Ministry of Finance Notice Issuing the Interim Provisions on Managing Centralized Procurement by State-owned Financial Enterprises
Financial Document no. 9 〔2018〕
To all State-owned financial enterprises:
In order to further enhance the efficiency of centralized procurement by state-owned financial enterprises, and standardize centralized procurement by state-owned financial enterprises, the Interim Provisions on Managing Centralized Procurement by State-Owned Financial Enterprises are issued to you, please implement them.
Annex: Interim Provisions on Managing Centralized Procurement by State-owned Financial Enterprises
Ministry of Finance
5 February 2018
Interim Provisions on Managing Centralized Procurement by State-owned Financial Enterprises
Chapter I General Principles
Article 1 The Present Provisions are formulated in accordance with relevant state laws, administrative regulations and departmental rules in order to regulate centralized procurement by state-owned financial enterprises, strengthen the management of procurement expenditures, and enhance the efficiency in the use of procurement funds.
Article 2 The Present Provisions apply to centralized procurement by State-owned financial enterprises.
The state-owned financial enterprises referred to in the Present Provisions include all state-owned enterprises that have obtained a financial business license, as well as state-owned financial holding companies, state-owned guarantee companies and other financial state-owned enterprises. Financial transaction venues implementing a membership system according to current laws and regulations shall be governed with reference to the Present Provisions.
The term “centralized procurement” in the Present Provisions refers to the act whereby state-owned financial enterprises purchase goods, projects and services included in the scope of centralized procurement through the method of contract.
Article 3 Centralized procurement by state-owned financial enterprises shall follow the principles of openness, fairness, justice, integrity and credit and effectiveness.
Article 4 State-owned financial enterprises shall conduct centralized procurement activities in line with relevant state regulations, establish an internal management system of unified management, graded authorization and mutual restraint, so as to effectively safeguard the overall interests of enterprises and the country.
Article 5 State-owned financial enterprises shall give priority to the purchase of energy-saving environmentally friendly products.
Chapter II Organization and Management
Article 6 State-owned financial enterprises shall establish and improve a management system which is separate from the functions of the operational management system.
Article 7 State-owned financial enterprises shall establish a Centralized Procurement Management Committee. Membership [to the committee] shall be composed by relevant persons in charge of the enterprise and persons in charge of the relevant business departments such as financial and legal departments, who shall be responsible for managing decision-making in relation to the centralized purchasing activities of the company. Departments for discipline inspection, supervision and auditing of state-owned financial enterprises may attend the meetings of centralized purchasing management committees.
The main responsibilities of the centralized procurement management committee of state-owned financial enterprises include:
(1) Examining and approving systems and regulations to manage centralized procurement by the enterprise;
(2) Determining the catalog and quotas of centralized procurement by the enterprise;
(3) Examining the procurement plan and reviewing its implementation;
(4) Examining matters related to procurement that have a major impact on the activities and development of business;
(5) Other important management and supervision issues involved in procurement activities.
Article 8 To concretely implement centralized procurement, state-owned financial enterprises may designate specific business units or set up centralized agencies for the day-to-day management of procurement, according to their actual conditions. According to the specific circumstances of the centralized procurement project, state-owned financial enterprises may purchase or entrust an external agency to handle purchasing matters.
Article 9 Where state-owned financial enterprises adopt public bidding and invite bids, a bid appraisal committee shall be formed according to law, to be responsible for the appraisal of procurement items. Where procurement takes place by non-bidding methods such as competitive negotiation, competitive negotiation and consultation, price inquiry, etc. relevant requirements about government procurement shall be taken into consideration and, a negotiation, consultation, or price inquiry group shall be established according to the reality of the unit.
Article 10 The headquarters of a state-owned financial enterprise may establish or jointly establish a pool of experts to review centralized procurement. The appraisal group is formed by internal professionals in finance and technology from state-owned financial enterprises, as well as by external experts in related technologies, and economy. Enterprises that do not have the above conditions shall reasonably use bidding agencies and external pools of appraisal experts.
