PRC Government Procurement Law

Revised on August 31 2014. Latest revision can be found at: http://www.chinalawandpractice.com/Article/3404336/PRC-Government-Procurement-Law-Revised-in-2014.html

(Adopted at the 28th Session of the Standing Committee of the 9th National People's Congress and promulgated on 29 June 2002 and effective as of 1 January 2003.)

PART ONE: GENERAL PROVISIONS

Article 1: This Law is formulated in order to standardize government procurement, to improve the efficiency of government procurement funds, to safeguard State and social interests, to protect the lawful rights and interests of the parties involved in government procurement, and to promote honest governance.

Article 2: This Law shall apply to government procurement within the People's Republic of China.

For the purposes of this Law, the term "government procurement" means the use of central government funds by all levels of State authorities, institutions and social organizations to procure goods, projects and services that fall within the catalogue for centralized procurement formulated in accordance with the law or that are above the procurement limits.

The catalogue for centralized government procurement and the procurement limits shall be formulated in accordance with the limits of authority stipulated in this Law.

For the purposes of this Law, the term "procurement" means the obtaining of goods, projects and services in the form of contracts for consideration, including by acquisition, lease, appointment, and employment etc.

For the purposes of this Law, the term "goods" means all types and categories of articles including raw materials, fuel, equipment, and products etc.

For the purposes of this Law, the term "projects" means construction projects, including the new construction, alteration, expansion, decoration, demolition and renovation etc. of buildings and structures.

For the purposes of this Law, the term "services" means the objects of government procurement other than goods and projects.

Article 3: Government procurement shall abide by the principles of transparency, fair competition, impartiality and good faith.

Article 4: The laws on invitation and submission of bids shall apply to government procurement of projects by invitation and submission of bids.

Article 5: No work unit or individual may in any way obstruct or restrict the free entry of suppliers in the government procurement market in its/his region or industry.

Article 6: Government procurement shall be conducted strictly in accordance with the approved budget.

Article 7: Government procurement shall combine centralized and decentralized procurement. The scope of centralized procurement shall be defined by the catalogue for centralized procurement promulgated by people's governments at provincial level and above.

The catalogue for centralized procurement for government procurement items that fall within the central government budget shall be determined and promulgated by the State Council. The catalogue for centralized procurement for government procurement items that fall within the local government budget shall be determined and promulgated by the people's government or its authorized institution of provinces, autonomous regions and municipalities directly under the central government.

Government procurement items that are included in the catalogue for centralized procurement shall be subject to centralized procurement.

Article 8: The limits for government procurement for government procurement items that fall within the central government budget shall be determined and promulgated by the State Council. The limits for government procurement for government procurement items that fall within local government budgets shall be determined and promulgated by the people's government or its authorized institution of provinces, autonomous regions and municipalities directly under the central government.

Article 9: Government procurement shall assist the realization of national policies on economic and social development, including environmental protection, support for undeveloped and ethnic minority regions, and promotion of small and medium-sized enterprises etc.

Article 10: Domestic goods, projects and services shall be procured for government procurement, except in the following circumstances:

1. the required goods, projects or services are not available in China, or are not available upon reasonable commercial conditions;

2. the objects of procurement are for use outside China; or

3. it is specified otherwise in other laws or administrative regulations.

For the purposes of the preceding paragraph, the term "domestic goods, projects and services" shall be defined by the relevant regulations of the State Council.

Article 11: Information on government procurement shall be publicly announced in media designated by the government procurement regulatory departments, except where commercial confidentiality is involved.

Article 12: In the course of government procurement activities, procurement personnel and related personnel that has a conflict of interest with the supplier must withdraw from the transaction. If a supplier considers that a procurement personnel or related personnel has a conflict of interest with another supplier, he may apply for the personnel to be withdrawn.

For the purposes of the preceding paragraph, the term "related personnel" includes members of bid evaluation committees for procurement by invitation and submission of bids, members of negotiation groups for procurement by competitive negotiation, and members of quotation request groups for procurement by requests for quotations.

Article 13: The finance department of people's government at all levels shall be the department responsible for supervision and administration of government procurement, and shall carry out the duties of supervising and administering government procurement activities in accordance with the law.

