In China, the laws that regulate government procurement include:

• the Government Procurement Law of the People’s Republic of China (the “Government Procurement Law”);
• the Regulations on the Implementation of the Government Procurement Law of the People’s Republic of China (the “Government Procurement Law Implementation Regulations”);
• the Measures for the Administration of Tenders and Invitations to Tender in the Government Procurement of Goods and Services (Decree of the Ministry of Finance No 87);
• the Administrative Measures for Non-Tendering Government Procurement (Decree of the Ministry of Finance No 74);
• the Interim Measures for the Administration of Government Procurement through the Competitive Consultation Procurement Method (Cai Ku [2014] No 214);
• the Administrative Measures for Government Procurement of Services; and
• the Interim Measures for the Administration of Government Procurement Through the Framework Agreement Method (Decree of the Ministry of Finance No 110).

There are many special laws concerning government procurement involving construction projects or military supplies.

Tendering laws regulate the government’s procurement of construction projects or construction-related goods and services. These laws include:

• the Tendering Law of the People’s Republic of China (the “Tendering Law”);
• the Regulations on the Implementation of the Tendering Law of the People’s Republic of China (the “Tendering Law Implementation Regulations”);
• the Rules on Projects Subject to Tendering; and
• the Regulations on the Scope of Infrastructure and Public Utility Projects Subject to Tendering.

Pursuant to the Government Procurement Law, the Central Military Commission of China should subsequently set down military procurement laws on specific matters. The current laws on this front include the Administrative Measures for Military Supplies Procurement.

According to Article 2 of the Government Procurement Law, there are three types of procuring entities:

• state authorities, including legislators, administrative authorities, procuratorates, courts and military institutions;
• public institutions, which means those established by government funds and performing public services in fields such as education, science, culture, and health, including public schools, public hospitals and scientific research institutions; and
• social organisations, which means those financed by government funds, including the Communist Youth League, the All-China Women’s Federation and the Federation of Trade Unions.

According to Article 2 of the Government Procurement Law and relevant regulations, government procurement as defined and regulated by law covers state authorities, public institutions and social organisations’ procurement of goods, construction projects and services that are:

• enlisted in the collective procurement catalogue issued by competent government authorities in accordance with the law; or
• having a value greater than the thresholds set by relevant government authorities in accordance with the law.

Such minimum value thresholds are decided and published by competent government authorities. For example, the minimum-value thresholds for government procurement projects using central government funds is set forth by the State Council, and the projects using local government funds by the relevant local governments. As such, the minimum-value thresholds applicable to different projects may vary. As an example, the applicable minimum-value thresholds in effect for projects funded by the central government budget are:

• RMB1 million for the supply of goods and services; and
• RMB1.2 million for construction projects.

Article 22 of the Government Procurement Law provides that suppliers engaging in government procurement activities must fulfil the following criteria:

• have the capacity to bear civil liability independently;
• have a good commercial reputation and sound financial accounting systems;
• have the equipment and professional and technical competence required for performance of the contract;
• have a good record of paying taxes and social insurance premiums in accordance with the law;
• have no record of major violations in their business activities for the three years prior to participation in government procurement activities; and
• other criteria stipulated in laws and administrative regulations.

Procuring entities may, in accordance with special requirements of procurement projects, specify particular requirements for potential suppliers, but they may not impose, by way of requiring unreasonable conditions, unequal or discriminatory treatment on suppliers.

As can be seen from the above, the criteria are rather generic and may apply to a wide range of participants intending to enter a government procurement contract. However, since suppliers are required to “have a good record of paying taxes and social insurance premiums in accordance with the law”, and in practice this means only Chinese entities qualify, this criterion poses practical difficulties for foreign suppliers that wish to strike a deal, if they do not have an affiliate registered in China.

Moreover, according to Article 10 of the Government Procurement Law and Articles 4 and 7 of the Administrative Measures for Government Procurement of Import Products, in terms of government procurement, Chinese domestic goods and products have priority over imported ones. Foreign suppliers can be admitted only with the approval of the relevant finance authorities and in circumstances where goods and products are not available or the commercial conditions required to acquire them are unreasonable, or laws and regulations specify that imported goods or products are needed.

The following outlines the key obligations of awarding authorities under the legislation.

Principles

Government procurement activities must conform with the principles of transparency, fair competition, impartiality, and good faith. No entity or individual may in any way obstruct or restrict suppliers’ freedom of entering the government procurement market in their region or industry.

Scope of Items Regulated by Law

As explained in 1.3 Types of Contracts Subject to Procurement Regulation, the law does not regulate all procurement activities carried out by the government and the government must follow the relevant provisions to determine whether a certain procurement project will be subject to government procurement regulations. In addition, the procuring entities must list the government procurement items in their budgets and funds for the relevant year and must report the same to the finance authority at the same level. Examination and approval of budgets will be carried out within the limits of budgetary authority and according to the procedures.

Choice of Procurement Methods

Government procurement must be conducted in one of the following forms:

• public invitation of tenders;
• private invitation of tenders;
• competitive negotiations;
• single-source procurement;
• requests for quotations;
• framework agreement procurement; or
• other procurement methods approved by the State Council’s regulatory department for government procurement.