Article 11 In the case of ordinary procurement projects, appraisal experts shall be randomly chosen from appraisal experts’ database. Where procurement projects adopt a complex technology, are strongly specialized or pose special requirements, and it is difficult to randomly choose appraisal experts, state-owned financial enterprises may choose their own experts according to procedures.
Chapter III Systems Construction
Article 12 State-owned financial enterprises may refer to the catalogs and standards for centralized procurement catalogs regularly released by People’s governments at or above the provincial level and, in combination with the actual conditions of the enterprise, formulate their own centralized procurement catalogs and quotas.
Article 13 State-owned financial enterprises shall, in accordance with relevant laws and regulations of the state and the Present Provisions, formulate internal measures to manage centralized procurement.
Article 14 The internal measures to manage centralized procurement formulated by state-owned financial enterprises shall include at least the following:
(1) A specification of the scope of centralized procurement by the company, as well as the concrete circumstances where different procurement methods are to be used;
(2) Specific procedures to implement centralized procurement, including the preparation of procurement plans, establishment of procurement projects, preparation of procurement requirements, implementation of procurement, signing of contracts, purchase acceptance, settlement of funds and archives management;
(3) A specification of the subjects [competent for] internal supervision and inspection of centralized procurement activities, and their responsibilities;
(4) Measures to handle and punish the staff and units responsible of violating the law, regulations, and professional ethics.
Article 15 State-owned financial enterprises shall establish and improve internal supervision and management systems, strengthen the internal supervision and inspection of centralized procurement, and effectively prevent mistakes and frauds in the procurement process.
Article 16 State-owned financial enterprises shall establish decision-making and implementation procedures for the mutual supervision and restriction of procurement activities, and clearly define the responsibilities and powers of the project management personnel responsible for reviewing procurement contracts, and for accepting them, achieving their respective separation.
Article 17 State-owned financial enterprises shall provide professional guidance and management of centralized procurement by their branches.
Chapter IV Procurement Methods
Article 18 State-owned financial enterprises may use public bidding, invitations for bids, competitive negotiation, competitive negotiation and consultation, procurement from a single source, price inquiry, and other procurement methods determined by relevant management departments.
Article 19 In order to procure items included in the scope of centralized procurement, state-owned financial enterprises shall, in principle, give priority to the methods of public bidding or invitation for bids. Where the adoption of procurement methods other than bidding is needed, it shall conform to requirements in the Present Provisions. Relevant methods] shall be approved in accordance to enterprises’ internal regulations on procurement prior to the commencement of procurement activities.
Article 20 Where an item of centralized procurement meets one of the following conditions, it may be purchased through invitations for bids:
(1) It is unique, and it can only be procured from a limited range of suppliers;
(2) Public bidding involves cost which are excessive if compared to the total value of the item to be procured;
(3) Other applicable cases as specified in enterprises’ internal regulations on centralized procurement.
Article 21 Where an item of centralized procurement meets one of the following conditions, it may be purchased through competitive negotiation:
(1) Where no supplier has won a tender, or there is no qualified supplier, or the [call for tenders] could not be re-issued;
(2) The technical complexity or the special nature are such that detailed specifications or specific requirements cannot be determined;
(3) The timing of the tender can not meet the urgent needs of users;
(4) The total price cannot be calculated in advance;
(5) Other applicable cases, as specified in enterprises’ internal measures on centralized procurement.
Article 22 Where an item of centralized procurement meets one of the following conditions, it may be purchased through competitive negotiation and consultation:
(1) it is a service item;
(2) The technical complexity or the special nature are such that detailed specifications or specific requirements cannot be determined;
(3) The total amount of the price can not be calculated in advance due to the timing of patenting, proprietary technology, service, or other reasons;
(4) Scientific research projects with an incomplete market competition;
(5) Construction projects other than those for which bidding must occur, in accordance with the Bidding and Tendering Law and its implementing regulations;
(6) Other applicable cases, as specified in enterprises’ internal measures on centralized procurement.
