Invitation and Submission of Bids for Construction Work for Construction Projects Measures

Article 3: The construction work units for those construction projects that comply with the scope and criteria set out in the Regulations on the Standards for the Scope and Size of Construction Projects Requiring Invitation for Bids Provisions (Order No.3 of the State Development Planning Commission) must be selected by means of the invitation for bids.

No work unit or individual may divide a project that legally requires the invitation for bids into several small projects or by any other means avoid the invitation for bids.

Article 4: Bid invitation and submission activities for Project Construction shall abide by the principles of openness, fairness, impartiality and good faith.

Article 5: The bid inviting party shall, according to law, be in charge of the bid invitation and submission activities for Project Construction. No work unit or individual may unlawfully interfere with the bid invitation and submission activities for Project Construction in any way.

Bid invitation and submission activities for construction work shall not be subject to territorial or departmental restrictions.

Article 6: Departments such as those for development planning, economy and trade, construction, railways, communications, the information industry, water resources, foreign trade and economic cooperation, civil aviation, etc. at all levels shall supervise bid invitation and submission activities for Project Construction pursuant to the division of functions and duties set out in the Circular of the General Office of the State Council on the Issuance of the Division of Functions and Duties Among Relevant Departments of the State Council in Respect of the Administrative Supervision of Bid Invitation and Submission Activities Opinion (ref. Guo Ban Fa [2000] No.34) and the provisions of the various local authorities, and shall lawfully investigate and handle illegal acts committed in the course of bid invitation and submission activities for Project Construction.

PART TWO: INVITATION FOR BIDS

Article 7: A party inviting bids for Project Construction shall be a legal person or other organization that lawfully puts forward a construction bid invitation project and invites bids.

Article 8: Bids for construction projects that legally require the invitation for bids for construction work may be invited only if the following conditions are satisfied:

(1) the bid inviting party has been lawfully established;

(2) the preliminary design and the budgetary estimate have been approved (if subject to examination and approval);

(3) the scope, method, organization, etc. of the invitation for bids have been verified (if subject to verification);

(4) a commensurate amount of funds is possessed or funding has been effectively secured; and

(5) the design drawings and technical materials required for the invitation for bids are available.

Article 9: The invitation for bids for Project Construction is divided into public invitation for bids and private invitation for bids.

Article 10: If, according to the regulations concerning administration of the examination and approval of construction projects, any construction project that legally requires the invitation for bids for construction work is subject to examination and approval by the project's examination and approval department, the bid inviting party must include in the submitted feasibility study such particulars relating to the invitation for bids as the scope, method, organization, etc. of the invitation for bids, for verification by the project's examination and approval department.

Article 11: Public invitation for bids is required for State construction projects designated key projects by the development planning department of the State Council, local construction projects designated key projects by the people's governments of the relevant provinces, autonomous regions and municipalities directly under the central government, and construction projects the investment in which consists wholly of State-owned funds or in which the investment of State-owned funds occupies a controlling or dominant position. Subject to approval, bids may be invited privately if:

(1) the project involves complicated technology or special requirements for which only a few prospective bidders are available for selection;

(2) the project is limited by natural environment of the region;

(3) the project involves State security, State secrets, emergency rescue or disaster relief, and is suitable for the invitation for bids but not for the public invitation for bids;

(4) compared to the value of the project, the cost of public invitation for bids would be so high as not to be worth it; or

(5) laws or regulations stipulate that the public invitation for bids is not suitable.

The private invitation for bids for key construction projects of the State shall be subject to the approval of the development planning department of the State Council. The private invitation for bids for local key construction projects shall be subject to the approval of the people's governments of the relevant provinces, autonomous regions and municipalities directly under the central government.

The private invitation for bids for those construction projects the investment in which consists wholly of State-owned funds or in which the investment of State-owned funds occupies a controlling or dominant position, and that require examination and approval, shall be subject to the approval of the examination and approval departments or, if the examination and approval departments examine and approve the project proposal only, the approval of the relevant administrative supervision departments.

Article 12: Subject to the approval of the examination and approval departments mentioned in Article 11 hereof, construction projects requiring examination and approval shall not require the invitation for bids for construction work in any of the following circumstances:

(1) the project involves State security, State secrets, emergency rescue or disaster relief, and is not suitable for the invitation for bids;

(2) the project uses poverty relief funds to provide work instead of aid, and requires the use of peasant labour;

(3) the main technology for the construction uses specific patents or proprietary technology;

(4) the project is constructed by the construction enterprise for its own use, and the qualification grade of the construction enterprise is commensurate with the requirements of the project;

(5) the project is a small-scale project added to another project under construction or involves the addition of floors to an existing main structure, and the original winning bidder remains able to contract for the project; or

(6) other circumstances specified by laws or administrative regulations.

Construction projects that do not require examination and approval but for which bid invitation is required by law shall not require the invitation for bids for construction work if it is characterized by any of the circumstances set forth in the preceding paragraph.

Article 13: If bids are to be invited publicly, the bid inviting party shall publish a bid invitation announcement, inviting unspecified legal persons or other organizations to submit bids. The bid invitation announcements for projects for which the invitation for bids for construction work is legally required shall be published in State-designated newspapers or periodicals and State-designated information networks.

If bids are to be invited privately, the bid inviting party shall send a bid invitation letter to at least three specific legal persons or other organizations that have the ability to handle the project and that have a good credit standing.

