Notice Of The Legislative Affairs Office Of The State Council Concerning The Public Consultation On The "Regulations On Implementing The Government Procurement Law Of The People's Republic Of China (Consultative Draft)"

To further improve the transparency and quality of the legislation and increase the level of the public participation in the government legislation, the Legislative Affairs Office of the State Council has published the "Regulations on Implementing the Government Procurement Law of the People's Republic of China (Consultative Draft)" (the Consultative Draft) for public consultation. The key issues subject to the consultation are as follows:

I. Key Contents in the Consultative Draft

To further regulate government procurement and improve the government procurement regime, the Ministry of Finance has finalized the Consultative Draft after reviewing the enforcement of the "Government Procurement Law", consulting the authorities concerned, centralized procurement organizations and local government procurement departments, repeatedly conducting research and making amendments. The key principles in the Consultative Draft are as follows:

(i) Scope of government procurement - in consideration of practicability, the Consultative Draft further specifies the applicability of the "Government Procurement Law", such as the coverage of the fiscal finds, definitions of goods, projects and services as well as events that the "Tendering Law" does not apply to government procurement projects.

(ii) Interested parties in government procurement - the Consultative Draft further specifies the nature, main duties and eligibility of centralized procurement organizations as well as nature and recognition of government procurement agencies. Departmentally centralized procurement organizations may be established in accordance with the actual demands in government procurement projects. Pre-assessment systems may be implemented for suppliers' eligibility. Suppliers are allowed to act jointly in government procurement projects.

(iii) Forms of government procurement - the Consultative Draft allows non-open tenders for procurement. Agreements on supply and procurement, fixed-location procurement services, electronic government procurement as well as goods, projects and services proposed by purchasers within the permissible scope determined after open tenders are also specified.

(iv) Government procurement procedures - to lower the requirements for small and medium enterprises to joint government procurement projects and improve the currently ineffective government procurement deposit system, the Consultative Draft proposes to regulate such system for taking deposits from participants in tenders. Regarding the government procurement expert assessment board system, the principles, rights and duties of experts of the assessment board are specified.

(v) Government procurement contracts - the Consultative Draft provides that sub-contracting is not allowed in procurement projects which are subject to government procurement incentives. Government procurement contracts must not include gift or kick-back. The Consultative Draft also includes the events in which a purchaser or supplier refuses to sign a contract as well as payments of procurement funds.

In addition, the Consultative Draft covers challenges to and complaints against suppliers, supervision and inspection conducted by the regulatory bodies as well as legal liability on purchaser, procurement agencies and suppliers in breach of law.

II. Others

Interested parties and members of the public may recommend amendments to the Draft Consultative before 5 February 2010 by:

(i) getting access to China Legislative Information Network System (http://www.chinalaw.gov.cn) and clicking the "Draft Legislation Consultation System" on the left of the homepage to submit comments and suggestions.

(ii) giving comments and suggestions by post: Beijing PO Box 1750 (Post Code: 100017), and remarking "Consultation on the Government Procurement Regulations" on the envelops.

(iii) giving comments and suggestions via email: zfcg@chinalaw.gov.cn

Legislative Affairs Office of the State Council

11 January 2010

Regulations on Implementing the Government Procurement Law of the People's Republic of China (Consultative Draft)

Chapter 1 General Principles

Clause 1 These Regulations are formulated in accordance the Government Procurement Law of the People's Republic of China (hereinafter referred to as the Government Procurement Law).

Clause 2 “Financial funds” referred to in Clause 2 of the Government Procurement Law include financial budget funds and other funds under financial administration.

Loan funds that are to be repaid with financial funds and that are secured by state-owned assets possessed or used by public institutions and incorporations shall be deemed as financial funds.

“Procurement with financial funds” referred to in Clause 2 of the Government Procurement Law means procurement implemented by a purchaser fully or partly with financial funds.

Clause 3 “Centralized procurement catalogue” referred to in Clause 2 of the Government Procurement Law means the item and category list for the goods, projects and services that should be subject to centralized procurement; “procurement threshold standards” referred to in the same Clause mean the minimum amount standards for the goods, projects and services under the items and categories that should be subject to government procurement other than those included in the centralized procurement catalogue.

Clause 4 “Goods” referred to in Clause 2 of the Government Procurement Law mean articles of all kinds of forms and types, including tangibles and intangibles. Intellectual property rights such as rights to exclusive use of trademarks, copyrights and patent rights shall be deemed as goods.

“Projects” referred to in Clause 2 of the Government Procurement Law mean projects to build structures and constructions, including new construction, reconstruction, extension, decoration, removal, repair and reconnaissance, design, construction, supervision, etc. in connection with construction projects.

“Services” referred to in Clause 2 of the Government Procurement Law mean any objects of government procurement other than goods and projects, including all kinds of professional services, information network development services, financial insurance services, transport services and repair and maintenance services, etc.

Where a procurement project includes several different procurement objects, the nature of such project shall be determined based on the object which takes the highest proportion of the project funds.

Clause 5 Where bid invitation and bidding is held in a government procurement project, the Law on Bid Invitation and Bidding shall apply, however, where there is no relevant provision in the Law on Bid Invitation and Bidding, the Government Procurement Law shall apply.

Where no bid invitation and bidding is held in a government procurement project, such procurement shall be implemented in accordance with the provisions of the Government Procurement Law and these Regulations.

Clause 6  A purchaser, when determining its procurement demand, or a purchaser or a procurement agency, when formulating its procurement document such as bid invitation document, negotiation document or enquiry document, must not appoint any supplier or good brand, must not formulate any technical specification in relation to a specific product, and must not stipulate any unreasonable limiting conditions.

Any unit or individual must not designate any supplier for the purchaser or intervene in a government procurement activity by other means in violation with the Government Procurement Law and these Regulations.

Clause 7 “Centralized procurement” referred to in Clause 7 of the Government Procurement Law means a purchaser’s acts to entrust a centralized procurement agency to purchase on its behalf, implement a departmental centralized procurement of, or purchase by itself according to laws, the goods, projects and services included in the centralized procurement catalogue; “decentralized procurement” referred to in the same Clause means a purchaser’s acts to purchase by itself according to laws, or entrust a government procurement agency to purchase on its behalf, the goods, projects and services that are not included in the centralized procurement catalogue and beyond the procurement threshold standards.

Clause 8 A provincial People’s Government may authorize a People’s Government above the county level to formulate the centralized procurement catalogue and procurement threshold standards applicable for its own administrative area, but such People’s Government above the county level must not narrow the scope of the centralized procurement catalogue.

Clause 9 The finance department of the State Council shall focus on the national economy and social development goals, formulate government procurement policies and government procurement product lists jointly with the relevant departments of the State Council, support and protect energy saving, environment friendly and independent innovation products through measures such as preferential or mandatory procurement, and support small and medium enterprises, the enterprises in underdeveloped areas and minority areas, etc.

A purchaser or procurement agency shall strictly execute the government procurement product list and implement the provisions of each policy.

Clause 10 “Domestic goods” referred to in Clause 10 of the Government Procurement Law mean end products manufactured in China whose domestic production costs exceed a certain proportion. Proportion of domestic production cost = (Factory gate price – Import price)/ Factory gate price.

“Domestic projects and services” referred to in Clause 10 of the Government Procurement Law mean projects and services provided by Chinese citizens, legal persons or other organizations.

