price. The model contracts/documents are still being crafted, and so quality control

Clauses are generally consistent with internationally accepted practices

Quality control procedures for goods are well defined in the model contracts/documents or in the regulations. Quality control is carried out by competent officers, inspection firms or specialized testing facilities

Supervision of civil works is carried out by independent engineering firms or qualified government supervisors and inspectors

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Final payments are processed promptly as stipulated in the contract procedures would have to be appropriately incorporated. However, a review of the old Standard Bidding Documents for goods, issued in 2005, show adequate provisions on inspections and testing, and the new Law on Proc. has a strengthened provision on performance, acceptance and close-out of contracts, even involving the community residents. But with respect to implementation and practice, it was reported in the 2002 CPAR that independent engineers are normally used only for large works contracts under foreign financing. Otherwise, agencies normally supervise works, and this is reported as being usually inadequate. The 2002 CPAR also reported that, in general, project and contract management capabilities of project implementing agencies are inadequate. As such, under-inspection of goods, and cost and time overruns in works contracts, are reportedly common. This is coupled by delays in final payments.

(b) Contracts include dispute resolution procedures that provide for an efficient and fair process to resolve disputes arising during the performance of the contract There is an Arbitration Law in the country It has been reported that there exists an

International Arbitration Center with the Vietnam Chamber of Commerce and Industry, and that in 1994, Decree 116/CP established economic arbitration centers in provinces and centrally administered cities. But there is no Arbitration Law as yet, arbitration does

The Arbitration Law is consistent with generally accepted practices for neutrality of arbitrators, due process, expediency and enforceability

The country accepts as a matter of course international arbitration for international competitive bidding

Provisions for Alternative Dispute Resolution (ADR) are standard in contracts

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ADR provisions conform to the international standard wording not seem to be a common practice used in public procurement, and local contract conditions for dispute resolution are reportedly inadequate. The old Standard Bidding Documents for goods issued in 2005 contain a standard provision on conciliation. No reference is made to any particular set of arbitration rules or proceedings, as this is for the parties to indicate in the Special Conditions of Contract. It is therefore important for the new standard contract forms to include stronger provisions on ADR.

(c) Procedures exist to enforce the outcome of the dispute resolution process The country is a member of the New York Convention on Enforcement of International Arbitration Awards

/ As local conditions have to be developed further to clearly reflect rights and obligations of parties in contracts, and courts are generally regarded as a mechanism of last resort, it appears that a winning party would find it difficult to have its contract enforced through the courts.

The country has procedures to enable the winner in a dispute to seek enforcement of the outcome by going to the courts

The country has a process to monitor this area of contract administration and to address performance issues

ANNEX “A”

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PILLAR IV – INTEGRITY AND TRANSPARENCY OF THE PUBLIC PROCUREMENT SYSTEM



• Indicator 9 – The country has effective control and audit systems

(a) A legal framework, organization, policy, and procedures for internal and external control and audit of public procurement operations are in place to provide a functioning control framework The system provides for adequate independent control and audit mechanisms and institutions to oversee the procurement function

The 2002 CPAR reports that the role of the State Audit Agency has been strengthened to include compliance procurement audit as part of its responsibilities. This is in addition to the appraisal system that is integrated in the Law on Proc. and the role of the MPI to lead and coordinate with agencies in conducting oversight and inspection for procurement nationwide. There is also a specific provision on procurement inspection (Art 71, Law on Proc.). Previously, concerns were raised by delegates in the 2004 CPAR Update on the overlapping inspection functions and frequency of inspections, but the now Art. 61 of the Decree appears to have consolidated the oversight functions with the MPI, and specifies these clearly. However, it was also reported that audits are not regular and usually conducted only when there is a major complaint against procuring entities. The issue here also is that efficiency of the process would still have to be established. More importantly, the oversight appears to take the form of prior reviews, and may have to be improved to look into procurement performance audits. There is no institutionalized internal control mechanism within agencies through the establishment of internal audit units with clearly defined functions and procedures.

The system provides for implementation of internal control mechanisms in individual agencies with clearly defined procedures

The system provides for proper balance between timely and efficient decision making and adequate risk mitigation

The system provides for specific periodic risk assessment and controls tailored to risk management

/

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PILLAR IV – INTEGRITY AND TRANSPARENCY OF THE PUBLIC PROCUREMENT SYSTEM Indicators Sub-Indicator Check


(b) Enforcement and follow-up on findings and recommendations of the control framework provide for an environment that fosters compliance [choose one] Internal or external audits are carried out at least annually, and recommendations are responded to or implemented within 6 months of the submission of the auditors’ reports

Although actions by procuring entities are subject to review by higher level agencies, audits are not regularly undertaken, and usually conducted only when there is a complaint. This means that audit recommendations are more reactive than proactive, and may tend to address specific transactions rather than broader issues on operations and practices by agencies.