Article 14: A bid invitation announcement or letter shall state at least the following particulars:

(1) the name and address of the bid inviting party;

(2) the subject matter, scale and source of funding of the project;

(3) the location and time limit for execution of the project;

(4) the time and place for obtaining the bid invitation documents or pre-qualification documents;

(5) the fee payable for obtaining the bid invitation documents or pre-qualification documents; and

(6) the required qualification rating of the bidders.

Article 15: The bid inviting party shall sell the bid invitation documents or pre-qualification documents at the time and place stated in the bid invitation announcement or letter. The period from the first to the last day of sale of the bid invitation documents or pre-qualification documents may not be shorter than five working days.

The bid inviting party may distribute the bid invitation documents through an information network or other media. The legal validity of bid invitation documents distributed through an information network or other media shall be equal to that of written bid invitation documents, but in the event of any inconsistency, the written bid invitation documents shall prevail. The bid inviting party shall preserve intact the originals of the written bid invitation documents.

The fee charged for bid invitation documents or pre-qualification documents shall be reasonable and may not have a profit margin. The bid inviting party may charge a discretionary deposit from bidders for the design documents appended. The bid inviting party shall refund the deposit to those bidders that return the design documents after the opening of the bids.

Bid invitation documents and pre-qualification documents are not returnable after sale. The bid inviting party may not, on its authority, terminate the invitation for bids after it has published the bid invitation announcement or letter or sold the bid invitation documents or pre-qualification documents.

Article 16: Depending on the project's own characteristics and requirements, the bid inviting party may require prospective bidders or bidders to provide documents satisfying their qualification requirements and examine their qualifications. Where laws or administrative regulations contain provisions on the qualification conditions for prospective bidders or bidders, such provisions shall govern.

Article 17: Qualification is divided into pre-qualification and post-qualification.

In the case of pre-qualification, the qualifications of prospective bidders are examined before the submission of bids.

In the case of post-qualification, the qualifications of the bidders are examined after the opening of the bids.

In general, if a pre-qualification examination is conducted no post-qualification is conducted, unless otherwise specified in the bid invitation documents.

Article 18: If the method of pre-qualification is adopted, the bid inviting party may publish a pre-qualification announcement. Pre-qualification announcements are governed by the provisions of Articles 13 and 14 hereof on bid invitation announcements.

If the method of pre-qualification is adopted, the bid inviting party shall state the pre-qualification conditions, criteria and examination methods in the pre-qualification documents. If the method of post-qualification is adopted, the bid inviting party shall state the required conditions, criteria and examination methods concerning bidder qualifications in the bid invitation documents.

The bid inviting party may not change the stated qualification conditions or examine the qualifications of prospective bidders or bidders on the basis of conditions that were not stated.

Article 19: Following pre-qualification, the bid inviting party shall issue notices of pre-qualification to the prospective bidders that have pre-qualified, informing them of the time, place and method of obtaining the bid invitation documents. At the same time, it shall notify the prospective bidders that have not pre-qualified of the outcome of the pre-qualification. Prospective bidders that have not pre-qualified may not participate in the bidding. The bids of bidders that have not post-qualified shall be treated as invalid.

Article 20: Qualification shall focus on whether the prospective bidders or the bidders meet the following conditions:

(1) to have the right to independently enter into contracts;

(2) to have the ability (including professional and technical qualifications and capabilities), the funds, the equipment and other material facilities and material conditions, the management capability, the experience, the reputation and the corresponding personnel to perform the contract;

(3) to not have been ordered to cease business, to not have been subjected to cancellation of one's bidding qualifications, to not have one's assets subjected to receivership or frozen and to not be in a state of bankruptcy;

(4) not to have become the winning bidder by fraudulent means, committed a material breach of contract, or caused serious project quality problems, during the last three years; and

(5) other conditions specified by laws or administrative regulations.

When examining the qualifications, the bid inviting party may not restrict or exclude prospective bidders or bidders by imposing unreasonable conditions, and it may not discriminate against certain prospective bidders or bidders. No work unit or individual may restrict the number of bidders by administrative or other unreasonable means.

Article 21: If the bid inviting party meets the statutory conditions for inviting bids on its own, it may carry out the bid invitation matters on its own. No work unit or individual may coerce it into appointing a bid invitation agency to carry out the bid invitation matters.

Article 22: Bid invitation agencies shall undertake bid invitation matters to the extent authorized by the bid inviting parties. Bid invitation agencies may undertake the following bid invitation matters, to the extent of their qualification grade:

(1) drafting the bid invitation plan and preparing and selling the bid invitation documents and pre-qualification documents;

(2) examining the qualifications of the bidders;

(3) preparing the reserve price;

(4) organizing site inspection by the bidders;

(5) organizing the opening and evaluation of the bids and assisting the bid inviting party with the determination of the winning bidder;

(6) drafting the contract; and

(7) other matters delegated by the bid inviting party.

A bid invitation agency may not act as agent without authority to do so, act as agent ultra vires or act as agent in an entrusted matter that it is fully aware to be in violation of the law.

A bid invitation agency may not undertake both bid agency and bid consultancy for the same bid invitation project. It may not transfer the bid invitation agency business without the consent of the bid inviting party.

Article 23: A project bid invitation agency shall execute a written engagement contract with the bid inviting party and charge an agency fee at the rate agreed upon by the parties. If the State has specified the fee rate, such rate shall be observed.

Article 24: The bid inviting party shall prepare the bid invitation documents in accordance with the special characteristics and requirements of the construction bid invitation project. In general, the bid invitation documents shall contain the following:

(1) the bid invitation;

(2) the points to be noted by the bidders;

(3) the main terms of the contract;

(4) the forms of the bid documents;

(5) if the bids are invited using a bill of quantities, the bill of quantities;

(6) the technical terms;

(7) the design drawings;

(8) the standards and method for evaluating the bids; and

(9) supplementary bidding materials.

