Viewpoint | Choice of SOE Procurement

A prominent problem in the field of state-owned enterprise procurement is the lack of applicable laws and regulations. The "Tendering and Bidding Law" and the "Government Procurement Law" do not fully cover the procurement activities of state-owned enterprises. The administrative regulations of the department on the procurement of state-owned enterprises are relatively general and the operability is not strong. In this case, the China Federation of Logistics and Purchasing, together with several research institutions and state-owned enterprises, has successively formulated the "State-owned Enterprise Procurement Operation Specification" (T/CFLP 0016-2019) and the "State-owned Enterprise Procurement Management Specification" (T/CFLP 0027-2020). The former stipulates the procurement process and general requirements of state-owned enterprises, as well as the general conditions and procedural rules of various procurement methods, the latter stipulates the management structure, procurement implementation, performance evaluation, supervision and management of state-owned enterprises. The two complement each other and are used together to form the system guidelines for the procurement management and operation of state-owned enterprises, and fill the state-owned enterprise procurement regulations. Blank.

According to the Code of Practice for Procurement of State-owned Enterprises (T/CFLP 0016-2019) and the Code of Management for Procurement of State-owned Enterprises (T/CFLP 0027-2020), the procurement of state-owned enterprises includes project procurement and operational procurement. Project procurement refers to the procurement activities implemented to achieve the established objectives of enterprise project management, which is an important part of project management, such as engineering projects, technical transformation projects, equipment and facilities projects, one-time operation and maintenance projects of enterprises and other procurement activities. Its characteristics are one-time and systematic. Operational procurement refers to the repetitive procurement activities implemented to meet the objectives of enterprise operation and management and maintain daily business activities, which is an important part of enterprise operation and management. Operational procurement can be further divided into operational procurement directly related to production and operational procurement indirectly related to production. The former such as enterprise raw materials, accessories procurement, parts, components, assembly procurement, daily production maintenance and other procurement activities. The latter such as consulting services, labor services, information services, warehousing services and other procurement activities. The procurement methods of state-owned enterprises mainly include bidding procurement, bidding procurement, consulting procurement, cooperation negotiation, competition negotiation, competition negotiation, single-source direct procurement and multi-source direct procurement. For different procurement content, the applicable procurement methods are also different. Article 7.3.1 of the "State-owned Enterprise Procurement Management Code" stipulates the principle of selecting procurement methods, that is, enterprises should choose the corresponding procurement methods according to the characteristics of the project.

1. Compulsory bidding system

Since bidding procurement can enable many bidders to participate in fair competition, encourage tenderers to obtain the best goods, projects or services at the lowest or lower price, ensure the reasonable and effective use of state-owned funds and other public funds, and improve economic and social benefits, certain types of procurement projects within the scope of the law, or procurement projects that reach a certain scale, must be purchased through bidding. The relevant legal provisions of the compulsory bidding system mainly include the "Tendering and Bidding Law", "Regulations on the Implementation of the Tendering and Bidding Law", "Provisions on Projects that Must Be Tested", "Provisions on the Scope of Infrastructure and Public Utilities Projects That Must Be Tested", etc. The above provisions delineate the scope of application of compulsory bidding procurement from the dimensions of procurement object, project type, source of funds, procurement scale, etc.

(1) Purchase object dimension

The procurement object of compulsory bidding is the construction project. According to Article 2 of the Regulations on the Implementation of the Bidding and Bidding Law, construction projects refer to projects and goods and services related to project construction. The project refers to the construction project, including the new construction, reconstruction, expansion of buildings and structures and related decoration, demolition, repair, etc.; the goods related to the construction of the project refer to the equipment and materials that constitute an integral part of the project and are necessary for the realization of the basic functions of the project; the services related to the construction of the project refer to the survey, design, supervision and other services required for the completion of the project. According to the second paragraph of Article 2 of the "Regulations on the Quality Management of Construction Projects", construction projects refer to civil engineering, construction projects, pipeline and equipment installation projects and decoration projects.