The specific standards for identifying domestic goods, projects and services shall be formulated by the relevant departments of the State Council jointly with the finance department of the State Council. The policies and measures for procurement of domestic goods, projects and services shall be formulated by the finance department of the State Council jointly with the relevant departments of the State Council.

“Failure to acquire on reasonable commercial terms” referred to in Clause 10 of the Government Procurement Law means the lowest quoted price for the domestic goods, projects and services which meet the requirements of the procurement documents is more than 20% higher than the lowest quoted price for such non-national goods, projects and services.

Clause 11 A purchaser who plans to purchase imported products shall, before the procurement start, report the same to the finance department of the People’s Government at the same level which is above the county level for examination and verification.

“Imported products” referred to in the preceding paragraph mean products which enter into China after customs clearance, examination and release by China Customs and are manufactured outside China’s customs area.

Clause 12 Government procurement information such as government procurement projects, procedural procurement documents and procurement results shall be made public, with the exceptions of information that are related to state secrets or trade secrets.

Government procurement information shall be published on media designated by the finance department of a People’s Government above the provincial level. Information concerning government procurement projects whose procurement amounts are more than 5 millions Yuan shall be published on media designated by the finance department of the State Council.

Clause 13 “A procurement staff member or other relevant staff member has any interest-based relationship with a supplier” referred to in Clause 12 of the Government Procurement Law means a procurement or other relevant staff member:

(1) has at present, or has had within 3 years before the procurement activity takes place, an employment relationship with any supplier;

(2) is at present, or has been within 3 years before the procurement activity takes place, a supplier’s financial advisor, legal adviser or technical adviser;

(3) is at present, or has been within 3 years before the procurement activity takes place, a supplier’s controlling shareholder or actual controller;

(4) is a lineal relative, branch line relative within three generations or a relative by marriage of a supplier’s legal representative or principal;

(5) has other interest-based relationship with a supplier, which has or may have a impact on the lawfully implementation of the procurement activity.

Where a supplier deems that a procurement staff member or other relevant staff member has a interest-based relationship with any other supplier, it may puts forward a request for withdrawal to the purchaser or its entrusted procurement agency and give its reasons for such request.

Clause 14 Government procurement may be operated fully or partly through an electronic system, so as to ensure the openness, uniformity, safety, smoothness, high-efficiency and convenience of such government procurement activity.

Chapter 2 Parties in Government Procurements

Clause 15 Any party in a government procurement, in any government procurement activity, shall enjoy the relevant rights and bear the relevant obligations in accordance with laws, and accept consciously the administration and supervision of the finance departments.

Clause 16 “Conventional government procurement projects” referred to in Paragraph 2, Clause 18 of the Government Procurement Law mean the procurement of standardized products that are commonly used by purchasers and may be purchased together in a large scale; “projects with special requirements of a department or system” referred to in Paragraph 2, Clause 18 of the Government Procurement Law mean the projects included in the centralized procurement catalogue that are not conventional, but only suitable for a certain department or system; “projects with special requirements of a unit” referred to in Paragraph 2, Clause 18 of the Government Procurement Law mean projects that have been included in the centralized procurement catalogue but need to be custom made based on the purchaser’s professional requests and are not suitable for centralized procurement and difficult to form a batch procurement.

Projects included in the centralized procurement catalogue which fall into “conventional government procurement projects” shall be implemented by a centralized procurement agency upon the purchaser’s commission, with the exceptions of the projects under special circumstances upon the approval of the finance department at the same level; a centralized procurement agency must not entrust any other procurement agency to implement the procurement project consigned by the purchaser; projects falling into the “projects with special requirements of a department or system” shall be subject to departmental centralized procurement organized by the purchaser. Departmental centralized procurement projects which fall into the “conventional government procurement projects” shall be organized and implemented by a centralized procurement institution upon commission; projects with special requirements of a unit shall be organized and implemented by the purchaser itself according to laws.

Clause 17 “Procurement agency” referred to in these Regulations means centralized procurement institutions established by a government and procurement agencies with certified qualifications.

“Procurement agencies with certified qualifications” referred to in the preceding paragraph mean public intermediary agencies with qualifications certified by a People’s government above the provincial level which engage in procurement agent business for government procurement of goods, projects and services.

A People’s Government above the provincial level shall publish the certified procurement agencies on designated media, and issue qualification certificates for government procurement agency.

Measures for the accreditation of qualification for government procurement agency shall be formulated by the finance department of the State Council.

Clause 18 The main responsibilities of a centralized procurement institution are:

(1) organizing and implementing the conventional government procurement projects included in the centralized procurement catalogue upon the purchaser’s commission;

(2) deciding through consultation with the purchaser the procurement demands, technical specifications, supplier qualifications and conditions, other commercial conditions and other contents;

(3) participating in inspections of performance of contracts upon the purchaser’s commission;

(4) implementing follow-up performance inspection on execution status of government procurement projects organized by it;

(5) formulating its internal supervision and management system and operating rules;

(6) accepting the purchaser’s commission and acting as agent in implementing decentralized procurement projects.

Clause 19 A local People’s Government at the county level shall establish centralized procurement institutions based on its demand in the organization of centralized procurements under the government procumbent projects at the same level, and report the same to the People’s Government at higher level for archiving.

A centralized procurement institution shall be set up according to laws to be an independent entity and subordinated to the People’s Government at the same level, and it must not have any subordination or other interest-based relationship with any government department, legal person or other organizations.

Clause 20 A centralized procurement institution shall meet the following conditions:

(1) has the capacity to bear independently civil responsibilities;

(2) has a certain number of professional staff with certified qualification for government procurement;

(3) has a fixed office and equipments and office conditions required for launching government procurement bidding agent business;

(4) has improved internal management system, business operation flow and procurement business database.

Clause 21 Where the purchaser entrusts a procurement agency to implement the procurement on its behalf, it shall enter into a written agency agreement with such procurement agency.

The agency agreement shall clarify the specific matters, authority and term in connection with the procurement agent business, and stipulate the rights and obligations of the purchaser and the procurement agency.

The procurement agency shall launch the procurement agent activities within the scope of the commission and according to laws, and safeguard the purchaser’s lawful rights and interests.

The procurement agency, during the process of acting as an agent in government procurements, shall not organize in any name any activities such as investigation to the supplier.

Clause 22 A People’s Government above the provincial level may, based on the actual demands in government procurement projects, permit a department or system to establish a special institution in charge of centralized procurement matters.

Where a department or system fails to obtain the approval for establishment of a special institution in charge of centralized procurement matters, it shall appoint one of its internal institutions to be responsible for handling centralized procurement matters.

Clause 23 The purchaser or procurement agency shall examine whether a supplier meets the conditions provided in Paragraph 1, Clause 22 of the Government Procurement Law, and such supplier shall provide the following certification materials:

(1) business license for legal person or other organizations, identification certificate for natural persons

(2) verification report to prove its financial status issued by an accounting firm, relevant certification materials for legally payment of taxes and social insurance charges;

(3) written declaration for no major illegal acts in its operation activities;

(4) other certification materials provided by the finance department of the State Council.

Where the purchaser has any special requirements for a procurement project, it shall require the supplier to provide relevant certification materials and explanatory statements on such supplier’s compliance with such special requirements and implement special examinations.

