HCMC dismisses controversies over contractor selection for wastewater treatment plant

They are defending their actions in face of a lawsuit by two rejected candidates. 

According to the city's leaders, the bidding process to select contractors for the package to design, build and operate the Nhieu Loc-Thi Nghe wastewater treatment plant (XL-02) was done strictly and in accordance with regulations. The city therefore will stick with its decision to choose the Acciona-Vinci consortium as the package's contractor.

"From the moment the city issued documents inviting contractors to apply until when we organized the bid evaluation, announcement of results and conclusions, the entire process was under strict supervision by the World Bank - the funding agency," the city's Vice Chairman Vo Van Hoan said Wednesday after the Samsung-Kolon-TSK and Suez-Posco consortiums filed lawsuits against the selection.

The $307-million sub-project to design, build and operate the Nhieu Loc-Thi Nghe wastewater treatment plant is the largest package in the second phase of the HCMC Environmental Sanitation Project, which has a total investment of $524 million, over half of which was loaned from the World Bank (WB).

According to Hoan, the WB has issued a response to the two consortiums, claiming that the contents of their lawsuit were baseless and that the two had committed violations during the bidding process. However, as the lawsuit is ongoing, the project has been stalled as Vietnamese law dictates that a project cannot be implemented until all related disputes are resolved.

HCMC authorities are currently waiting for the central government's opinion on the issue while the WB has urged the city to implement the project immediately, claiming that it had already worked on the issue with the Samsung-Kolon-TSK consortium directly at the WB's headquarters in the U.S.

"They (the consortiums) file lawsuits everywhere causing difficulties for the city. Until now, many people still think that just having low bids is enough to be selected, but in this project with the WB's strict supervision, their own regulations also apply," Hoan said.

"Currently, the city has invited representatives from the Ministry of Public Security and the Department of Bidding Management (under the Ministry of Planning and Investment) to work [on the contractor selection] and these agencies have all agreed that if the city sees no issue then they'll also have no comment."

The investment management board for the HCMC Environmental Sanitation Project, as representative for the project's investor, started accepting contractors' bids for the sub-project from March 2017 and a total of five consortiums had eligible appliations: Samsung (South Korea)-Kolon (South Korea)-TSK (Japan), Wabag (India)-WTE (Germany), OTV (France)-Dealim (South Korea), Acciona (Spain)-Vinci (France)-JFE (Japan) and Dregremont (France)-Posco (South Korea).

After a 2-year bidding process, the Acciona-Vinci consortium was awarded the contract in March despite its bid being $14.7-million higher than the lowest bid by the Samsung-Kolon-TSK consortium. This prompted the consortium to file complaints with government ministries, departments and National Assembly delegates three times, claiming the bidding process was unfair and not transparent.

The Suez-Posco consortium also requested a review by the government, claiming that its application had not been evaluated objectively.

In a letter to Prime Minister Nguyen Xuan Phuc last month, the WB's Country Director for Vietnam Ousmane Dione reasserted for the second time that the bidding process for the XL-02 package had followed the instructions on the legal agreements between Vietnam and the International Bank for Reconstruction and Development, and that all of its steps had been approved by the WB.

According to Dione, the complaints by the Samsung-Kolon-TSK and Suez-Posco consortiums had already been resolved during the pre-selection and the bid-evaluation processes by the project's implementing agency. On the WB's system, the processes for resolving the two consortiums' complaints have been marked as closed.

He also noted that the XL-02 package had been signed with the Acciona-Vinci consortium as the winning contractor since March this year but the contract has yet to be activated due to delays in advance payments caused by the above complaints.

"The success of the Ho Chi Minh City Environmental Sanitation Project Phase 2 depends greatly on this important package. Therefore, I urge Ho Chi Minh City to quickly start and implement the contract in parallel with the settlement of ongoing complaints so as not to cause delays, affecting the interests of the city and the people," the letter stated.

The Ho Chi Minh City Environmental Sanitation Project Phase 2 is a major project aimed to treat domestic wastewater in the Nhieu Loc-Thi Nghe basin and District 2; help restore, preserve the ecosystems of the Saigon River and the lower basin of the Dong Nai River; and give the city a facelift.

The massive project includes a 8-kilometer (5-mile) sewage system leading wastewater from the Bo Dong Well to the Nhieu Loc-Thi Nghe wastewater treatment plant in District 2, as well as the plant itself which has a designed capacity of 480,000 cubic meters per day and a network of secondary and tertiary sewers connecting to households in District 2.