Administrative Measures for the Bidding and Tendering of Railway Engineering Construction Projects (Mainland China)

Karl Zhang

On August 31, 2018, the Ministry of Transport issued the Administrative Measures for the Bidding and Tendering of Railway Engineering Construction Projects (the “Measures”), which will go into effect on January 1, 2019.  The Measures regulate the bidding, tendering, tender opening, tender evaluation and tender award procedures, as well as the relevant supervision and responsibilities, of railway engineering construction projects.  The Measures are highlighted below:

1. Invitation to tender

Pursuant to Article 8 of the Measures, a procurement agency handling a railway construction project that requires a tender process is required to prepare the pre-qualification documents and tender documents by following the standard and supplemental texts for the railway industry formulated by the development and reform department under the Standard Council in conjunction with relevant administrative supervision authorities, such as the Pre-qualification Documents for Standard Construction Tendering Qualifications and the Standard Construction Tender Documents, the Standard Equipment Procurement Tender Documents, the Standard Material Procurement Tender, the Standard Survey Tender Documents, the Standard Design Tender Documents and the Standard Supervision Tender Documents.  Article 18 of the Measures stipulates that a procurement agency shall not set unreasonable threshold requirements or exclude potential bidders, while specifically mentioning the following as unreasonable requirements: refusal accept a bid submission from a design, construction or supervision enterprise that meets the state’s requirements for opening up the railway construction market; setting enterprise qualifications or individual qualifications which violate the relevant state requirements or have no bearing on the actual procurement project; setting the bidders’ qualification requirements in the tender documents or pre-qualification documents higher than as set forth in the tender announcements; or setting performance requirements for enterprises or project representatives that exceed the actual needs of the construction for the procurement project.

2. Bidding

The Measures stipulate that the bidders shall prepare their bid documents in accordance with the requirements of the tender documents and respond to the substantive requirements and terms put forth therein.  If a subcontract is involved, the bidders shall specify details about the items to be subcontracted after the tender award according to the actual circumstances of the project and the relevant construction subcontract requirements as specified in the tender documents.  The bidders may submit the bid bond in the form of a bank guarantee.  The bidders shall not engage in the following acts: collusive bidding; bribing the procuring agency, tender agents or the bid evaluation committee; submitting a bid via leveraging the qualifications or qualification certificates from other legal persons or organizations by means of affiliation, transfer, lease or other fraudulent means; or acts that exclude other bidders from fair competition.

3. Bid opening, bid evaluation and bid award

The Measures stipulate that the procurement agency shall invite all bidders to participate in the bid opening according to the time and place specified in the tender documents and record and archive the important events and details of the opening.  The bid evaluation committee shall review documents submitted by the bidders in accordance with the relevant requirements, and shall evaluate the bids objectively and fairly.  After bid evaluation is completed, a bid evaluation report shall be submitted to the procurement agency along with a list of no more than three tender award candidates.

For railway engineering or construction projects that are required by law to go through a tender process, the Measures stipulate the specific contents that should be disclosed when the tender award candidates are announced, such as the name of the tender project, the phases or the package number, the ranking of the candidates, their names, bid prices, the construction period or delivery schedule commitments, etc.  Meanwhile, the procurement agency shall submit a written report on the status of the tender process to the regulatory authorities for the bidding and tendering of railway engineering or construction projects within 15 days after the day the tender winner is determined.

After the tender winner is determined, the procurement agency shall issue a tender award notice to the winner and notify all other bidders who were not awarded the tender.  If all bids are rejected, the procurement agency shall notify all bidders in writing and explain the specific reasons.  With respect to the results of a project that is required by law to go through a tendering process, the name of the tender winner shall be announced in the relevant media pursuant to applicable requirements.

4. Supervision and administration

The Measures stipulates the division of labor for the supervision of the bidding and tendering of railway projects.  The supervision is divided into two levels, with the State Railway Administration being responsible for the supervision of the whole industry, while the regional railway supervision bureaus are responsible for supervising the tendering and bidding activities for railway engineering or construction projects within their jurisdiction.  The supervision and administration methods primarily include supervision and spot checks, complaint handling, recordation, receipt of written reports, administrative penalties, and public disclosure of records.  If bidders or other interested parties believe that the tendering and bidding process are not compliant with the laws and regulations, they may, within 10 days after the date of knowledge or presumed knowledge, file a complaint with the administrative supervisory authority for the bidding and tendering of the railway construction projects.

After accepting a complaint, the administrative authority for the bidding and tendering of railway engineering construction projects shall obtain and examine the relevant documents, investigate and verify the relevant circumstances, review the complaint according to the investigation and collected evidence, and make a decision pursuant to the following requirements: reject complaints that lack factual or legal basis, and if the complaint has verifiable facts, the matter shall be handled s in accordance with the Tendering and Bidding Law of the People’s Republic of China and other relevant laws, regulations and rules.

An enterprise intending to invest in the railway industry may pay particular attention to the Measures.