Public invitation of tenders is the principal method of government procurement and any efforts to break down the entire project in order to circumvent the public invitation of tenders will not be tolerated. Except for single-source procurement, all other forms of government procurement should have more than three suppliers participating in the tender, and the successful suppliers should be selected through the examination procedures required by law; the application of single-source procurement is strictly limited. The government procurement regulations (including the major legislation summarised in 1.1 Public Procurement Legislation) further set out detailed conditions for the selection of each such procurement method, as well as the relevant procedural requirements (such as the requirements for prior advertisement and publication of procurement results). In construction projects, for example, the Rules on Projects Subject to Tendering and the Regulations on the Scope of Infrastructure and Public Utility Projects Subject to Tendering provide that construction projects and construction-related services must be procured by way of public invitation of tenders. The procuring entity must base its choice of procurement method on the conditions and requirements set out by law.

Non-discrimination

The government procurement regulations and the Tendering Law and relevant regulations all forbid the procuring entities from imposing – by way of requiring unreasonable conditions – unequal or discriminatory treatment on suppliers. Such discriminatory treatment may include providing different information to different suppliers and customising certain technical requirements for a certain supplier.

Performance of Contract

Government procurement contracts are subject to the regulations on contracts in the Civil Code of the People’s Republic of China. The rights and obligations of a contract will be agreed based on the principles of equality and voluntariness.

Both parties to a government procurement contract may not alter, suspend, or terminate the contract at will. If the continued performance of a government procurement contract will harm national or social interests, both parties involved must then alter, suspend, or terminate the contract. The party at fault will be liable for compensation. If both parties are at fault, each will bear the corresponding liability.

According to Article 2 of the Circular of the Ministry of Finance on Issues Concerning the Disclosure of Government Procurement Information (Cai Ku [2015] No 135), the announcements of government procurement projects must be published on the media platforms designated by the Ministry of Finance. Such media platforms include the China Government Procurement website (www.ccgp.gov.cn) and its provincial counterparts.

Such announcements include public invitations to tender, pre-qualification review announcements, competitive negotiation announcements, competitive consultation announcements, and requests for quotations.

Information contained in public invitations to tender and pre-qualification review announcements includes:

• the names, addresses and contact information of the procuring entities and their agencies;
• the names, quantities and simple specifications, or basic introductions to the projects;
• budgets, government procurement policies and regulations to be implemented, and tenderers’ qualifications;
• the time, place and method of obtaining tendering or pre-qualification documents, and the prices of the tendering or pre-qualification documents; and
• the deadlines to submit the tendering or pre-qualification documents, the times and places of pre-qualification or of the opening of tenders, and the names and phone numbers of contact persons.

Information in competitive negotiation announcements, competitive consultation announcements, and requests for quotations includes:

• the names, addresses and contact information of the procuring entities and their agencies;
• the names, quantities and simple specifications or basic introductions to the projects;
• budgets, government procurement policies and regulations to be implemented, and suppliers’ qualifications;
• the time, place and method of obtaining negotiation, consultation and quotation documents, and the prices of these documents; and
• the deadlines, opening times and places to submit the response documents, and the names and phone numbers of contact persons.

When procuring suppliers for public services that the government is required to provide to the general public, apart from the procurement information mentioned above, the procuring entity must also publish the procurement needs on designated media platforms to solicit public opinion.

According to Article 22 of the Interim Measures for the Administration of Government Procurement Through the Framework Agreement Method, information in framework agreement procurement announcements includes:

• the names, addresses and contact information of the procuring entities;
• the names and document numbers of the procurement projects, procurement needs and the cap to unit price quotation;
• information on procuring entities or end customers applicable to the framework agreements to be procured;
• the quantities if it is possible to estimate;
• the participating conditions for suppliers;
• the terms of the framework agreements;
• the time, place and method of obtaining procurement documents;
• the method of submission, deadline and places to submit the response documents, and the method, time and place to open the response documents;
• the valid term of the procurement announcements; and
• other information required to be disclosed by the financial departments of relevant provincial governments.

Awarding authorities may be permitted to do so depending on different situations. For government procurement of goods and services involving tendering, Article 10 of the Measures for the Administration of Tenders and Invitations to Tender in the Government Procurement of Goods and Services (Decree of the Ministry of Finance No 87) provides that the procuring entity must conduct a market survey on the market technology or services, supply situation, price, and other factors of the procurement items, and must scientifically and reasonably determine the procurement needs and conduct price measurement based on, among other things, the results of the market survey and relevant asset allocation standards. Article 10 of the Measures for the Administration of Government Procurement Needs (Cai Ku [2021] No 22) also provides that the procuring entity may conduct a survey on the industrial development, market supplies, information on successful purchases of similar procurement projects, and the consumables, spare parts, upgrading and maintenance services, etc, that may possibly be required before finalising the needs for a specific procurement. Article 11 further specifies the types of procurements that have to be subject to a prior market survey:

• goods and services over RMB10 million, or construction projects over RMB30 million;
• procurements that concern public interests and attract great public attention, including public services;
• procurements that are technically complex or highly professional, including information on construction projects that require the customised development and procurement of imported products; and
• other projects that the procuring entity or the budget supervision entity deems necessary to conduct a survey.

