Experts fret over appointment of North-South Expressway contractors

The experts and several businesses have raised concerns that the proposal to appoint contractors than select them through a bidding process could undermine competition and transparency.

The government proposal made last month would change the investment method for eight sections of the North-South Expressway from private-public-partnership (PPP) projects to wholly state-funded ones.

The Ministry of Planning and Investment suggested that relevant authorities consider appointing contractors rather than select them via bidding in order to speed up work. All appointed contractors must have enough financial, technological and human resources as well as experience in implementing similar projects, the proposal said, adding that priority given to construction firms under the Ministry of National Defence.

Associate Professor Dr. Tran Chung, chairman of the Association of Investors in Vietnam Road Traffic Works, argued that the government should only pick some projects, rather than all eight of the North-South Expressway sections, to be state-funded.

"For example, projects that are necessary in terms of national security and environmental protection could use the state budget. The expressway projects that are just 20-30 kilometers [12-19 miles] long could be kept as PPP projects," Chung said.

He felt that the appointment of contractors under the defence ministry should also be done only for sections that have urgent national security and defense implications.

"I lean toward the option of bidding, which would create fairer and healthier competition between businesses, but the state needs to control the issue of underbidding in price and progress made by the project," Chung said.

Economist Ngo Tri Long also supported the option of selecting domestic contractors via bids even if the expressway sections are to be built using the state budget, because it would be more transparent and in line with the Law on Public Investment.

"If contractors are appointed then many people would be concerned about interest groups. I think it's unlikely that the National Assembly would concur with this proposal," he said.

To speed up the bidding process, Long suggested speeding up the approval of procedures and using more appropriate criteria to shorten contractor selection. If contractors are appointed instead, it should be done in accordance with the law and the appointed contractor must meet the criteria for construction capacity, financial capacity, experience and there must be no unfair prioritization, he said.

Vu Duc Nhan, deputy general director of the Phuong Thanh Company, said contractor selection via appointment can be completed in just three months, cutting down the selection time by two-thirds compared to selection via bidding.

However, he noted that this would reduce competitiveness and transparency and create more pressure for state agencies in later stages of project implementation.

State agencies therefore need to come up with criteria for contractor selection and grade contractors' capacities, then appoint the contractor with the highest grades as they had done for projects to renovate National Highway 1, he said.

Nhan also said that the proposal to prioritize appointing companies under the defence ministry was unfair for other companies because the North-South Expressway was not a project for national security and defense.

"Companies under the Ministry of National Defence and civil contractors are all equal before the law, and a more capable contractor should receive more of the work," he said.

"Each method, either appointment or bidding, has its own advantages and disadvantages. The most important thing is that the procedures need to be completed quickly to shorten the investment preparation time. The procedures for selecting investors for the North-South Expressway project in the past have taken far too long."

Use existing shortlist

Le Duc Tho, deputy general director of construction firm Cienco4, said that the Transport Ministry has already completed the preliminary round of contractor selection for many expressway projects, with the shortlist including many transport companies with high capacity that have participated in many build-operate-transfer (BOT) projects including expressways.

Should the government's proposal be approved, the shortlisted contractors could be appointed to participate in the North-South Expressway project, he said.

However, Tho also stressed that since the North-South Expressway was not a "national secret," the contractor selection needs to be done via public bidding to ensure competitiveness between contractors.

The government's proposal to convert the North-South Expressway's sub-projects from PPP projects to state-funded projects is still awaiting approval from competent authorities, according to a transport ministry representative.

The representative also stressed that prioritizing appointing construction firms under the defense ministry is a separate suggestion from the planning ministry, and the contractor selection method post-conversion must still be in accordance with the law.

The eight expressway projects affected by the proposal are part of 11 North-South Expressway sections, work having begun on the three remaining sections, all state funded.

Last year, the transport ministry had tried to find foreign investors for the eight projects, but very few passed the qualification round, which meant low competition between bidders. The ministry then decided that only domestic investors would be allowed in these projects to "ensure national security and expand Vietnamese firms’ capability in constructing infrastructure."