On September 14, 2008, the Implementing Rules for the Comprehensive Evaluation Method of International Bidding on Mechanical and Electrical Products (Trial Implementation) (Order 311) went into effect. The PRC Ministry of Commerce (MOFCOM) issued Order 311 on August 15, 2008. Order 311 standardizes the international bidding process for electromechanical products and encourages the purchase of advanced technologies and equipments.
MOFCOM issued Order 311 in accordance with the PRC Tendering and Bidding Law and the Implementation Measures for International Bidding on Mechanical and Electrical Products (Order 13) issued in 2004. Under Order 13, in order for certain mechanical and electrical products to be introduced in China, they must go through a bidding process that is open to international parties. The products covered in this category include certain mechanical and electrical products to be used in infrastructure and public utilities projects, government procurement projects, and projects financed by the government, foreign aid, or foreign loans.
The Comprehensive Evaluation Method, as provided in Order 311 (the Method), applies to bidding projects for large-scale equipment and whole equipment sets involving complex technologies or technical plans. Using the Method, evaluators will assign weights to certain bid factors, such as business, technology, price, and service, in order to asses the strengths overall bid. Order 311 requires that the weight assigned to the price factor may not be lower than 30 percent, and the weight assigned to the technology factor may not be greater than 60 percent.
Bid evaluation committees conduct comprehensive analyses of the bids by evaluating the weighted factors to select the winning bidder using the Method. Each member of the bid evaluation committee will independently score the bids. The committee will arrive at a total score by adding up each factor’s aggregate scores, and will recommend the bidder with the highest total score as the winning bidder. The committee may eliminate individual scores that deviate 20 percent in either direction from the average scores. Order 311 also provides other technical rules on how the evaluation should be carried out.
Under Order 311, parties must file materials relevant to the Method that they use with MOFCOM when they bid on projects funded by loans or aid provided by international organizations or foreign governments and to which the Method applies. For biddings on projects using domestic funds or other funds and to which the Method applies, parties must file with the directly governing authorities, which will then file with MOFCOM.
The Chinese government introduced international bidding as a method of purchasing some mechanical and electrical products in 1985 when it decided to reform China’s import control mechanisms. In 2000, MOFCOM’s predecessor issued the first Implementation Measures for the International Bidding for Mechanical and Electrical Products. In 2001, China purchased $3.2 billion worth of mechanical and electrical products through international biddings. According to MOFCOM, the amount purchased between 2000 and 2005 was $53.6 billion, and the amount is expected to exceed $100 billion between 2006 and 2010. Many key state-sponsored projects have used these products, including the Three-Gorge Dam, high-speed railways, urban light rails, large airports, and nuclear power plants.