For other government procurements, Chinese laws do not preclude the awarding authority from conducting a market survey prior to procurement.

However, where the procurement is made via a tender process, it is advisable to pay close attention to Article 43 of the Tendering Law, which prescribes that, before giving an award, awarding authorities should not negotiate with tenderers in relation to tender prices, proposals, or any other substantive matters.

The Government Procurement Law, the Administrative Measures for Non-Tendering Government Procurement, the Administrative Measures for Tenders and Invitations to Tender in Government Procurement of Goods and Services, the Interim Administrative Measures for Government Procurement Through the Competitive Consultation Procurement Method, and the Interim Measures for the Administration of Government Procurement Through the Framework Agreement Method provide for seven government procurement methods.

Public Invitation to Tender

A public invitation to tender means that a procuring entity lawfully invites, by way of announcement, unspecified suppliers to tender.

According to Article 43 of the Tendering Law, “before determining a successful tenderer, the tender inviter shall not enter into negotiations with the tenderer regarding tender prices, tender proposals or any other substantive matters”.

Private Invitation to Tender

The method of private invitation to tender is set out in both the government procurement regulations and the Tendering Law. The government procurement regulations provide for private invitation to tender for the procurement of goods or services, where this means that a procuring entity lawfully and randomly selects three or more suppliers from a list of qualified suppliers, who are invited by letter to tender. The Tendering Law governs the private invitation to tender for the procurement of construction projects and/or construction-related services, where this means that a procuring entity will send invitation letters to tender to three or more specific and qualified legal persons or other organisations that have a good credit rating.

Of note, Article 43 of the Tendering Law also applies to this method of procurement.

Competitive Negotiations

Competitive negotiation is carried out pursuant to the following steps:

• a negotiating group is formed by the procuring entity;
• negotiation documents are drafted;
• the negotiating group conducts negotiations with more than three qualified suppliers selected by it, from a list of qualified candidates, on matters in relation to the procurement of goods, construction projects and services;
• after negotiations, the suppliers submit their respective response documents and final quotations according to the requirements in the negotiating documents; and
• the procuring entity determines the successful supplier from the candidates recommended by the negotiating group.

Competitive Consultations

Competitive consultation means that a procuring entity or its agency sets up a competitive consultation group to consult with any qualified supplier regarding matters in relation to the procurement of goods, construction projects, and services, and then the suppliers submit the response documents and quotations according to the requirements in the consultation documents, and the procuring entity subsequently determines the successful supplier from the candidates recommended by the consultation group.

Requests for Quotations

Request for quotation means that a price enquiry group issues a notice of request for a quotation for the procurement of certain goods to qualified suppliers, asking the suppliers to offer their one-time, fixed prices for the goods concerned, following which the procuring entity determines the successful supplier from the candidates recommended by the price enquiry group. Unlike in competitive negotiations and competitive consultations, this measure does not offer the chance for negotiation or consultation.

Single-Source Procurement

Single-source procurement means procurement of goods, construction projects and services from a particular supplier. This measure allows negotiation or consultation.

Framework Agreement Procurement

Framework Agreement Procurement is a two-stage method of procurement where the budget supervision entity of the procurer or the procurer’s collective procurement agency shortlists no less than two suppliers and signs a framework agreement with each supplier at stage one, after which, the procuring entity or end user selects a final supplier from the shortlisted suppliers and signs the procurement contract with the selected supplier at stage two. This method of procurement is a relevantly new method developed in recent years and is applicable to government procurement of goods and services with clear and uniform standards and specifications, and where there is a need for repetitive procurement.

The procuring entities do not have absolute discretion over the choice of tender procedures or other measures, which may vary depending on the fulfilment of certain conditions.

Public Invitation to Tender and Private Invitation to Tender

For government procurement of constructions, including the purchase of relevant goods and services, if the budget of a project reaches certain prescribed thresholds (eg, the price of a construction contract is more than RMB4 million), then tendering procedures will apply. For government procurement of constructions subject to tendering, Article 8 of the Tendering Law Implementation Regulations provides that, unless the construction project fulfils one of the following criteria for private invitation of tenders, public invitation to tender will apply:

• only a limited number of suppliers are eligible to be chosen due to the special requirements and technical complexity of the project or due to limitations posed by the natural environment; or
• the cost of public invitation to tender will consume too large a proportion of a contract’s price.

For government procurement of goods and services not related to construction, if this does not meet the conditions for non-tendering procedures (ie, competitive negotiations, competitive consultations, requests for quotations, and single-source procurement), the tendering procedure will apply. For goods and services subject to tendering, Article 29 of the Government Procurement Law provides that, unless the goods and services to be procured fulfil one of the following criteria, public invitation to tender will apply:

• special goods and services that can only be procured from a limited number of suppliers; or
• the cost of public invitation to tender would be too high compared to the total value of the government procurement contract.

