The President promulgated the amendments to Articles 4, 15, 17, 22, 25, 30, 31, 50, 52, 59, 63, 76, 85, 93, 94, 95, 101 and 103 of the Government Procurement Law (hereinafter, the “Law”) and the addition of Articles 11-1, 26-1 and 70-1 via the President-Hua-Zhong-One-Yi-10800049691 Decree of May 22, 2019. The amendments are highlighted below.
First, Article 11-1 of the Law is added to stipulate the new mechanism of procurement review team to help review procurement documents and provide consultation on procurement matters so as to enhance procurement functions and efficiency and ensure procurement quality.
Second, for procurements relating to national security, Article 17 of the Law as amended will authorize the formulation of restrictive conditions and review regulations for the qualifications of domestic or foreign suppliers to ensure national security.
Third, Article 52 of the Law as amended relaxes the applicable conditions for the most favorable bid and deletes the former provision before amendment that heterogeneous construction, financial or service procurement projects may adopt the most favorable bid only when it is not appropriate for the procuring agency to adopt the lowest bid. In addition, with respect to a procuring agency’s procurement of professional services, technical services, information services, social and welfare services or cultural or creative services with a value above the announced monetary threshold, the provision is revised from “may adopt the most favorable bid without a bottom price” to “in principle the most favorable bid without setting a bottom price shall be adopted” to facilitate the procuring agency’s adoption of flexible procurement strategies.
Fourth, Article 94 of the Law as amended contains the additional requirement that the “scholars and experts” appointed for the evaluation operation by a procuring agency shall not be incumbent personnel of government agencies.
Fifth, Article 101 of the Law as amended contains an additional “materiality” restriction on reasons for publishing in the Government Procurement Gazette the name of a supplier who “participates in a tender or executes or performs a contract with false documentation,” “fails to pass an inspection or acceptance inspection,” “fails to perform warranty after the acceptance inspection,” or “is subject to circumstances where the contract is rescinded or terminated for reasons attributable to the supplier.” Instead, a supplier’s name may be published in the Government Procurement Gazette only under circumstances relating, for example, to the severity of the damage incurred by the procuring agency, the degree of imputability of the supplier, the supplier’s actual remedies or compensatory measures so that the system of suspending rogue suppliers will better meet the principle of proportionality. In addition, it is additionally required that before notifying a supplier that its name will be published in the Government Procurement Gazette, a procuring agency shall provide the supplier with an opportunity to state its opinion, and the procuring agency shall also set up a “procurement and review team” to determine if a supplier meets the criteria for suspension.
Sixth, Articles 101 and 103 of the Law as amended specifically include bribery such as providing, promising or delivering inappropriate benefits to relevant procurement personnel as one of the reasons for publishing the supplier’s name in the Government Procurement Gazette. Any supplier in violation of the above provision will be included in the list of undesirable suppliers and will be suspended for three years.
Seventh, Article 103 of the Law as amended contains the additional scenario of “material breach of contract” and adopts a cumulative weighted suspension period, where the first breach will trigger publication in the Government Procurement Gazette with three-month suspension; the second breach will cause publication in the Government Procurement Gazette with six-month suspension; and the third breach will entail publication in the Government Procurement Gazette with one-year suspension.
Eighth, amendments relating to culture and creativity, social welfare, green energy and environmental protection include Article 4 of the Law as amended, which additionally stipulates that an artistic and cultural organization conducting procurement with grants or subsidies from government agencies shall not be governed by the Government Procurement Law. Article 22 of the same law authorizes the formulation of the regulations governing the evaluation, selection and fee collection for social welfare services; Article 26-1 provides that a procuring agency may set technical specifications to promote the conservation of natural resources and environmental protection; and Article 52 provides that for social welfare or cultural or creative services, in principle the most favorable bid without a bottom price shall be adopted.