Understanding Bidding: What is bidding? What is public procurement & private procurement?

This article will guide you through the basic concepts of tender, learn the difference between public and private tender, and then choose the right "field" for your business.

Main contents:

  1. Public bidding (B2G)
  2. Private Bidding (B2B)
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What is a bidding?

Bidding is a part of the purchasing activities between businesses and between businesses and state agencies. It represents a civilized form of competition in a market economy and is a special transaction method for large-scale transactions that demand efficiency and transparency. All professional businesses, whether they are from Vietnam or abroad, regardless of their field or scale, if they have the capability, cannot ignore bidding. In Vietnam, bidding is divided into two markets: state bidding (B2G) and private bidding (B2B).

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What is public bidding & private bidding?

1. Public Bidding (B2G)

Public bidding is also known as Public Procurement or Government Procurement. Procurement projects using the government budget belong to this market. Features of this market:
  • Mature and competitive market.
  • Large budget source.
  • Requires high competence. Strict about capability profiles. Many times bids are lost due to paperwork, not because of insufficient competence.
  • Procedures are complicated, especially challenging for businesses that have never participated in bidding.

Want to participate in public bidding?

Within the scope of this article, we will focus on introducing private bidding - the format that DauThau.Net supports, if businesses want to learn more about public bidding/public procurement, please see here: https://dauthau.net/en/about/general-introduction.html

2. Private Bidding (B2B)

Private bidding (also known as Private Procurement or Business Procurement - in English: B2B (Business to Business)) is a form of procurement by enterprises using private capital. Projects of private enterprises, which use private capital for bidding, are part of this market. The features of this market are:
- The market is still new as private businesses in Vietnam have only recently begun to flourish. There's a lot of potential for expansion.
- Large but scattered, unconsolidated budget: Previously, most private enterprises made small, individual purchases, whereas conglomerates like Vingroup, Lotte, and Masan, who frequently made purchases, often had to use their platforms or bid on their websites, so there was no consolidation. DauThau.Net is the first private bidding platform in Vietnam, but it was only launched on 28/12/2020.
- Not too strict about paperwork. As long as the ability to meet requirements is present.
- Quick: Due to the use of private capital, the procedures are flexible, negotiations and contract signings are swift, and disbursements are expedited.

Why do both the state and private sectors need bidding?

Most would answer: because the Bidding Law Law on Bidding (No. 43/2013/QH13) of 2013 mandates it. However, this answer is entirely incorrect!
The purpose of bidding is to find a contractor (or investor) that meets one's technical and quality requirements at the lowest cost, thanks to competition through bidding. Therefore, bidding is a civilized business form in a developed market economy, benefiting either private investors (private procurement) or the government budget (public procurement). Thus, both the private sector and the public need this mechanism.
For public procurement, if the project uses the government budget, the procurement will be required to comply with the Law on Bidding (No. 43/2013/QH13) 2013.
For private procurement, bidding is optional and is not covered by the procurement law. Therefore, the bid solicitor still has the right to choose whether to apply the law on bidding (or not, depending on the needs of the bid solicitor).

Does your company need to make purchases through bidding?

To find out, answer the following questions:
  1. Are you confident that your regular supplier offers the best prices and quality, or can best meet your requirements?
  2. Are you sure your network of contacts will help you find the right product/service provider?
  3. Do you face challenges in finding suppliers for goods, products, or services?
  4. Are you looking for a construction company to build a villa but don't know anyone?
  5. Do you want to have more transparency and efficiency in your company's procurement department?
If the answer to any of the above is "Yes", then it means your company should shift to professional procurement through competitive bidding or tendering..

Does your company need to practice before participating in private bidding?

Private bidding is simple; there's no need for prior practice or preparing complex procedures like those required for public procurement. However, being prepared with good capabilities, quality products, and services, accurately filling in company details, and regularly updating your company's information on the private bidding network DauThau.Net are essential. Besides the proactive "hunt" for tender information, our intelligent software also utilizes the declared data from bidders to assist them in searching for and accessing tender information.

Can government-owned enterprises participate in private bidding??

Government-owned enterprises are mandatorily required to invite bids on the national procurement system as per the Bidding Law. However, when it comes to participation, government-owned enterprises can bid on the private sector bidding platform DauThau.Net.

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