The bid inviting party shall specify the substantive requirements and criteria in the bid invitation documents and indicate the same in a prominent manner.

Article 25: In addition to submitting bid documents complying with the requirements of the bid invitation documents, the bid inviting party may require the bidders to submit alternative bidding plans, provided that it gives an explanation thereof in the bid invitation documents and specifies the commensurate evaluation and comparison methods.

Article 26: The various technical standards specified in the bid invitation documents shall comply with mandatory State standards.

The various technical standards specified in the bid invitation documents may not require or indicate a certain patent, trademark, name, design, place of origin, producer or supplier nor may it contain other elements that favour or discriminate against prospective bidders. If it is necessary to cite a certain producer's or supplier's technical standards to accurately or clearly specify the technical standards for the proposed bid invitation project, the words "or equivalent" shall be added following the reference.

Article 27: If a construction bid invitation project requires a division into bid stages and the determination of time limits therefor, the bid inviting party shall determine the bid stages and time limits reasonably and specify the same in the bid invitation documents. Unit projects that are closely related or indivisible in terms of project technology may not be divided into bid stages.

The bid inviting party may not use unreasonable bid stages or time limits therefor to restrict or exclude prospective bidders or bidders.

Article 28: The bid invitation documents shall expressly specify all the factors, in addition to the price, to be considered during the bid evaluation and how these factors are to be measured or evaluated.

The bid evaluation criteria and method and the conditions for being awarded the contract specified in the bid invitation documents may not be changed during the bid evaluation process.

Article 29: The bid invitation documents shall specify an appropriate term of validity of the bids in order to ensure that the bid inviting party has sufficient time to complete the bid evaluation and execute a contract with the winning bidder. The term of validity of the bids shall be calculated from the deadline for the submission of the bid documents by the bidders.

If special circumstances arise prior to the expiration of the term of validity of the bids, the bid inviting party may request in writing that all the bidders extend the term of validity of the bids. If a bidder agrees to the extension, it may not request or be granted permission to amend the material substance of its bid documents, but it shall appropriately extend the term of validity of its bid deposit. If a bidder does not agree to the extension, its bid shall become void, but it shall have the right to recover its bid deposit. The bid inviting party shall compensate the bidders for losses incurred due to the extension of the term of validity of their bids, unless such extension is due to an event of force majeure.

Article 30: If the time limit for completion of a construction bid invitation project exceeds 12 months, the bid invitation documents may specify a project pricing index system, factors triggering a price adjustment and the adjustment method.

Article 31: The bid inviting party shall specify a reasonable period of time required by the bidders to prepare their bid documents. However, for projects that, in accordance with the law, require an invitation for bids, the minimum length of time between the initial issuance of the bid invitation documents and the deadline for the submission of the bid documents by the bidders may not be less than 20 days.

Article 32: Depending on the specific circumstances of a bid invitation project, the bid inviting party may arrange onsite surveys of the project site for prospective bidders in order to familiarize them with the relevant features of the project site and its related environment. The prospective bidders shall themselves be responsible for the judgments and decisions they derive based on the situation as explained to them by the bid inviting party.

The bid inviting party may not arrange for individual or separate onsite surveys for any one bidder.

Article 33: The bid inviting party may respond in writing or by convening a bid submission preparatory meeting to questions raised by prospective bidders during their reading of the bid invitation documents or the onsite surveys, provided that it communicates the response in writing to all the prospective bidders that purchased the bid invitation documents. The contents of such responses shall constitute an integral part of the bid invitation documents.

Article 34: The bid inviting party shall determine whether to set a reserve price based on the specific features of the project. If a reserve price is to be set, the process for setting the reserve price and the reserve price must be kept confidential.

If a reserve price is set for a bid invitation project it shall be determined rationally on the basis of such factors as the approved initial design, investment budget and the relevant pricing method, with reference to the relevant project quotas, by taking into account market supply and demand and by comprehensively considering the investment, time limit for the work and quality, etc.

The reserve price shall be set by the bid inviting party itself or the intermediary institution engaged by it. Only one reserve price may be set for one project.

No work unit or individual may coerce the bid inviting party into setting a reserve price or submitting it to the departments for examination or interfere in its setting of such a reserve price.

The setting of a reserve price for a bid invitation project is not required and an invitation for bids may be carried out without setting a reserve price.

PART THREE: SUBMISSION OF BIDS

Article 35: A bidder is a legal person or other organization that responds to an invitation for bids and participates in the bidding competition. No subsidiary without independent legal person status of the bid inviting party or legal person or any of its subsidiaries that provides design or consultancy services for the initial preparations or supervision of a bid invitation project is qualified to participate in the bid submission for such a bid invitation project.

Article 36: A bidder shall prepare its bid documents in accordance with the requirements of the bid invitation documents. The bid documents shall respond to the substantive requirements and conditions put forward in the bid invitation documents.

In general, the bid documents shall include the following:

(1) the bid;

(2) the bid price;

(3) the design of the construction organization; and

(4) a commercial and technical deviation chart.

If a bidder, on the basis of the actual circumstances of the project as specified in the bid invitation documents, intends to subcontract out some of the non-principal, non-key parts of the work after its bid is accepted, it shall specify the same in its bid documents.

Article 37: In the bid invitation documents, the bid inviting party may require the bidders to provide a bid deposit. In addition to cash, the bid deposit may be provided in the form of a bank letter of guarantee issued by a bank, certified cheque, bank draft or money order.