Audits are carried out annually, but response to or implementation of the auditors’ recommendations takes up to a year

Audits are performed annually, but recommendations are rarely responded to or implemented

Audits are performed erratically, and recommendations are not normally implemented

/

(c) The internal control system provides timely information on compliance to enable management action There are written standards for the internal control unit to convey issues to management, depending on the urgency of the matter

There is no established internal control system within agencies, through the mandatory creation of internal audit units with clearly defined functions and procedures.

There is established regular periodic reporting to management throughout the year

The established periodicity and written standards are complied with (d) The internal control systems are sufficiently defined to allow performance audits to be conducted [choose one] There are internal control procedures, including a manual that states the requirements for this activity, which is widely available to all staff

See comments in Indicator 9 (c).

There are internal control procedures, but there are omissions or practices that need some improvement

There are procedures, but adherence to them is uneven

The internal control system is poorly defined or non-existent

/

(e) Auditors are sufficiently informed about procurement requirements and control systems to conduct quality audits that contribute to compliance [choose one] There is an established program to train internal and external auditors to ensure that they are well versed in procurement principles, operations, laws and regulations, and the selection of auditors requires that they have adequate knowledge of the subject as a condition for carrying out procurement audits

In the absence of a Comprehensive Capacity Building Program, there is no showing of a formal training program for auditors. As such, the program to be developed should also include these auditors as targeted participants.

If auditors lack procurement knowledge, they are routinely supported by procurement specialists or consultants

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There is a requirement that the auditors have general knowledge of procurement principles, operations, laws and regulations, but they are not supported generally by specialists in procurement

There is no requirement for the auditors to have knowledge of procurement, and there is no formal training program, and no technical support is provided to the auditors

/

• Indicator 10 – Efficiency of appeals mechanism

(a) Decisions are deliberated on the basis of available information, and the final decision can be reviewed and ruled upon by a body (or authority) with enforcement capacity under the law Decisions are rendered on the basis of available evidence submitted by the parties to a specified body outside the regular courts that has authority to issue a final decision that is binding unless referred to an appeals body

There is a good provision in Art. 73 of the Law on Proc. that creates the Consulting Council on Compliant Settlement. This body is part of an entire appeals procedure that begins with the procuring entity, the procedure is bound by timelines, the body is outside the regular courts, and the body includes a representative from the relevant professional association. However, there appears to be no enforceability or finality in its decisions, because an aggrieved party has the discretion to either sue in court or go through the process of settlement of procurement complaints.

An appeals body exists which has the authority to review decisions of the specified complaints body and issue final enforceable decisions

There are times specified for the submission and review of complaints and issuing of decisions that do not unduly delay the procurement process

/

(b) The complaint review system has the capacity to handle complaints efficiently and a means to enforce the remedy imposed [choose one] The complaint review system has precise and reasonable conditions and timeframes for decisions to be rendered, and clear enforcement authority and mechanisms

There is no clear provision on the powers of the body and the remedies it may impose. Art. 75 of the Law on Proc. and Chapter IX of the Decree deal with violations of the law, but these remedies are clearly given either to the person deciding the investment or the MPI, not to the Consulting Council. Its purpose thus appears to be merely consultative to the Competent Person. There may be a need to specify more clearly the division of jurisdiction between the administrative process and the courts, and the powers of the Consulting Council may be strengthened further.

There are items and timeframes established for resolution of complaints, but mechanisms and authority for enforcement are unclear or cumbersome

/

Terms and timeframes for resolution of complaints or enforcement mechanisms and responsibilities are vague

There are no stipulated terms and timeframes for resolution of complaints, and responsibility for enforcement is not clear

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(c) The system operates in a fair manner, with outcomes of decisions balanced and justified on the basis of available information Procedures governing the decision making process of the review body provide that decisions should be based on information relevant to the case

It is apparent from the Law on Proc. and the Decree that much effort has been taken to ensure that decisions are unbiased. However, although Art. 73 of the Law on Proc. states that the Consulting Council may request for the necessary information and documents, there is no clear provision that provides which these relevant documents are. There is also a need to strengthen Art. 73 of the Law on Proc. so that the discretion of the Competent Person and the scope of his decision in settling a bidder’s complaint are clearly specified and not subject to abuse.