Clause 24 The purchaser or procurement agency shall stipulate in its procurement documents such as bid invitation document and negotiation document the qualification conditions for supplier, qualification certification documents that should be submitted and measures and standards for qualification examination, unless a preliminary qualification examination should be implemented in accordance with Clause 25 of these Regulations.

Clause 25 Where the purchaser or procurement agency plans to, in accordance with the provisions of these Regulations or the actual demand in a procurement project, implement a preliminary examination on the supplier’s qualification, the announcement for such preliminary qualification examination shall be published on media designated by the finance department of the People’s Government above the provincial level, and the period of such announcement shall be no less than five working days. 

The announcement for preliminary qualification examination shall include the purchaser, the name of the procurement project, the demand in such procurement project, the contents, standards and methods of the preliminary qualification examination and the time and place for submission of qualification certification documents by suppliers.

The suppliers shall, within the time limit provided in the announcement, submit the qualification certification documents in accordance with the requirements of the announcement.

The purchaser or procurement agency shall organize a review committee to implement the preliminary examination on suppliers’ qualification.

Clause 26 “Records of major illegal acts” referred to in Item (5), Paragraph 1, Clause 22 of the Government Procurement Law include:

(1) administrative penalty decisions made by an administrative authorities above the county level for any illegal acts of the supplier or its legal representative, director, supervisor, senior management personnel during its operation activities, with the exceptions of the administrative penalty decisions in which a warning or a fine of RMB 10,000 Yuan below is imposed.

(2) criminal convictions made by judicial authorities at all levels for the illegal acts of the supplier or its legal representative, director, supervisor, senior management personnel during its operation activities.

Clause 27 The finance department of a People’s Government above the provincial level shall establish a government procurement supplier database, to facilitate the organization of government procurement activities by purchasers and procurement agencies. The specific measures shall be formulated by the finance department of the State Council.

Any unit or individual must not use the government procurement supplier database to set up barriers between regions and industries, or obstruct or restrict any supplier’s access to government procurement market according to laws.

Clause 28 The finance department of a People’s Government above the county level shall publish on designated media the names of suppliers which are included in the misconduct record list and the period during which such suppliers are prohibited from participating in government procurement activities.

The purchaser or procurement agency must not take in or invite suppliers which are prohibited from participating in government procurement activities to participate in the same.

Clause 29 Where several suppliers participate in a government procurement as an association, and the purchaser stipulates some special conditions for supplier based on its demand in the procurement project, there should be at least one supplier in such association which meets the special conditions stipulated by the purchaser. Where an association is composed of several suppliers with the same qualification conditions, the qualification grade of such association shall be determined based on the qualification conditions of the supplier at lower grade.

Each party in the association must not participate separately or jointly with other suppliers as one another association in the government procurement activities under the same project.

The purchaser or procurement agency must not oblige any suppliers to form an association to participate in the government procurement, and must not restrict the competitions between suppliers.

Chapter 3 Government Procurement Modes

Clause 30 The specific amount standards for public bidding in the procurement projects of a People’s Government above the county level may be formulated by a local People’s Government at the same level authorized by the People’s Government at the provincial level.

Clause 31 Where a purchaser plans to purchase goods or service projects above the amount standards for public bidding, under the following circumstances, non-public bidding procurement mode may be adopted upon the approval of the finance department of the People’s Government above the county level:

(1) the public bidding fails with no unreasonable clauses in its bid invitation document and all bidding procedures in conformity with the provisions, while the implementation of such procurement project will be influenced if a new public bidding is launched;

(2) the procurement project has particularity and the number of suppliers which meet the qualification conditions is less than 3;

(3) the procurement project is urgent and it will be difficult to satisfy the work demands if public bidding procurement mode is adopted.

The finance department shall, within 7 working days from its receipt of an application, decide whether to approve such application. Where the decision can not be made within the provided time limit due to the complexity of the project, the period for giving a reply may be extended appropriately, but the extended time shall be no longer than 7 working days, and reasons for such extension shall be given to the applicant.

Clause 32 In small-amount and sporadic procurement projects which fall into conventional projects in the centralized procurement catalogue, procurement by supply upon agreement and by service at fixed site may be implemented. A centralized procurement agency shall, through public bidding, determine intensively the suppliers of procurement by supply upon agreement and by service at fixed site, and clarify the product which wins the bid and the service conditions and fix the same in a written agreement. The purchaser shall choose the supplier and service or product which wins the bid within the scope of the bid winners for supply upon agreement and service at fixed site.

Clause 33 Each government procurement mode may be implemented by electronic means. Online auction and electronic reverse auction shall apply to enquiry procurement mode.

Clause 34 The finance department of State Council shall reinforce its uniform leadership and organization of the informatization construction in government procurement, and establish an integrated national electronic government procurement management and transaction platform.

Clause 35 Where the purchaser plans to purchase goods, projects or services above the amount standards for public bidding, either public bidding mode or non-public bidding mode may be adopted. Where non-public bidding mode is adopted in the procurement, the corresponding procurement method shall be chosen in accordance with the provisions of Clause 29, 30, 31 and 32 of the Government Procurement Law.

Clause 36 Where only one supplier gives material response after the bidding announcement or preliminary qualification examination announcement for a procurement project is published on media designated by the finance department of the People’s Government above the provincial level in accordance with the provisions, such supplier shall be deemed to be the “only supplier” referred to in Item (1), Clause 31 of the Government Procurement Law.

Clause 37 Where a purchaser purchases repeatedly goods or service projects in the same item or category within one budget year by means other than public bidding, and the total amount of funds under such procurements exceeds the amount standards for public bidding, it shall be deemed that such purchaser is evading public bidding procurement by breaking up the whole into parts, unless the procurement budget has been adjusted before the procurement activity starts or non-public bidding mode is adopted upon approval according to laws.

Chapter 4 Government Procurement Procedures

Clause 38 The purchaser shall, in accordance with the procurement catalogue, the procurement threshold standards, the approved government procurement project and the funding budget, formulate an implementing plan for government procurement and report the same to the finance department of the People’s Government at the same level.

Clause 39 Where a public bidding is held in the procurement of a good or service, it shall be ensured that a reasonable time required for the formulation of bidding document is given to the bidder, which shall be no less than twenty days from the date on which the bid invitation document is issued to the date on which the bidding document is submitted by the bidder; however, under any of the following circumstances, the time limit from the date on which the bid invitation document is issued to the deadline for submission of bidding document may be shortened appropriately, provided that such time limit shall be no shorter than ten days.

（1）The purchaser or procurement agency has published a preparatory procurement announcement for a series of government procurement projects of this year on media designated by the finance department, and the period from the date on which such announcement is published to the date on which the bidding invitation announcement for a specific procurement project is published is longer than 20 days;

(2) The purchaser or procurement agency has published the preparatory bidding invitation announcement for a specific procurement project of this year on the media designated by the finance department, and the period from the date on which such preparatory bidding invitation announcement is published to the date on which the formal bid invitation announcement is published is longer than 20 days;

(3) In a procurement project that is implemented by the purchaser or procurement agency in batches under the same procurement standards, when the second and subsequent batches of such procurement project is in progress and the purchaser or procurement agency has published the preparatory announcement for such bidding in batches on media designated by the finance department for government procurement information release.

(4) The public bidding fails and a new public bidding needs to be launched.

