Laws of the People's Republic of China

The Ministry of Foreign Trade and Economic Cooperation

Decree of the Ministry of Foreign Trade and Economic Cooperation of the People's Republic of China

No.1

Measures on the Administration of International Bidding for Mechanical and Electrical Products are hereby promulgated and shall come into force as of the day of May 11,1999.

Minister of the Ministry of Foreign Trade and Economic Cooperation, Shi Guangsheng

March 14,1999

Measures on the Administration of International Bidding for Mechanical and Electrical Products

Chapter I General Provisions

Article 1

With a view to standardizing the behavior of international bidding of mechanical and electrical products and establishing an open and fair competition mechanism for international bidding and equitable tender evaluation criteria, these Measures are hereby formulated pursuant to the Provisional Measures on Managing the Import of Mechanical and Electrical Products, the Circular of the State Council on Strengthening the Management of Importing Mechanical and Electrical Equipment by Utilizing International Lending Projects (GuoFa [1990] No.64) and the Circular of the General Office of the State Council on Printing and Distributing the Provisions of the Ministry of Foreign Trade and Economic Cooperation Concerning the Institution Setting up Under the Function and Staffing (GuoBanFa [1998] No.122).

Article 2

"International Bidding" specified in these Measures means international open competitive bidding.

Article 3

The Ministry of Foreign Trade and Economic Cooperation (hereinafter referred to as MOFTEC) shall be responsible for coordinating, managing and supervising international bidding for national mechanical and electrical products, formulating the rules and the management methods for the international bidding and organizing to conduct the international bidding thereupon, examining and approving the qualification for international bidding agencies of mechanical and electrical products, and undertaking the routine work of the National Tender Evaluation Committee.

Article 4

Administrative apparatuses of import and export of mechanical and electrical products of various localities and departments (hereinafter referred to as import and export apparatuses) shall take the responsibilities for supervising, coordinating and managing the process of international bidding of their mechanical and electrical products respectively and undertaking the routine work of their own tender evaluation committee.

Article 5

Agencies of international bidding for mechanical and electrical products (hereinafter referred to as "bidding agencies") shall undertake the business of international bidding for mechanical and electrical products.

Article 6

"The purchaser" specified in these Measures means state organs, enterprises, public institutions and other social organizations, which purchase mechanical and electrical products through international bidding.

"Bidding agencies" specified in these Measures mean legal persons or social intermediaries, which obtain the qualification for bidding and carry out the international bidding business of mechanical and electrical products in compliance with the Methods on Examining and Approving the Qualification for International Bidding of Mechanical and Electrical Products (promulgated in another decree).

"The tender" specified in these Measures means legal persons, who participate in tendering competition in accordance with bid documents.

Chapter II Scope of Bidding

Article 7

The following mechanical and electrical products shall be subject to international bidding:

(1)

The mechanical and electrical products specified by the Government to be purchased through international bidding. The concrete catalogue shall be formulated, adjusted and promulgated by MOFTEC;

(2)

The mechanical and electrical products purchased by utilizing the loans of the World Bank, Japan Overseas Economic Cooperation Fund (OECF) and Japan Import and Export Bank (hereinafter referred to as "overseas loans");

(3)

The mechanical and electrical products that shall be purchased through international bidding under the item of government procurement;

(4)

The mechanical and electrical products required by other lending institutions to be purchased through international bidding.

Article 8

The following mechanical and electrical products may be submitted to bidding agencies for bidding by the purchaser:

(1)

The imported mechanical and electrical products controlled by the Government (such as quotas, specified products, etc.). After requesting the relevant import and export agency to apply to MOFTEC and obtaining the approval of MOFTEC (the application letter is set out in Attachment 1), the purchaser may authorize bidding agencies to organize international bidding.

(2)

The mechanical and electrical products subject to automatic import registration; and

(3)

The mechanical and electrical products imported by enterprises with foreign investment for self-use.

Article 9

Except in overseas loan projects, international bidding is not necessary to be conducted in the event that one of the following conditions occurs:

(1)

Utilizing foreign government loan or export credit;

(2)

Not necessary to hand over foreign exchange to foreign parties;

(3)

Purchasing parts and auxiliary equipment needed for manufacturing;

(4)

Purchasing used mechanical and electrical products;

(5)

One-shot import volume less than US $ 10,000; or

(6)

Other mechanical and electrical products to which international bidding is not applicable.

Chapter III Bid Documents

Article 10

Bid documents shall be compiled in accordance with purchasing needs by the purchaser and bidding agencies, or consulting service agencies entrusted by the purchaser. Bid documents mainly include as follows:

(1)

Invitation for bidding;

(2)

General instructions to tenders;

(3)

Names, quantities and technical specifications of bidding products;

(4)

Contract clauses;

(5)

Contract form; and

(6)

Attachments:

(i)

Tender document;

(ii)

Tender opening table;

(iii)

Tender quotation;

(iv)

Product description table;

(v)

Specification deviation chart;

(vi)

Tender bond format;

(vii)

Format of letter of guarantee of advance payment;

(viii)

Format of power of attorney of legal persons; and

(ix)

Format of letter of authority of manufacturers.