Other relevant departments of people's government at all levels shall carry out the duties of supervising and administering relevant government procurement activities in accordance with the law.

PART TWO: PARTIES INVOLVED IN GOVERNMENT PROCUREMENT

Article 14: The term "parties involved in government procurement" means all types of entities that have rights and obligations in the course of government procurement activities, including buyers, suppliers and procurement agencies etc.

Article 15: The term "buyer(s)" means State authorities, institutions and social organizations engaged in government procurement in accordance with the law.

Article 16: Centralized procurement institutions are procurement agencies. They shall be set up by people's governments at the level of municipalities and autonomous prefectures divided into several districts and above in accordance with the requirements for centralized procurement of the government at that level.

Centralized procurement institutions shall be non-profit business legal persons and shall engage in procurement as entrusted by the buyer.

Article 17: When engaged in government procurement activities, centralized procurement institutions shall act in accordance with the requirements that the procurement price be lower than the average market price, that procurement shall be more efficient, and that goods and services of high quality are procured.

Article 18: A buyer purchasing government procurement items in the catalogue for centralized procurement must appoint a centralized procurement institution to act on his behalf. In the case of items not in the catalogue for centralized procurement, the buyer may procure them himself or may appoint a centralized procurement institution to procure on his behalf within the scope of appointment.

A centralized procurement institution shall be appointed to act as agent when purchasing general government procurement items in the catalogue for centralized procurement. Items specially required by a department or system shall be centrally procured by the department. Items specially required by a work unit may be procured by that work unit with the authorization of the people's government at the provincial level or above.

Article 19: A buyer may appoint a procurement agency whose qualifications have been recognized by the relevant department of the State Council or that of the people's government at the provincial level to engage in government procurement within the scope of appointment.

The buyer has the right to select his own procurement agency. No work unit or individual may in any way designate the procurement agency for the buyer.

Article 20: A buyer that appoints a procurement agency in accordance with the law to handle procurement matters shall sign an agency appointment contract with the procurement agency, which shall set out the terms of the appointment and the rights and obligations of both parties.

Article 21: The term "supplier(s)" means legal persons, other organizations or natural persons that supply goods, projects or services to the buyer.

Article 22: Suppliers engaging in government procurement activities shall fulfil the following criteria:

1. have the capacity to bear civil liability independently;

2. have a good commercial reputation and sound financial accounting systems;

3. have the equipment and professional and technical competence required for performance of the contract;

4. have a good record of paying taxes and social insurance premiums in accordance with the law;

5. have no record of major violations in its business activities for the three years prior to participation in government procurement activities; and

6. other criteria stipulated in laws and administrative regulations.

Buyers may, in accordance with special requirements of procurement projects*, specify particular requirements for the supplier, but they may not impose unequal or discriminatory treatment on the supplier with unreasonable conditions.

Article 23: A buyer may require a supplier engaging in government procurement to provide the relevant qualification certificates and information on commercial achievements, and may investigate the supplier's qualifications in accordance with the provisions hereof on the criteria a supplier must fulfil and with the special requirements imposed on the supplier by the procurement projects*.

Article 24: Two or more natural persons, legal persons or other organizations may form a joint entity to take part in government procurement as a single supplier.

Each supplier taking part in government procurement as a joint entity shall fulfil the criteria in Article 22 hereof and shall provide the buyer with the articles of incorporation clarifying the work and obligations to be undertaken by each party in the joint entity. Each party of the joint entity shall jointly sign a procurement contract with the buyer, and assume joint and several liability for the items agreed on in the procurement contract to the buyer.

Article 25: Parties involved in government procurement may not collude to damage State interests, social interests or the lawful rights and interests of other parties, nor use any means to exclude other suppliers from competition.

Suppliers may not bribe buyers, procurement agencies, members of bid evaluation committees, members of competitive negotiation groups and members of quotation request groups, and may not use any other improper means to win a bid or make a deal.

Procurement agencies shall not bribe buyers or use any other improper means to obtain illegal benefits.

PART THREE: METHODS OF GOVERNMENT PROCUREMENT

Article 26: Government procurement shall be conducted in the following forms:

1. public invitation for bids;

2. private invitation for bids;

3. competitive negotiations;

4. single-source procurement;

5. requests for quotations; or

6. other procurement methods recognized by the State Council regulatory department for government procurement.