Competitive Negotiations

For government procurement of goods and services, Article 30 of the Government Procurement Law provides that goods and services that fulfil one of the following criteria may be procured through competitive negotiation in accordance with the law:

• after tenders have been invited, no supplier has submitted a tender, or none of the tenders qualify, or it is impossible to invite tenders again;
• the item involves complex technology or is of a special nature, and its detailed specifications or substantial requirements cannot be determined;
• the time taken to invite tenders would not satisfy the client’s urgent needs; or
• the total price cannot be calculated in advance.

Government procurement of constructions that are not subject to tendering according to applicable laws may adopt the measure of competitive negotiations.

Competitive Consultations

According to Article 3 of the Interim Measures for the Administration of Government Procurement Through the Competitive Consultation Procurement Method (Cai Kun [2014] No 214), goods and services that fulfil one of the following criteria may be procured through competitive consultations:

• government procurement of services;
• the item involves complex technology or is of a special nature, and its detailed specifications or substantial requirements cannot be determined;
• the total price cannot be calculated in advance as the time or quantity of procurement of artworks, patents, or know-how cannot be determined in advance, or due to other similar causes;
• scientific projects which do not have adequate competition on the market, and commercialised scientific projects that need financial support; or
• construction projects other than those required to be tendered by the Tendering Law and the Tendering Law Implementation Regulations.

Requests for Quotations

Article 32 of the Government Procurement Law provides that government procurement items of unified specifications and standards may be procured through requests for quotations in accordance with this Law, provided that the stock is sufficient and the price variation is small.

Government procurement of constructions should not adopt the measure of requests for quotations.

Single-Source Procurement

Article 31 of the Government Procurement Law provides that goods and services that fulfil one of the following criteria may be procured from a single source in accordance with this Law:

• they can only be procured from a sole supplier;
• due to unforeseeable urgency, it is not possible to procure them from another supplier; or
• it is necessary to continue to procure from the original supplier in order to ensure consistency or compatibility of ancillary services with the original procurement item, and the total additional procuring funds do not exceed 10% of the procurement amount in the original contract (government procurement of constructions not required by law to invite tenders may adopt the measure of single-source procurement).

Framework Agreement Procurement

Article 3 of the Interim Measures for the Administration of Government Procurement Through the Framework Agreement Method provides that items that fulfil one of the following criteria may be procured by way of a framework agreement:

• items included in the collective procurement catalogue and the necessary ancillary consumables, compartments, etc, thereto, provided that procurements for such items will be frequent and small in value;
• legal, appraisal, accounting, auditing and other services needed in the administration of a government department or system, which are not included in the collective procurement catalogue but have an annual total procurement budget higher than the minimum procurement thresholds, provided that procurements for such services are frequent and small in value (it should, however, be noted that if the procuring government is able to consolidate the fractional purchases into one single procurement and sign a contract of non-fixed term, place or quantity to meet its needs, the procuring government will not adopt the framework agreement method in its procurement);
• services procured by the government in order to be provided by the procuring government to end users outside the procuring government or government system, which are not included in the collective procurement catalogue but have an annual total procurement budget higher than the minimum procurement thresholds, provided that it is required that such services will present more than two suppliers for end users to choose voluntarily; or
• other circumstances allowed by the Ministry of Finance.

Under the following circumstances, a procurement contract may be directly awarded to one supplier if:

• there is only one supplier;
• no other suppliers are available due to unforeseen emergencies;
• this is necessitated by the requirement of consistency or compatibility with the original items procured to purchase from the original suppliers, and the overall sum paid for the additional procurement is no more than 10% of the procurement amount of the original procurement contract;
• the government procurement projects relate to national security and secrets, although this type of procurement does not necessarily have to be made with a sole source of supply; and
• the items to be procured are not in the collective procurement catalogue and the total price of such items does not meet the minimum procurement thresholds (this type of procurement is not strictly a government procurement according to the law of China).

Chinese laws provide time limits for the publication of procurement documents.

The Circular of the Ministry of Finance on Issues Concerning the Disclosure of Government Procurement Information (Cai Ku [2015] No 135) provides:

• the time limit for the publication of public invitations to tender and pre-qualification review announcement of tenders is five working days;
• the time limit for the publication of a competitive negotiation announcement, competitive consultation announcement, and requests for quotations is three working days;
• the time limit for the publication of a single-source procurement announcement must be no less than five working days;
• the publication of a successful tender and the deal with the successful tenderer must be made within two working days after the notification of the award was issued and the successful tenderer was determined, and the time limit for this publication is one working day; and
• government procurement contracts must be made public within two working days after such contracts are signed.

China’s legislation does not give hard-line time limits for receiving any letter of intent or other forms of expression of interest from suppliers, and it is up to the procuring entity to set up the time limits, which are normally determined by taking into consideration elements such as the complexity and time required for preparation of a project. However, for the tender procedure, a minimum time period of 20 days, commencing from the issuance of a tender invitation to the submission of tenders, is required by law. If any clarification or alteration to the invitation to tender documents arises during the tender procedure, affecting tender preparation, according to law, at least 15 days from the occurrence of such event to the expiration of the tender submission period will be given, otherwise, the procuring entity will extend the time period.