Clause 40 Where a invited bidding is held in the procurement of a good or service project, and the purchaser and the invited suppliers have agreed on shortening the time limit for submission of bidding documents and entered into a written agreement, the time limit from the date on which the bid invitation document is put on sale to the deadline for submission of bidding documents may be shortened appropriately, provided that such time limit shall be no shorter than ten days.

Clause 41 Where a invited bidding is held, the purchaser shall determine the invited suppliers by one of the following ways:

(1) a preliminary examination of supplier qualification shall be implemented in accordance with Clause 25 of these Regulations, and more than three suppliers shall be chosen at random among the suppliers which meet the relevant qualification conditions;

(2) more than three suppliers shall be chosen at random among the suppliers in the database established by the finance department of the People’s Government above the provincial level which meet the relevant qualification conditions;

Clause 42 The bid invitation document shall stipulate expressly the contents of material response in a bidding document. Where a bidding document fails to respond fully to the material clauses provided in the bidding document, such bidding shall be deemed as invalid.

Where there is any material requirement in a competitive negotiation procurement documents or enquiry procurement documents, the provision of the preceding paragraph shall apply.

Clause 43 A bid invitation document may require bidders to pay bid securities. Where a bidder fails to pay bid security in accordance with the provisions of the bid invitation document, its bidding shall be deemed as invalid.

Bid security may be paid by check, bill of exchange, promissory note, letter of guarantee, etc, and the amount of bid security shall not exceed 1% of the procurement project budget and be no more than RMB 100,000 Yuan.

The purchaser or procurement agency shall, within five working days after the issuance of the bid-winning notice, refund initiatively the bid securities to the suppliers which fail to win the bid, and refund initiatively the bid security to the supplier who wins the bid within five working days after the execution of the procurement contract.

Where the suppliers which participate in a competitive negotiation or enquiry procurement are required to pay the security, the provisions in these Regulations in connection with bid security shall apply as a reference.

Clause 44 Bidding appraisal methods in government procurement are divided into lowest price method and integrated scoring method.

The purchaser or procurement agency shall clarify the specific appraisal method, appraisal factors, appraisal detailed rules and appraisal standards in its bid invitation document. Contents that are not expressly provided in the bid invitation document shall not apply as appraisal basis.

Clause 45 The period for public sale of a bid invitation document shall be no shorter than five working days.

Clause 46 In a bidding procurement, if the number of suppliers which have submitted valid bidding documents before the deadline for submission of bidding documents, or suppliers which meet the qualification conditions after the opening of bidding, or suppliers which respond to the material clauses of the bid invitation document is less than three, such procurement task shall be cancelled, and the purchaser or procurement agency shall report the same to the finance department of the People’s Government above the county level and such finance department shall handle the same as follows:

(1) Where there is no unreasonable clause in the bid invitation document and the bidding procedure conforms to the provisions, competitive negotiation, enquiry, single source or other mode shall be adopted for the procurement upon approval based on the actual situations of such procurement project. Where competitive negotiation or quotation mode is adopted for the procurement, the purchaser or procurement agency shall re-organize the procurement activity in accordance with the provided procedure.

(2) Where there is any unreasonable clause in the bid invitation document or the bidding procedure does not conform to the provisions, the purchaser or procurement agency shall be obliged to modify the bid invitation document, and re-organize the procurement activity in accordance with the provided procedure.

Clause 47 “Each offer made by the suppliers has exceeded the procurement budget” referred to in Item (3), Paragraph 1, Clause 36 of the Procurement Law means all offers made by suppliers have exceeded the procurement budget. Where the offers made by some suppliers exceed the procurement budget, which leads to a situation that the number of suppliers whose offer does not exceed the procurement budget is less than three, it shall be deemed that each offer made by suppliers has exceeded the procurement budget.

Clause 48 In a bidding procurement, the purchaser or procurement agency shall publish the procurement budget before the opening of bidding. Where it does not publish the procurement budget before the opening of bidding, after the end of bidding appraisal, it must not abolish the bidding on the ground that each offer made by suppliers has exceeded the procurement budget or the purchaser can not pay as bid.

Clause 49 “Equal quality and service” referred to in Item (5) of Clause 38 and Item (4) of Clause 40 means the product quality and service provided by a supplier both meet the minimum requirements of the procurement documents.

Clause 50 Where single source procurement mode is adopted, the purchaser or procurement agency shall obtain in advance the approval of the finance department at the same level with the purchaser.

The purchaser or procurement agency shall, before obtaining the approval of the finance department, publish the procurement information and the name of the only supplier on media designated by the finance department, and the period for the announcement shall be no less than five working days, unless under the circumstances provided in Item (2) and (3) of Clause 31 of the Government Procurement Law and Clause 46 of these Regulations.

Clause 51 Finance departments of People’s Governments above the provincial level shall establish government procurement appraisal expert reserves in accordance with the classification of specialties provided by the finance department of the State Council.

Clause 52 Government procurement appraisal experts shall follow the principles of fairness, impartiality, objectivity and selecting the best, implement the appraisal independently in accordance with the provisions of the procurement documents, and be responsible for their respective appraisal opinions.

Where an appraisal expert has any objection to the procurement documents or the appraisal report, he/she shall subscribe his/her different opinion on the report and give his/her reasons, or else he/she shall be deemed to have given his/her consent.

The bidding appraisal committee or the negotiation or enquiry group must not alter without authorization the appraisal procedure, appraisal method, appraisal factors, appraisal detailed rules and appraisal standards determined by the procurement documents; where the procurement documents is in violation of the relevant laws, regulations and rules, such personnel shall refuse to implement the appraisal and explain the relevant situations to the purchaser or procurement agency.

The purchaser or procurement agency shall appraise the professional and technical level, professional ethics, appraisal works, etc. of each appraisal expert.

Clause 53 The purchaser, procurement agency and their staff must not, before the start of or during the process of the appraisal, make any tendentious or misleading explanations or illustrations to the bidding appraisal committee or the competitive negotiation or enquiry group.

Clause 54 The procurement agency shall, within five working days after the end of the appraisal, deliver the appraisal report to the purchaser, and the purchaser shall, within five working days, choose in order the supplier who wins the bid or who makes the deal among the candidates for winning of bid or conclusion of transaction recommended in the appraisal report.

Before the notice of winning of bid or conclusion of transaction is sent, where the procurement agency finds that the bidding appraisal committee or the negotiation or enquiry group fails to implement the appraisal in accordance with the appraisal method, appraisal factors, appraisal detailed rules and appraisal standards, it may, upon the purchaser’s written consent, require the original bidding appraisal committee or the negotiation or enquiry group to implement a re-appraisal, and notify in writing all suppliers participating in such procurement activity of the reasons for such re-appraisal. The re-appraisal opinion shall be the final appraisal opinion.

Where the purchaser or any supplier has any objection to the computing results of the bidding appraisal committee’s or the negotiation or enquiry group’s grading, the procurement agency shall organize such bidding appraisal committee or the negotiation or enquiry group to implement a re-examination. Where it is necessary to change the result of winning of bid or conclusion of transaction upon the re-examination, the alteration announcement shall be published on the media on which the original information announcement is published.

Where the purchaser organizes its procurement by itself, Paragraph 2 and 3 of this Clause shall apply as a reference.

