To carry out the Government Procurement Law of the People’s Republic of China and its implementation regulations to regulate tenders and invitations to bid in government procurement of goods and services, the Ministry of Finance amended the 2004 Measures for the Administration of Tenders and Invitations to Bid in Government Procurement of Goods and Services on July 11, 2017 (“Directive No. 18”) and promulgated the new Measures for the Administration of Tenders and Invitations to Bid in Government Procurement of Goods and Services (“Directive No. 87”), which will go into effect on October 1, 2017.
Consisting of 7 chapters and 88 articles, Directive No. 87 deletes 36 articles from Directive No. 18, adds 34 articles and amends 54 articles. Except for the General Provisions and Supplemental Provisions, Directive No. 87 stipulates in separate chapters the operating procedure for government procurement of goods and services, invitations to bid, tenders, bid opening and evaluation, bid award, contracting and legal responsibilities, with the amendments focusing on three aspects:
First, the issues regarding the laxity of the procuring agency in its duty to perform as the principle entity and the insufficient exercise of its independent procurement right are addressed by specifically stipulating the responsibilities of the procuring agency as the principal entity and increased its accountability. In the implementation of procurement policies, strengthening of internal control, establishment of the requirements of procurement, publication disclosure of the procurement, and the acceptance of performance, there is also an increase to the degree of participation by the procuring agency in the procurement activities, thereby expanding its independent procurement rights.
Second, the reform requirements for “delegation, regulation and service” (which collectively denote streamlined administration, the synthesis of delegation with regulation, and optimized services) should be carried out to reduce institutional transaction costs. To meet policy requirements such as the promotion of the “delegation, regulation and service” reform the implementation of “tax and fee reduction,” and support of substantive economic development, Directive No. 87 sets forth several substantive measures to achieve innovations and improvements in the following aspects: (1) the suppliers’ equal right to participate is protected; (2) the suppliers’ right to know is safeguarded; and (3) the investment cost of suppliers is reduced for improved bidding convenience. The rights and interests of providers are further protected, and the economic and time costs of suppliers in their participation in tenders are reduced.
Third, there is a focus on problem-based learning to improve supervisory measures. For major issues such as high prices with inferior quality, kickbacks, or poor efficiency, Directive No. 87 further improves on the design of the regime in place and the regulation of procurement, with a focus on strengthening requirements for procurement and the acceptance inspection management to reduce room for illegal operations and assure procurement quality. Directive No. 87 further sets forth targeted measures such as improvement on fair trade rules, increased transparency and fairness, prohibition of kickbacks, improved bid invitation procedure to the increase efficiency of procurement, strengthen the supervision on reviews and impose more legal responsibilities on all parties.