State agencies that intend to spend more than 5 million kip of state funds must put project contracts up for bid, according to the Ministry of Finance.
Deputy Prime Minister and Minister of Finance, Mr Somdy Duangdy, signed a ministerial guideline earlier this month defining the new procedures state agencies must comply with when making use of state funds.
The decision is viewed as a renewed attempt by the ministry to force state agencies to comply with the Law on State Procurement and ensure that expenditure is worthwhile and justified.
The government promulgated the law in 2017 but enforcement has been weak because of the absence of guidelines.
According to the ministerial guideline on state budget expenditure, which is available at the Lao national gazette website hosted by the Ministry of Justice, state agencies are authorised to directly select contractors to carry out construction and infrastructure repair projects only if the cost is less than 5 million kip.
Contractors for projects that cost more than 5 million kip, but not more than 500 million kip, must be selected through comparative price bids.
Selection of a contractor for a project using state funding of more than 500 million kip must be done through an open bidding process. In this case, state agencies must publicly advertise the bid through the media and on websites so that any company in Laos can submit a bid. In some cases, state agencies can invite companies to submit a bid without first making a public announcement. But this is only permissible when state agencies need a contractor who can provide specific technical construction and repair standards, which only a few companies in Laos can do.
In addition to the purchase of construction and infrastructure repair services, the guideline also gives rules on the purchase of general goods and services.
According to the guideline, state agencies must seek comparative price bids to select a supplier of goods and services when expenditure of the state budget is between 5 million and 200 million kip.
If the cost of the goods and services required is more than 200 million kip, state agencies must publicly advertise the bid so that local and international firms in Laos can submit an offer.
State agencies may hold a closed bid only when they require companies to supply specific technical standards of goods and services.
State procurement is one of the areas the government has been trying to make more transparent. In the past, many government officials made use of loopholes in the procurement law to take bribes from companies seeking contracts.