In general, the bid deposit may not exceed 2% of the total bid price, nor a maximum of Rmb800,000. The term of validity of the bid deposit shall exceed the term of validity of the bids by 30 days.

Bidders shall provide the bid deposit to the bid inviting party together with the bid documents by the method and in the amount specified in the bid invitation documents.

If a bidder fails to provide the bid deposit in accordance with the requirements of the bid invitation documents, its bid documents will be rejected and treated as an invalid bid.

Article 38: The bidders shall deliver their sealed bid documents to the bid submission address before the deadline for the submission of bid documents specified in the bid invitation documents. The bid inviting party shall issue to the bidders receipts indicating the signer and the date of receipt, after receipt of the bid documents. No work unit or individual may open the bid documents prior to the bid opening.

Bid documents delivered after the deadline for the submission of bid documents specified in the bid invitation documents shall be invalid and the bid inviting party shall refuse to accept the same.

If fewer than three bidders submit bid documents, the bid inviting party shall invite bids anew in accordance with the law. If there are still fewer than three bidders after the new invitation for bids and the construction project is one that requires examination and approval, the invitation for bids may be dispensed with subject to the approval of the original examination and approval department. For other construction projects, the bid inviting party may decide at its own discretion whether to invite bids anew.

Article 39: Before the deadline for the submission of bid documents specified in the bid invitation documents passes, a bidder may supplement, amend, replace or withdraw the bid documents it has submitted, and it shall notify the bid inviting party thereof in writing. The content of the supplementation or amendments shall become an integral part of the bid documents.

Article 40: Bidders may not supplement, amend, replace or withdraw their bid documents between the deadline for the submission of bid documents and the expiration of the term of validity of the bids specified in the bid invitation documents. If a bidder supplements, amends or replaces its bid documents, the bid inviting party shall refuse to accept the same. If a bidder withdraws its bid documents, it shall forfeit its bid deposit.

Article 41: Before the opening of the bids, the bid inviting party shall duly keep such bid materials as the received bid documents, the amendment or withdrawal notices, alternative bid plans, etc. in its custody.

Article 42: Two or more legal persons or other organizations may organize as a consortium and jointly submit a bid as a single bidder.

After the members of a consortium have executed an agreement for joint submission of a bid, they may not submit individual bids in their own names, organize into a new consortium or participate in another consortium for the purposes of submitting a bid for the same project.

Article 43: If a consortium participates in and passes the pre-qualification, any changes to its composition prior to the deadline for the submission of bids shall be subject to the consent of the bid inviting party. If the post-change consortium reduces the competition or comprises a legal person or other organization that was not subject to the pre-qualification, that failed such pre-qualification or lowers the qualifications of the consortium to a level lower than the minimum standard specified in the pre-qualification documents, the bid inviting party shall have the right to refuse such change.

Article 44: The members of the consortium must designate a head, authorizing it to represent all the members of the consortium in taking responsibility for handling and coordinating the bid submission and contract implementation stages and shall submit to the bid inviting party a power of attorney signed by the legal representatives of all of the members of the consortium.

Article 45: If a bid is submitted by a consortium, the bid deposit shall be provided in the name of the members of the consortium or of the head of the consortium. If the bid deposit is provided in the name of the head of the consortium, it shall be binding on all of the members of the consortium.

Article 46: The acts set forth below shall constitute collusion by bidders on the bid price:

(1) bidders mutually agree to inflate or bring down the bid price;

(2) bidders mutually agree to respectively quote high, medium and low prices for the bid invitation project;

(3) bidders first conduct an internal price competition and determine a winning bidder among themselves and then participate in the bid; or

(4) other acts of collusion on the bid price between bidders.

Article 47: The acts set forth below shall constitute collusion between the bidders and the bid inviting party in the submission of bids:

(1) the bid inviting party opens the bid documents prior to the bid opening and informs other bidders of the details of the bids or assists a bidder in replacing its bid documents or modifying its price quote;

(2) the bid inviting party discloses the reserve price to a bidder;

(3) the bid inviting party and bidders consult on bringing down or inflating the bid price at the time of the bid submission and giving the bidders or the bid inviting party extra compensation after the awarding of the contract;

(4) the bid inviting party internally determines the winning bidder in advance; or

(5) other acts of collusion in the submission of bids.

Article 48: A bidder may not submit its bid in the name of a third party.

For the purposes of the preceding paragraph, the phrase "submit its bid in the name of a third party" means such acts as the bidder attaching itself to another construction work unit or obtaining qualifications or a qualification certificate by transfer or loan from another work unit or having another work unit and its legal representative seal and sign the bid documents prepared by the bidder.

PART FOUR: OPENING OF BIDS, EVALUATION OF BIDS AND DETERMINATION OF THE WINNING BIDDER

Article 49: The bids shall be opened in public at the time of the deadline for submission of the bid documents as determined in the bid invitation documents. The bids shall be opened at the place specified in the bid invitation documents.

Article 50: The bid inviting party shall not accept bid documents if:

(1) they were delivered after the deadline or were not delivered to the designated place; or

(2) they were not sealed as required in the bid invitation documents.