Public invitation for bids shall be the principal method of government procurement.

Article 27: When a buyer procures goods or services and public invitation for bids must be used, the precise amount shall be decided by the State Council if the good or service is a government procurement item within the central government budget. If it is a government procurement item within the local government budget, the precise amount shall be decided by the people's government of the province, autonomous region or municipality directly under the central government. Where procurement methods other than public invitation for bids must be used due to special circumstances, the approval of the government procurement regulatory department of the people's government at the level of municipalities and autonomous prefectures divided into several districts and above shall be obtained before procurement begins.

Article 28: A buyer may not split up goods or services that should be procured through public invitation for bids into several smaller parts or by any other means to avoid procurement through public invitation for bids.

Article 29: Goods and services that fulfil one of the following criteria may be procured through private invitation for bids in accordance with this Law:

1. special goods and services that can only be procured from a limited number of suppliers; or

2. the cost of public invitation for bids would be too great a proportion of the total value of the government procurement item.

Article 30: Goods and services that fulfil one of the following criteria may be procured through competitive negotiation in accordance with this Law:

1. after bids have been invited, no supplier has submitted a bid, or none of the bids qualify, or it is impossible to reinvite bids;

2. the item involves complex technology or is of a special nature, and the detailed specifications or substantial requirements cannot be determined;

3. the time taken to invite tenders would not satisfy the client's urgent needs; or

4. the total price cannot be calculated in advance.

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

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

2. due to unforeseeable urgency, it is not possible to procure them from another supplier; or

3. it is necessary to continue to purchase from the original supplier in order to ensure consistency or compatibility of ancillary services with the original procurement item, and the total purchase funds do not exceed 10% of the procurement amount in the original contract.

Article 32: Government procurement items of unified specifications and standards may be procured through requests for quotations in accordance with this Law where the source is sufficient and the price variation is small.

PART FOUR: GOVERNMENT PROCUREMENT PROCEDURES

Article 33: When a department responsible for drawing up departmental budgets draws up the budget for the next financial year, it shall list in the budget the government procurement items and funds for the year and report these to the finance department at the same level. Examination and approval of departmental budgets shall be carried out within the limits of budgetary authority and according to procedures.

Article 34: When goods or services are procured through private invitation for bids, the buyer shall select three or more suppliers at random from the suppliers that fulfil the relevant qualifications and conditions, and shall send bid invitation letters to them.

Article 35: When goods and services are procured through invitation for bids, the period between the date on which the issue of bid invitation documents commences and the deadline for submission of bid documents by the bidders may not be less than 20 days.

Article 36: During procurement through invitation for bids, a bid shall be invalidated in any one of the following circumstances:

1. there are less than three suppliers with the required professional qualifications, or less than three suppliers make substantive response to the bid invitation document;

2. violations of laws and regulations occur, which affect the fairness of the procurement;

3. the bid price of all the bidders exceed the procurement budget and is not affordable by the buyer; or

4. the procurement is abandoned due to a major change in circumstances.

After the bids have been invalidated, the buyer shall inform all the bidders of the reason therefor.

Article 37: After the bids have been invalidated, a new invitation for bids shall be organized, unless the procurement has been abandoned. If it is necessary to adopt another procurement method, the approval of the government procurement regulatory department of the people's government at the level of municipalities and autonomous prefectures divided into several districts and above or that of the relevant government departments shall be obtained before procurement activities begin.

Article 38: Procurement through competitive negotiations shall follow the procedure below:

1. Setting up a negotiation group. The negotiation group shall be composed of the buyer's representative(s) and the relevant experts, with an odd number of members totalling three or more. Of these members, the number of experts shall not be less than two-thirds.

2. Preparing the negotiation documents. The negotiation documents shall clarify the negotiation procedure, the particulars of the negotiation, the clauses of the draft contract and the standards for deciding on the award of the contract etc.

3. Deciding the list of suppliers to be invited to participate in negotiations. The negotiation group shall decide on not less than three suppliers from the list of suppliers that fulfil the relevant qualifications and conditions to participate in negotiations, and shall provide them with the negotiation documents.