Procedures governing the decision making process of the review body provide that decisions should be balanced and unbiased in consideration of the relevant information

Procedures governing the decision making process of the review body provide that decisions can be subject to higher level review

/

Procedures governing the decision making process of the review body provide that decisions should result in remedies that are relevant to correcting the implementation of the process or procedures

(d) Decisions are published and made available to all interested parties and to the public [choose one] All decisions are publicly posted in a government website or another easily accessible place

There is no provision to post the decision of the Competent Person or the Consulting Council, except the requirement in Art. 5 of Law on Proc. for the posting of the treatment of violations of the law.

All decisions are posted in a relatively restricted access media (e.g., official gazette of limited circulation)

Publication is not mandatory, and publication is left to the discretion of the review bodies, thus making access difficult

/

Decisions are not published and access is restricted (e) The system ensures that the complaint review body has full authority and independence for resolution of complaints [choose one] The complaint review body is independent and autonomous with regard to resolving complaints

The complaint review body only has a consultative role to the Competent Person.

The complaint review body is not independent and autonomous with regard to resolving complaints

/

• Indicator 11 – Degree of access to information

(a) Information is published and distributed through available media, with support from information technology when feasible [choose one] Information on procurement is easily accessible in media of wide circulation and availability. The information is centralized at a common place. Information is relevant and complete. Information is helpful to interested parties to understand the procurement processes and requirements, and to monitor outcomes, results and performance

/ Under Art. 5 of the Law on Proc., relevant procurement information are required to be posted in a procurement bulletin that is published by the MPI and is readily available to the public, and in a website managed by the MPI. This is

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Information is posted in media that is not readily and widely accessible, or is not user friendly for the public at large; or is difficult to understand to the average user; or essential information is lacking

complemented by a requirement under the new State Auditing Law for the State Auditing Agency to make audit information public.

Information is difficult to get and very limited in content and availability There is no public information system as such, and it is generally up to the procuring entity to publish information

• Indicator 12 – The country has ethics and anti-corruption measures in place

(a) The legal and regulatory framework for procurement, including tender and contract documents, includes provisions addressing corruption, fraud, conflict of interest, and unethical behavior, and sets out (either directly or by reference to other laws) the actions that can be taken with regard to such behavior [choose one] The procurement law or the regulations specify this mandatory requirement and give precise instructions on how to incorporate the matter in tendering documents. Tender documents include adequate provisions on fraud and corruption

The Law on Proc. has good provisions on ensuring competition, avoiding conflicts of interest, prohibited acts in procurement, and the penalties for violations (Arts. 11, 12, and 75, Law on Proc.). However, the standard tender documents still have to be issued, and precise provisions for incorporating these in the tendering documents are needed.

The procurement law or the regulations specify this mandatory requirement, but leaves no precise instruction on how to incorporate the matter in tendering documents, leaving this up to the procuring agencies. Tender documents generally cover this, but without consistency

/

The legal/regulatory framework does not establish a clear requirement to include provisions in documents, but makes fraud and corruption punishable acts under the law. Few tendering documents include appropriate provisions dealing with fraud and corruption

The legal framework does not directly address fraud, corruption or unethical behavior, and its consequences. Tender documents generally do not cover the matter

(b) The legal system defines responsibilities, accountabilities and penalties, for individuals and firms found to have engaged in fraudulent or corrupt practices [choose one] The legal/regulatory framework explicitly deals with the matter. It defines fraud and corruption in procurement, and spells out the individual responsibilities and consequences for government employees and private firms or individuals found guilty of fraud or corruption in procurement, without prejudice to other provisions in the criminal law

/ Art. 75 of the Law on Proc. and Ch. IX of the Decree provide these. Art. 75 also specifically provides that individuals whose acts in violation of the Law on Proc. constitute crimes shall be dealt with in accordance with the Criminal legislation. The legal/regulatory framework includes reference to other laws that

specifically deal with the matter (e.g., anti-corruption legislation in general). The same treatment is given to the consequences

ANNEX “A”

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The legal/regulatory framework has general anti-corruption and fraud provisions, but does not detail the individual responsibilities and consequences which are left to the general relevant legislation of the country

