Lao People's Democratic Republic

Lao People's Democratic Republic

Peace Independence Democracy Unity Prosperity

Ministry of Finance No: 0861 / MOF

Vientiane Capital, date: 05 May 2009

AMENDMENT OF SOME ARTICLES OF IMPLEMENTING RULES AND REGULATIONS ON DECREE OF GOVERNMENT PROCUREMENT OF GOODS, WORKS, MAINTENANCE AND SERVICES.

§  Based on the Decree No. 03/PM, dated 9 January 2004 on government procurement of goods, works, maintenance and services (amended version).

§  Based on the Implementing Rules and Regulations No. 063/MOF, dated 12 March 2004 on Government Procurement of goods, works, maintenance and services.

§  Based on the Decree No. 80/PM, dated 28 February 2007 on the organization of the Ministry of Finance.

The Minister of Finance has approved to amend the content of some articles in the Implementing Rules and Regulations No. 063/MOF, dated March 12, 2004 on government procurement of goods, works, maintenance and services.

Part II

Procurement Procedures

Article 8: Conditions for Use of Procedures

(1)  Limited Bidding

Limited Bidding is used for threshold value specified in Article 13 and where there are a limited numbers of suppliers or contractors. The procuring entity shall invite bids from a list of potential suppliers or contractors to assure competitive prices. This procedure may be used in the case permitted as specified in item 5 of this Article.

(2)  National Shopping

This procedure is used for the purchase of goods which are subject to frequent purchase and small works and maintenance and for which the threshold value does not exceed the values in Article 13. Price Comparison may be used by two procedures such as: National Shopping (by simple way) and National Shopping.

(3)  International Shopping

This procedure is used only for goods and shall not apply for works which the threshold value does not exceed the values in Article 13. For goods required, the supplier or domestic manufacturer is limited and domestic market can not supply adequately.

(4)  Direct Contracting/Purchase

a)  Direct Contracting/ Purchase (threshold value does not exceed the values in Article 13). The procuring entity may conduct direct purchase at a shop with the receipt invoiced. The purchasing price should be market price. Direct Contracting according to allocated value is to purchase day to day expenses only.

b)  Direct Purchase or Direct Contracting which threshold values exceed the allocated value. The procuring entity shall be approved on a case by case basis and consistent with the following cases:

(a)  For reasons connected with the protection of industrial or intellectual property rights and in the absence of an agent, the contract must be awarded to a single supplier or contractor;

(b)  Goods are required to replace parts of an existing equipment or repair such equipment;

(c)  In case additional works of similar nature are required to existing works under an ongoing contract, previously procured, and where it is unlikely to obtain lower prices through a further procurement procedure. The value of the additional works shall not exceed 20% of the original contract’s value;

(d)  For emergency operations such as natural disasters, epidemics or for un-foreseeable events or due to delay not caused by procuring entity or project owner, the time limitation does not allow to follow the public or limited bidding procedure;

(e)  The project and site is remote/isolated area, has local features or poor access.

(5) The direct contracting and limited bidding under Article 8 (1) and 8 (4) may be used when approved on a case by case basis by:

Threshold Value estimated
(Kip) / Ministry or equivalent agency / Provinces / Embassy or Governmental office abroad / Loan or Grant Project / State-Owned Enterprises
Amount more than 3.000.000 to 50.000.000 / Chief of Cabinet (if the budget is managed by the Ministry) or relevant Head of the Department (if the budget is managed by the Department) or authorized person to approve and appoint ad hoc Bidding Committee which composed of 3-5 members. / Head of Provincial Administrative Office (if the budget is managed by the province) or Head of Division (if the budget is managed by Division) or authorized person to approve and appoint ad hoc Bidding Committee; Head of District (if the budget is managed by District) or Chief of District Office (if the budget is managed by District Office) or authorized person to approve and appoint ad hoc Bidding Committee which composed of 3-5 members. / Ambassador or Chief of Office or authorized person to approve and appoint ad hoc Bidding Committee,
which composed of 3-5 members. / Based on agreement and contract of Loan/Grant and shall be approved by the donor. / Managing Director or authorized person to approve and appoint ad hoc Committee, which composed of 3-5 members.
Amount more than 50.000.000 to 500.000.000 / Minister or authorized person to approve and appoint ad hoc Bidding Committee, which composed of:
3-5 members. / Head of Provincial Administrative Office or authorized person to approve and appoint ad hoc Bidding Committee, which composed of 3-5 members. / Ambassador or Chief of Office or authorized person to approve and appoint ad hoc Bidding Committee, which composed of 3-5 members. / Based on agreement and contract of Loan/Grant and shall be approved by the donor. / Managing Director and authorized person to approve and appoint ad hoc Committee.
Amount more than 500.000.000 to 50.000.000.000 / Minister or authorized person to approve and appoint ad hoc Bidding Committee. / Provincial Governor or authorized person to approve and appoint ad hoc Bidding Committee. / Minister of Foreign Affairs or Minister which has representative office to approve and appoint ad hoc Bidding Committee. / Based on agreement and contract of Loan/Grant and shall be approved by the donor. / Board of Directors to approve and appoint ad hoc Bidding Committee.
Amount more than 50.000.000.000 / Minister or authorized person to approve and appoint ad hoc Bidding Committee. / Coordinate with the relevant ministry, by which the Minister of the Ministry concerned or authorized person to approve and appoint ad hoc Bidding Committee. / Minister of Foreign Affairs or Minister which has representative office or authorized person to approve and appoint ad hoc Bidding Committee. / Based on agreement and contract of Loan/Grant and shall be approved by the donor. / Board of Directors to approve and appoint ad hoc Bidding Committee.

Article 13. Threshold Values

1.  Levels

The threshold value estimated for each procurement procedures is excluded any taxes and duties, as follow:

Method of Procurement / Threshold Value (Kip)
Direct Purchase* / ≤ 3.000.000
Direct Purchase
(approval on a case by case basis as Article 8.5) / 3.000.000
Request For Quotation (RFQ)
1. RFQ (National Shopping)
a). RFQ by simple way
b). RFQ / > 3.000.000 to ≤ 50.000.000
> 50.000.000 to ≤ 500.000.000
2. International Shopping / ≤ 500.000.000 (Goods)
not allow for Works
Limited Bidding** / > 50.000.000 to ≤ 500.000.000
National Competitive Bidding (NCB) / > 500.000.000 to ≤ 5.000.000.000 (Goods)
> 500.000.000 to ≤ 25.000.000.000 (Works)
International Competitive Bidding (ICB) / > 5.000.000.000 (Goods)
> 25.000.000.000 (Works)

*Usually for day to day expense otherwise subject to Article 8 (4) and 8 (5).

** Limited Bidding is subject to prior approval as per Article 8 (5) and also possible for higher estimated contract amounts as per Article 8 (1) (b) and (c);

2.  Revision of thresholds

Threshold values of sub-paragraph (1) above should be reviewed every two years by the Ministry of Finance. The threshold values should normally be increased in relation with the consumer price index. Threshold values shall increase when such index increases 25% and the Ministry of Finance shall adjust the threshold values accordingly to the most appropriate figure. Each revision shall be announced in the public procurement website and the content of Article 13 (1) of these Implementing Rules and Regulations shall be amended accordingly.

3.  Splitting of Contracts

Contracts for the supply of goods and the construction of works shall not be split into smaller contracts to reduce the value of a contract below a threshold. For the purpose of calculating threshold values, the value of a transaction shall be as follows:

(a)  In the case of works, the total value of works and civil engineering activities are taken together to fulfill an economic and technical function;

(b)  In the case of supplies which are awarded over a given period of time by means of a series of contracts awarded to one or more suppliers and which may be renewed, the total aggregate value of the contracts with similar characteristics to be awarded within 12 months following the first award or the total value of the contract where its term is longer than 12 months.

4.  Lots

According to sub-paragraph (3) above, the procuring entity may separate a transaction into a series of contracts (lots) according to the qualifications or criteria of the suppliers and contractors. However, for the purpose of this Article, the value of such lots must be aggregated to calculate the total value of the contract in accordance with the procurement procedure to be used. The lots will then be evaluated and awarded following such procedure. In any public bidding procedure, the procuring entity or project owner may indicate the existence of lots and that suppliers or contractors may select lots for bidding. Lots will be considered appropriately. The overriding principle for lots is that the aggregate value determines the thresholds to be used.