The qualification and criteria for participation in a procurement process are decided based on the specifics of each project.

The Government Procurement Law provides that, if a supplier wishes to participate in government procurement, it must at least:

• have the capacity to bear civil liability independently;
• have a good commercial reputation and sound financial accounting systems;
• have the equipment and professional and technical competence required for performance of the contract;
• have a good record of paying taxes and social insurance premiums in accordance with the law;
• have no record of major violations in its business activities for the three years prior to participation in government procurement activities; and
• meet other criteria stipulated in laws and administrative regulations.

As to the sixth bullet point, more specifically, the laws provide for requirements relating to the qualifications of suppliers based on the subject matters of procurement. For instance, the laws set forth the qualifications for constructing entities and designers, and such requirements must be communicated by the procuring entity to the tenderers. This is particularly the case for construction projects. If an entity awarded or instructed to carry out a construction project lacks the qualifications required by law, their executed construction contracts will be nullified.

In addition, a procuring entity may set out special conditions for certain suppliers based on the particularity of the procurement projects, as long as such conditions are reasonable and do not constitute favouritism for or discrimination against any supplier.

If a competitive process is introduced (including a public tendering process, private tendering process, competitive negotiations and requests for a quotation), the law stipulates a minimum number of three qualified candidates to ensure a valid competition. A procuring entity may decide the acceptable number of qualified candidates as the situation requires, but the prescribed minimum number should be met. A public tender invitation is expected to attract too many participants, so in order to prevent the subsequent progress of tender evaluation and award of contract from being jeopardised, some local authorities may have in place measures such as drawing lots or casting votes to cap the number of eligible suppliers.

Restrictions on suppliers should be imposed on a fair and reasonable basis, and no procuring entity should have double standards or offer partial treatment. According to the Government Procurement Law Implementation Regulations, no procuring entity may:

• provide different suppliers with different information about the same project;
• set out any qualification, technology, or business condition that is incongruent with the features and actual needs of the project or irrelevant to the performance of the contract;
• require any technology or service for the procurement that is only available from a certain supplier or product;
• provide that any award applicable only to a certain region or industry will be a bonus or condition based on which the contract is awarded or the deal is entered;
• apply different standards to the review of qualification or otherwise of different suppliers;
• designate a certain patent, trade mark, brand or supplier or a certain group of any of the foregoing;
• illegally limit the form of ownership, organisation or location of any suppliers; or
• use any other unreasonable conditions to limit or exclude potential suppliers.

However, if any procurement has only one source, there will be only one eligible supplier. Relevant Chinese legislation has specific provisions to determine which procurement measures should be adopted (see 2.4 Choice/Conditions of a Tender Procedure).

The criteria used in evaluating tenders are determined by the procuring entity based on the specific requirements of a project, such as its nature, function, scale, goals, technology, and price. Although such decision is considered to be of a commercial nature, the procuring entities are forbidden from using this as an excuse to conceal biased or discriminative treatment.

Lowest Quote Wins, or Selection Based on Other Factors

Evaluation methods and procedures are directly linked to evaluation criteria, which may, subject to the principle of fairness and compliance, differ as certain procurement measures differ. If the tendering procedure is adopted, there are two evaluation methods: lowest quote wins, or selection based on a combination of other factors. Even if the lowest quote method is adopted, the quote itself will not be the only decisive factor. All the substantial requirements in a tender invitation must also be met. Procurements of goods or services with a unified standard in technology, services and other aspects must utilise the “lowest quote wins” method. However, in practice, other factors will also be considered as criteria for evaluation. Where tendering processes are involved, evaluation will be at its most stringent, requiring a tender evaluation committee to be set up to evaluate the tenders. The committee should also follow the statutory requirements stipulated in relation to the formation of the committee and the selection of its members.

Selection of Suppliers

For selection of suppliers, according to the Government Procurement Law Implementation Regulations, the procuring entity must determine, within five working days following the receipt of the evaluation report, the supplier(s) winning the tender or getting the contract according to the order of recommendation as shown in the evaluation report. In particular, if the candidates are invited to tender and the winner(s) of the tender is/are decided by the “low quote wins” method, the winner(s) must either satisfy to the maximum extent the requirements contained in the tender invitation documents, or meet all substantial requirements contained in the tender invitation documents, and offer the lowest tender price as determined by the evaluation, provided that this lowest price will not be lower than the relevant costs.

Splitting Tender Evaluation From Awarding

In practice, some local governments have rolled out regulations to split tender evaluation from awarding. For instance, some have implemented a method of determination that separates the determination of the winner from the tender evaluation, so that the procuring entity may remain independent when making a decision about the candidates recommended by the tender evaluation committee. Such reform is not limited to local levels, and the central government has also supported the revision and reform of the provisions governing the tender evaluation and awarding mechanism under the Tendering Law.