Bid documents shall be treated as invalid by the bid evaluation committee after preliminary examination if:

(1) they do not bear the work unit's seal or do not bear the signature or seal of the legal representative or his authorized representative;

(2) they were not completed in the specified format, there are omissions or key segments of text are illegible and undecipherable;

(3) the bidder submitted two or more sets of different bid documents, or on one set of bid documents it quoted two or more price quotes for the same project and failed to state which quote was valid, unless such quote appears in an alternate bid plan submitted in accordance with the bid invitation documents;

(4) the name of the bidder or its organizational structure is not consistent with that at the time of pre-qualification;

(5) no bid deposit was provided as required by the bid invitation documents; or

(6) the joint bid agreement of the members of a consortium was not included with the bid by the consortium.

Article 51: The bid evaluation committee may, in writing, require bidders to give the necessary clarification, explanation or supplementation of those contents of the bid invitation documents whose meaning is not clear, of conflicting statements on the same issue or those contents with obvious textual or calculation errors. The bid evaluation committee may not ask a bidder suggestive or leading questions or expressly point out to it omissions or errors in its bid documents.

Article 52: If the bid documents fail to respond to the substantive requirements or conditions put forward in the bid invitation documents, the bid inviting party shall refuse such bid documents and shall not permit the bidder to amend or withdraw the discrepancies or reservations that fail to satisfy requirements so as to cause its bid to be responsive.

Article 53: When the bid evaluation committee evaluates the price quote in a bid that responds to the substantive requirements of the bid invitation documents, it shall make corrections in accordance with the principles set forth below, unless otherwise specified in the bid invitation documents:

(1) in the event of discrepancy between a number expressed in figures and the same number expressed in words, the number expressed in words shall prevail; and

(2) in the event of a discrepancy between the product of the multiplication of a unit price and the work quantity and the total price, the unit price shall prevail. If there is an obvious error in the placing of the decimal point in a unit price, the total price shall prevail and the unit price shall be corrected accordingly.

A price quote adjusted in accordance with the preceding paragraph shall be binding once confirmed by the bidder.

Prices and preferential conditions not included in the bid documents shall not be considered during the bid evaluation.

Article 54: The additional benefits that would be generated by an alternative bid plan with technical standards superior to those specified in the bid invitation documents submitted by a bidder may not be considered in the evaluated bid price. If a bidder satisfies the basic technical requirements of the bid invitation documents and its bid is the lowest evaluated bid or receives the highest marks, its alternative bid plan may be considered.

Article 55: If the bid inviting party set a reserve price, reference shall be made thereto when evaluating the bids but it may not serve as the sole basis for evaluating the bids.

Article 56: After the bid evaluation committee has completed the bid evaluation, it shall submit a written bid evaluation report to the bid inviting party. The bid evaluation report shall be signed by all the members of the bid evaluation committee.

In general, the bid inviting party shall determine the winning bidder within 15 days after the submission of the written bid evaluation report by the bid evaluation committee, but, in any event, shall do so no later than 30 working days prior to the expiration of the term of validity of the bids.

The letter of acceptance shall be issued by the bid inviting party.

Article 57: The candidates recommended for the status of winning bidder by the bid evaluation committee shall be limited to between one and three persons and they shall be listed in order. The bid inviting party shall accept the candidates recommended for the status of winning bidder by the bid evaluation committee and may not determine the winner from persons other than the candidates recommended for the status of winning bidder by the bid evaluation committee.

Article 58: For projects that legally require the invitation for bids, the bid inviting party shall select the top-ranked candidate as the winning bidder. If the top-ranked candidate renounces its win, indicates that it is unable to perform the contract due to force majeure or if the bid invitation documents provide for the payment of a performance bond and the top-ranked candidate fails to pay the same within the specified period of time, the bid inviting party may select the second-ranked candidate as the winning bidder.

If the second-ranked candidate is unable to execute the contract for the same reasons specified in the preceding paragraph, the bid inviting party may select the third-ranked candidate as the winning bidder.

The bid inviting party may authorize the bid evaluation committee to directly determine the winning bidder.

If the State Council has other provisions on the determination of the winning bidder, such provisions shall prevail.

Article 59: The bid inviting party may not demand that the winning bidder lower its price, increase the quantity of work, shorten the time limit for the work or make other demands that run contrary to the wishes of the winning bidder and treat such demands as conditions for issuing the letter of acceptance and executing the contract.

Article 60: The letter of acceptance shall be legally binding on the bid inviting party and the winning bidder. If the bid inviting party changes the result of the determination of the winning bidder, or the winning bidder renounces the project that it has won, after the letter of acceptance has been issued, it shall assume legal liability therefor according to law.

Article 61: If the bid inviting party uses in whole or in part a technical achievement or a technical plan from the bid documents of a losing bidder, it must obtain the written consent of such bidder and give it a specific measure of financial compensation.

Article 62: The bid inviting party and the winning bidder shall conclude a written contract in accordance with the bid invitation documents and the winning bidder's bid documents within 30 days of the date of issuance of the letter of acceptance. The bid inviting party and the winning bidder may not subsequently conclude other agreements that contravene the substantive terms of the contract.

The winning bidder shall pay a performance bond or other form of performance security if the bid invitation documents require the winning bidder to do so. If the winning bidder refuses to provide such bond or security, it shall be deemed to have renounced the project that it won. If the bid inviting party requires the winning bidder to pay a performance bond or other form of performance security, the bid inviting party shall provide to the winning bidder security for the project amounts.

The bid inviting party may not arbitrarily increase the performance bond nor may it compel the winning bidder to advance payment of the construction funds for the project that it won.

Article 63: The bid deposits shall be refunded to the losing bidders within 15 working days after the bid inviting party and the winning bidder have executed the contract.

