2021-06-21

Government Procurement Law of the People's Republic of China

(14-APR-2015)


Note:English version for reference only,Chinese version shall prevail.

Chapter 1 General Provisions

Article 1 The Government Procurement Law of the People's Republic of China (hereinafter referred to as the "Law") is hereby enacted with the primary aims of standardizing government procurement behavior, improving the efficiency of the use of government procurement funds, safeguarding the state interests and public interests of society, protecting the legitimate rights and interests of the government procurement parties, and promoting the building of an honest and clean government.

Article 2 Government procurement within the territory of the People's Republic of China shall be subject to this Law.

For the purpose of the Law, government procurement refers to the actions of the state departments at various levels, institutions and social organizations that procure goodsconstruction and related services in the catalogue made for centralized procurement according to the law or procuring them in excess of their quotas.

The catalogue and quota for centralized government procurement shall be set forth within the limit of authority as prescribed herein.

The term procurement as used herein shall refer to the action of obtaining compensated goods, constructions and related services, including purchase, lease,entrustment, employment etc. by means of contract.

For the purpose of the Law, goodsrefer to substances of different kinds in all forms, including raw and semi-finished materials, fuels, equipment, products, and.

The term engineering works as used herein refer to construction projects including the construction, reconstruction, extension, fitting, removal, and repair of buildings and component parts.

Services mentioned herein refer to all objects other than goods and constructions under government procurement.

Article 3 All government procurements must be undertaken in line with the principles of openness, transparency, fair competition, impartiality, and honesty.

Article 4 In situations where the government procurement of constructions takes the form of public bidding, the Tendering and Bidding Law of the People's Republic of China shall prevail.

Article 5 No entity or individuals are allowed by any meansto obstruct or restrict free access by the suppliers tothe government procurement markets in their locality and industry.

Article 6 Government procurement must be carried out in strict accordance with the approved budget for that purpose.

Article 7 Government procurement may be conducted in a combination of centralized and scattered ways. The scope of a centralized procurement shall be determined upon the basis of the catalogue for centralized procurement as published by the people's government above the provincial level.

In regard to those items to be procured by the government under the central budget, the catalogue for centralized procurement of such items shall be determined and published by the State Council. In regard to those under the local budget, the catalogue for the centralized procurement of such items shall be determined and published by the governments of the provinces, autonomous regions, municipalities directly under the Central Government, or those organizations with proper authority.

The items included in the catalogue for centralized government procurement shall be procured in a centralized way.

Article 8 The quotas for government procurement shall be determined and published by the State Council if they are listed as those to be procured under central budget; the quotas for those to be procured under the local budget shall be determined and published by the governments of the provinces, autonomous regions, municipalities directly under the Central Government, or those organizations with proper authority.

Article 9 Government procurement must be helpful to the realization of the state policy targets for economic and social development, including environment protection and support for underdeveloped areas and areas of minorities as well as the promotion of the development of small and medium-sized enterprises.

Article 10 Government procurement must target domestic goods, constructionsor services except in the following cases:

1. In the event that thegoods, constructions, or services to be procured are not available or cannot be obtained under reasonable commercial conditions within the territory of China;

2. In the event that such items are to be procured for use outside China;

3. In the event that other laws and administrative regulations prescribe otherwise for such procurement.

The domestic goods, constructions, and services mentioned in the preceeding paragraph shall be defined in accordance with the relevant regulations of the State Council.

Article 11 Information on government procurement shall be released to the public in a timely manner on the news media as designated by the government procurement regulatory authorities, except information that involves business secrets.

Article 12 If, during the activity of government procurement, the procurement personnel and concerned individuals have a conflict of interest with the suppliers, they must avoid the activity. In the event that the suppliers maintain that the procurement personnel and people concerned have a conflict of interest with them, they may petition the former for avoidance.

The people concerned as mentioned in the preceeding pararaph include members of the bid appraisal committee if the procurement is carried out by public bidding, members of the negotiation team if it is done by competitive negotiation, and members of the inquiry team if it is done at inquiry price etc.

Article 13 The finance department under the people's government at various levels shall be in charge of the supervision and administration of government procurement and shall perform its supervisory and administrative functions regarding government procurement activities according to the law.