Article 36 of the Government Procurement Law provides that under the following circumstances, the awarding authority may exclude suppliers’ tenders:

• less than three suppliers are qualified for participation or have satisfied all the substantial requirements in the procurement documents;
• an illegal or non-compliant act has taken place that adversely affects the fairness of the procurement procedure;
• all the tenderers’ quotations are higher than the procurement budget and the procuring entity is unable to pay the excess amount; and/or
• the procurement is cancelled due to major changes.

For suppliers, the Government Procurement Law further sets out vitiating acts that will render tenders invalid, summarised below:

• submission of false materials or information in order to win a deal;
• taking unjustified measures to slander and/or exclude other competing suppliers;
• malicious collusion with the procuring entity, other suppliers or the procurement agency;
• bribery or provision of other unjustified benefits to the procuring entity or the procurement agency;
• negotiation or discussion with the procuring entity during the procurement; and/or
• refusing supervision or inspection by the competent authorities or providing false information.

According to the Government Procurement Law and other applicable regulations, the tender documentation (or the pre-qualification documents) must set out the qualification criteria of the tenderers, the evaluation methodology and the evaluation criteria for tender selection.

Regarding the qualification criteria, the tender documentation must specify the qualification or credit certification document to be provided by the tenderer, the qualification review criteria and method, and other verification documents that the tenderer must provide. Regarding evaluation methods and criteria, the law states that evaluation criteria that are not disclosed in the tender documentation may not be adopted as grounds for tender evaluation. The procuring entity must decide to base the tender selection for government procurement projects on either the “lowest quote wins” or on the “multi-factor selection” approach.

The procuring entity or procuring agent is obliged to publicise in an announcement the result of the contract award procedure and the tender invitation/negotiation/consultation documentation on the media platform designated by the department of finance of a provincial or higher-level government within two working days after the winning supplier has been selected. In case of a tendering procedure, tenderers who did not pass the pre-qualification review will be informed of the reasons for failure to pass and if the tender evaluation is conducted on the “multi-criteria selection” basis, the procuring entity or procuring agent will also notify non-successful tenderers of their respective score of evaluation and their ranking.

As explained in 3.2 Obligation to Notify Interested Parties Who Have Not Been Selected, the procuring entity or procuring agent is obliged to publicise in an announcement the contract award decision on the designated media platform.

The announcement will specify the name, address and contact information of the procuring entity or procuring agent; the project name and reference number; the name and address of the winning supplier and the contract price or transaction price of the awarded contract; the name, specifications and models, quantity, unit price, and service requirements for the major goods and services to be procured (as the case may be), as well as a list of the names of experts participating in the tender/quotation evaluation.

Government Procurements

Where government procurements are conducted through a tender procedure, after the deadline for tender document submission has passed and before the commencement of tender evaluation, the procuring entity or its agency must organise and preside over a tender opening meeting to which all the competing suppliers are invited. The suppliers may examine and acknowledge the intactness of their respective tender documents at the tender opening meeting, following which the procuring entity or its agency will open the tender and announce information as required by the tender invitation documents in the presence of the suppliers at the meeting.

Where necessary, before the tender opening meeting, the procuring entity or its agency may additionally hold a Q&A session to answer questions raised by the suppliers.

Other Procurements

The legislation forbids prior negotiation between the procuring entity and the tenderers before the contract award decision has been made. For other methods of procurement, the regulations have already granted opportunities for the parties to negotiate or consult with each other and no further obligations for prior hearings are imposed.

There is no fixed standstill period between the notification of the contract award decision and the execution of the contract. However, according to the Government Procurement Law and other applicable laws and regulations, if any question, query or complaint lodged before the department of finance is likely to affect the contract award decision or the deal, the procuring entity must suspend the execution of the contract. Procurement activities must also be suspended while the department of finance is handling the complaint, but the suspension may not exceed 30 days.

Review procedures are handled by different bodies based on the nature of each procurement measure.

Government Procurement of Goods or Services Other Than Construction Projects

If the government procures goods or services other than construction projects, this is governed by the Government Procurement Law. This law prescribes that “the finance departments of people’s governments at all levels shall be responsible for supervision and administration of government procurement”, which includes the supervision and inspection carried out by the government procurement regulatory departments in response to complaints filed by suppliers, and ex officio supervision and inspections. Any interested party dissatisfied with a decision made by a finance department can apply for an administrative reconsideration of the decision or proceed with a judicial review by the court.

Government Procurement of Construction Projects

If the government procures construction projects, thisis governed by the Tendering Law. This law prescribes that “the departments of industry and information technology, housing and urban construction, transportation, railway, water resources, commerce and other departments of the local people’s governments above the county level shall supervise the relevant tender activities according to their respective duties and responsibilities”. Any interested party dissatisfied with a decision made by these departments can apply for an administrative reconsideration of the decision or proceed with a judicial review by the court.

Government Procurement of Goods or Services Other Than Construction Projects

According to the Government Procurement Law, if the procuring entity breaches procurement laws, suppliers can only seek legal redress through the procedures of queries, complaints, and administrative reconsideration or lawsuits, sequentially rather than selectively.