4. The negotiations. All members of the negotiation group shall concentrate on negotiating with each supplier separately. During negotiation, no party may reveal technical information, prices or other information related to other suppliers participating in the negotiations. If there are substantive changes to the negotiation document, the negotiation group shall inform all the suppliers participating in the negotiations in writing.

5. Deciding on the winning supplier. After negotiations are concluded, the negotiation group shall request all the suppliers participating in the negotiations to submit a final bid price within a stipulated time period. The buyer shall decide on the winning supplier from the candidates submitted by the negotiation group on the basis of fulfilment of procurement requirements, equal quality and services, and on the principle of lowest quotation, and shall notify the result to all the suppliers participating in the negotiations who fail to make a deal.

Article 39: In the case of single-source procurement, the buyer and the supplier shall follow the principles stipulated in this Law. Procurement shall proceed on the basis of guaranteed quality of the procurement item and on a reasonable price agreed by both parties.

Article 40: Procurement by requests for quotations shall follow the procedure below:

1. Setting up a quotation request group. The quotation request group shall be composed of the buyer's representative(s) and the relevant experts, with an odd number of members totalling three or more. Of these members, the number of experts shall not be less than two-thirds. The quotation request group shall stipulate the price structure for the procurement item and the standards for deciding on the award of the contract etc.

2. Deciding the list of suppliers to be requested for quotation. The quotation request group shall, in accordance with the procurement requirements, decide on not less than three suppliers from the list of suppliers that fulfil the relevant qualifications and conditions, and shall issue to them a quotation request notification for price submission.

3. Quotation request. The quotation request group shall request the chosen suppliers to submit a price that may not be changed.

4. Deciding on the winning supplier. The buyer shall decide on the winning supplier on the basis of fulfilment of procurement requirements, equal quality and services, and on the principle of lowest price, and shall notify the result to all the suppliers that are requested for quotation and fail to make a deal.

Article 41: The buyer or his appointed procurement agency shall organize checking and acceptance of the performance of the agreement by the supplier. In the case of large scale or complex government procurement project*, the buyer shall invite a quality testing institution recognized by the State to participate in the checking and acceptance. Those participating in checking and acceptance shall sign the checking and acceptance document and shall assume the corresponding legal liability.

Article 42: A buyer and procurement agency shall preserve properly the procurement documents for each procurement activity of government procurement projects*, and may not forge, alter, conceal or destroy these. Procurement documents shall be preserved for at least 15 years after the date on which the procurement is concluded.

Procurement documents shall include the procurement records, the procurement budget, the bid invitation documents, bid documents, the bid evaluation standards, the evaluation report, the determination of winning bids documents, the text of the contract, proof of checking and acceptance, replies to queries, handling decisions on complaints, and other relevant documents and materials.

Procurement records shall include at least the following particulars:

1. the type and name of procurement item;

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

3. the procurement method, and the reasons for using the procurement method shall be specified except in the case of public invitation for bids;

4. the criteria and reasons for inviting and selecting the supplier;

5. the standards for evaluating bids and the reasons for deciding on the winning bidder;

6. the reasons for bid invalidation; and

7. corresponding records for procurement by methods other than invitation for bids.

PART FIVE: GOVERNMENT PROCUREMENT CONTRACTS

Article 43: The Contract Law shall apply to government procurement contracts. The rights and obligations between buyers and suppliers shall be defined by contract in accordance with the principles of equality and voluntariness.

A buyer may appoint a representative of the government procurement agency to sign the government procurement contract with the supplier. Procurement agencies signing contracts in the name of the buyer shall provide the buyer's letter of authorization and appointment as an appendix to the contract.

Article 44: Government procurement contracts shall be in writing.

Article 45: The State Council regulatory departments for government procurement shall, in conjunction with the relevant State Council departments, stipulate the clauses compulsory in government procurement contracts.

Article 46: A buyer shall sign the government procurement contract in accordance with the items determined in the procurement documents with the winning bidder or supplier within 30 days of the date of issue of the letter of acceptance or notification.