Chapter 5 Government Procurement Contract

Clause 55 The purchaser and the supplier who wins the bid or makes the deal shall enter into a government procurement contract in accordance with the matters identified in the procurement documents, and the material contents in such procurement contract such as the object of procurement, specification and model, procurement amount, procurement quantity and quality standards shall be in consistency with the procurement documents.

A government procurement contract shall include policy contents for government procurement such as energy conservation and environmental protection, independent innovation and supporting small and medium enterprises.

Clause 56 The purchaser must not charge any performance security from any supplier, and must not transform any bid security paid by any supplier who wins the bid or makes the deal into performance security.

Clause 57 The main clauses of a government procurement contract shall stipulate the name of both parties, object, price and reward, quantity, quality, time of performance of contract, disposal of disputes, etc.

Clause 58 In a procurement project that is subject to preferential policies for preferential or mandatory procurement, the contract shall not be performed by way of subcontracting.

Clause 59 In the determination of the contract amount or contract object of a government procurement contract or the relevant agreements, gift, kickback, etc. are all prohibited.

Clause 60 After a notice of winning of bid or conclusion of transaction is sent, the supplier who wins the bid or makes the deal shall enter into a government procurement contract with the purchaser, unless any event of force majeure occurs.

Where the supplier who wins the bid or makes the deal abandon the project under such bidding or transaction and refuses to enter into a contract with the purchaser, its bid security shall be confiscated by the purchaser and turned over to the national treasury at the same level; where any losses are caused to the purchaser, such supplier shall also compensate for such losses, and its act shall be put on record as a misconduct. The purchaser may determine in order the next candidate for winning of bid or conclusion of transaction as the supplier who wins the bid or makes the deal, and enter into a government procurement contract with the same.

Purchasers which change the result of winning of bid or conclusion of transaction or refuse to enter into a government procurement contract with the supplier shall bear legal responsibilities according to laws. 

Clause 61 The purchaser or procurement agency shall, in accordance with the standards and methods provided in the procurement documents and government procurement contract, timely organize an inspection of the government procurement project.

Clause 62 The purchaser shall, in accordance with the government procurement contract, timely pay the procurement funds to the supplier who wins the bid or makes the deal.

The procedure for payment of government procurement project funds shall be executed in accordance with the national provisions in connection with financial funds payment management. Where the procurement funds are subject to the arrangement of financial budget, the relevant provisions under treasury centralized payment system shall apply.

Clause 63 Procurement documents may be saved as electronic files, which should be in full accord with the original records of such procurement documents.

Chapter 6 Challenge and Complaint

Clause 64 The purchaser or procurement agency shall, within three working days, give reply to the supplier’s inquiry, provided that the contents of such reply must not include any trade secrets in connection with the procurement project and other suppliers.

Clause 65 Where a supplier believes that its rights and interests has been damaged due to any of the following reasons, it may question the purchaser or procurement agency in writing according to laws:

(1) there is any restrictive or tendentious clause in the procurement documents;

(2) the procurement documents fails to be supplemented, clear or amended in accordance with the provided procedures;

(3) the procurement or relevant personnel have any interest-based relationship with any supplier and do not withdraw when they should withdraw;

(4) the procurement procedure is in violation of the provisions;

(5) procurement parties collaborate with each other;

(6) any other supplier provides any false materials in order to win the bid or conclude the deal with the purchaser;

(7) any other situations that make it believe that the procurement documents, the procurement process and the result of winning of bid or conclusion of transaction has caused damage to its rights and interests.

Clause 66 “Supplier” referred to in Clause 52 of the Government Procurement Law means suppliers who participate directly in the procurement activities under the challenged government procurement project.

“Procurement documents” referred to in Clause 52 of the Government Procurement Law mean procurement project announcement, bid invitation document, preliminary qualification examination document, competitive negotiation document, enquiry document and the supplement, alteration and clarification document to the procurement documents.

“Procurement process” referred to in Clause 52 of the Government Procurement Law means each procedural link from the issuance of the procurement project information announcement to the publication of the result of winning of bid or conclusion of transaction such as the issuance and sale of procurement documents, opening of bid, bidding appraisal, clarification, negotiation and enquiry.

Clause 67 The period for submission of challenge provided in Clause 52 of the Government Procurement Law shall be computed in accordance with the following provisions:

(1) Where the procurement documents are challenged, such period shall commence as of the date of receipt of procurement documents by the supplier and end on the deadline date for submission of bidding or for submission of responsive documents for negotiation or enquiry.

(2) Where the procurement process is challenged, such period shall commence as of the date on which the procurement procedural links end.

(3) Where any member of the bidding appraisal committee or the competitive negotiation or enquiry group is challenged, such period shall commence as of the date on which the result of winning of bid or conclusion of transaction is published.

Clause 68 The purchaser or procurement agency, after receiving a written challenge from a supplier, shall sign on the return receipt, and give a written reply within seven working days after the signature upon receipt of such return receipt, explain its basis and reasons, and notify in writing the supplier who put forward such challenge and other suppliers related to the handling result of such challenge, provided that the contents of such reply must not involve any trade secrets of any other suppliers concerned.

Clause 69 Where the purchaser or procurement agency deems that a challenge is well-grounded, such challenge shall be handled separately as follows:

(1) Where the supplier puts forward its challenge in relation to Item (1) and (2) of Clause 65 of these Regulations, correction shall be made timely and an announcement or written notice shall be issued to all suppliers participating in such procurement activity;

(2) Where the supplier puts forward its challenge in relation to Item (3)-(6) of Clause 65 of these Regulations, the procurement process or result shall be deemed as invalid and a new procurement activity shall be organized, which shall be reported to the finance department at the same level for archiving;

(3) Where the supplier puts forward its challenge in relation to Item (7) of Clause 65 of these Regulations, such challenge shall be handled with reference to the provisions of the two preceding Items of this Clause based on the specific situations and whether the result of winning of bid or conclusion of transaction will be influenced.

Clause 70 The procurement agency shall give reply to the supplier’s inquiry or challenge within the scope of matters entrusted by the purchaser. Where the matter under the inquiry or challenge is beyond the scope of matters entrusted by the purchaser, the procurement agency shall timely ask the supplier to put forward such inquiry or challenge to the purchaser.

Clause 71 Real-name system shall be implemented when a supplier raises a challenge or complaint, and its challenge or complaint shall include the specific matters that are challenged or complained about and the basis of fact proving the damage caused to its interests, and any supplier must not raise any false or malicious challenge or complaint.

A matter complained about by a supplier must be a matter that has been challenged.

Clause 72 Where a matter complained about which is accepted by the finance department has been accepted by another administrative authority, the finance department may terminate the handling procedure for such complaint.

Clause 73 Each People’s Government above the county level shall be responsible for accepting and handling according to laws the matters complained about by suppliers in government procurement activities under budget projects at the same level, and shall be subject to the supervision and guidance of the finance department of the People’s Government at the next higher level.

Where the project complained about is a procurement project arranged jointly by central budget and local budget, such compliant shall be handled by the finance department of the People’s Government in charge of the purchaser’s budget.

Clause 74 A supplier, when raising a complaint, shall submit its letter of complaint face to face, and provide several copies of its letter of complaint in accordance with the number of respondents and suppliers related to such complaint. The main contents of a letter of complaint shall include:

(1) the name or designation, place of domicile, contact information and the relevant certification of the complainant

(2) the designation, place of domicile and contact information of the respondent;

(3) specific matters complained about, basis of fact and legal ground;

(4) challenge, status of reply to challenge and the relevant certification materials.

