E-procurement underpins adaptation to Industry 4.0

The Vietnam National e–Procurement System makes procurement easier and cheaper

In the era of Industry 4.0, the impacts of geographical boundaries and space on industry will be mostly eliminated. Instead, innovation in automation, digitalisation, and connection between real and virtual worlds is creating the starting point for the replacement of traditional trade and business with Industry 4.0. E-procurement is gradually replacing traditional procurement, and is becoming part of Industry 4.0, enhancing transparency and efficiency in state budget management.

According to the Vietnam National e-Procurement Centre, in 2017, the number of e-procurement packages more than doubled compared to 2016, reaching 8,200 packages with the total value of approximately VND9 trillion ($398.23 million). In just the first seven months of 2018, about 8,900 packages were procured online, exceeding the total for the entirety of 2017. Notably, the largest package was worth VND194 billion ($8.6 million).

Established in 2009, the Vietnam National e–Procurement System (VNEPS) is managed by the Vietnam National e-Procurement Centre under the Ministry of Planning and Investment’s Public Procurement Agency. The system supports enterprises and bidders to approach thousands of business opportunities from publicly funded projects in all categories – goods, civil works, consulting, and non-consulting services. VNEPS meets the four requirements established by Forbes for Industry 4.0, and opens up precious opportunities for enterprises to participate in public procurement.

Connectivity

One major challenge for enterprises wanting to expand into public procurement is information access. VNEPS is the solution for this challenge.

Simply put, VNEPS is an e-commerce intermediary platform helping to connect enterprises with procuring entities in public-funded projects. These projects will be opened for competitive procurement

on the VNEPS website: http://muasamcong.mpi.gov.vn. By registering a membership profile, bidders are able to access all information about the projects and procurement opportunities, and participate in the bids easily and conveniently. The system brings an advantage of removing geographical obstacles. With only an internet-connected laptop, every bidder, anytime, anywhere, is able to participate in procurement packages on the system. All trading and information exchange processes between bidders and procuring entities during bid preparation and bid evaluation are conducted completely online via the system.

Information transparency

All procurement information, including procurement plan, invitation for prequalification, invitation for bids, bidding documents, and bidder selection results, is made public on the system. Users can easily access this information on the VNEPS website. Besides, an e-procurement mobile application, named “Mua Sam Cong: Dau thau”, is now available on the iOS and Android mobile platforms. Users can access information about bidding packages with this app anytime, anywhere.

VNEPS helps to reduce the risk of collusion by keeping the quantity and identities of participating bidders confidential until opening of bids. Specifically, no entity – not even the system administrator – is able to know that information before the bid opening. Therefore, an equal and competitive environment exists for all bidders participating in e-procurement.

A cost-saving technical platform

Bidding documents (request for proposals) can be downloaded free of charge via VNEPS, and the bid participation fee is only VND330,000 or $14.6 (including VAT). Thanks to the system, bidders can also save transportation, printing, and accommodation costs to participate in bidding. Human resources and time spent on procurement are reduced significantly when many steps can be done online. For firms, e-procurement helps reduce expenses and increase efficiency. For procuring entities, the reduced cost can enhance the effectiveness of state budget usage. According to estimates, bidding packages average 9.23 per cent cost-saving ratings, approximately VND475 billion ($21 million). Taking the northern province of Son La as an example, 53 e-procurement packages in 2017 had cost-saving rates of 9.5 per cent compared to 1.2 per cent in traditional procurement conducted in this province. E-procurement also helped cut down human resources costs to open a bid, from 10-12 people to fewer than three people when conducing e-procurement.

Simplified procurement process

The whole e-procurement process on the system is simplified and optimised throughout: from preparing and advertising procurement plans and bidding documents, preparing and submitting bids, and opening bids, to evaluating and announcing bidder selection results. Information on the system can be saved and used for multiple actions. For procuring entities, bidding information submitted on the system such as bidder selection plans, invitations for tenders, and bidder selection results are linked with each other. The system automatically fills those information in relevant forms. Bid prices are automatically calculated and updated from priced bill of quantities or price schedules, so that the system can prevent distortion and adjust mathematical mistakes in every package. For bidders, information like business information, financial capacity, implemented contracts – can be prepared in advance in the bidder’s profile and then those can be used when preparing bids. In 2018’s last quarter, the Ministry of Planning and Investment plans to issue a circular regarding sample for bid evaluation report forms for e-procurement, in which the examination of bidder’s qualification can be done automatically by the system. The system is being continuously upgraded to improve transfer speed and file upload size. As more and more steps are done online, more time and money will be saved.