The letter of acceptance and the letter of notification shall be legally binding on both buyer and supplier. If the buyer changes the result of determination of the winning bidder or winning supplier, or the winning bidder or winning supplier renounces the project* that he has won, after the letter of acceptance or notification has been issued, he shall assume his legal liability in accordance with the law.

Article 47: A buyer shall submit a copy of the procurement contract to the government procurement regulatory department at the same level and to the relevant departments for record filing within seven working days of the conclusion of the procurement contract for government procurement projects*.

Article 48: The winning bidder or supplier may, with the consent of the buyer, perform the contract through sub-contracting.

If government procurement contracts are sub-contracted, the winning bidder or supplier shall be responsible to the buyer for the procurement project and the sub-contracted project(s), and the sub-contractor shall be responsible for the sub-contracted project(s).*

Article 49: If, in the course of performance of government procurement contract, a buyer needs to increase the amount of goods, projects or services that are the same as the subject matter of the contract, he may, on condition that other clauses in the contract are not altered, consult and sign a supplementary contract with the supplier, but the procurement amount involved in all the supplementary contracts may not exceed 10% of procurement amount in the original contract.

Article 50: Both parties to a government procurement contract shall not alter, suspend or terminate the contract on their own authority.

If the continued performance of a government procurement contract will harm State or social interests, both parties involved shall alter, suspend or terminate the contract. The party at fault shall be liable for compensation. If both parties are at fault, each shall bear the corresponding liability.

PART SIX: QUERIES AND COMPLAINTS

Article 51: If a supplier has queries concerning government procurement matters, he may consult the buyer. The buyer shall reply in a timely manner, but the reply may not involve trade secrets.

Article 52: If a supplier believes that the procurement documents, procurement procedure, or the result of determination of the winning bidder or winning supplier cause harm to his own rights and interests, he may query the buyer in writing within seven working days of the date on which he knows or should have known the damage to his rights and interests.

Article 53: The buyer shall reply within seven working days of the date of receipt of a written query from the supplier, and shall notify the supplier making the query and other relevant suppliers in writing, but the contents of the reply may not involve trade secrets.

Article 54: If the buyer has appointed a procurement agency to make the procurement, the supplier may inquire or query the procurement agency. The procurement agency shall render a reply regarding the matter in accordance with Articles 51 and 53 hereof within the limits of its authority as authorized by the buyer.

Article 55: If the supplier making the query is dissatisfied with the reply of the buyer or the procurement agency, or the buyer or procurement agency has not replied within the stipulated time period, the supplier may, within 15 working days of the deadline for reply, complain to the government procurement regulatory department at the same level.

Article 56: Government procurement regulatory departments shall, within 30 working days of the date of receipt of the complaint, render a decision on the handling of the complaint, and shall notify the complainant and the parties involved in the complaint in writing.

Article 57: While handling a complaint, government procurement regulatory department may, based on the actual circumstances, notify the buyer in writing to suspend procurement activities, but the suspension period may not exceed 30 days.

Article 58: If a complainant is dissatisfied with the handling decision of the government procurement regulatory department, or the government procurement regulatory department fails to handle the complaint within the stipulated time period, the complainant may apply for an administrative review or institute an administrative action in the people's court in accordance with the law.

PART SEVEN: SUPERVISION AND INSPECTION

Article 59: Government procurement regulatory departments shall strengthen supervision and inspection of government procurement activities and centralized procurement institutions.

The main contents of supervision and inspection shall be:

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

2. implementation of the scope of procurement, methods of procurement and procurement procedures; and

3. the professional qualities and skills of government procurement personnel.

Article 60: Government procurement regulatory departments may not set up centralized procurement institutions and may not participate in the procurement activities of government procurement projects*.

There shall be no subordinate relationship or any conflict of interest between procurement agencies and administrative authorities.

Article 61: Centralized procurement institutions shall establish proper internal supervisory and administration systems. Policy decisions on procurement activities and implementation of procedures shall be clear and shall mutually supervised and restrained. The limits of authority of procurement personnel and of personnel responsible for the examination and verification, checking and acceptance of procurement contracts shall be clear and separate.

Article 62: Procurement personnel in centralized procurement institutions shall possess the relevant professional qualities and skills, and shall fulfil the qualification requirements for the specialist post stipulated by government procurement regulatory departments.