Article 64: The scale of construction, construction standards, construction details and contract price determined in the contract shall be kept within the range approved in the initial design and budget documents. If it is truly necessary to exceed the specified range, the same shall be reported to the original examination and approval department for its examination and approval prior to the execution of the contract for the winning bid. If an examination was required but no submission therefor was made, the original examination and approval department shall refuse to recognize the same at the time of adjusting the initial design and budget.

Article 65: For projects that legally require the invitation for bids for construction work, the bid inviting party shall submit a written report on the invitation and submission of bids to the relevant administrative supervision department within 15 days after the date of issuance of the letter of acceptance.

The written report mentioned in the preceding paragraph shall at minimum include the following contents:

(1) the scope of the bid invitation;

(2) the bid invitation method and the media in which the bid invitation announcement was published;

(3) the points to note for bidders, technical terms and bid evaluation criteria and method from the bid invitation documents, the main contract terms, etc.;

(4) the composition and bid evaluation report of the bid evaluation committee; and

(5) the result of the determination of the winning bidder.

Article 66: The bid inviting party may not directly designate subcontractors.

Article 67: At the time of executing the contract or at the time the winning bidder puts forth a request to subcontract out some of the work, the bid inviting party shall have the right to refuse such request if the subcontractor does not satisfy the criteria, or does not comply with the regulations, for subcontracting. If the bid inviting party discovers that the winning bidder has transferred the project or illegally subcontracted part of it, it may demand that the winning bidder rectify the matter. If the winning bidder refuses to rectify the matter, the bid inviting party may terminate the contract and petition the relevant administrative supervision department to investigate and handle the case.

If a member of the supervisory personnel or the relevant administrative department discovers that the winning party has transferred the project or illegally subcontracted part of it in breach of the contract, he/it may require the winning bidder to rectify the matter or inform the bid inviting party to demand that the winning bidder rectify the matter. If the winning bidder refuses to rectify the matter, the relevant administrative supervision department shall be petitioned to investigate and handle the case.

PART FIVE: LEGAL LIABILITY

Article 68: If a project legally requires the invitation for bids and bids are not invited, or if a project that legally requires the invitation for bids is divided into several small projects or if any other method is used to avoid an invitation for bids, the relevant administrative supervision department shall order rectification of the matter within a specified period of time and may impose a fine of not less than 0.5% and not more than 1% of the contract amount. If the project partially or solely uses State-owned funds, the examination and approval department for the project may suspend the execution of the project or suspend the allocation of funds therefor. The person directly in charge of the work unit and the other directly responsible persons shall be disciplined in accordance with the law.

Article 69: If a bid invitation agency violates the law by divulging information and materials relating to the bid invitation and bid submission activities that ought to be kept confidential, or if it colludes with the bid inviting party or a bidder to damage the interests of the State, the public interest or the lawful rights or interests of a third party, the relevant administrative supervision department shall impose upon it a fine of not less than Rmb50,000 and not more than Rmb250,000 and impose upon the person directly in charge of the work unit and other directly responsible persons a fine of not less than 5% and not more than 10% of the fine imposed upon the work unit. If there was illegal income, such income shall be confiscated. If the circumstances are serious, the relevant administrative supervision department may suspend it from participation in bid invitation agency business in related fields for a certain period of time and the qualification certification department may suspend or cancel its bid invitation agency qualifications. If a criminal offence is constituted, criminal liability shall be pursued by the judicial departments in accordance with the law. If a third party incurred a loss as a result thereof, liability for damages shall be borne in accordance with the law.

If any of the acts described in the preceding paragraph had an effect on the determination of the winning bidder and the winning bidder was the beneficiary of such act, its winning bid shall be null and void.

Article 70: If the bid inviting party restricts or excludes prospective bidders by imposing unreasonable conditions, discriminates against prospective bidders, compels bidders to organize into a consortium to submit a joint bid or limits the competition among the bidders, the relevant administrative supervision department shall order it to rectify the matter and may impose a fine of not less than Rmb10,000 and not more than Rmb100,000.

Article 71: If the bid inviting party for a project that legally requires the invitation for bids reveals the names or number of prospective bidders that have obtained the bid invitation documents or other information concerning the invitation and submission of bids that could affect the fairness of the competition or divulges the reserve price, the relevant administrative supervision department shall give it a warning and may impose a fine of not less than Rmb10,000 and not more than Rmb100,000. The person directly in charge of the work unit and other directly responsible persons shall be disciplined in accordance with the law. If a criminal offence is constituted, criminal liability shall be pursued in accordance with the law.

If any of the acts described in the preceding paragraph had an effect on the determination of the winning bidder and the winning bidder was the beneficiary of such act, its winning bid shall be null and void.

Article 72: Unless it has a legitimate reason, if the bid inviting party terminates the invitation for bids after it has published the bid invitation announcement, sent the bid invitation letters or sold the bid invitation documents or pre-qualification documents, the relevant administrative supervision department shall give it a warning and may, depending on circumstances, impose a fine of not more than Rmb30,000. If prospective bidders or bidders have incurred losses as a result thereof, it shall compensate them for such losses.