Query procedure

“If a supplier believes that the procurement documents, procurement procedure, or the result of determination of the winning tenderer or winning supplier cause harm to their own rights and interests, they may query the procuring entity in writing...”

Complaint procedure

“If the supplier making the query is dissatisfied with the reply of the procuring entity or the procurement agency, or the procuring entity or procurement agency has not replied within the stipulated time period, the supplier may... complain to the government procurement regulatory department at the same level.”

Administrative reconsideration or litigation procedure

“If a supplier is dissatisfied with the decision of the government procurement regulatory department, or the government procurement regulatory department fails to handle the complaint within the stipulated time period, the supplier may apply for an administrative reconsideration or institute an administrative action in the people’s court in accordance with the law.”

Government Procurement of Construction Projects

According to the Tendering Law Implementation Regulations, if the government breaches procurement laws, suppliers are subject to different remedies. If a supplier has any objection to the pre-qualification documents, tender opening, and the tendering review results of a project that must be tendered in accordance with the law, the supplier must first lodge an objection with the tender inviter, and then seek redress through the procedures of queries, complaints, and administrative reconsideration or lawsuits, sequentially. If the supplier has objections other than those mentioned above, the supplier may complain directly to the administrative supervision department and seek redress through the procedures of complaints and administrative reconsideration or lawsuits, sequentially.

Government Procurement of Goods or Services Other Than Construction Projects

According to the Government Procurement Law and the Government Procurement Law Implementation Regulations, interim measures, as remedial measures, may be taken by different parties in different manners at different stages of a procurement claim. In the case where a query is raised, which may affect the result of a tender or the transaction, the procuring entity must suspend the execution of the relevant contract, or the performance of the contract if the contract has already been executed. In the case where a complaint is lodged, the government procurement regulatory department may, during the process of dealing with the complaint and based on the specifics of the complaint, require the procuring entity to suspend the procurement by sending a written notice to the procuring entity, provided that the suspension shall be no more than 30 days.

Government Procurement of Construction Projects

The procuring entity must give a response to an objection brought by a potential tenderer or other interested parties within three days after the objection is put forward, and suspend all tender invitation or submission activities.

Government Procurement of Goods or Services Other Than Construction Projects

As provided in 4.1 Responsibility for Review of the Awarding Authority’s Decisions, both the suppliers engaged in the relevant procurement project and the government procurement regulatory department may challenge the awarding authority’s decisions.

Government Procurement of Construction Projects

The tenderers or other interested parties, and the government procurement regulatory department are all eligible to challenge the awarding authority’s decisions.

Government Procurement of Goods or Services Other Than Construction Projects

The time limit for suppliers to raise a query

If any supplier thinks that procurement documents, procurement procedures, the tender award, or the deal may harm its interests, the supplier shall bring forward a query within seven working days after it becomes or should have become aware of such damage to its interests.

The time limit for suppliers to lodge a complaint

If the supplier raising a query is unsatisfied with the procuring entity or procuring agent’s response, or the procuring entity or procuring agent fails to reply within the given time limit (seven working days), the supplier may lodge a complaint within fifteen working days after the foregoing reply period expires.

The time limit for suppliers to apply for a reconsideration or initiate an action

In terms of application for a reconsideration, if any citizen, legal person, or other organisation thinks a specific administrative act has infringed on its lawful rights or interests, the citizen, legal person, or the organisation may apply for an administrative reconsideration within sixty days after it has become aware of the act, unless applicable laws provide for a longer term.

The time limit to apply for an administrative lawsuit

The statute of limitation for a citizen, legal person or other organisation to directly file a lawsuit before a People’s Court is six months, beginning from the date on which the citizen, legal person or organisation became or should have become aware of the infringing administrative act, unless it is otherwise provided in applicable laws.

Government Procurement of Construction Projects

The time period for tenderers and other interested parties to raise a point of disagreement

Potential tenderers or other interested parties may raise a point of disagreement over pre-qualification documents at least two days prior to the last date for submitting the application for pre-qualification review, and may raise a point of disagreement over the tender invitation documentation at least ten days prior to the last day for submitting tenders.

If tenderers have any objection to the opening of tenders, the tenderers must express their disagreement at the site of the tender opening. If tenderers or other interested parties disagree with the contract award for projects that are required by law to invite tenders, the tenderers or interested parties must raise an opinion of disagreement during the announcement period of the winning tenderer.

The time limit for tenderers or other interested parties to file a complaint

If a tenderer or other interested party thinks the tender invitation or submission procedures are inconsistent with the applicable laws or administrative regulations promulgated by the State Council, the tenderer or interested party may file a complaint within ten days after it becomes or should become aware of the non-compliance.

The time limit for tenderers or other interested parties to apply for a reconsideration or lawsuit

This time limit is the same as for government procurements of goods or services.

Government Procurement of Goods or Services Other Than Construction Projects

The complete objection process regarding government procurements consists of four stages: objection, complaint, reconsideration, and lawsuit. For an objection raised by suppliers, the procuring entity must provide a response within seven working days after the objection is raised.