Article 23 Where an item of centralized procurement meets one of the following conditions, it may be purchased from a single provider:
(1) It can only be procured from a sole supplier;
(2) Due to unforeseen emergency situations it can not be procured from other suppliers;
(3) It is necessary to ensure the consistency of the items originally procured, or of the supporting services, and another purchase from the original supplier is needed;
(4) Other applicable cases, as specified in enterprises’ internal measures on centralized procurement.
Article 24 Where items of centralized procurement conform to such conditions as product specifications, unified standards, the supply of goods in stock is adequate, and the difference in price is minimal, they may be purchased through price inquiry, prior to their listing in enterprises’ internal measures on centralized procurement.
Chapter V Procurement Management
Article 25 State-owned financial enterprises shall implement centralized procurement according to the procurement plan, and include it into their annual budget. Items to be procured outside of the plan shall be approved according to relevant internal regulations of enterprises. A major adjustment of the procurement plan shall be reported to the Centralized Procurement Management Committee for consideration in accordance with procedures.
Article 26 State-owned financial enterprises shall not reduce the number of items to be procured by public bidding to zero or evade public bidding through any other means.
Article 27 State-owned financial enterprises shall conclude procurement contracts based on the successful bid or the result of the transaction, and the procurement contract shall be subject to examination by the internal legal department or the legal intermediary agency.
Article 28 State-owned financial enterprises shall do a good work in disclosing information on public procurement through such channels as the enterprise website, the tendering agency website or the public media on government procurement information designated by People’s governments at the provincial level and above, except for the cases when information about public bidding items and non-public bidding itmes arelates to state secret or to trade secret.
Where open bidding is adopted, the call for bids, the guidelines for pre-qualification, the candidates and the results of bidding shall be announced in accordance with relevant provisions. The contents of public bidding to be discloses include, but are not limited to such basic information as the name of the bidding project name, the party intviting bids, the agency inviting bids, the date of the call for bids, the successful bidder, the content and price of the bid. The call for bids and the results of the bids shall be announced through one and the same channel.
In the case of non-public bidding, the result of the transaction shall be announced within 3 working days from the date when the procurement contract is signed, and information shall include but not be limited to such basic information as the content of procurement, the method of procurement, the candidates, the successful supplied, the procurement quantities determined in the contract, the procurement price.
Chapter VI Supervision and Inspection
Article 29 State-owned financial enterprises shall conscientiously implement the Present Provisions, disclose in the annual financial reports procurement items having a major impact on the costs and expenditures of the enterprise, and voluntarily accept supervision and inspection by financial, auditing and other relevant departments.
Article 30 Where a bidder or any other interested party believe that any violation of law has occurred in the implementation of centralized procurement activities by state-owned financial enterprises they may, in accordance with relevant provisions, file a complaint with the financial institution responsible for the state-owned financial enterprise, and with other relevant departments of the state.
Article 31 The parties to enterprise procurement shall not collude with each other to damage the interests of the enterprise, the state, the public and the lawful rights and interests of other parties.
Article 32 Where a party to procurement discloses the basic tender offer or other circumstances and materials related to procurement that shall remain secret, or otherwise violates relevant laws, administrative regulations and the Present Provisions, responsibility shall be prosecuted in accordance with the law.
Chapter VII Supplementary Provisions
Article 33 Where state-owned financial enterprises use loans or grants of international organizations, foreign governments, foreign legal persons and of other organizations and individuals to make a purchase, and the lender or the grantor has made a prior agreement on the procurement method, the circumstance shall be considered as a mitigating circumstance, provided that no damage was caused to national interest and to social public interest.
Article 34 The Present Provisions shall come into force on March 1, 2018.The “Provisions on Strengthening Centralized Procurement Management of State-owned Financial Enterprises” (Financial Document no. 209  ) shall at the same time be abolished.