Myanmar: New Tender Rules Released
The President’s Office of the Republic of the Union of Myanmar has issued a new tender procedure (Tender Procedure) to be followed in respect of construction, procurement of goods and services, and leasing and selling carried out by government departments and organizations.
Although Direction 1/2017 containing the Tender Procedure is not entirely clear on all points, it is a welcome improvement on previous guidance. The following are the major points it makes:
The aim of the Tender Procedure is to "eliminate waste of the State’s funds, corruption and monopolising tenders", and to "ensure just and fair competition, transparency, accountability and responsibility".
When a tender process is not necessary
A tender process for construction or procurement of goods and services is necessary unless the value of the tender is less than MMK 10 million (approximately USD 7,000).
For every matter calling for a tender, a tender committee must be formed to manage the process.
Tasks of tender committees
The tasks of the tender committees are as follows:
- Scrutinising whether or not there are approved funds for the project to be implemented;
- Standardising contract formats for construction, procurement of goods and services, leasing and selling;
- Specifying quality of the items to be purchased;
- Determining terms and conditions in the proposed contract which will be included in the tender, criteria for assessment, financial information (contractual terms, payment schedule, delivery
schedule, tax etc.);
- Specifying method for scrutinising in respect of high-tech and complex procurement and assigning other technical experts to it;
- Setting time and place for submitting tender, time and place for opening tender and date for announcement of winner;
- Assigning tender acceptance and vetting committees;
- Refunding tender security to those who are not awarded the bid and requesting security for business implementation;
- Announcing the winner;
- If it is a tender for procurement of goods requiring samples, making arrangements to accept the samples and register them; and
- Setting floor price for lease or sale.
Submitting the tender and security
Not surprisingly, the tender must be submitted according to the procedure, place and time stated in the tender document. Other than complex and large scale projects, the period of the tender shall not exceed three months from the date of submission.
Tender security may be obtained from a bank recognised by the Central Bank of Myanmar (presumably this would now include branches of foreign banks). Tender security is 1% of the tender value and valid up to 28 days after the end of the period of the tender.
Opening and announcement of tenders for construction, procurement of goods and services
When the tender is opened, the following will be announced:
- Name of bidder;
- Price submitted; and
- Amount of tender security and validity period.
Where the tender value is more than MMK 1,000 million (approximately USD 714,000), tender opening will be recorded by photo and video.
Evaluation of tenders
Evaluation of tenders will take place using a point system that is outlined in the Tender Procedure. Different criteria apply in the point system depending on whether the tender process is for a complex and large scale project, or a tender for consultancy services.
Sale/lease of state-owned land, land plots or factories
A detailed procedure is laid down for the sale or leasing of state-owned land, land plots, or factories, involving a Floor Price Calculating Committee and advertising the asset. The bidder who bids the highest price above the floor price wins the bid. If all bidders are lower than this floor price, the tender procedure may be cancelled.
Although the Tender Procedure is not entirely clear at this point, it seems that the intention with international companies is that they will be able to participate in the tender without establishing an entity in Myanmar, however if they win the bid, they will need to establish a subsidiary in country before entering into a contract following their successful bid.
The tender committee may reject some or all of the tenders for a number of reasons, including suspicion of collusion or suspicion of corruption.
A complaints procedure is established where a bidder can file grievances with the tender committee, and if dissatisfied with the decision of the tender committee, can make a complaint to the Ministry of Planning and Finance.
Special tender procedures for PPP’s
The Tender Procedure states that specific tender procedures will be developed for Public Private Partnerships (PPP’s) depending on the nature of the activity (petroleum and gas blocks; construction of electricity power stations, renting electricity generators, issuing telecommunication licenses, and mining).