Where the complainant is a natural person, the letter of complaint shall be signed by him/her. Where the complainant is a legal person, the letter of complaint shall be signed and sealed by its legal representative in company with its common seal affixed. Where the complainant is any other organization, the letter of complaint shall be signed and sealed by its principal in company with its common seal affixed.

Clause 75 “After receipt of the letter of complaint” referred to in Clause 56 of the Government Procurement Law means after the finance department’s receipt of a letter of complaint which meets the conditions. Where the materials in a letter of complaint are incomplete or unclear, the finance department may, within five working days after its receipt of such letter of complaint, ask the complainant to make correction. The notice of making correction shall specify matters to be corrected and a reasonable time limit for making correction. Where the complainant does not correct the letter of complaint within the specified time limit without any justified reasons, such complainant shall be deemed to have abandoned its application for complaint. Time used for correcting the complaint materials shall not be included in the time limit for handling the complaint.

The finance department shall, within five working days after its receipt of a letter of complaint, examine the same; where the letter of complaint meets the provided conditions, such complaint shall be accepted; where the letter of complaint fails to meet the provided conditions, such complaint shall not be accepted; where the matters complained about do not fall into the jurisdiction of such finance department, or shall firstly be subject to the investigation and punishment of any other administrative authority, such finance department shall ask the complainant to deliver such letter of complaint to the competent authority.

Clause 76 The finance department shall, within three working days after its acceptance of a complaint, send copies of the letter of complaint to the respondent and suppliers related to the matters complained about.

The respondent shall, within five working days from its receipt of the copy of a letter of complaint, explain in writing to the finance department, and provide the relevant evidences, basis and other relevant materials. Where the respondent fails to provide its explanation materials, such respondent shall be deemed to have acknowledged the matters complained about.

Clause 77 The finance department shall adopt paper review method when handling the matter complained about. The finance department, when considering it necessary, may implement investigation and collection of evidences, and organize a face-to-face cross-examination of evidences between the complainant and respondent.

Where the finance department conducts its investigation according to laws, the complainant, respondent and units or personnel related to the matters complained about shall report information truthfully and provide the relevant materials.

Where the matter complained about involves or may involve any important clue of a crime, the finance department shall transfer such matter to the judicial authority for disposal in accordance with the relevant provisions, and notify in writing the complainant of the transfer status and the transferred documents.

Clause 78 Where the complainant withdraws its complaint after the finance department accepts such complaint, the finance department shall terminate the complaint procedure, unless the finance department finds any major illegal situation.

Clause 79 Under any of the following circumstances, the complaint shall be dismissed:

(1) After a complaint is accepted, it is found that such complaint does not meet the conditions for acceptance provided in the Government Procurement Law and these Regulations.

(2) The facts identified in the reply to a challenge are clear, and the basis applied in such reply is accurate;

(3) The matter complained about falls into the scope of state secrets or contents that are not disclosed during the process of procurement, while the complainant fails to give a justified information source or provide valid evidences.

Clause 80 Where the finance department, upon examination, deems that the procurement documents and procurement process are in violation of the relevant provisions of the Government Procurement Law and these Regulations, which has or may have an impact on the result of winning of bid or conclusion of transaction, the following provisions shall apply separately under each circumstance:

(1) Where the supplier who wins the bid or makes the deal has not been decided yet, the procurement act shall be deemed to be illegal, and a new procurement activity shall be launched as ordered in accordance with the provided procedure.

(2) Where the supplier who wins the bid or makes the deal has been decided but the procurement contract has not yet been executed, or the procurement contract has been executed but has not yet been performed, the result of winning of bid or conclusion of transaction shall be deemed to be invalid or the contract shall be rescinded, and a new procurement activity shall be launched as ordered in accordance with the provided procedure; where any losses are caused to the purchaser or complainant, the relevant persons in charge shall bear the liability for damage.

(3) Where the procurement contract has already been performed, and the decision that such procurement activity is illegal causes any losses to the purchaser or complainant, the liability for damage shall be borne by the relevant persons in charge.

Clause 81 The finance department shall, within thirty working days after its receipt of a complaint, make a disposal decision on the matter complained about, notify the complainant and other parties related to the matter complained about of the same, and publish the handling result on media designated by the finance department of the People’s Government above the provincial level.

Where the finance department needs to obtain the relevant certifications or go through any inspection, testing, quarantine, authentication and expert appraisal when handling a complaint, the time needed shall not be included in the time limit for handling the complaint.

Clause 82 During the period for handling the matter complained about, the finance department may ask in writing the purchaser to suspend the procurement activity under any of the following circumstances:

(1) The purchaser or procurement agency deems it necessary to suspend the procurement activity;

(2) Suspension of the procurement activity is good for the disposal of the matters complained about;

(3) The complainant applies to suspend the procurement activity, and the finance department deems such application to be reasonable and decides to suspend the procurement activity.

Clause 83 Where the finance department, during its disposal of any matter complained about, finds any illegal act of a procurement party that should be investigated for legal responsibilities, such matter shall be handled separately according to laws.

Chapter 7 Supervision and Inspection

Clause 84 A finance department of People’s Government above the county level shall be responsible for the supervision and inspection of the procurement activities of the government at the same level. The main contents of such supervision and inspection are:

(1) the implementation status of the laws, regulations, policies concerning government procurement;

(2) the performance status of government procurement projects, procurement implementing plans, procurement procedures and procurement contracts;

(3) status concerning setting and operation of the centralized procurement institutions;

(4) status concerning the announcements of government procurement projects, procurement standards, procurement results and other government procurement information;

(5) status concerning certified qualifications of persons engaging in government procurement;

(6) status concerning the agent business operated by certified government procurement agencies;

(7) status concerning establishment of procurement files and conservation of procurement documents

(8) other contents provided in laws and regulations.

Clause 85 A finance department of People’s Government at higher level shall inspect and guide the supervision and administration of government procurement activities implemented by the finance department of its subordinate People’s Government.

Clause 86 The finance department shall reinforce its appraisal of the centralized procurement institutions. The main contents of such appraisal include:

(1) status concerning the execution of laws and regulations by the centralized procurement institutions, and whether there is any illegal act or disciplinary offence;

(2) status concerning the execution of the procurement mode and procedure;

(3) status concerning the establishment and improvement of internal management system in centralized procurement institutions;

(4) status concerning the management of bidding security, etc. by centralized procurement institutions;

(5) status concerning the professional quality, professional skill and incorruptibility and self-discipline of the practitioners in centralized procurement institutions;

(6) status concerning procurement prices and funds saving;

(7) status concerning disposals of challenges by centralized procurement institutions;

(8) status concerning service quality of centralized procurement institutions;

(9) other matters provided by the finance department of People’s Government above the provincial level.

A finance department shall formulate an appraisal plan, to implement regular appraisals on centralized procurement institutions; appraisal results shall be reported to the People’s Government at the same level, and published on media designated by the finance department of People’s Government above the provincial level.

Clause 87 The State shall establish a certified qualification system for persons engaging in government procurement, accreditation and appraisal shall be implemented on such persons in accordance with the qualification standards, and a system of employment with certificates shall be implemented.

