Research on the Development Status of China’s Tender Agent System

 President Dr. Zhu Jianyuan

Dr. Zhu Jianyuan

Table of Contents

Ⅰ •

Summary of China Tendering Market

Ⅱ •

Status of China’s Tender Agent System

Ⅲ •

Suggestions

Ⅰ

. Introduction

Feature —Huge Investment in Fixed Assets Source: National Bureau of Statistics

China invested RMB 27 Trillion in fixed assets, 2010. Tendering and Bidding are the main channels of selecting suppliers

Ⅰ

.

Summary of China Tendering Market

Ⅰ

. Summary of China Tendering Market

Ⅰ

Summary of China Tendering Market

Ⅰ

. Summary of China Tendering Market

Ⅰ

. Summary of China Tendering Market

Ⅱ

.

Status of China’s Tender Agent System Development of Tender agency

In 1984, Ministry of Commerce (MOC) issued Certificate of Procurement Agent, required in participating in international bidding to procure electronic equipments and machines, to CNTIC because of the WB financing programs. In 1980s, there were already four companies engaged in procurement agent.

In 2000,China Bidding Law was issued , some new tender agency apeared and developed such as Guoxin Tender Group.

Till now, There are over 5,000 tender agency in China. Some of them own multi qualifications of different areas, industries and central level.

Ⅱ

.

Status of China’s Tender Agent System

Structure of Tender Agency 数据来源：www.chinbaidding.com.cn

According to data from MOHURD in Aug 23, 2012, the amont of Engineering project tender enterprises reached at 5113, among which, corporates and privates 93%, playing the main role.

Ⅱ

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Status of China’s Tender Agent System Proffessional Service Guarantees the Investment Efficiency Popularization of Tender System Decrease of Supervision Cost of the Government

The Positive Role China Tender Agency Playing

Ⅱ

.

Status of China’s Tender Agent System

Comparation Between Tender Agency Model and Self-tendering Model Tender Agency •

Tender Agency is a intermediary service institute between EA and bidders, carrying out tendering within authority area on behalf of EA

•

Tender Agency has special site and professional team.

•

Tender Agency serve EA from different industries, have rich tender practise experience, more proffessional and standard.

Ⅱ

.

Status of China’s Tender Agent System

Comparation Between Tender Agency Model and Self-tendering Model Self tendering • EA conducts project tender directly.

EA lacks special site nor professional team.

• EA lacks experience, positivity and proffession.

Ⅱ

.

Status of China’s Tender Agent System

Comparation Between Tender Agency Model and Self-tendering Model Tender Agency •

Tender Agency is less than EA with concentration of personnel relatively easy for government supervision.

•

Tender Agency focuses more on Proffessional ethics and reputation.

•

Terder Agency deal with a great amount of documents and are responsible for logistics

自主招标

whose tech level is very low.

Ⅱ

.

Status of China’s Tender Agent System

Comparation Between Tender Agency Model and Self-tendering Model Self tendering •

EA are more than tender agency, which is not easy for governtment supervision.

•

EA focus more on project management and others.

•

EA must deals with proffessional documents and make proffesional tech standard.

自主招标

Ⅱ

.

Status of China’s Tender Agent System

Comparation Between Tender Agency Model and Self-tendering Model Tender Agency •Tender document is jointly compiled by several agencies.

.

• Tender Agency could organize comprehensive bid assessment expert tank in the request of BTL and government.

•Small intervention scope. Tender Agency only intervenes for the management from opening bid to signing contract .

Ⅱ

.

Status of China’s Tender Agent System

Comparation Between Tender Agency Model and Self-tendering Model Self tendering •

EA must compile tender documents themselves.

•

EA can build tender assess,ment expert tank.

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Large intervention scope.EA is responsible for all stages of a project.

Ⅱ

.

Status of China’s Tender Agent System

Comparation Between Tender Agency Model and Self-tendering Model Self tendering •

EA must compile tender documents themselves.

•

EA can build tender assess,ment expert tank.

•

Large intervention scope.EA is responsible for all stages of a project.

Ⅱ

.

Status of China’s Tender Agent System

Comparative Research on Tender Agency Model and Self-tendering 0ne Tender Agency Self-tendering •Tender agency must serve both EA and bidders , supervised by bidding authoritative department. • The pricing of tender agency service is based on cost evaluation and the bid winning price of the project, goods and service required by the bidding projects.

Ⅱ

.

Status of China’s Tender Agent System

Comparative Research on Tender Agency Model and Self-tendering 0ne Self tendering •EA could make its self-decision with regard to the result of tender. However, EA must also be under supervision by government bodies.

•No need to set service fee. However the human and material input and the cost of raw materials must be recognized.

Ⅱ

.

Status of China’s Tender Agent System

Advantages and Disadvantages of China Tender Agency

Advantages

1. Strong service capability in tender agency ， ss-industry with professional team and rich cro 2. Tender agency has certain capability of anti-corruption as an intermediary servic e institute between EA and bidders

3.