Article 14: Notification/Announcement

1. Invitations to bid covered by these Implementing Rules and Regulations shall be notified as follows:

(a) Domestic public bidding: in a Lao language newspaper and public procurement website.

(b) International public bidding: in Lao and English language newspapers published in Lao PDR and in public procurement website or, in case of large-scale and important project, in an international English language newspaper, such as the UN Publication Development Business and the notices are sent to foreign diplomatic missions in Lao PDR.

(c) Limited bidding: invitations to bid shall be sent to suppliers or contractors selected by the procuring entity or project owner in accordance with Part IV and sent (all invitations sent at the same time) by registered mail.

(d) National shopping item (b) advertises through the mass media, newspaper and public procurement website.

(e) International shopping: Quotations are invited from at least 3 qualified suppliers or contractors in at least 2 countries and in public procurement website.

(f) Direct contracting: The procuring entity or project owner may negotiate directly with suppliers or contractors from whom it has solicited quotations in accordance with paragraph 4 of Article 8.

2. Time limits used by the procuring entity or project owner for the submission of bids shall be reasonable and take into account the nature of goods, services or work sought. Sufficient time should be given to allow all bidders to prepare their bids. The following minimum time limits shall be observed:

From date of notification / Public Bidding / Limited Bidding and Price Comparison / Direct Contracting
Normal procedure / 45 days / Domestic and International:
30 days / 20 days
Accelerated procedure* / 20 days / Domestic: 10 days
International: 20 days / 05 days

* Must be justified on a case by case basis

** Or by mutual agreement in cases falling within Article 8 (4) (d).

3. Notification shall comprise the following:

§  The identity of the procuring entity or project owner;

§  A summary of the works, goods or services sought; address to obtain bidding documents and further information related to the submission of bids;

§  Bid security, if required;

§  Cost of tender documents;

§  Procedural requirements;

§  Final date and address for submission of bids.

Part III

Consultants’ or Experts’ Services

Article 16: Other Methods of Consultants’ and Experts’ Selection

In some circumstances, the quality and cost based method is not the most appropriate method for selecting consultants. The following other methods may be used within the parameters described below.

(1) Quality-Based Selection is appropriate for the following complex or highly specialized assignments for which it is difficult to define precise terms of reference and the required input from the consultants; assignments that have a high downstream impact and in which the objective is to have high quality expertise; and assignments that can be carried out in substantially different ways. Under quality based selection the request for proposals requests submission of both technical and financial proposals at the same time, but in separate envelopes. After evaluating the technical proposals the price envelope of only the consultant with the higher ranked technical proposal is opened and the rest are returned unopened, after the negotiations are successfully concluded. In case of failed negotiations with the top ranked consultant the financial proposal of the next highest technically ranked consultant should be opened for negotiations to conclude a contract. Other aspects of this selection process shall be identical to those of quality and cost based selection.

(2) Fixed Budget Selection is used only when the assignment is simple and can be precisely defined and when the budget is fixed. The request for proposals shall indicate the available budget and request the consultants to provide their best technical and financial proposals in separate envelopes, within the budget. Evaluation of all technical proposals shall be carried out first and then the price envelopes shall be opened and the consultant who has submitted the highest ranked technical proposal and whose financial proposal is within the specified budget shall be selected.

(3)  Least-Cost Selection is appropriate to selection of consultants for assignments of a standard or routine nature (audits, engineering design of noncomplex works and so forth). Under this method, a “minimum” qualifying mark for the “quality” is established. Proposals to be submitted in two envelopes are invited from a short list. Technical envelopes are opened first and evaluated. Those securing less than the minimum mark stated in the request for proposals are rejected, and the financial envelopes of the rest are opened in public. The firm with the lowest price shall then be selected.

(4)  Selection Based on Consultants’ Qualifications is used for very small assignments for which the need for preparing and evaluating competitive proposals is not justified. From a shortlist of experienced consultants the firm with the most appropriate qualifications and references will be asked to submit a combined technical–financial proposal and then be invited to negotiate the contract.