The legal/regulatory framework does not deal with the matter

(c) Evidence of enforcement of rulings and penalties exists [choose one] There is ample evidence that the laws on corrupt practices are being enforced in the country by application of stated penalties

The Law on Proc. is new, and so it may take some time for evidence on cases to arise. A Law on Anti-Corruption was also passed in 2005, and it may also need time for evidence on its impact to be gathered. At any rate, the 2002 CPAR indicated that cases on corruption are being reported in local newspapers, and that this was an indication of enforcement of anti-corruption measures. It should be noted that there was a previous concern that local bidders were reluctant to report corruption for fear of adversely affecting a long-term relationship with their potential employers/purchasers. It would be interesting to see in the future how the new Law on Proc. and the new Law on Anti-Corruption affect this concern.

There is evidence available on a few cases where laws on corrupt practices have been enforced

/

Laws exist, but evidence of enforcement is weak

There is no evidence of enforcement

(d) Special measures exist to prevent and detect fraud and corruption in public procurement [choose one] The government has in place a comprehensive anti-corruption program to prevent, detect and penalize corruption in government that involves the appropriate agencies of government with a level of authority and capacity to enable its responsibilities to be carried out. Special measures are in place for detection and prevention of corruption associated with procurement

/ Local newspapers have constantly been reporting on the efforts of the President to fight corruption. This appears to indicate a high level of sincerity and concern on the part of government on this issue. It has also been recently reported that a Central Anti-Corruption Steering Committee has been established to strictly deal with corruption and wastefulness at all levels. Even the Law on Proc. has strengthened provisions on corrupt practices, and provides some indicators of corruption in procurement in Art. 70.

The government has in place an anti-corruption program, but it requires better coordination or authority at a higher level to be effective. No special measures exist for pubic procurement

The government has isolated anti-corruption activities not properly coordinated to be an effective integrated program

The government does not have an anti-corruption program

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(e) Stakeholders (private sector, civil society, and ultimate beneficiaries of procurement/end-users) support the creation of a procurement market known for its integrity and ethical behaviors [choose one] There are strong and credible civil society organizations that exercise social audit and control. Organizations have government guarantees to function and cooperation, and their operations are generally promoted and respected by the public. There is evidence that civil society contributes to shape and improve integrity of public procurement

The Law on Proc. has improved private sector participation in procurement, as a professional association is represented in the Consulting Council on Complaint Settlement (Art. 73), and community residents are tapped to supervise procurement activities (Art. 59). However, the law does not institutionalize a participative or collaborative process whereby various stakeholders are consulted on higher policy matters. Civil society observers are not required to be invited during public biddings. Local newspapers have also reported that voters have suggested that the National Assembly needs to put forward stronger and more effective measures to deal with pressing issues, its law-making process, and in law enforcement activities.

There are several civil society organizations working on the matter, and the dialogue with the government is frequent, but it has limited impact on improving the system

There are only a few organizations involved on the matter, the dialogue with government is difficult, and the contributions from the public to promote improvements are taken in an insignificant way

/

There is no evidence of public involvement in the system; or the government does not want to engage the public organizations on the matter

(f) The country should have in place a secure mechanism for reporting fraudulent, corrupt or unethical behavior [choose one] There is a secure, accessible and confidential system for the public to report cases of fraud, unethical behavior and corruption

The 2002 CPAR reported the absence of an effective system for dealing with complaints. This has probably led to the reluctance of bidders to report corruption. Art. 64 of the Law on Proc. gives bidders the right to file procurement complaints, petitions and denunciations, and Art. 47 of the Decree provides that complaints would have to be sealed. However, it appears that concerns on the judicial system still persist, and that while there are specific provisions on securing confidentiality, the integrity of the entire system needs to be developed further.

There is a mechanism in place, but accessibility and reliability of the system undermine and limit its use by the public

/

There is a mechanism in place, but security and confidentiality cannot be guaranteed

There is no secure mechanism for reporting fraud, unethical behavior and corruption cases

(g) Existence of Codes of Conduct/Codes of Ethics for participants that are involved in aspects of the public financial management systems, that also provide for disclosure for those in decision making positions There is a code of conduct or ethics for government officials, with particular provisions for those involved in public financial management, including procurement

/ The 2002 CPAR reports that government employees are expected to follow the 1998 Ordinance on Civil Servants which

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The code defines accountabilities for decision making, and subjects decision makers to specific financial disclosure requirements

/ requires them to respect the people and provide a diligent service to the people, to be honest, to avoid bureaucracy and corruption, to use public resources with economy, and to avoid abuse of their position. They are also expected to follow other related codes such as the Anti-Corruption Law. These are complemented by Ch. IV of the Law on Proc. which constantly reminds public officers involved in procurement on responsibilities in the bidder selection process, the need for preserving the confidentiality of procurement-related documents, the need for being honest, objective and impartial in the bidding process, and the need for bidders to be truthful and accurate in the bidding process and in filing procurement complaints, petitions and denunciations.