Other relevant departments of the people's governments at various levels shall, according to the law, perform their supervisory and administrative functions in connection with the government procurement activities.

Chapter II Government Procurement Parties

Article 14 Government procurement parties refer to various kinds of entities, including purchaser, supplier and procurement agency that have rights to and obligations for government procurement activities.

Article 15 Purchaser refers to government departments, institutionsand social organizations that conduct government procurement in accordance with the law.

Article 16 The procurement agency must be a centralized procurement organization. The people's governments of the cities and autonomous prefectures with administrative districts shall establish centralized procurement agencies at their respective levels in light of the requirements for the items to be procured.

The centralized procurement agencies must be non-profitable corporate bodies that deal with procurement matters at the instructions of the purchaser.

Article 17 When centralized procurement agencies conduct government procurement activities, they must meet the requirements that the procurement price should be lower than the average market price; the procurement efficiency should be higher, and the quality of procurement should be fine, and the services should be excellent.

Article 18 In the event that a purchaser purchases items included in the catalogue for centralized government procurement, those items must be procured by a centralized procurement agency on its behalf. If the intended items are not included in the catalogue for centralized government procurement, the purchaser may purchase them on their own, or request a centralized procurement agency to do so instead on its behalf within a specified limit.

In the event that items included in the catalogue for centralized procurement are those to be procured by the government for general use, a centralized procurement agency shall be entrusted to do the job. If, however, they are to be used by any department or by the system it belongs to for special purposes, they will be procured by the department in a centralized way. If they are to be used by any department exclusively for special purposes, the department may procure them on its own with the approval of the people's government above the provincial level.

Article 19 A purchaser may entrust any procurement agency rather than centralized procurement agencies to carry out a government procurement within its limit of authority.

A purchaser has the option to select any procurement agency and no entity or individual shall be allowed to designate in any form whatsoever any procurement agency for the purchaser.

Article 20 In the event that a purchaser entrusts a procurement agency to carry out procurement on its behalf according to the law, the purchaser shall enter into an agency agreement with the procurement agency to prescribe the items so entrusted and their respective rights and obligations so agreed upon between both sides.

Article 21 Suppliers as used herein shall refer to corporate bodies, other organizations, or natural persons that supplygoods, constructions, or services to the purchaser.

Article 22 Those suppliers participating in government procurement activities must meet the following requirements:

1. they have the capability of undertaking civil liability;

2. they have a fine business reputation and a sound financial accounting system;

3. they have the necessary equipment and professional skills to perform contracts;

4. they have a fine record of paying taxes and surcharges and social security funds according to the law;

5. they have no record of material malpractice in its business operations during the three years before participation in the government procurement activity;

6. they meet all other requirements as may be prescribed by the laws and administrative regulations.

The purchaser may, in light of the special requirements for the items to be procured, set forth special terms and conditions for the suppliers to meet, but are not allowed to give suppliers different or discriminative treatment by means of unreasonable requirements.

Article 23 The purchaser may request those suppliers involved in government procurement to provide documents proving their qualification and business performance and carry out an examination of their qualification in light of the conditions set for them herein and on the basis of the specific requirements of the items to be procured for them to meet.

Article 24 More than two natural individuals, corporate bodies, or other organizations may form an associate to participate in government procurements in the capacity of one supplier.

Those suppliers participating in government procurement in the form of an associate must all meet the requirements as set forth in Article 22 herein and must provide the purchaser with the agreement of association, indicating the jobs and obligations they respectively undertake. All parties to an associate shall enter into a procurement agreement with the purchaser, assuming several and joint liabilities to the purchaser for the things and matters as agreed upon therein.

Article 25 Government procurement parties are prohibited from colluding with each other to infringe upon state interests, the public interests of society, or the legitimate rights and interests of others involved or excluding other suppliers from competition by any means whatsoever.

Suppliers are prohibited from winning a bid or concluding any transaction by offering a bribe or by any other illicit means towards the purchaser, procurement agency, member of the bid appraisal committee, member of the competitive negotiation team, or member of the inquiry team.

Procurement agencies are prohibited from obtaining unlawful benefits from the purchaser by means of bribes or any other illicit means.