Chapter IV Bidding Procedures

Article 11

The purchaser shall enter authorization agreement for bidding with bidding agencies, which have the qualification for bidding of mechanical and electrical products, and provide bidding bond (except purchasing mechanical and electrical products by utilizing overseas loan projects). If the amount of the authorized bidding is up to or below US $ 2 million, the bidding bond shall not exceed 20 percent of the amount. If the amount of the authorized bidding is above US $ 2 million, the bidding bond of the overage above US $ 2 million shall not exceed 1 percent of the amount.

Article 12

Compiling bid documents. Bid documents shall include two parts of technique and commerce (including the requirements for the manufacture's performance and the evidences for tender evaluation), and the material clauses shall be marked with "*". If one of the above requirements does not be satisfied, the case shall result in the rescission of the tender.

Article 13

In addition to clauses of constituting the rescission of commercial tender, the evidences for tender evaluation shall include major parameters of rescinding technical bid and scope of deviation, and permissible scope of price deviation and discount calculation methods.

Article 14

The purchaser shall submit bid documents; facilities purchase order, and written and official replies to relevant projects to the relevant import and export apparatus for examining and verifying the bid documents in compliance with the Provisional Measures on Managing the Import of Mechanical and Electrical Products. The import and export apparatus shall deliver the reply to the application for the examination and verification of the bid documents (see Format 1) to the purchaser and the relevant units within 20 working days (10 working days for miniature unit set of equipment). If the reply does not be delivered during the stipulated period for certain special reasons, the import and export apparatus shall describe the reasons and the period needed to be extended.

Article 15

The bid documents, which have been examined and approved, may not be amended without the permission of the relevant import and export apparatus.

Article 16

After the purchaser and the bidding agency receive the reply to the application for the examination and verification of the bid documents, the bidding announcement shall be published in the newspapers and periodicals or other media specified by the government (see Format 2).

Article 17

The validity period of tender, commencing from the date of the bidding announcement, may not be less than 30 days, and may not be less than 60 days for main complete set of equipment.

Article 18

Opening the tenders at the time and place stipulated in the bidding announcement. The tender scheme, alternative courses, price reduction statement or discount from the price shall be advanced at the moment of opening of tenders, otherwise it may not be treated as evidences for tender evaluation. The purchaser, tenders and relevant parties shall participate in carrying out the opening of tenders.

Article 19

The bidding agency shall deliver or mail the tender opening record (see Format 3) to the relevant import and export apparatus for reference within 3 days after opening the tenders (the effective starting time shall rest upon the date in the postmark).

Chapter V Rules for Tender Evaluation

Article 20

Initial evaluation shall be conducted by the initial evaluation committee, which has an odd number of members, composed of the purchaser, the bidding agency and the relevant experts. Half of the members shall be experts.

Article 21

Initial evaluation shall be strictly carried out in accordance with bid documents and tender document and contain three categories of commerce, technique and price. The tender who has the lowest bid shall be the bid-winner in the event that the two categories of commerce and technique meet the requirements of the bid documents.

Article 22

Requirements for commerce evaluation. Upon occurrence of one of the following conditions, the bidding shall be rescinded:

(1)

The tender's failure in providing the tender bond, the insufficiency of the tender bond or the validity period of the letter of guarantee, or the inconsistency between the tender bond form or the issuing bank and the requirements of the bid documents;

(2)

Exceeding the business scope of the tender;

(3)

The attorney of the tender failure in submitting the valid power of attorney issued by the manufacture;

(4)

The tender document without the signature of the legal representative, or the signing party without the valid power of attorney of the legal representative;

(5)

The inconsistency between the performance of the tender with the requirements of the bid documents; or

(6)

The insufficiency of the validity period of tender.

Article 23

Requirements for technique evaluation

(1)

The tender document shall be rescinded, if it does not satisfy the major parameters in technical specification and exceeds the scope of deviation.

(2)

The technical comparison table shall be filled in accordance with the requirements of the bid documents and the major parameters, and may not be filled in with marks. After clarification of the technical problems, which are needed and permitted to be clarified, the tender document meeting the requirements shall be regarded as valid, which shall be described in the comparison table.

Article 24

Requirements for the evaluation of price

(1)

The evaluation shall be conducted on the basis of assessing factors stipulated in the tender documents. Any necessary markup or markdown shall be described according to the stipulation of the bid documents and the tender document during the process of evaluation.

(2)

The tender shall make a list of spare parts necessary for the quality assurance period and the prices in accordance with the requirements of the bid documents and the technical situations of the products, and credit the price of the spare parts into the tender sum. The case that the spare parts are not necessary shall be described in the tender document; otherwise the average rate of the spare parts of other effective tenders shall be credited into the tender sum (or the highest bid of the effective tenders upon the requirement of lending institutions).

(3)

As for calculating the tender sum in overseas loan projects, the price of foreign products shall be based on CIF, and that of domestic products shall be based on ex works (excluding value-added tax).