The code is of obligatory compliance, and consequences are administrative or criminal

/

Legend: _ - The Sub-indicator would have to be carefully reviewed by an External Assessor (as this would involve consideration of international practices and standards)

- Answer

Annex "B-1"

DPP

68% PA75% 37%

0.923076923 2.77 11.54%

0.884615385 2.65 11.06%0.676923077 2.03 8.46%0.615384615 1.85 7.69%0.769230769 2.31 9.61%0.692307692 2.08 8.65%0.723076923 2.17 9.04%0.692307692 2.08 8.65%

61% 31%0.641025641 1.92 11%

0.461538462 1.38 8%0.948717949 2.85 16%0.807692308 2.42 13%

0.487179487 1.46 8%0.326923077 0.98 5%

BIS Ratings by Department of Public Procurement (DPP)

(f) General Conditions of Contract (GCC) for public sector contracts covering goods, works and services consistent with national requirements and, when applicable, international requirements

Indicator 2 - Existence of Implementing Regulations and Documentation(a) Implementing regulation that provides defined processes and procedures not included in higher level legislation

(b) Model tender documents for goods, works, and services (c) Procedures for pre-qualification (d) Procedures suitable for contracting for services or other requirements where technical capacity is a key criterion

(e) User’s guide or manual for contracting entities

(c) Advertising rules and time limits (d) Rules on participation(e) Tender documentation and technical specifications(f) Tender evaluation and award criteria(g) Submission, receipt and opening of tenders(h) Complaints

Pillars/Indicators/Baselines Assessments by 13 DPP staffs

Pillar I - The Legislative and Regulatory Framework Indicator 1 – Public procurement legislative and regulatory framework achieves the agreed standards and complies with applicable obligations

(a) Scope of application and coverage of the legislative and regulatory framework

(b) Procurement Methods

Annex "B-1"

57% PA45% 15%

0.666666667 2.00 17%

0.296296296 0.89 7%

0.454545455 1.36 11%

0.380952381 1.14 10%

91% 30%1 3.00 25%

0.778846154 2.34 19%

0.846153846 2.54 21%

1 3.00 25%

35% 12%0.576923077 1.73 14%

0.288461538 0.87 7%

0.423076923 1.27 11%

0.128205128 0.38 3%

Indicator 5 – The country has institutional development capacity (a) The country has a system for collecting and disseminating procurement information, including tender invitations, requests for proposals, and contract award information

(b) The country has systems and procedures for collecting and monitoring national procurement statistics

(c) The country has a sustainable strategy to provide training, advice and assistance to develop the capacity of government and private sector participants to understand the rules and regulations and how they should be implemented

(d) Quality control standards are disseminated and used to evaluate staff performance and address capacity development issues

(d) Systematic preparation and completion of reports for certification of budget execution and for reconciliation of delivery with budget programming

Indicator 4 – The country has a functional normative/regulatory body(a) The status and basis for the normative/regulatory body is covered in the legislative and regulatory framework

(b) The normative/regulatory body has a defined set of responsibilities that do not overlap with other agencies, and these responsibilities include, but are not limited to the following: providing advice to contracting entities, drafting amendments to the legislative and regulatory framework, and regulations, monitoring public procurement, providing procurement information, managing statistical databases, reporting on procurement to other parts of government, developing and supporting implementation of initiatives for improvements of the public procurement system, and providing implementation tools and documents to support training and capacity development of implementing staff(c) The normative/regulatory body's organization, funding, staffing, and level of independence and authority (formal power) to exercise its duties should be sufficient and consistent with the responsibilities

(d) The responsibilities should also provide for separation and clarity so as to avoid conflict of interest and direct involvement in the execution of procurement transactions

Pillar II - Institutional Framework and Management CapacityIndicator 3 – Public procurement legislative and regulatory framework achieves the agreed standards and complies with applicable obligations

