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Government procurement policy and practices are administered nationally by the Procurement Monitoring Office (ProMO), Department of Fiscal Policy, Ministry of Finance. Government procurement is governed by Implementing Rules and Regulations on Government Procurement of Goods, Construction, Repairs and Services (IRRs). All Ministries, bodies equivalent to Ministries, Provinces, Vientiane Prefecture together with all State-owned enterprises are bound to adhere to these rules and regulations. While international aid agencies are permitted to follow their in-house procurement rules, they may use the IRRs of the Lao PDR, if they prefer.
These rules and regulations originally came into effect in 1996 under the Procurement Decree No. 95/CM of 5 December 1995. Based on experience between 1996 and 1998, they were revised and re-issued with effect from 22 December 1998.
The objectives of the IRRs are to clarify the provisions of the Procurement Decree (i) by ensuring transparency; (ii) achieving regularity and uniformity; (iii) achieving economy and efficiency; and (iv) guaranteeing suppliers and contractors fair and equal access to the award of contracts. The IRRs envisages four methods of procurement: (i) limited bidding where the number of bidders may be limited to 3 to 5 individuals or companies capable of meeting the terms of the contract; (ii) local price comparison which allows the procuring entity to compare the prices from at least three domestic suppliers; (iii) international comparison which allows the procuring entity to compare the offers of at least three companies from at least two different countries; and (iv) direct contracting which allows the procuring entity to negotiate terms and conditions directly with one or more suppliers. The IRRs set out precisely when each of these procedures may be used, for example, in emergencies, for purchases below appropriate threshold values, no suitable bid, day-to-day purchasing, for purchases of works or goods where the annual aggregate value of such works or goods does not exceed the appropriate threshold values set out in the IRRs, where for technical reasons or for the protection of industrial property rights the contract may be only executed by one supplier or for additional supplies of additional works not exceeding 20 per cent of the original contract.
Invitations to bid are subject to clearly articulated notification requirements with respect to advertisements in mass circulation newspapers whether in Lao or English and whether published in the Lao PDR or internationally, simultaneous posting of bids under limited bidding and the need to allow reasonable time for bids taking account of the nature of the goods, services or works to be procured. The following minimum time limits must be observed. For normal procedure, these time periods are 45 days for public bidding, 30 days for limited bidding and price comparison and 20 days for direct contraction. For an accelerated procedure, these periods become 30 days, 15-20 days (domestic v international) and 10 days respectively. The notification shall include the identity of the procuring entity; a summary of the works, services or goods sought; address for the bidding documents, further information and submission of bids; cost of the bidding documents; procedural requirements; and final date for the submission of bids.
The IRRs elaborate the criteria for the selection of bidders including general suitability, financial capacity and technical ability as well as the creation and maintenance of a roster system which is a system of formal pre-qualification allowing qualified bidders to participate in the procurement procedure without further investigation.
The procurement procedures are executed through a permanent Procurement Committee which has to ensure strict adherence to the IRRs. If in doubt, the Procurement Committee may seek the advice of the Director of the ProMo on the correct application of the relevant procurement procedures. Where the decision of the Committee is subject to Ministerial approval, as in the case of high value contracts, such approval is to be withheld where the procurement is in breach of the IRRs.
The IRRs state that the criteria for awarding contracts includes an all-inclusive net price, as well the date of completion of the contract; running costs and cost effectiveness; after-sales service and technical assistance; commitments to spare parts, covering security of supply and price; and quality and technical merit of the works or supplies. The list of criteria is non-exhaustive. However, the procuring entity is obliged to specify in the bidding documents which criteria will be applied to bids. Finally, the IRRs defines the contract documents and explains the procedures for alteration of the contract, invocation of force majeure, compensation for delays in delivery or completion, arbitration and dispute resolution.
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