President Dr. Zhu Jianyuan

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

Dr. Zhu Jianyuan

Ⅰ• Summary of China

Tendering Market

Ⅱ• Status of China’s

Tender Agent System

Ⅲ • Suggestions

Table of Contents

Ⅰ. Introduction

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

Feature—Huge Investment in Fixed AssetsFeature—Huge Investment in Fixed Assets

Source: National Bureau of Statistics

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

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.

Development of Tender agency

Ⅱ. Status of China’s Tender Agent System

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

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.

数据来源：www.chinbaidding.com.cn

Structure of Tender Agency Structure of Tender Agency

Ⅱ. Status of China’s Tender Agent System

Proffessional Service

Guarantees the Investment Efficiency

Popularizationof Tender System

The Positive Role China Tender Agency

Playing

Decrease of Supervision Cost of the

Government

Ⅱ. Status of China’s Tender Agent System

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.

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

Ⅱ. Status of China’s Tender Agent System

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

Ⅱ. Status of China’s Tender Agent System

Self-tendering

• EA conducts project tender directly. EA lacks special site nor professional team.

• EA lacks experience, positivity and

proffession.

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

whose tech level is very low.自主招标

Ⅱ. Status of China’s Tender Agent System

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

自主招标

Ⅱ. Status of China’s Tender Agent System

Comparation Between Tender Agency Model and Self-tendering ModelComparation 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.

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 .

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

Ⅱ. Status of China’s Tender Agent System

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

• 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

Self-tendering

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

• 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

Self-tendering

Tender Agency

• 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.

Comparative Research on Tender Agency Model and Self-tendering 0neComparative Research on Tender Agency Model and Self-tendering 0ne

Self-tendering

Ⅱ. Status of China’s Tender Agent System

Comparative Research on Tender Agency Model and Self-tendering 0neComparative 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

1. Strong service capability in tender agency ， with professional team and rich cross-industry

2. Tender agency has certain capability of anti-corruption as an intermediary ser-

vice institute between EA and bidders

3.Tender agency, with few members, could also be selected to perform the supervi-

sion 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

percent of bidding winners cost.

Advantages and Disadvantages of China Tender AgencyAdvantages and Disadvantages of China Tender Agency

Ⅱ. Status of China’s Tender Agent System

Advantages and Disadvantages of China Tender AgencyAdvantages and Disadvantages of China Tender Agency

Ⅱ. Status of China’s Tender Agent System

Advantages

6.Supervised through certificate approval mechanism;more formal and easier.

7. The management of the tender documents is formal and concentrated. Easy for to get a

large amount of tender documents from few tender agency for easy examination by estab-

lishing tender documents archive system

8. Feasible to expand tender supervision to personal behavior of the practitioners by estab-

lishing certificate admission mechanism and personal credit evaluation mechanism, which

avoid corruption in the tender process .

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.

The Advantages and Disadvantages of tender agency system The Advantages and Disadvantages of tender agency system

Ⅱ. Status of China Tender Agency System

Disadvantages

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

increase.

5. Low-cost competition among tender agency would lead to interior service quality. If high-

quality tender agency compromises in the price competition, it will bring bad effect to normal

tender service result.

6. Different industry identification standards and tender agency identification process make the

procedure very complex and reduce the efficiency. Also it increases the cost of EA and gov-

ernment, consuming much more time.

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

Ⅱ. Status of China Tender Agency System

Legal Status of Tender AgencyLegal Status of Tender Agency

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

Ⅲ . The Role and Legal Status of Tender Agency

ㅋ

Function of CoordinationFunction of Coordination

Decision Making and Consultation Service

Decision Making and Consultation Service

ServiceServiceSupervision Supervision

FunctionsFunctions

Structure of KONEPS

Functions of Tender AgencyFunctions of Tender Agency

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

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）

Ⅱ. Status of China Tender System

Till now, tender exam has been hold nationally for three years. 23,000 staff get tenderee professional level certificate and finish tenderee registration.

中国招标代理机构从业人员资质管理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）

Ⅱ. Status of China Tender System

Fees of China Tender AgencyFees of China Tender Agency

Bid Winning Price(in Mil-lion RMB Terms)

Tender of Goods

Tender of Sser-vice

Tender of Engineer-ing Projects

Less than 1 Million RMB 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%

招标代理 PA 服务的费率

The purpose of the Asian Development Bank (ADB) is: to help developing countries in their efforts to reduce poverty, raise people’s living standards thus realizing the ultimate goal of poverty-free Asia-Pacific (AP). As a re-gional financial institute in AP, ADB boasts remarkably advanced and valuable experience in the operation and supervision of bidding and ten-dering and the coordination of economic development policies. As a third information-service party which provides services to China’s bidding and tendering market, Chinabiding.net is always dedicating itself in promoting cooperation and interaction among related parties and pushing the progress of China’s tendering course. We are always ready to cooperate with parties concerned and increase interaction and consultation with ADB in our effort to promote China’s experience in bidding agency and contribute to the bidding system formation and economic development for all Asian coun-tries.

Ⅲ. Suggestions

 Specifically speaking, we would recommend China Association of Bid-ding and Tendering (CABT) being at the head of organizing senior experts in China tendering agencies, with the extensive participation of Chinabid-ding.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 pa-cific region. While at the same time, it is also expected that we could learn from the internationally advanced tendering management model and man-ner, thus promoting the common economic development in Asia at large.

Ⅲ. Suggestions