Chapter III Forms of Government Procurement

Article 26 Government procurement shall take the following forms:

1. open biding;

2. invited biding;

3. competitive negotiation;

4. single-source procurement;

5. inquiry;

6. any other forms as approved by the government procurement regulatory authorities under the State Council.

Open tendering shall be designated as the primary form of government procurement.

Article 27 In the event that the purchaser purchases goodsor services in the form of open biding, the specific quotas shall be stipulated by the State Council if they fall into scope of those to be procured under the central budget, or, if they are included in the catalogue for local government procurement under local budget, by the people's governments of a province, autonomous region, or municipalities directly under the Central Government. In special situations where forms other than open biding have to be adopted, approval shall, before beginning the procurement activity, be obtained from the government procurement regulatory authorities of the people's government of a city or autonomous prefecture with administrative districts.

Article 28 Purchasers are prohibited from breaking up the whole of goodsor services into parts that shall be procured by open biding in an attempt to avoid procurement by open biding.

Article 29 Goods or services meeting the following circumstances may be procured by invited biding in accordance with the law:

1. they are of a special nature and can only be procured from a limited number of suppliers; and

2. the percentage of expenses in the total value of government procurement will be too large if they are procured by open biding.

Article 30 Goods or services meeting the following circumstances may be procured by competitive negotiation according to the Law:

1. after public bidding, there is no supplier tender or qualified tender or re-bidding is not possible;

2. specific descriptions or requirements cannot be determined for the sake of complex technology or special nature;

3. the time limit cannot meet the demand of users if public bidding is adopted; and

4. the total price of the commodities or services cannot be worked out beforehand.

Article 31 Commodities or services meeting the following circumstances may be procured by unitary source purchase:

1. they can only be procured from a single supplier;

2. procurement from other suppliers is impossible due to the occurrence of an unexpected critical situation; and

3. additional procurement shall be made from the original suppliers in order to keep consistency with the previous procurement or meet the needs of supporting services and the total amount of the additional procurement does not exceed 10% of the original contract value of the procurement.

Article 32 When the description and standard of goods to be procured are unified, and the goods on hand are sufficient with a small margin of change in price, they may be procured in the form of inquiry according to the Law.

Chapter IV Procedure for Government Procurement

Article 33 When the department with the budgeting function prepares the budget for the ensuing fiscal year, the items of government procurement and capital budget for the year shall be listed and reported to the fiscal department at the same level for consolidation. The departmental budget shall be approved in accordance with the limit of administrative power and procedure.

Article 34 In the event that goods or services are to be procured in the form of invited biding, the purchaser shall select more than three suppliers at random from among the qualified suppliers and send them an invitation for bid.

Article 35 In the event that goods or services are to be procured in the form of invitation for bid, the length of time between the date the bid documents are sent out and the deadline for the submission of tender documents by the tender shall be no less than 20 days.

Article 36 In the event that procurement takes the form of invitation for bid, the bid shall be cancelled in any of the following situations:

1. there is no more than three suppliers that are eligible or give an essential response to the bid documents;

2. there is any illegal or breaching acts that effect a fair procurement;

3. the offer of the tender exceeds the budget for the procurement and is not affordable by the purchaser; or

4. the task of procurement is cancelled due to any important change.

After the cancellation of the bid, the purchaser shall notify all the tenderers of the reason.

Article 37 After the cancellation of the bid, arrangement for a new invitation to bid shall be made unless the task of procurement is cancelled. If it is necessary to adopt any other form of procurement, approval is, before the start of procurement activity, required from the procurement regulatory authorities of the people's government of a city and autonomous prefecture with administrative districts.

Article 38 In the event that the form of competitive negotiation is adopted for procurement, the following procedure shall be followed:

1. Formation of a negotiation team. The team must comprise of more than three members in an odd number who are representatives and relevant experts of the purchaser, among them experts shall account for no less than two thirds of the total number of its members.

2. Preparation of negotiation documents. These documents must definitely specify the procedure and contents of negotiation, terms and conditions of the draft contract, the criterion for conclusion of transactions, and etc.