(a) Procurement planning and data on costing are part of the budget formulation process and contributes to multiyear planning

(b) Budget Law and financial procedures support timely procurement, contract execution and payment

(c) Procurement actions are not initiated until budget appropriations have been made

Annex "B-1"

40% PA47% 16%

0.487179487 1.46 12%

0.333333333 1.00 8%

0.384615385 1.15 10%

0.673076923 2.02 17%

42% 14%0.307692308 0.92 10%

0.423076923 1.27 14%

0.541666667 1.63 18%

31% 10%

0.430769231 1.29 14%

0.292307692 0.88 10%

0.205128205 0.62 7%(c) Procedures exist to enforce the outcome of the dispute resolution process

(a) There are effective mechanisms for partnerships between the public and private sector

(b) Private sector institutions are well organized and able to facilitate access to the market

(c) There are no major systemic constraints (e.g., inadequate access to credit, contracting practices, etc.) inhibiting the private sector's capacity to access the procurement market

Indicator 8 – Existence of contract administration and dispute resoltuon provisions

(a) Procedures are clearly defined for undertaking contract administration reesponsibilities that include inspection and acceptance procedures, quality control procedures, and methods to review and issue contract amendments in a timely manner

(b) Contracts include dispute resolution procedures that provide for an efficient and fair process to resolve disputes arising during the performance of the contract

Indicator 6 – The country’s procurement operations and practices are efficient

(a) The level of procurement competence among government officials within the entity is consistent with their procurement responsibilities

(b) The procurement training and information programs for government officials and for private sector participants are consistent with demand

(c) There are established norms for the safekeeping of records and documents related to transactions and contract management

(d) There are provisions for delegating authority to others who have the capacity to exercise reponsibilities

Indicator 7 – Functionality of the public procurement market

Pillar III - Procurement Operations and Market Performance

Annex "B-1"

60% PA0.00 41% 10%

0.923076923 2.77 18%

0.8846153850.676923077 2.03 14%0.6153846150.256410256 0.77 5%

0.096153846 0.29 2%

0.076923077 0.23 2%

40% 10%0.487179487 1.46 10%

0.519230769 1.56 10%

0.415384615 1.25 8%

0.423076923 1.27 8%

0.153846154 0.46 3%

90% 22%0.897435897 2.69 90%

69% 17%0.743589744 2.23 11%

0.846153846 2.54 12%

0.692307692 2.08 10%0.848484848 2.55 12%

0.592592593 1.78 8%

0.666666667 2.00 10%

0.41025641 1.23 6%

(e) The system ensures that the complaint review body has full authority and independence for resolution of complaints

Indicator 11 – Degree of access to information (a) Information is published and distributed through available media, with support from information technology when feasible

Indicator 10 – Efficiency of appeals mechanism (a) Decisions are deliberated on the basis of available information, and the final decision can be reviewed and ruled upon by a body (or authority) with enforcement capacity under the law

(g) Existence of Codes of Conduct/Codes of Ethics for participants that are involved in aspects of the public financial management systems, that also provide for disclosure for those in decision making positions

Indicator 12 – The country has ethics and anti-corruption measures in place (a) The legal and regulatory framework for procurement, including tender and contract documents, includes provisions addressing corruption, fraud, conflict of interest, and unethical behavior, and sets out (either directly or by reference to other laws) the actions that can be taken with regard to such behavior

(b) The legal system defines responsibilities, accountabilities and penalties, for individuals and firms found to have engaged in fraudulent or corrupt practices

(c) Evidence of enforcement of rulings and penalties exists(d) Special measures exist to prevent and detect fraud and corruption in public procurement

(e) Stakeholders (private sector, civil society, and ultimate beneficiaries of procurement/end-users) support the creation of a procurement market known for its integrity and ethical behaviors

(f) The country should have in place a secure mechanism for reporting fraudulent, corrupt or unethical behavior

(d) Decisions are published and made available to all interested parties and to the public

Pillar IV - Integrity and Transparency of the Public Procurement SystemIndicator 9 – The country has effective control and audit systems

(a) A legal framework, organization, policy, and procedures for internal and external control and audit of public procurement operations are in place to provide a functioning control framework

(b) The complaint review system has the capacity to handle complaints efficiently and a means to enforce the remedy imposed

(c) The system operates in a fair manner, with outcomes of decisions balanced and justified on the basis of available information

(b) Enforcement and follow-up on findings and recommendations of the control framework provide an environment that fosters compliance

