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Efficient procurement is key

Update: December, 13/2014 - 09:50

Having a single unit handle public procurement will save a lot of money, Nguyen Tan Thanh, deputy director of the Viet Nam Asset Management Department, told Tien Phong (Vanguard) newspaper.

Can you explain what's new in the latest draft of the document on public procurement?

The latest version of the draft (October 2014) is quite different from the previous ones. In this, the scope of work assigned to the consolidated procurement unit will be narrowed down. The most important mission of this unit is to gather procurement requirements from government agencies. Based on demands that are in line with the Procurement Law, the unit will then organise a tender to select the best bid.

Then the unit has to prepare a framework agreement with the winning bidder. However, the agreement will be signed by the beneficiary agency that receives the products, not the procurement unit.

So the unit in charge of public procurement will not be directly involved in monetary transactions or the distribution of public assets.

Some people have argued that separate procurement packages will offer many more choices in selecting the best bidders. Why does the Ministry of Finance (MOF) want to have "concentrated procurement" applied nation-wide?

There are various factors that led to this decision. Firstly, it would be easy to control the standard norms and management regimen for public assets. Under the proposed model, the procurement unit will be totally separate from those using the procured assets. So the beneficiary agencies are free to decide what they want to buy in accordance with the procurement agreement.

Secondly, collusions that can reduce transparency and accountability in public procurement will be averted in the tendering process.

The new model will also help save money and human resources in the procurement process. There is a need to purchase almost 2,000 automobiles at present. Just one tender package will be required under the new model, as opposed to around 1,000 under the present public procurement law.

There is no doubt that a huge sum of money will be saved.

What are the likely challenges that the new model will face?

Under the draft document, the procurement unit will comprise a group of experts from different units and agencies. In addition, it will consult with specialised agencies in sectors like healthcare or education when the asset to be procured relates to these sectors, particularly with regard to specific technical requirements. The consultation will be in the form of documents and done during the budget period.

Can you comment on the possibility of monopolistic control happening under the concentrated procurement model?

I don't think this will happen. A very important principle for procurement under the new model is the imperative of conducting thorough market research and rational separation of tender packages. We also need an effective supervising mechanism for the agency's activity.

One important thing to note about the draft that has been submitted to the Prime Minister for approval is that there is no increase in the number of administrative staff in any of the agencies involved in the process.

Ministries/sectors having the procurement centres of their own will have to run and manage their centres. However, for those that don't have such centres, offices/agencies will be nominated to undertake the job as a part of their missions.

What about the kickbacks in the form of commissions and "special treatment" from equipment providers?

Experiences from other countries show that concentrated procurement has helped save about 20 per cent of the cost compared with traditional methods.

I have to say that as of now we do not have specific data on losses incurred through "commissions" or "kickback" money. But, in my opinion, the sum is not small. In the future, such commissions will become a part of State revenue. That's why the process has to be transparent and accountable, with full information disclosure in public media.

What if the procurement unit is placed within the Viet Nam Asset Department?

I think this model has been practised well in many countries, including Japan, Malaysia, South Korea, Great Britain and others. In England, it was found after the introduction of this model that prices of certain equipment had been increased by 130 per cent over the average. The head of the office will have to bear full responsibility for all activities performed by the consolidated procurement unit as it is placed under his/her leadership. — VNS

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