3. Listing of the names of suppliers to be invited to negotiate. The negotiation team shall select no less than three suppliers from those eligible on the list and send to them the negotiation documents.

4. Negotiations. All members of the negotiation team shall negotiate together with the candidate suppliers respectively. During the negotiation, neither party may disclose the technical know-how, price, or other information of any other supplier. If there is any material change in the negotiation documents, the negotiation team shall notify all the suppliers participating in the negotiation in writing.

5. Determination of the conclusive supplier. After the negotiation, the negotiation team shall demand that all the participant suppliers present a final offer by a specified deadline and the purchaser shall make a selection from the candidates suggested by the negotiation team and determine the conclusive supplier in the principle that the procurement requirements in amount, quality, service, and lowest offer are all met and distribute the result to all other failing suppliers that have participated in the negotiation.

Article 39 Where the form of unitary source purchase is adopted, the purchaser and the supplier must abide by the principles as stipulated herein and the procurement shall be completed at the reasonable price as agreed upon between both sides to the extent that the quality of the procured items is secured.

Article 40 In the event that the form of inquiry is adopted for procurement, the following procedures must be followed:

1. Formation of an inquiry team. The team must comprise of more than three members in an odd number who are representative and relevant experts of the purchaser, among them experts shall account for no less than two thirds of the total number of its members. The inquiry team makes stipulations regarding the price structure, the criterion for conclusion of transaction, and other items of the procurement.

2. Listing of the names of suppliers to be inquired. The inquiry team shall select no less than three suppliers from those eligible on the list in light of its procurement demand and issue a notice of inquiry for them to offer a price.

3. Inquiry. The inquiry team shall demand the inquired supplier to present a one-time offer without alteration.

4. Determination of the conclusive supplier. The purchaser shall select and determine the conclusive supplier in the principle that the procurement requirements for amount, quality, service, and lowest offer are all met and distribute the result to all other failing suppliers.

Article 41 The purchaser or the procurement agency with its authority shall organize an inspection regarding how the supplier has performed the contract. In the event that large-size or complex items for government procurement are involved, the state-certified quality testing organization shall be invited to participate in the inspection. All the members of the inspection party shall sign their names on the certificate of acceptance and bear the corresponding legal liability.

Article 42 The purchaser and the procurement agency shall keep the procurement documents for each item under the government procurement catalogue in safe custody and are prohibited from forging, altering, concealing, or destroying any of them. The duration of the custody of the procurement documents shall be at least 15 years as calculated from the completion date of the procurement.

The procurement documents shall include the record of the procurement activities, the budget for procurement, the bid and tender documents, the bid appraisal standards, the appraisal report, the bid decision document, the contract, the certificate of acceptance, and the response to the inquiry as well as the decision to settle the complaint and other related documents and information.

The record of procurement activities must contain at least the following contents:

1. the category and name of the item to be procured;

2. the budget for procurement, structure of funds, and contract price;

3. the form of the procurement and the reason if any form other than open biding is adopted;

4. the requirements and reasons set for the suppliers to be invited and selected;

5. the bid appraisal standards and the reason why the winning bidder was determined;

6. the reason for the cancellation of the bid; and

7. the corresponding record if any form other than open biding is adopted.

Chapter V Government Procurement Contract

Article 43 The government procurement contracts shall be governed by the Contract Law of the People's Republic of China. The rights and obligations of the purchaser and the supplier shall be agreed upon in the form of a contract and in the principles of equality and voluntariness.

A purchaser may appoint any procurement agency to conclude, on its behalf, a government procurement contract with the supplier. In the event that a contract is signed by a procurement agency in the name of the purchaser, the power of attorney issued by the purchaser is required to be attached as an annex to the contract.

Article 44 All government procurement contracts must be made in writing.

Article 45 The government procurement regulatory authorities under the State Council shall, in concert with other departments thereunder, stipulate what specific terms and conditions must be contained in a procurement contract.

Article 46 The purchaser, the winning bidder, and conclusive supplier shall, within 30 days of the issue of notices of winning the bid and concluding the transaction, enter into a government procurement contract regarding the items as determined by the procurement documents.

