Public Procurement: Terms of Reference for High-Speed Rail Bidding

This month will likely see the bidding for six construction contracts, valued at 10 billion baht each in the first phase of the Thai-Chinese high-speed railway project linking Bangkok with Nakhon Ratchasima, following the awards of earlier eight contracts for the 253-kilometer section.

This 125-billion-baht northeastern phase (USD4 billion) will all be funded by the government budget, as compared to the private investment in the public-private partnership three-airport high-speed rail connecting Don Mueng Airport in Bangkok, Suvarnabhumi Airport in Samut Prakarn  and U-Tapao Airport in Rayong on the Eastern Economic Corridor.

The bidding process in the Public Procurement Act of 2017 (or PPA) considerably differs from its counterpart in the Public-Private Partnership Act of 2019, well-known as PPP, although both share the same goal of transparency and sizes of infrastructure megaprojects.

Besides the high-speed northeastern rail, the PPA bidding procedure discussed below is applicable to infrastructure megaprojects in other sectors as well.

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The three methods of selection

 

The PPA sets forth three methods of selecting contractors for a project: (1) a general invitation to bid; (2) a restricted selection; and (3) a specific engagement.

A general invitation to bid or open bidding applies to the first phase of the northeastern high-speed rail where the government issues an invitation to bid or a request for proposal in general to those who are qualified to make a proposal for a construction contract—technical, pricing or otherwise.

The restricted selection method is limited to a smaller project, under which the government invites three contractors or more to make a proposal.

The specific engagement works well for a very small or urgent project when the government invites only one qualified contractor to make a proposal and negotiate a contract price directly with the government owner.

This article deals with the procurement by way of general invitation to bid or open bidding.

 

Who is the government?

 

The government agency, who owns the project and who can be called the government project-owner and is entitled to launch a bidding procedure, can be any government agency or state enterprise with responsibility to oversee the infrastructure project.

Government agencies are legal entities such as the Ministry of Transport, Department of Rail Transport, Department of Airports, Department of Highways, Department of Rural Roads, and the Office of Transport and Traffic Policy and Planning.

State enterprises include the State Railway of Thailand, Port Authority of Thailand, the Mass Rapid Authority of Thailand, Bangkok Mass Transit Authority, Expressway Authority of Thailand, the Airports of Thailand Co., Ltd., and Airport Rail Link Co., Ltd.

All these government agencies and state enterprises come under the umbrella of the PPA.

 

Public hearing of terms of reference is optional

 

The invitation to bid and a request for proposal can come in with various names including terms of reference or TOR.

Even though the high-speed rail project falls within the jurisdiction of the Ministry of Transport, details of the TOR must be in compliance with a regulation issued by the Ministry of Finance.

Restrictions on foreign participation, if any, will be noted in the TOR.

The PPA does not require the government project-owner to undertake a public hearing of the TOR. The law, however, refers to the good governance practice, in which the owner may conduct such public hearing—it’s normally done online.

The public hearing for the TOR of the first-phase has been conducted in February, to be followed by  a public hearing in the second phase for the 355-kilometer Nakhon Ratchsima – Nong Khai section in a month or two.

 

Bidding announcement and TOR must be published online

 

What the PPA requires is that the government project-owner must publicly and openly announce the bidding and the TOR for a particular project (for example, the high-speed rail), the date, time, and place to submit a proposal and other related contract conditions.

There are specific provisions of the law for the bid announcement and the TOR to be published online on the website of the government project-owner and the website of the Comptroller General’s Department or CGD as well as physically at the office of owner.

As with the previous eight construction contracts for the first-phase—this first section of the northeastern high-speed rail, is divided into 14 contracts—the bidding for the remaining six contracts may be carried out by e-bidding through the IT system controlled by the CGD. The bidding by e-bidding is not compulsory, but once launched, must comply with the e-bidding regulation prescribed by the Ministry of Finance.

According to the PPA, the medium price must be posted by the government project-owner on the CGD’s website.

 

Wirot Poonsuwan is the Senior Counsel and Head of Special Projects at Bangkok law firm Blumenthal Richter & Sumet and can be contacted at [email protected].

 

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