Measures for administration of qualification accreditation for persons engaging in government procurement shall be formulated by the finance department of the State Council jointly with other relevant departments of the State Council.

Clause 88 “Procurement standards for government procurement projects” referred to in Clause 63 of the Government Procurement Law mean the basic requirements such as the specifications and functions of a procurement object determined by the purchaser based on the actual demand in a procurement project.

The purchaser shall publish the determined procurement standards on media designated by the finance department of People’s Government above the provincial level, and must not make use of such procurement standards to restrict any potential supplier from participating in the government procurement activity.

Clause 89 Where the purchaser finds any illegal act committed by the procurement agency during its acting as an agent in a government procurement activity, the purchaser shall timely hold back such act and require the procurement agency to make correction. Where the procurement agency refuses to make any correction, the purchaser shall timely report the same to the finance department of People’s Government at the same level for disposal by such department according to laws; where a certified procurement agency refuses to make any correction, the purchaser shall terminate its commission agreement with such procurement agency.

Where the procurement agency finds any illegal act committed by the purchaser during a government procurement activity, the procurement agency shall timely advise the purchaser to make correction. Where the purchaser refuses to make any correction, the procurement agency shall timely report the same to the finance department of People’s Government at the same level for disposal by such department according to laws. The purchaser must not terminate its commission agreement with such procurement agency because of the above situation.

Clause 90 Where purchaser believes that a procurement activity has caused any damage to its rights and interests, it may timely report the same to the finance department of People’s Government at the same level for disposal by such department according to laws.

Clause 91 The finance departments of People’s Governments at each level, together with other departments which perform supervision and administration duties in connection with government procurements according to laws, shall reinforce their supervision and administration of government procurement appraisal experts, establish and improve an system for appraisal of professional level, professional ability and performance of job duties of appraisal experts.

The purchaser and procurement agency shall, in accordance with the appraisal system provided in the preceding paragraph, make records of the status concerning the participation in a government procurement activity by the appraisal experts, and timely feed such information back to the finance department.

Clause 92 The finance departments of People’s Governments at each level, together with other departments which perform supervision and administration duties in connection with government procurements according to laws, shall reinforce their supervision and inspection of suppliers, make records of the misconducts of suppliers during their participation in government procurement activities in an integrity file, so as to establish gradually an unified national credit system for government procurement suppliers.

Clause 93 Government procurement parties shall accept the inspections of the finance department or other government departments which perform according to laws supervision and administration duties in connection with government procurement activities, report information truthfully, provide relevant materials, and must not refuse to provide, or conceal, any information or materials.

Any information and materials in connection with the inspections may be written down, taped, video taped, photographed and copied.

Clause 94 Other departments of People’s Governments at each level which perform supervision and administration duties in connection with government procurement activities in accordance with the provisions of laws and administrative regulations shall, in accordance with their division of duties, reinforce their supervision and inspection of government procurement activities, cooperate with and reinforce their coordination with, the finance departments, and timely report the relevant situations.

Auditing authorities shall reinforce their audit supervision of government procurement activities. Activities conducted by supervision and administration departments for government procurement and government procurement parties in connection with government procurement shall be subject to the supervision of auditing authorities.

Supervisory authorities shall reinforce their supervision of the state organs, public servants and other personnel appointed by state administrative organs which participate in government procurement activities. Cases transferred by finance departments and other departments bear supervision and administration duties in connection with government procurement shall be timely handled according to laws.

Chapter 8 Legal Responsibilities

Clause 95 The amounts of fines imposed on the purchaser and procurement agency provided in Clause 71 of the Government Procurement Law are above 20,000 Yuan and below 100,000 Yuan.

The amounts of fines imposed on the purchaser and procurement agency provided in Clause 72 of the Government Procurement Law are above 20,000 Yuan and below 200,000 Yuan; the amounts of fines imposed on the staff of a purchaser and procurement agency are above 2,000 Yuan and below 20,000 Yuan.

Clause 96 Where the purchaser commits any of the following acts, it shall be ordered to make correction within a specified time limit; where the situation is serious, a warning shall be given to it, and a fine of 5,000 Yuan above and 50,000 Yuan below may be imposed on it at the same time; the officers in direct charge and other persons held directly liable shall be punished by their administrative departments or the relevant authorities, and a notice of such punishment shall be circulated;

(1) failing to implement the government procurement plan in accordance with the provided program;

(2) failing to implement a self-procurement project in accordance with the mode and procedure provided in the Government Procurement Law;

(3) failing to entrust a centralized procurement agency according to laws to implement a government procurement project which is incorporated in the centralized procurement catalogue and falls into conventional government procurement projects;

(4) failing to choose the supplier who wins the bid or makes the deal among the candidates for winning of bid or conclusion of transaction recommended by the bidding appraisal committee or the negotiation or enquiry group in accordance with the provisions;

(6) the material contents of the executed government procurement contract is inconsistent with the contents of the procurement documents;

(6) charging any performance security;

(7) change, rescind or terminate without authorization the procurement government contract, or the procurement amount of additional goods, projects and services which are the same with the object of such contract is more than 10% of the amount of the original contract; 

(8) importing any products without going through the examination, verification, and obtaining the consent, of the finance department.

Where the purchaser commits any of the acts in Items (2)-(7) and refuses to make correction, payment of funds to it in accordance with the budget shall be suspended.

Clause 97 Where the purchaser or procurement agency commits any of the following acts, it shall be ordered to make correction within a specified time limit; where the situation is serious, a warning shall be given to it, and a fine of 5,000 Yuan above and 50,000 Yuan below may be imposed on it at the same time; the officers in direct charge and other persons held directly liable shall be punished by their administrative departments or the relevant authorities, and a notice of such punishment shall be circulated;

(1) failing to publish government procurement information on designated media according to laws;

(2) failing to implement preferential or mandatory government procurement policies;

(3) failing to select experts from a government procurement expert reserve according to laws;

(4) failing to implement a preliminary qualification examination or choose the suppliers in accordance with the provided procedure in a invited bidding, competitive negotiation or enquiry procurement;

(5) failing to submit within the provided time limit the copy of the government procurement contract to the government procurement supervision and administration department at the same level and the relevant departments for archiving;

(6) failing to organize a inspection of the supplier’s performance of contract in accordance with the provisions;

(7) failing to handle any supplier’s challenge in the provided time limit.

Clause 98 Where the purchaser, procurement agency or any of their staff makes intentionally any tendentious or false representations in a procurement activity, which misleads the government procurement appraisal experts in the bidding appraisal committee or the competitive negotiation or enquiry group, such purchaser or procurement agency shall be ordered to make correction within a specified time limit; where the situation is serious, a warning shall be given to it, and a fine of 5,000 Yuan above and 50,000 Yuan below may be imposed on it at the same time; the officers in direct charge and other persons held directly liable shall be punished by their administrative departments or the relevant authorities, and a notice of such punishment shall be circulated;

Clause 99 Centralized procurement institutions which engage in profitable activities shall be ordered to make correction and warned, and their illegal gains (if any) shall be confiscated at the same time; the officers in direct charge and other persons held directly liable shall be punished according to laws by the People’s Government which establish such centralized procurement institutions or the relevant authorities.