(c) The internal control system provides timely information on compliance to enable management action

(d) The internal control systems are sufficiently defined to allow performance audits to be conducted

(e) Auditors are sufficiently informed about procurement requirements and controls systems to conduct quality audits that contribute to compliance

Annex "B-2"

External Assessor

Internal Assessors (13 DPP staffs)

Indicator 1 58% 75%

Indicator 2 61% 61%

Indicator 3 58% 45%

Indicator 4 100% 91%

Indicator 5 25% 35%

Indicator 6 25% 47%

Indicator 7 33% 42%

Indicator 8 22% 31%

Indicator 9 7% 20%




Vietnam Level of Achievement: BIS Indicators


Vietnam Level of Achievement: BIS Pillars

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

BIS Assessment by Indicators: A comparison between external and internal assessors

External Assessor Internal Assessors (13 DPP staffs)

Annex "B-2"

External Assessor

Internal Assessors (13 DPP staffs)

Pillar I 60% 68%Pillar II 61% 57%Pillar III 27% 40%Pillar IV 54% 55%

40%

50%

60%

70%

80%

BIS Assessment by Pillars: A comparison between external and internal assessors

0%

10%

20%

30%

Pillar I Pillar II Pillar III Pillar IV

External Assessor Internal Assessors (13 DPP staffs)

Annex "C"

60% PA58% 29%

3 12%

2 8%1 4%1 4%2 8%1 4%2 8%2 8%

61% 31%3 17%

1 6%3 17%3 17%

1 6%0 0%(f) General Conditions of Contract (GCC) for public sector contracts covering

goods, works and services consistent with national requirements and, when applicable, international requirements

Level of AchievementPillar I - The Legislative and Regulatory Framework

(a) Scope of application and coverage of the legislative and regulatory framework

(d) Rules on participation

Pillars/Indicators/Baselines

(c) Advertising rules and time limits (b) Procurement Methods

(g) Submission, receipt and opening of tenders

(e) Tender documentation and technical specifications

(a) Implementing regulation that provides defined processes and procedures not included in higher level legislation

(f) Tender evaluation and award criteria

Indicator 2 - Existence of Implementing Regulations and Documentation(h) Complaints

(b) Model tender documents for goods, works, and services (c) Procedures for pre-qualification (d) Procedures suitable for contracting for services or other requirements where technical capacity is a key criterion

(e) User’s guide or manual for contracting entities

BIS Ratings of External Assessor

Indicator 1 – Public procurement legislative and regulatory framework achieves the agreed standards and complies with applicable obligations

Page 1

Annex "C"

Level of AchievementPillars/Indicators/Baselines


61% PA58% 19%

1 8%

1 8%

3 25%

2 17%

100% 33%3 25%

3 25%

3 25%

3 25%

25% 8%2 17%

1 8%

0 0%

0 0%(d) Quality control standards are disseminated and used to evaluate staff performance and address capacity development issues

(b) The normative/regulatory body has a defined set of responsibilities that do not overlap with other agencies, and these responsibilities include, but are not limited to the following: providing advice to contracting entities, drafting amendments to the legislative and regulatory framework, and regulations, monitoring public procurement, providing procurement information, managing statistical databases, reporting on procurement to other parts of government, developing and supporting implementation of initiatives for improvements of the public procurement system, and providing implementation tools and documents to support training and capacity development of implementing staff

(d) The responsibilities should also provide for separation and clarity so as to avoid conflict of interest and direct involvement in the execution of procurement transactions

(c) The normative/regulatory body's organization, funding, staffing, and level of independence and authority (formal power) to exercise its duties should be sufficient and consistent with the responsibilities

Indicator 5 – The country has institutional development capacity (a) The country has a system for collecting and disseminating procurement information, including tender invitations, requests for proposals, and contract award information

(b) The country has systems and procedures for collecting and monitoring national procurement statistics

Pillar II - Institutional Framework and Management Capacity

(b) Budget Law and financial procedures support timely procurement, contract execution and payment

(c) Procurement actions are not initiated until budget appropriations have been made

Indicator 3 – Public procurement legislative and regulatory framework achieves the agreed standards and complies with applicable obligations

(a) Procurement planning and data on costing are part of the budget formulation process and contributes to multiyear planning

(d) Systematic preparation and completion of reports for certification of budget execution and for reconciliation of delivery with budget programming

(c) The country has a sustainable strategy to provide training, advice and assistance to develop the capacity of government and private sector participants to understand the rules and regulations and how they should be implemented