(4)

Except in overseas loan projects, the tender sum shall be calculated on the basis of the installation site specified by the purchaser after arrival of the products, of which the price of the foreign products shall be CIF add import add duty add internal transport cost add premium, etc. And the price of the domestic products shall be ex-works (excluding value-added tax) add internal transport cost add premium, etc.

(5)

If tender prices are denominated in various currencies, those prices shall be converted into US $ based on the current selling rates of the Bank of China during the process of price evaluation.

Article 25

Rules for dealing with other matters arising from tender evaluation

(1)

The original of banker's references shall be produced. The duplicated documentation of banker's references issued within 3 months before the bid opening has the same effectiveness as the original.

(2)

Clarifying the ambiguity in the tender document shall be permitted, but the material statement concerning technique, commerce, and price, etc may not be amended. The clarification shall be carried out in writing.

(3)

The tender document shall be rescinded in the event that the tender copies the technical specification stipulated in the bid documents as one part of the tender document.

(4)

The products manufactured by equity joint venture enterprises duly registered in China shall be regarded as meeting with the requirements for the tenders' performance, if the performance of the technical person in overall meets the requirements of the bid documents.

Chapter VI Transaction of the Import Procedure

Article 26

The purchaser and the bidding agency shall submit the tender evaluation report with official seals of both parties and signatures of members of the Initial Evaluation Commission (see Attachment 2) to the relevant import and export apparatus according to the supervisor privilege level with 15 working days after the initial evaluation.

Article 27

The import and export apparatus shall organize the tender evaluation commission to examine and verify the tender evaluation report within 10 working days. If no party challenges, import formalities may be handled for the products of foreign bid winner pursuant to the Provisional Measures on Managing the Import of Mechanical and Electrical Products. The bidding agency shall issue the award notice on the basis of import formalities. In event of purchasing the products by utilizing overseas loans, the bidding agency shall submit the tender evaluation report to the lending institution in accordance with the notice of the tender evaluation outcome issued by the national tender evaluation commission after the examination and verification of the tender evaluation, and obtain its approval before issuing the award notice and handling import formalities.

Article 28

The purchaser may not enter into supply contracts with foreign sellers who win the bid, unless import formalities have been handled. The tender bond shall be returned to the purchaser within 5 days after the constitution of supply contracts.

Chapter VII Violation of Rules and Punishment

Article 29

Any of the following acts shall be regarded as violation of rules:

(1)

Colluding with others to invite tenders falsely;

(2)

Disclosing information on tender evaluation during the period of tender evaluation;

(3)

Disrupting the process of bidding and tender evaluation through unfair means;

(4)

Not evaluating tenders in accordance with the rules for tender evaluation stipulated in these Measures;

(5)

Writing the tender evaluation report in contravention of the bid documents and the tender document;

(6)

Constituting supply contracts before examining and approving the tender evaluation report or handling import formalities; or

(7)

Other acts which violate these Measures.

Article 30

Punishment

(1)

If the bidding agency is responsible for the violation of rules, the bidding shall be invalid and a notice of criticism shall be given to the present violator. In addition, the qualification for bidding of the bidding agency shall be suspended or abolished according to circumstances of the violation.

(2)

If the tender is responsible for the violation of rules, its tender document shall be invalid. In addition, its qualification for tender shall be suspended or abolished according to circumstances of the violation.

(3)

If the purchaser is responsible for the violation of rules, the bidding shall be invalid and a notice of criticism shall be given to the purchaser. In addition, the relevant import and export apparatus may not handle import formalities.

(4)

If the initial evaluation committee is responsible for the violation of rules, the tender evaluation report shall be invalid. In addition, the member who shall take the material responsibilities for the violation of rules shall be prohibited to conduct the tender evaluation.

(5)

If the purchaser does not enter supply contracts with the bid-winner in accordance with effective stipulations, the bidding bond may not be returned. The 50% of the bidding bond shall be paid to the bid-winner, and the other 50% shall be paid to the bidding agency.

If the bid-winner does not enter supply contracts with the purchaser in accordance with effective stipulations, the bid bond may not be returned. The 50% of the bid bond shall be paid to the purchaser, and the other 50% shall be paid to the bidding agency.

(6)

If the acts constitute breach of discipline, the supervisory body shall give administrative sanctions to the violator. If the case constitutes a crime, the offender shall be investigated for criminal responsibility according to law.

Chapter VIII Supplementary Provisions

Article 31

If the loan agreement between governments of between financing institutions contains special provisions, the special provisions, shall prevail.

Article 32

Local bidding or invitation for tender may not be adopted in overseas loan projects without the permission of the lending institutions. If it is permitted, its procedures may follow the procedures of these Measures.

Article 33

Service charges for bidding shall be collected in accordance with the relevant laws and regulations.

Article 34

MOFTEC shall be responsible for the interpretation of these Measures. If the former relevant laws or regulations are in contravention of these Measures, these Measures shall prevail.