Clause 100 Under any of the following circumstances, the centralized procurement institution shall be ordered to make correction within a specified time limit; where the situation is serious, a warning shall be given; where such procurement agency refuses to make any correction, the officers in direct charge and other persons held directly liable shall be punished according to laws by the People’s Government which establish such centralized procurement institution or the relevant authorities:

(1) the internal supervision and management system is unsound, or positions and personnel that should be separated are not separated;

(2) the centralized procurement institution consigns its centralized procurement projects to other procurement agencies;

(3) the procurement price is significantly higher than the average market price, or the quality does not meet the procurement requirements, and no reasonable reason can be given;

(4) the centralized procurement institution fails to establish according to laws an internal management system and business database for government procurement, and has disordered management.

Clause 101 Where a certified procurement agency obtain any government procurement agent business from the purchaser by offering a bribe or by other improper means, a fine of 20,000 Yuan above and 200,000 Yuan below shall be imposed on such procurement agency, and its illegal gains (if any) shall be confiscated; where a crime is constituted, the relevant units and personnel shall be prosecuted for criminal responsibilities according to laws by judicial authority.

Clause 102 Where a certified procurement agency, when acting as an agent in government procurement business, commits any illegal act which is in violation of the provisions of the Government Procurement Law and these Regulations, and the situation is serious, its qualification for government procurement agent business shall be suspended or revoked; where a crime is constituted, the relevant units and personnel shall be prosecuted for criminal responsibilities according to laws.

Clause 103 Where any procurement staff member and relevant person who knows perfectly well his/her interest-based relationship with a supplier does not withdraw according to laws, a warning shall be given to such person, a fine of 2,000 Yuan above and 20,000 Yuan below may be imposed on him/her at the same time, and he/she shall be punished according to laws by the unit he/she work for, the superior administrative departments or the relevant departments; where the situation is serious, his/her qualification for engaging in government procurement shall be revoked.

Clause 104 Where any staff member of a purchaser or procurement agency engages in government procurement business without obtaining a qualification for engaging in government procurement, such purchaser or procurement agency shall be ordered to make correction within a specified time limit, and a warning shall be given; a fine of 2,000 Yuan above and 20,000 Yuan below shall be imposed on the staff member who engages in government procurement activities in violation of laws.

Clause 105 Where the supplier commits any of the following acts, it shall be included in the misconduct record list and be prohibited from participating in any government procurement activities in 1-3 years, its illegal gains (if any) may be confiscated at the same time, and a fine of 5‰ above and 10‰ below of the procurement amount may be imposed on it; where the situation is serious, its business license shall be revoked by the industry and commerce administrative authority; where a crime is constituted, the relevant units and personnel shall be prosecuted for criminal responsibilities according to laws: 

(1) offering a bribe or providing any other improper benefits to any member of the bidding appraisal committee or the competitive negotiation or enquiry group;

(2) refusing to enter into a government procurement contract with the purchaser without any justified reasons after the winning of bid or conclusion of transaction;

(3) the material contents of the executed government procurement contract is inconsistent with the contents of the procurement documents;

(4) implementing the government procurement contract by way of subcontracting without the purchaser’s consent; 

(5) implementing without authorization a government procurement contract that is subject to preferential policies for preferential or mandatory government procurement by way of subcontracting;

(6) failing to perform the contractual obligations in accordance with the provisions of the government procurement contract, and providing counterfeit and shoddy products;  

(7) changing or rescinding a government procurement contract without authorization.

Where the supplier commits any act in Item (1) of the preceding paragraph, the result of winning of bid and conclusion of transaction shall be invalidated.

Clause 106 “Malicious collaboration” referred to in Item (3), Paragraph 1 of Clause 77 of the Government Procurement Law includes the following acts:

(1) A supplier obtains is informed by the purchaser or procurement agency of the bidding status of other suppliers and amends its bidding document accordingly; 

(2) A supplier is informed by the purchaser or procurement agency of the member status of the bidding appraisal committee or the competitive negotiation or enquiry group; 

(3) Several suppliers lower or raise the quoted price upon consensus through consultation, so as to make a certain supplier win the bid or conclude the transaction with the purchaser; or they decide upon consultation in advance to make a certain supplier win the bid or conclude the transaction with the purchaser and then compensate the other suppliers;

(4) The material clauses in the bidding documents or responsive documents submitted by two or more suppliers have a lot in common, for which such suppliers fail to give any reasonable reasons;

(5) Other collaboration acts provided by laws, regulations and the finance department of the State Council.

Clause 107 Where the supplier provides any false materials or fabricates any facts for questioning or complaint and the situation is serious, a fine of 5‰ above and 10‰ below of the procurement amount shall be imposed on it, and it shall be included in the misconduct record list and be prohibited from participating in any government procurement activities in 1-3 years.

Clause 108 Where any government procurement appraisal expert, in his/her participation in any government procurement activity, commits any of the following acts, a warning shall be given to him/her, and a fine of 2,000 Yuan above and 20,000 Yuan below may be imposed on him/her at the same time; where the situation is serious, his/her participation qualification for government procurement expert shall be revoked; where a crime is constituted, he/she shall be prosecuted for criminal responsibilities according to laws.

(1) failing to perform his/her obligations of careful review in accordance with the provisions of the procurement documents during the process of bidding appraisal, competitive negotiation and enquiry, which leads to any damage to the purchaser’s interests caused by the procurement result;

(2) accepting any bribe or other improper benefits from the purchaser, procurement agency or supplier;

(3) knowing perfectly well his/her interest-based relationship with a supplier but failing to withdraw voluntarily;

(4) revealing appraisal document, appraisal status and the state secrets and trade secrets obtained during the process of appraisal;

(5) failing to implement the appraisal in accordance with the procurement documents and being obviously tendentious.

Clause 109 Unless otherwise provided in the Government Procurement Law and these Regulations, where any administrative penalty is imposed for any act in violation of the provisions of the Government Procurement Law and these Regulations, such administrative penalty shall be enforced by the finance department above the county level which is at the same level with the purchaser.

Clause 110 Where any government procurement party commits any illegal act provided in Clause 96, 97, 98, 105 and 108 of these Regulations which causes any losses to any other person, such party shall bear civil responsibilities in accordance with the relevant civil laws.

Clause 111 Where any staff member of any supervision and administration department for government procurement abuses his/her power, neglects his/her duties or plays favouritism and commit irregularities in violations of the provisions of the Government Procurement Law and these Regulation during his/her implementation of supervision and inspection, administrative penalties shall be imposed on him/her according to laws; where a crime is constituted, he/she shall be prosecuted for criminal responsibilities according to laws.

Chapter 9 Supplementary Provisions

Clause 112 Where any imported mechanical and electrical products are to be purchased upon the finance department’s consent upon examination and verification, such bid invitation and bidding shall be implemented in accordance with the relevant national provisions.

Clause 113 Where any emergent procurement is implemented due to any serious natural disaster or other events of force majeure, the Government Procurement Law and these Regulations shall not apply and the measures for administration shall be formulated separately by the finance department of the State Council.

Clause 114 “Procurements in connection with national security and state secrets” referred to in Clause 85 of Government Procurement Law mean any government procurement projects for which a certificate for secrecy-related project is issued by the national confidentiality organ at the same level.

Clause 115 The People’s Governments at provincial level may formulate the implementing measures in accordance with the provisions of these Regulations.

Clause 116 These Regulations shall take effect as of _______.

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