Key Points:

  • Provision for Public Announcement of Penalties
  • Complements the PRC Tendering and Bidding Law

In June 2008 to support the establishment of a credit system and a fair market in tendering and bidding activities, 10 PRC governmental agencies jointly issued the Recording and Public Notice on Illegal Activities in Tendering and Bidding Interim Rules (“Interim Rules”).

The government agencies included the National Development and Reform Committee (“NDRC”), the Ministry of Industry and Information Technology (“MIIT”), the Ministry of Finance, the Ministry of Transportation, the Ministry of Commerce (“MOFCOM”), the Ministry of Housing and Urban-Rural Development, the Ministry of Supervision, the Ministry of Water Resources and the Legislative Affairs Office of the State Council.

The Interim Rules, which include four chapters and 21 clauses are effective January 1, 2009, and treat the illegal activities of tenderees, bidders, tender agencies and bid appraisal committees. Under the PRC Tendering and Bidding Law, relevant governmental authorities may impose administrative penalties on illegal activities in tendering and bidding, while the Interim Rules grant the NDRC power to publicly announce penalties including warnings, fines, confiscation of illegal gains, suspension or cancellation of tender agency qualifications, suspension of qualifications to attend bids for certain periods, cancellation of qualifications for membership of bid appraisal committees, suspension of project implementation, withdrawal of funds, suspension of provision of funds for construction provided by the state, and suspension of approval for construction projects.

Public announcements will include the parties’ names, the illegal activities being penalized, the basis for the administrative penalties, decisions rendered, the time at which the administrative penalties were levied and the names of the authorities making the penalty decisions. The public announcement authority may also directly publish the administrative penalties decision issued by the administrative authorities.

The Interim Rules provide for relevant administrative authorities at the State Council or provincial level to make a public announcement within 20 working days after an administrative penalty decision is made. The duration of such public notices is generally six months, but if the restriction period of the administrative penalty prohibiting the parties from participating in tenders or bids is longer than six months, the duration of the public notice will be extended to cover the same period. The Interim Rules also set forth procedures for correcting a public announcement. If the parties consider the public announcement to be inconsistent with the administrative penalty decision, they may provide evidence of this and request a correction in writing from the public announcement authority. The public announcement authority must render any correction and notify the applicants if it finds that an error has been made.

Another notable aspect of the Interim Rules is that the public announcement authority need not suspend the public notice during a period of administrative appeal or an administrative lawsuit. If the administrative penalty decision is later changed or withdrawn, the public announcement authority must make the same change to its public notice and issue a special statement to that effect.

Historically, implementation of the PRC Tendering and Bidding Law experienced problems. A 2004 State Council document outlines problems in China’s tendering and bidding activities and the Interim Rules are intended to address and improve this situation.