The notices of winning the bid and concluding the transaction shall have binding force upon both the winning bidder and supplier. If, after issue of the notices of winning the bid and concluding the transaction, the purchaser alters the results of bid winning and the conclusion of transaction, or the winning bidder or supplier forfeits the bid and the transaction, the breaching party shall assume legal liabilities according to the law.

Article 47 The purchaser shall, within 7 working days after the date on which the government procurement contract is signed, submit a copy thereof to the government procurement regulatory authorities at the same level and the related department for archival purposes.

Article 48 The winning bidder and the conclusive supplier may, with the approval of the purchaser, perform the contract in the form of a sub-contract.

In the event that a government procurement contract is to be performed in the form of a sub-contract, the winning bidder and the conclusive supplier shall be responsible to the purchaser in regard to the items procured and those sub-contracted and the sub-conclusive suppliers shall be responsible to the purchaser in regard to the sub-contracted items.

Article 49 In the event that the purchaser needs an increase of the same goods, constructions, or services as the subject matter of the contract during the performance thereof, supplementary contracts may be concluded with the purchaser, provided that all other terms and conditions remain unchanged and the total amount of such supplementary contract price does not exceed 10% of the original contract price.

Article 50 Both parties to a government procurement contract may not alter, suspend, or terminate the contract without mutual consent.

In the event that the continuous performance of a government procurement contract would do harm to the interests of the state and society, both parties thereto must alter, suspend, or terminate the contract. The party at fault shall assume liability of compensating the other. If, however, both parties are at fault, they shall assume their respective liabilities.

Chapter VI Query and Complaint

Article 51 In the event that the supplier has any questions regarding the government procurement activities, the questions may be presented to the purchaser, which shall give a reply on a timely basis but the reply must not involve any business secrets.

Article 52 In the event that the supplier deems that the procurement documents, the procurement process, and the result of winning the bid and concluding the transaction have infringed upon its rights and interests, it may, within 7 working days after it knows about or should know about such an infringement, query the purchaser in writing.

Article 53 The purchaser shall, within 7 working days after receiving the written query, present a reply in writing and notify the querying supplier and other suppliers in written form, but the reply must not involve any business secrets.

Article 54 In the event that the purchaser entrusts a procurement agency to make procurement on its behalf, the supplier may consult or query the procurement agency and the latter shall give a reply to the former within the limit of authority as prescribed in Articles 51 and 53 hereof.

Article 55 If the querying supplier is not satisfied with the reply as given by the purchaser or the procurement agency, or if the purchaser or the procurement agency fails to give a reply within the specified period of time, the querying supplier may, within 15 working days after the expiry of the specified period, lodge a complaint with the government procurement regulatory authorities at the same level.

Article 56 The government procurement regulatory authorities shall, within 30 working days after receipt of any complaint, make a decision regarding the complaint and notify the complainant and the persons involved in the complaint in writing.

Article 57 When the government procurement regulatory authorities is dealing with the complaint, it may notify the purchaser in writing to cease its procurement activity if the situation warrants it, provided that the duration of suspension does not exceed at longest 30 days.

Article 58 In the event that the complainant is not satisfied with the decision regarding his complaint or the government procurement regulatory authorities fails to deal with the case within the specified time limit, the complainant may petition for an administrative reconsideration or lodge an administrative lawsuit with the people's court.

Chapter VII Supervision and Inspection

Article 59 The government procurement regulatory authorities shall strengthen the supervision and inspection of government procurement activities and organizations in charge of the centralized procurement.

The supervision and inspection mainly cover the following items:

1. the implementation of the laws, administrative regulations, and rules regarding government procurement;

2. the implementation of the scope, form, and procedure of procurement; and

3. the professional quality and technical ability of the government procurement personnel.

Article 60 The government procurement regulatory authorities may not establish organizations for centralized procurement and are not allowed to participate in any procurement activities in connection with government procurement items.

The procurement agency shall have no relationship of subordination to or other relationship of interest with the administrative department.

Article 61 A centralized procurement organization shall have a sound internal supervisory and administrative system. The procedures for making and implementing decisions on procurement activities shall be clearly defined and the decision-makers and the implementers shall mutually supervise and restrain each other. The functions and powers of the personnel responsible for procurement and those for the examination of contracts and the checking and acceptance of procured goods will be expressly defined and separated.