Indicator 4 – The country has a functional normative/regulatory body(a) The status and basis for the normative/regulatory body is covered in the legislative and regulatory framework

Page 2

Annex "C"



27% PA25% 8%

1 8%

0 0%

0 0%

2 17%

33% 11%1 11%

1 11%

1 11%

22% 7%

1 11%

0 0%

1 11%

(c) There are no major systemic constraints (e.g., inadequate access to credit, contracting practices, etc.) inhibiting the private sector's capacity to access the procurement market

(a) There are effective mechanisms for partnerships between the public and private sector

(c) There are established norms for the safekeeping of records and documents related to transactions and contract management

(b) Contracts include dispute resolution procedures that provide for an efficient and fair process to resolve disputes arising during the performance of the contract

(b) The procurement training and information programs for government officials and for private sector participants are consistent with demand

Indicator 7 – Functionality of the public procurement market

(b) Private sector institutions are well organized and able to facilitate access to the market

(a) Procedures are clearly defined for undertaking contract administration reesponsibilities that include inspection and acceptance procedures, quality control procedures, and methods to review and issue contract amendments in a timely manner

(a) The level of procurement competence among government officials within the entity is consistent with their procurement responsibilities

Pillar III - Procurement Operations and Market Performance

Indicator 8 – Existence of contract administration and dispute resoltuon provisions

(c) Procedures exist to enforce the outcome of the dispute resolution process

Indicator 6 – The country’s procurement operations and practices are efficient

(d) There are provisions for delegating authority to others who have the capacity to exercise reponsibilities

Page 3

Annex "C"



54% PA7% 2%

1 7%

0 0%

0 0%

0 0%

0 0%

33% 8%1 7%

2 13%

1 7%

1 7%

0 0%

100% 25%3 100%

76% 19%2 10%

3 14%

2 10%3 14%

1 5%

2 10%

3 14%

Legend:NA - Not Achieved (Less than 20% of Baseline elements achieved)PA - Partially Achieved (At least 20% but less than 70% of Baseline elements achieved)SA - Substantially achieved (At least 70% but less than 90% rating on Baseline elements)FA - Fully Achieved (90% to 100% rating on Baseline elements)

(a) Information is published and distributed through available media, with support from information technology when feasible

Pillar IV - Integrity and Transparency of the Public Procurement System

(a) A legal framework, organization, policy, and procedures for internal and external control and audit of public procurement operations are in place to provide a functioning control framework

(d) Special measures exist to prevent and detect fraud and corruption in public procurement

(e) Stakeholders (private sector, civil society, and ultimate beneficiaries of procurement/end-users) support the creation of a procurement market known for its integrity and ethical behaviors

(f) The country should have in place a secure mechanism for reporting fraudulent, corrupt or unethical behavior

Indicator 11 – Degree of access to information

(b) The complaint review system has the capacity to handle complaints efficiently and a means to enforce the remedy imposed

Indicator 9 – The country has effective control and audit systems

(a) Decisions are deliberated on the basis of available information, and the final decision can be reviewed and ruled upon by a body (or authority) with enforcement capacity under the law

(c) The internal control system provides timely information on compliance to enable management action

(g) Existence of Codes of Conduct/Codes of Ethics for participants that are involved in aspects of the public financial management systems, that also provide for disclosure for those in decision making positions

Indicator 12 – The country has ethics and anti-corruption measures in place (a) The legal and regulatory framework for procurement, including tender and contract documents, includes provisions addressing corruption, fraud, conflict of interest, and unethical behavior, and sets out (either directly or by reference to other laws) the actions that can be taken with regard to such behavior

(b) The legal system defines responsibilities, accountabilities and penalties, for individuals and firms found to have engaged in fraudulent or corrupt practices

(c) Evidence of enforcement of rulings and penalties exists

(e) The system ensures that the complaint review body has full authority and independence for resolution of complaints

Indicator 10 – Efficiency of appeals mechanism

(d) Decisions are published and made available to all interested parties and to the public

(d) The internal control systems are sufficiently defined to allow performance audits to be conducted

(e) Auditors are sufficiently informed about procurement requirements and controls systems to conduct quality audits that contribute to compliance

(b) Enforcement and follow-up on findings and recommendations of the control framework provide an environment that fosters compliance

(c) The system operates in a fair manner, with outcomes of decisions balanced and justified on the basis of available information

Page 4