If you are using a soap free baby wash like Johnsons baby wash, then that is causing the irritation.
Many baby washes are very drying on the skin. The 'no tears' washes have the same ph as the eyes, so that they don't make your eyes sting. The problem is your skin is not the same ph as your eyes, so they dry you skin and can make it sore.
You do not need to wash your dds labia minor/major with anything except water. In fact rubbing/wiping it isn't really necessary either, sitting in a warm bath of just water is actually enough. The use of any soaps/cleansers actually stops the skin doing its work.
Also, do you wash her hair in the bath? The shampoo that then gets into the water can irritate the vulva, this is really common.
If you really want to use somehting, switch to E45 junior bath wash, which goes into the water, but even that can irritate my dd. Best is Oilatums bath wash, but it costs an arm and a leg.
From talking to other mums, I have found that lots of dds get red (mine do) it might be that she isn't drying herself well after doing a wee, and so she has slightly damp wee knickers against her skin. I started pointing this out to dd and telling her it was Ok to get some dry knickers if they got a bit soggy, as damp kicks are not comfy. That did help more than anything.