Centralized procurement institutions shall strengthen education and training of their personnel, and shall carry out regular assessments of the professional standards, work achievements and professional ethics of procurement personnel. Procurement personnel that do not pass the assessment may not remain in the post.

Article 63: The procurement standards for government procurement items shall be publicized.

When the methods of procurement stipulated herein are used, buyers shall publicize the results of the procurement once it is completed.

Article 64: Buyers must carry out procurement in accordance with the procurement methods and procedures stipulated herein.

No work unit or individual may, in violation of the provisions hereof, require buyers or procurement personnel to purchase from a supplier designated by it/him.

Article 65: Government procurement regulatory departments shall inspect the procurement activities of government procurement projects*, and the parties involved in government procurement shall reflect the situation truthfully and provide the relevant materials.

Article 66: Government procurement regulatory departments shall check the procurement prices, effectiveness of fund conservation, quality of service and reputation of centralized procurement institutions, and whether they have violated the law, and shall regularly and truthfully announce the results of their investigations.

Article 67: Government departments that are responsible for administering and supervising government procurement in accordance with the provisions of laws and administrative regulations shall, in accordance with their division of responsibilities, strengthen supervision of government procurement activities.

Article 68: Auditing authorities shall carry out audit supervision of government procurement. The government procurement activities of government procurement regulatory departments and all the parties involved in government procurement shall be subject to the audit supervision of auditing authorities.

Article 69: Supervisory authorities shall strengthen the supervision of State authorities, State civil servants and other personnel appointed by State administrative authorities that participate in government procurement activities.

Article 70: Any work unit or individual has the power to lodge complaints about and report violations of laws in the course of government procurement activities, and the relevant departments and authorities shall handle the matters in a timely manner in accordance with their responsibilities.

PART EIGHT: LEGAL LIABILITY

Article 71: In any of the following circumstances, the buyer and procurement agency shall be ordered to rectify matters within a stipulated time period, given a warning, and may also be fined; and the persons directly in charge and other directly responsible personnel shall be penalized and reported by their administrative department in charge or other relevant authorities:

1. unauthorized use of another procurement method when public invitation for bids should be used;

2. unauthorized raising of procurement standards;

3. appointment of an agency that does not possess the qualifications for government procurement business agent to carry out procurement;

4. use of unreasonable conditions to impose unequal or discriminatory treatment on a supplier;

5. consult and negotiate with bidders during the course of invitation for bids for procurement;

6. failure to sign a procurement contract with the winning bidder or supplier after the letter of acceptance or notification has been issued; or

7. refusal to be supervised and inspected by the relevant departments in accordance with the law.

Article 72: If a buyer, procurement agency or its personnel is in any of the following circumstances, and a criminal offence is constituted, the criminal liability shall be pursued. If no criminal offence is constituted, a fine shall be imposed, and illegal income, if any, shall be confiscated. Personnel of the State authorities shall be subject to administrative penalty:

1. collusion with suppliers or procurement agencies;

2. taking of bribes or obtaining other improper benefits in the course of procurement;

3. provision of false information in the course of supervision and inspection carried out in accordance with the law by the relevant departments; or

4. disclosing the lowest reserve price before the opening of bids.

Article 73: If one of the illegal acts listed in the two preceding Articles affects or may affect the result of determination of the winning bidder or winning supplier, it shall be handled in accordance with the following situations respectively:

1. if the winning bidder or supplier has not yet been determined, the procurement activities shall be terminated;

2. if the winning bidder or supplier has been determined but the procurement contract has not yet been performed, the contract shall be rescinded and another winning bidder or supplier be chosen from among the qualified candidates;

3. if the procurement contract has been performed, causing losses to the buyer or supplier, the responsible person shall be liable for compensation.

Article 74: If a buyer fails to appoint a centralized procurement institution to carry out centralized procurement of government procurement items subject to centralized procurement, the government procurement regulatory departments shall order rectification. If the buyer refuses to do so, the payment of funds in accordance with the budget shall be stopped, and the personnel directly in charge and other directly responsible personnel shall be penalized by the department in charge at the level above or by the relevant authorities in accordance with the law.