Article 73: The relevant administrative supervision department shall order the bid inviting party or the bid invitation agency to rectify the matter, may, depending on circumstances, impose a fine of not more than Rmb30,000 and if the circumstances are serious the bid invitation shall be null and void if:

(1) the bid invitation announcement was not published in the designated media;

(2) no bid invitation letters were sent, in accordance with the law, for a private invitation for bids;

(3) the period between the date the bid invitation documents or pre-qualification documents went on sale and the date the sale of the same was terminated was less than five working days;

(4) the period between the date of commencement of issuance of the bid invitation documents for a project for which the invitation for bids was legally required and the deadline for the submission of the bid documents was less than 20 days;

(5) a public invitation for bids was required but not carried out;

(6) an invitation for bids was carried out without meeting the conditions for an invitation for bids;

(7) the carrying out of examination and approval Measures was required but not carried out;

(8) the invitation for bids was not carried out in accordance with the contents of the examination and approval of the project examination and approval department;

(9) bid documents were accepted after the deadline for the submission of bid documents; or

(10) the number of bidders did not meet statutory requirements but no new invitation for bids was carried out.

If the bid invitation is determined to be null and void, a new invitation for bids shall be carried out.

Article 74: If there is collusion among bidders in the submission of bids or collusion between a bidder and the bid inviting party in the submission of bids or if a bidder bribes the bid inviting party or the bid evaluation committee in an attempt to win the contract, the winning bid shall be null and void, the relevant administrative supervision department shall impose a fine of not less than 0.5% and not more than 1% of the amount of the project that was won and, on the person directly in charge of the work unit and the other persons directly responsible, a fine equivalent to not less than 5% and not more than 10% of the amount of the fine imposed on the work unit; if there was illegal income, such income shall be confiscated; if the circumstances were serious, punishment shall range from a one to two year suspension of the work unit's bidding qualifications and an announcement thereof up to the revocation of its business licence by the administration for industry and commerce; if a criminal offence is constituted, criminal liability shall be pursued in accordance with the law. If a third party incurred a loss as a result thereof, damages shall be borne in accordance with the law.

Article 75: If a bidder submits its bid in the name of a third party or otherwise practises deception to fraudulently win the contract, its winning bid shall be null and void and it shall bear liability for the resulting loss incurred by the bid inviting party in accordance with the law. If a criminal offence is constituted, criminal liability shall be pursued in accordance with the law.

If a bidder for a project that legally requires the invitation for bids commits either of the acts specified in the preceding paragraph and such act was insufficient to constitute a criminal offence, the relevant administrative supervision department shall impose a fine of not less than 0.5% and not more than 1% of the amount of the project that was won and, on the person directly in charge of the work unit and the other persons directly responsible, a fine equivalent to not less than 5% and not more than 10% of the amount of the fine imposed on the work unit; if there was illegal income, such income shall be confiscated; if the circumstances were serious, punishment shall range from a one to three year suspension of the work unit's bidding qualifications and an announcement thereof up to the revocation of its business licence by the administration for industry and commerce.

Article 76: If the bid inviting party for a project that legally requires the invitation for bids violates the law by conducting negotiations on such substantive matters as the bid price, bid plan, etc. with a bidder, the relevant administrative supervision department shall give it a warning and discipline the person directly in charge of the work unit and the other persons directly responsible.

If the act specified in the preceding paragraph affected the determination of the winning bidder, the winning bid shall be null and void.

Article 77: If a member of the bid evaluation committee accepted property or other advantage from a bidder, or if a member of the bid evaluation committee or a member of the relevant working personnel participating in the bid evaluation revealed to a third party information on the evaluation and comparison of the bids, candidates recommended for the status of winning bidder or other information relating to the bid evaluation, the relevant administrative supervision department shall give him a warning, confiscate the property that was accepted, may impose a fine of not less than Rmb3,000 and not more than Rmb50,000 and may revoke the qualifications to act as a member of an evaluation committee of a member of an evaluation committee who committed the aforementioned violation, announce the same and prohibit him from participating in the evaluation of bids for any bid invitation project. If a criminal offence is constituted, criminal liability shall be pursued in accordance with the law.

Article 78: If a member of the bid evaluation committee absents himself without authorization during the bid evaluation, thereby affecting the normal conduct thereof, or fails to perform his responsibilities in an objective and fair manner, the relevant administrative supervision department shall give him a warning; if the circumstances were serious, his qualifications to act as a member of a bid evaluation committee shall be revoked, he shall be prohibited from participating in the evaluation of bids for any bid invitation project and he shall be fined not more than Rmb10,000.

Article 79: The bid evaluation shall be null and void, a new bid evaluation or a new bid invitation shall be carried out in accordance with the law and the relevant administrative supervision department may impose a fine of not more than Rmb30,000 if any of the following circumstances arises during a bid evaluation:

(1) the bid invitation documents used did not specify the bid evaluation criteria or method;

(2) the bid evaluation criteria or method included content that favoured a bidder or excluded bidders, or prevented or limited the competition between bidders and affected the outcome of the bid evaluation;

(3) a person who should have recused himself from serving as a member of the bid evaluation committee participated in the bid evaluation;

(4) the formation of the bid evaluation committee and the members thereof did not satisfy statutory requirements; or

(5) the bid evaluation committee and its members violated the law during the bid evaluation and such violation had an effect on the outcome of the bid evaluation.

Article 80: If the bid inviting party selects the winner other than from among the candidates for the status of winning bidder recommended by the bid evaluation committee or, for a project that legally requires the invitation for bids, it itself selected a winner after all of the bids had been rejected by the bid evaluation committee, the winning bid shall be null and void. The relevant administrative supervision department shall order it to rectify the matter and may impose a fine of not less than 0.5% and not more than 1% of the amount of the project that was won; the person directly in charge of the work unit and the other directly responsible persons shall be disciplined in accordance with the law.