Article 62 The personnel in charge of the centralized procurement shall have corresponding professional quality and technical ability meeting the requirements for one to hold a professional post as prescribed by the government procurement regulatory authorities.

The centralized procurement organization shall strengthen education and training of its working personnel and, at regular intervals, make appraisals of their professional level, work achievement, and professional ethics. Any procurement personnel found to be disqualified after being appraised may not continue to hold their post.

Article 63 The procurement standards for government procurement items will be made public.

If the forms of procurement as stipulated by the Law are adopted, the purchaser shall, upon the completion of the procurement activities, publicly announce the results of the procurement.

Article 64 The purchaser must carry out procurement by means of the forms and through the procedures as prescribed by the Law.

No entitiess and individuals may require, in violation of the Law, the purchaser or its procurement personnel to make procurement from their designated suppliers.

Article 65 The government procurement regulatory authorities shall launch an inspection of the procurement activities regarding government procurement items and the government procurement parties involved must report the real situations and provide related information and documents.

Article 66 The government procurement regulatory authorities shall make an appraisal of the centralized procurement organization in regard to the price, result of fund-efficiency, service quality, reputation, and compliance with the law and make public the result of the appraisal at a specified time.

Article 67 The government administrative departments responsible for government procurement in accordance with the laws and administrative regulations shall, in light of the division of their duties, intensify their supervision over government procurement activities.

Article 68 The audit department shall supervise government procurement by means of audit. The government procurement regulatory authorities and all the government procurement parties are required to accept the supervisory audit by the audit department in regard to their government procurement activities.

Article 69 The supervisory department shall implement supervision over the government organizations, state civil servants, and other personnel authorized by state administrative departments who participate in government procurement activities.

Article 70 All entitiess and individuals have the right to file a complaints and make accusations regarding any violation of the law during the government procurement activities and the departments and organizations concerned shall in a timely manner duly deal with such offences within and in light of their respective functions and powers.

Chapter VIII Legal Liabilities

Article 71 In the event of any of the following situations, the purchaser and procurement agencies shall be enjoined to make rectification, be given a disciplinary warning, and may be fined. Furthermore, the person in charge and others directly responsible shall be administered a punishment and it shall be made public by circular by competent administrative department or the related organization:

1. to procure in forms other than open biding without approval;

2. to raise the procurement standards without approval;

3. to give different or discriminative treatment to suppliers by means of unreasonable terms and conditions;

4. to conduct consultation and negotiation with the tenders in the process of procurement by public bidding;

5. to decline concluding a procurement contract with the winning bidder and the supplier after issue of the notice of winning bid and conclusion; and

6. to refuse supervision and inspection as conducted by the competent department according to the law.

Article 72 In the event of any of the following cases, the purchaser and procurement agencies and their working personnel shall be subject to the criminal liability if it constitutes a crime or punished in the form of a fine if it does not constitute a crime. Furthermore, their illegal earnings, if any, shall be confiscated or administrative sanction shall be given if the people involved are state civil servants:

1. to willfully collude with the supplier or procurement agency;

2. to accept bribes or obtain any other illegitimate benefits in the process of procurement;

3. to provide false information when the department concerned carries out supervisory inspection according to the law; and

4. to disclose the lower limit on bids before the opening of bids.

Article 73 If any of the offences outlined in the previous two articles effects or would possibly effect the result of the winning bid and conclusion, the case shall be handled in light of the following circumstances:

1. the termination of the procurement activity if the bid winning and conclusive supplier are not yet determined;

2. the cancellation of the contract and re-determination of the winning bidder and conclusive supplier from qualified winning bidders and candidate conclusive suppliers after the winning bidder and conclusive supplier are determined but the procurement contract has not yet been performed; and

3. losses caused to the purchaser and the supplier after the performance of the procurement contract, the compensation liability shall be assumed by the person held liable.

Article 74 In the event that any purchaser does not request a centralized procurement agency to procure in a centralized way such government procurement items as should be, the government procurement regulatory authorities shall demand it to make rectification or halt the payment of budgeted funds if it refuses to make rectification. Furthermore, the person in charge and any others directly responsible shall be administered punishment by the higher administrative department or the department concerned.