Article 75: If a buyer fails to announce the procurement standards and results of procurement for government procurement items in accordance with the law, he shall be ordered to rectify the matter, and the personnel directly in charge shall be penalized in accordance with the law.

Article 76: If a buyer or procurement agency, in violation of this Law, conceals or destroys procurement documents that should be preserved, or forges or alters procurement documents, a fine of not less than Rmb 20,000 and not more than Rmb 100,000 shall be imposed by the government procurement regulatory department. The personnel directly in charge and other directly responsible personnel shall be penalized in accordance with the law. If a criminal offence is constituted, the criminal liability shall be pursued in accordance with the law.

Article 77: If a supplier commits one of the following acts, he shall be subject to a fine of not less than five thousandths and not more than ten thousandths of the procurement amount, included in the name list of bad records, and shall be banned from participating in government procurement activities for any period from one to three years. If there is illegal income, such illegal income shall be confiscated. If the circumstances are serious, his business licence shall be revoked by the administration for industry and commerce. If a criminal offence is constituted, the criminal liability shall be pursued in accordance with the law:

1. provision of false information to win a bid or deal;

2. use of improper means to slander or exclude another supplier;

3. collusion with the buyer, other suppliers or the procurement agency;

4. bribing of or the provision of improper benefits to the buyer or the procurement agency;

5. consult and negotiate with the buyer during the course of invitation for bids for procurement; or

6. refusal to be supervised and inspected by the relevant departments, or the provision of false information.

If a supplier commits acts listed in Items (1) to (5) in the preceding paragraph, the bid or deal that he has won shall be rendered invalid.

Article 78: Procurement agencies that violate the law in the course of government procurement shall be fined in accordance with the provisions of relevant laws and regulations, and their qualifications to engage in the relevant business may be revoked. If a criminal offence is constituted, the criminal liability shall be pursued in accordance with the law.

Article 79: If a party involved in government procurement commits an illegal act as stipulated in Article 71, 72 or 77 hereof, causing harm to others, he shall bear civil liability in accordance with the relevant civil laws and regulations.

Article 80: Personnel of government procurement regulatory departments who, in violation of this Law, abuse their powers, are derelict in their duties or practise graft in the course of supervision and inspection shall be subject to administrative penalty in accordance with the law. If a criminal offence is constituted, the criminal liability shall be pursued in accordance with the law.

Article 81: Where a government procurement regulatory department fails to handle a complaint within the stipulated time period, the personnel directly in charge and other personnel directly responsible shall be subject to administrative penalty.

Article 82: A government procurement regulatory department that makes false statements or conceal the true circumstances when assessing centralized procurement institutions or fail to carry out regular assessments and announce the assessment results shall be ordered to rectify matters in a timely manner. The person in charge of the department shall be informed by the authority at the level above or by the supervisory authority, and the personnel directly responsible shall be subject to administrative penalty.

A centralized procurement institution that submits false information orconceals the true circumstances when being assessed by government procurement regulatory departments shall be subject to a fine of not less than Rmb 20,000 and not more than Rmb 200,000 and shall be informed. If the circumstances are serious, its procurement agency qualifications shall be revoked.

Article 83: Any work unit or individual that obstructs or restricts entry of a supplier in the government procurement market in its/his region or industry shall be ordered to rectify matters. If it/he refuses to do so, the person in charge of the work unit or the individual shall be penalized by the administrative department in charge at the level above, or by the relevant authorities.

PART NINE: SUPPLEMENTARY PROVISIONS

Article 84: When government procurement that makes use of loans from international organizations or foreign governments is carried out, and there are other stipulations on the substantial conditions on procurement in the agreement between the lender, the financier and the Chinese party, these stipulations may apply provided that they do not harm the State or social interests.

Article 85: This Law shall not apply to emergency procurement due to serious natural disaster or other matters of force majeure, or procurement involving national security or State secrets.

Article 86: Regulations governing military procurement shall be formulated separately by the Central Military Commission.

Article 87: The specific steps and procedures for implementing this Law shall be stipulated by the State Council.

Article 88: This Law shall be effective as of 1 January 2003.

*Translator's note: The term "project(s)" here does not have the meaning of construction projects as provided in Article 2. Rather, it refers to projects in general.