THE IMPACT OF PUBLIC PROCUREMENT RULES AND THE ADMINISTRATIVE PRATICES OF PUBLIC PROCURERS ON BID RIGGING: THE CASE OF VIETNAM TAM THANH TRAN Foreign Trade University, Vietnam GIANG NGUYEN TRUONG Ritsumeikan Asia Pacific University, Japan

OUTLINE Research question 2. Methodology Findings Concluding remarks

Research question What are the aspects of public procurement rules and administrative practices of public procurers facilitating bid rigging? (2) To which extent do public procurement laws and administrative practices of Vietnamese public procurers facilitate bid rigging?

2. Methodology 17 in-depth interviews with six groups of stakeholders within Vietnam in August 2016. Group 1: Three key officials holding top- and medium-level leadership positions at the Vietnam Competition Authority (VCA) and one key official of the Vietnam Competition Council (VCC) Group 2: Four key officials holding top- and medium-level leadership positions at the Vietnam Public Procurement Agency (PPA); two key officials at the local Public Procurement agencies in Ho Chi Minh city and An Giang province where all of the bid rigging cases were detected.

2. Methodology 17 in-depth interviews with six groups of stakeholders within Vietnam in August 2016. Group 3: Two members of the Criminal Bill Editing Group (the Editing Group) Group 4: One key official at the Vietnamese Association of Construction Contractors (VACC) Group 5: One Judge at the Economic Court – Ho Chi Minh City People’s Court Group 6: Three legal scholars in the field of competition law in Vietnam

3. FINDINGS #0 The aspects of the rule and practices that facilitate bid rigging: (1) Rules and administrative practices contributing to restriction of potential bidder’s participation and entry (2) Rules and administrative practices related to subcontracting and joint bidding (3) Public procurement goals and policies

3. FINDINGS #1- Rules and administrative practices contributing to restriction of potential bidder’s participation and entry Unnecessary and excessive selection criteria are widely used by public procurers in Vietnamese public procurement market.

‘the Public Procurement Agency has received a massive number of enquiry letters from bidders as to the issue of whether criteria imposed by public procurers in certain public tenders to choose the bidders are appropriate or not; in most of these cases, these criteria led to less competition’ Interviewee 8 (Hanoi, 27 August 2016)

‘a public tender was organised to buy meeting-hall chairs with the amount of 1000 pieces in Ha Noi with the tender value of 6 billion. However, one of the criteria imposed by the public procurer in this case was that the bidder’s annual revenue was VND 1000 billion. This is far higher than the usual financial requirements that are typically expected to be approximately 1.5 times to twice the contract price’ Interviewee 6 (Hanoi, 27 August 2016)

3. FINDINGS #2- Rules related to sub-contracting and joint bidding + Regulations governing subcontracting appear to deal with division of cartel proceeds effectively + The current law fails to request the joint bidders to clarify the purpose and merits of submitting a joint bid.

3. FINDINGS #3- Public procurement goals and polices + Objectives towards enhancing transparency and anti-corruption under the current legislation may facilitate bid rigging conspiracies. + There exist secondary policies that may limit the competition in public procurement including promoting bid rigging collusion.

4. CONCLUDING REMARKS + Vietnamese public procurement legislation as well as administrative practices of public procurers do unintentionally facilitate bid rigging + The strongest concern include (1) the practice of imposing unnecessary and excessive selection criteria (2) regulation of joint bidding (3) information disclosure and frequent communication between bidders backed by public procurers on the basis of transparency and anti-corruption policy + Experience from Vietnam should sound an alarm for other countries to assess their public procurement rules and administrative practices to reduce factors facilitating bid rigging.

Thank You