Upon expiry of the foregoing seven-day reply period, the suppliers may lodge a complaint within 15 working days thereafter, and the department of finance must make a decision regarding the complaint within 30 working days after receiving the same. The time limit for the department of finance to deal with a complaint is no more than 59 working days, which excludes time spent on inspection, testing, appraisal, expert review, or by the complaining party on supplementing or correcting the materials.

If suppliers apply for a reconsideration, according to the Administrative Law of the People’s Republic of China, the competent government authority will decide whether or not to accept the application within five working days after receiving the same and will make a decision on the substantive issue within 60 days after the date the authority decides to accept the application, where the application is reviewed by normal proceedings, with the possibility of the period being extended for another 30 days upon approval by the head of the reconsideration authority, or within 30 days if the application is reviewed by expedited proceedings.

If suppliers lodge an administrative action against the procuring entity, the action will then have to adhere to time limitations as defined by the Administrative Procedure Law and other applicable regulations. The typical length for a first-instance decision to be made under the Administrative Procedure Law is six months.

Government Procurement of Construction Projects

The complete objection process for government procurements consists of four stages: objection, complaint, reconsideration, and lawsuit. The relevant time limitations regarding the four stages are as follows.

The tender inviter must reply to an objection within three days after the date on which the tenderers or other interested parties make such objection.

The tenderer or interested party may lodge a complaint with the regulatory department within ten working days after it becomes or should have become aware of the infringement upon its rights, and the regulatory department must make a decision as to whether to accept the complaint within three working days after receiving the same, and issue a final decision regarding the complaint within 30 working days after the acceptance of the complaint. The objection process may last no more than 60 days, including non-working days, and excluding time spent on inspection, testing, appraisal, and expert review.

The length of proceedings of an administrative reconsideration or administrative action for construction projects are the same as for government procurements of goods and services.

No official statistics are published in respect of the number of complaints considered by the review body per year, even though the results of consideration are announced on an official government procurement information platform run by the China Government Procurement website.

Tenderers or other interested parties may engage an agent to make a query or complaint against a tender award decision, which means, submitting a query or complaint may incur an agent’s fee. According to applicable regulations, no finance authority is allowed to charge either the complaining party or the party against which the complaint is made, any fee for handling the complaint.

Additionally, expenses might be incurred from inspection, testing, appraisal, and expert evaluation conducted for the purpose of preparing the requisite verification documentation, but these expenses are not necessarily charged to the complaining party.

According to the Administrative Measures for Making Queries and Complaints Regarding Government Procurement, the complaining party will first bear the expenses of third-party inspection, testing and appraisal carried out regarding a complaint, and once the decision has been reached determining the responsibility of each party, the party at fault will be responsible for all expenses, or if both parties are at fault, each party will bear the expenses in reasonable proportion to their own responsibility as determined by the decision.       

For construction projects procured by the government and all goods and services relating to such projects, if purchased through tender procedures, the authority and successful tenderer will enter into a written contract according to the tender documentation, with the subject matter, price, quality, term of performance, and other major terms in the contract being consistent with the provisions in the tender documentation and tenders submitted by the successful tenderer. The authority and the successful tenderer may not execute a separate agreement containing anything substantially contradictory to the contract.

For other government procurements, the procuring entity and the supplier winning the tender will enter into a government procurement contract stipulating the matters confirmed in the procurement documents.

If the procuring entity aspires to add additional goods, construction work, or services during the performance of a contract, the procuring entity may enter into a supplemental contract with the supplier on the condition that no other provisions in the government procurement contract will be modified, and the total amount of the procurement of all such supplemental contracts together may be no more than 10% of the procurement amount of the original government procurement contract.

Legislation imposes great restrictions on the amendment, suspension or termination of government procurement contracts. The Government Procurement Law stipulates that neither party to the government procurement contract may alter, suspend, or terminate the contract arbitrarily; however, if continuation of the performance of the government procurement contract will harm national or social interests, then the parties must terminate the contract in question.

Although it is still under dispute in judicial practice whether government procurement contracts are, in nature, administrative contracts favouring the government, legislation provides that the procuring entity must protect national and social interests in its procuring activities, and where the performance of a procurement contract will hurt national and social interests, the procuring entity and the suppliers must amend, suspend or terminate the procurement contract. Such legislation confers compelling control in favour of the awarding authority to the contract performance process.

This is not applicable as there is no case law in China.

The Government Procurement Law and the Measures for the Administration of Tenders and Invitations to Tender in the Government Procurement of Goods and Services are undergoing amendment. In July 2022, the Ministry of Finance published the Government Procurement Law of the People’s Republic of China (amendment draft) to solicit public comments. This is a major amendment to the Government Procurement Law since its promulgation in 2014. In 2021, an amendment draft for the Measures for the Administration of Tenders and Invitations to Tender in the Government Procurement of Goods and Services was circulated to solicit comments.

In addition, the Ministry of Finance published the Interim Measures for the Administration of the Cooperative Innovation Method for Government Procurement (draft) in February 2024 to solicit public comments. The draft provides for a brand-new procurement method that allows the procuring entity and the selected supplier to co-operate on the research and development of products the procuring entity intends to purchase.