Article 81: If the bid inviting party fails to determine the winning bidder within the specified period of time, changes the result of the determination of the winning bidder after issuing the letter of acceptance, refuses to execute a contract with the winning bidder without a valid reason or, when executing the contract, proposes additional conditions or amendments to the substantive provisions of the contract, the relevant administrative supervision department shall give it a warning, order it to rectify the matter and may, depending on circumstances, impose a fine of not more than Rmb30,000. If the winning bidder incurred a loss, the bid inviting party shall compensate it for such loss.

If the winning bidder renounces the project that it has won after the issuance of the letter of acceptance, refuses to execute the contract with the bid inviting party without a valid reason, when executing the contract, proposes additional conditions or amendments to the substantive contents of the contract, or refuses to pay the required performance bond, the bid inviting party may cancel its qualifications as winning bidder and forfeit its bid deposit. If the bid inviting party incurred a loss in excess of the amount of the bid deposit, the winning bidder shall compensate it for the portion of the loss in excess of the bid deposit. If the winning bidder did not pay a bid deposit, it shall be liable to compensate the bid inviting party for its loss.

Article 82: If the winning bidder assigns the project that it has won to a third party, divides the project it has won into parts and assigns such parts to different third parties, violates the law by subcontracting out to a third party part of the principal, key part of the project it has won or if the subcontractor further subcontracts or assigns its subcontract, the subcontract shall be null and void and the relevant administrative supervision department shall impose a fine of not less than 0.5% and not more than 1% of the amount of the assigned or subcontracted project; if there was illegal income, it shall confiscate such income; it may order a suspension of operations for rectification; and if the circumstances were serious, the administration for industry and commerce shall revoke the business licence.

Article 83: If the bid inviting party and the winning bidder do not comply with the bid invitation documents and the winning bidder's bid documents when concluding the contract, or if they conclude an agreement that deviates from the substantive provisions of the contract, or if the bid inviting party arbitrarily increases the performance bond or demands that the winning party advance the construction funds for the project that it won, the relevant administrative supervision department shall order them/it to rectify the matter and may impose a fine of not less than 0.5% and not more than 1% of the amount of the project that was won.

Article 84: If the winning bidder fails to perform the contract it concluded with the bid inviting party, the performance bond shall not be refunded. If the loss incurred by the bid inviting party exceeds the amount of the performance bond, it shall compensate the bid inviting party for that portion of the loss exceeding the performance bond. If the winning bidder did not provide performance bond, it shall be liable to compensate the bid inviting party for its loss.

If the winning bidder fails to perform its obligations in accordance with the contract it concluded with the bid inviting party and the circumstances were serious, the relevant administrative supervision department shall impose a punishment ranging from a two to five year revocation of its qualifications to participate in the bidding for bid invitation projects and make an announcement thereof up to the revocation of its business licence by the administration for industry and commerce.

If the failure to perform the contract is due to force majeure, the provisions of the preceding two paragraphs shall not apply.

Article 85: If the bid inviting party fails to perform the contract it concluded with the winning bidder, it shall refund twice the amount of the performance bond paid by the winning bidder. If the loss incurred by the winning bidder exceeds the amount of the refunded performance bond, it shall compensate the winning bidder for that portion of the loss exceeding the refunded performance bond. If the winning bidder did not provide a performance bond, the bid inviting party shall be liable to compensate it for its loss.

If the failure to perform the contract is due to force majeure, the provision of the preceding paragraph shall not apply.

Article 86: If the law is violated in the course of a project that legally requires the invitation for bids for construction work, the winning bid shall be null and void and a new winning bidder shall be selected from among the other bidders in accordance with the criteria for winning the contract specified in laws or a new bid invitation shall be carried out in accordance with the law.

If the winning bid is null and void, the issued letter of acceptance and the executed contract shall not be legally binding ab initio without prejudicing, however, the validity of the independently existing terms on the method of dispute resolution of the contract.

Article 87: If any work unit violates the law by restricting or excluding legal persons or other organizations from its region or system from participating in a bid, by designating a bid invitation agency for the bid inviting party, by coercing the bid inviting party to appoint a bid invitation agency to handle the bid invitation matters or by otherwise interfering in the bid invitation and submission activities, the relevant administrative supervision department shall order it to rectify the matter; the person directly in charge of the work unit and the other directly responsible persons shall be disciplined by giving them a warning, recording a demerit or recording a serious demerit in accordance with the law. If the circumstances were relatively serious, they shall be disciplined by demotion, removal from office or dismissal in accordance with the law.

If an individual utilizes his authority to commit any of the violations mentioned in the preceding paragraph, his liability shall be pursued in accordance with the provisions of the preceding paragraph.

Article 88: If a member of the working personnel of a State authority with administrative supervision responsibilities for bid invitation and bid submission activities in accordance with the law practices favouritism, commits irregularities, abuses his authority or is derelict in his duties and the same constitutes a criminal offence, his criminal liability shall be pursued in accordance with the law; if a crime is not constituted he shall be given an administrative penalty in accordance with the law.

Article 89: Any work unit or individual has the right to file a complaint on or report a violation of the law occurring in the course of the invitation and submission of bids for construction work for construction projects to the project examination and approval department or the relevant administrative supervision department.

PART SIX: SUPPLEMENTARY PROVISIONS

Article 90: If bids are invited for a project utilizing loans or aid from an international organization or a foreign government and the lender or the aid provider has regulations on the criteria and procedure for the invitation and submission of bids for construction work at variance with those hereof, its regulations may be applied, unless they run contrary to the public interest of the People's Republic of China.

Article 91: The State Development Planning Commission in concert with the relevant departments is in charge of interpreting these Measures.

Article 92: These Measures shall be implemented as of May 1 2003.