Tender agency, with few members, could also be selected to perform the supervisi on function, which is beneficial for government to reduce its workload.

4. The competition between tender agency is beneficial for EA to gain high-quality service and low tendering cost 5. It is easier and more rational to calculate the tender agency cost based on the per cent of bidding winners cost.

Ⅱ

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Status of China’s Tender Agent System

Advantages and Disadvantages of China Tender Agency

Advantages

6.S

upervised through certificate approval mechanism;more formal and easier.

7. The management of the tender documents is formal and concentrated. Easy for to get a la rge amount of tender documents from few tender agency for easy examination by establishin g tender documents archive system 8. Feasible to expand tender supervision to personal behavior of the practitioners by establis hing certificate admission mechanism and personal credit evaluation mechanism, which avoi d corruption in the tender process .

Ⅱ

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Status of China Tender Agency System The Advantages and Disadvantages of tender agency system

Disadvantages

1.

Tendering according to standard procedure , it will produce bad effects such as low-efficiency, time -consuming and high cost if adding procedures or remporary changes appear in overall demand.

2. If the operation capability for PA is poor, it will delay the process. 3.Tender agency must strike a balance between EA requirements and government laws and regulations, which is easy to transfer the attention paid by government from the violation of tender laws to PA, making PA coordination room relatively narrow.

Ⅱ

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Status of China Tender Agency System The Advantages and Disadvantages of Tender Agency System

Disadvantages

4. The experience of tender agency in compiling technical part and EA in business part will not in crease.

5. Low-cost competition among tender agency would lead to interior service quality. If high-qua lity tender agency compromises in the price competition, it will bring bad effect to normal ten der service result. 6. Different industry identification standards and tender agency identification process make the pr ocedure very complex and reduce the efficiency. Also it increases the cost of EA and govern ment, consuming much more time.

Ⅲ

. The Role and Legal Status of Tender Agency Legal Status of Tender Agency

The legal status of tender agency is said first in China Bidding Law issued in 1 st , Jan 2000. It is stated in the 13 th articles: Tender Agency is a social intermediary organization established in accordance with the law and engages in tender agent business.

ㅋ Ⅱ

. Status of China Tender System

Functions of Tender Agency

Decision Making and Consultation Service

Functions

Function of Coordination Supervision Service

Ⅱ

. Status of China Tender System

• Personnels working in China Tender Agency are over 0.8 million, amoung which, personnels on project tender are over 0.4 million.

Ⅱ

. Status of China Tender System

中国招标代理机构从业人员资质管理 ２００９－２０１１年招标师考试通过情况 数据来源：中国招标师在线（ｗｗｗ．ｚｂｓｏｎｌｉｎｅ．ｃｏｍ） Till now, tender exam has been hold nationally for three years. 23,000 staff get tenderee professional level certificate and finish tenderee registration.

Ⅱ

. Status of China Tender System

Fees of China Tender Agency

Bid Winning Price(in Millio n RMB Terms) Less than 1 Million RMB Tender of Goo ds Tender of Sservi ce Tender of Engineerin g Projects 1.5% 1.5% 1.0% 1-5 Million 1.1% 0.8% 0.7% 5-10 Million 0.8% 0.45% 0.55% 10-50 Million 0.5% 0.25% 0.35% 50-100 Million 0.25% 0.1% 0.2% 100-1000 Million 0.05% 0.05% 0.05% More than 1000 Million 0.01% 0.01% 0.01% ２００９－２０１１年招标师考试通过情况 数据来源：中国招标师在线（ｗｗｗ．ｚｂｓｏｎｌｉｎｅ．ｃｏｍ）

Ⅲ

. Suggestions

 The purpose of the Asian Development Bank (ADB) is: to help developing countries in their efforts to reduce poverty, raise people’s living standards t hus realizing the ultimate goal of poverty-free Asia-Pacific (AP). As a regi onal financial institute in AP, ADB boasts remarkably advanced and valua ble experience in the operation and supervision of bidding and tendering an d the coordination of economic development policies. As a third informatio n-service party which provides services to China’s bidding and tendering m arket, Chinabiding.net is always dedicating itself in promoting cooperation and interaction among related parties and pushing the progress of China’s t endering course. We are always ready to cooperate with parties concerned and increase interaction and consultation with ADB in our effort to promot e China’s experience in bidding agency and contribute to the bidding syste m formation and economic development for all Asian countries.

Ⅲ

. Suggestions

 Specifically speaking, we would recommend China Association of Biddin g and Tendering (CABT) being at the head of organizing senior experts in China tendering agencies, with the extensive participation of Chinabidding.

net, to establish joint promotion agencies. Hopefully these agencies would be ideal platforms for China to introduce valuable experience and systems with regard to tendering agency to countries in Asia and the pacific region. While at the same time, it is also expected that we could learn from the inte rnationally advanced tendering management model and manner, thus prom oting the common economic development in Asia at large.