Article 75 In the event that any purchaser fails to make public the standard for and results of the procurement of government procurement items, it shall be demanded to make rectification and the directly responsible person in charge shall be administered a disciplinary punishment according to the law.

Article 76 In the event that any purchaser or procurement agency conceals, destroys the procurement documents that shall be retained, forges, or alters the procurement documents in violation of the Law, the government procurement regulatory authorities shall give them a fine of between RMB 20,000 and RMB 100,000 and administer a disciplinary punishment to the persons in charge and other persons directly responsible for the case according to the law or subject them to the criminal liabilities if the offence constitutes a crime.

Article 77 In the event of any of the following cases, the suppliers shall be fined within the range of 0.5% to 1% of the amount of procurement, included on the name list of those with unclean records, and prohibited from participating in government procurement activities for one to three years. If they possess any unlawful gains, those gains shall be confiscated. If the situation is serious, their business license shall be revoked by the administration for industry and commerce. If their offence constitutes a crime, they shall be subject to criminal liabilities:

1. to win the bid or conclude the transaction by providing false information or documents;

2. to vilify and squeeze out other suppliers by illicit means;

3. to willfully collude with the purchaser, other suppliers, or the procurement agency;

4. to offer a bribe or provide other unlawful benefits to the purchaser and procurement agency;

5. to consult and negotiate with the purchaser during the period of procurement by open biding; and

6. to reject the supervision and inspection by the department concerned or to provide false information.

In the event of any of the situations (l) to (5) as stated above, the winning bid and concluded transaction shall be nullified.

Article 78 In the event that a procurement agency commits any illegal activities during the operation of government procurement, it shall be fined according to the relevant laws and operation of government procurement shall be forbidden for one to three years. It shall be subject to criminal liabilities if actions constitute a crime.

Article 79 Government procurement parties falling under any of the situations as listed in Articles 71, 72, and 77 hereof and having caused losses to others shall assume civil liabilities in accordance with the relevant civil laws.

Article 80 Personnel of the government procurement regulatory authorities that abuse their power and position, neglect their duties, engage in favoritism, or commit irregularities shall be given an administrative sanction in accordance with the law or be subject to criminal liabilities if their act constitutes a crime.

Article 81 If the government procurement regulatory authorities fails to handle any complaint lodged by the suppliers, the people in charge and others directly responsible for the case shall be given an administrative sanction.

Article 82 If, at the time of appraising the performance of a centralized procurement institution, the government procurement regulatory authorities gives false presentations and conceals the real situation or it fails to carry out the appraisal and announce the result of appraisal at the specified time, it shall duly make rectification and its higher authorities or the supervisory department shall circulate a notice of criticism regarding the individuals directly responsible and administer an administrative sanction to the person in charge that was directly responsible.

If any centralized procurement institution reports false achievements to and conceals the real situation from the government procurement regulatory authorities, it shall be fined within the range of RMB 20, 000 to RMB 200,000 and a notice of criticism shall be circulated. If the case is serious, qualification as a procurement agency shall be cancelled.

Article 83 If any entities or individuals obstruct suppliers from entering the government procurement market of their locality or industry, they shall be demanded to make rectification within a specified time; in the case of any failure to do so, the higher administrative department or the department concerned will give punishments to the persons or individuals in charge.

Chapter IX Supplementary Provisions

Article 84 If it has been otherwise prescribed in the procurement agreements between the lenders, financing parties on one side and a Chinese party on the other regarding government procurement by using loans from international organizations and foreign governments, the provisions thereof may be applicable, provided that the state interests and public interests are not infringed upon.

Article 85 Emergent procurement carried out in cases of force majeure including serious natural and other disasters and procurement involving state security and secrete is not be subject to the Law.

Article 86 The laws and regulations on military procurement shall be otherwise formulated by the Military Commission of the Central Committee of the Chinese Communist Party.

Article 87 Specific steps and methods for the implementation of the Law are formulated by the State Council.

Article 88 The Law will come into force as of January 1, 2003.

Note:English version for reference only,Chinese version shall prevail.

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