(2) Item Type Dimension

The provisions on the scope of compulsory bidding from the project type dimension are mainly reflected in the Provisions on the Scope of Infrastructure and Public Utilities Projects that must be tendered. According to the regulations, energy infrastructure projects, transportation infrastructure projects, communication infrastructure projects, water conservancy infrastructure projects, urban rail transit and other urban construction projects are related to social public interests and public safety, and must be tendered in accordance with the law.

(3) Funding source dimension

From the perspective of the source of funds, all or part of the use of state-owned funds investment or state financing projects and the use of international organizations or foreign government loans, aid funds projects must be tendered in accordance with the law. The provisions of Article 2 of the "Regulations on Engineering Projects that Must Invest in Bidding" are further refined. Projects that use state-owned funds or state financing in whole or in part refer to projects that use budget funds of more than 2 million yuan and the funds account for more than 10% of the investment. Projects in which state-owned enterprises and institutions have funds that hold a controlling or dominant position. Projects using loans and aid funds from international organizations or foreign governments refer to projects using loans and aid funds from international organizations such as the World Bank and the Asian Development Bank, as well as projects using loans and aid funds from foreign governments and their institutions.

(4) Procurement scale dimension

The provisions on the scope of compulsory bidding from the dimension of procurement scale are mainly reflected in the Provisions on Projects that Must Be Tested. The estimated price of construction single contract is above 4 million yuan, the estimated price of procurement single contract for important equipment, materials and other goods is above 2 million yuan, the estimated price of procurement single contract for survey, design, supervision and other services is above 1 million yuan, and the procurement of survey, design, construction, supervision and important equipment and materials related to engineering construction can be combined in the same project, if the total estimated contract price meets the standards specified in the preceding paragraph, bidding must be conducted.

2, may not bid the statutory circumstances

In the presence of statutory circumstances, even if the project falls within the scope of the compulsory bidding system, it may not be tendered in accordance with the law. According to the Law on Tendering and Bidding, the Regulations on the Implementation of the Law on Tendering and Bidding, and the Measures for Tendering and Bidding for Construction Projects, it mainly includes the following situations:

(1) Special projects involving national security, state secrets, emergency rescue and disaster relief;

(2) It belongs to special circumstances such as the use of poverty alleviation funds to implement work-for-work relief and the need to use famous agricultural workers;

(3) The need to adopt irreplaceable patents or know-how;

(4) The purchaser can construct, produce or provide on its own according to law;

(5) The franchise project investors who have been selected through bidding can build, produce or provide on their own in accordance with the law;

(6) It is necessary to purchase works, goods or services from the original winning bidder, otherwise it will affect the construction or functional supporting requirements;

3. Special provisions for invitation to tender

Where there are statutory circumstances, projects that should be subject to public bidding in accordance with the law may be invited to tender. According to the "Regulations on the Implementation of the Bidding Law" and the "Measures for Bidding and Bidding for Construction Projects", the following situations are mainly included:

(1) Technical complexity, special requirements or limited by the natural environment, only a small number of potential bidders to choose from;

(2) The cost of using the open tender method accounts for an excessive proportion of the project contract amount;

(3) Construction projects involving national security, state secrets or emergency rescue and disaster relief are suitable for bidding but not for public bidding.

4. Voluntary bidding

Due to the positive role of bidding in promoting fair competition, regulating transaction behavior, and enhancing economic benefits, the purchaser can voluntarily choose bidding as a procurement method for projects that are not required by law. It is applicable to procurement projects with clear procurement requirements, competitive conditions for the subject matter of the procurement, permitted procurement time, open procurement costs, and reasonable bidding transaction costs.

1. Bidding procurement

Competitive procurement refers to the procurement needs are clear, the purchaser in accordance with the established rules and methods of one or more price comparisons to finalize the procurement of the contract counterpart. Competitive procurement is applicable to procurement with clear procurement needs, uniform specifications and models, sufficient supply, stable price or clear price formation mechanism. Among them, the procurement that allows one quotation shall be the procurement of goods that are not individually customized or provided to the purchaser, and the value of the existing fixed market is not high and the frequency is not high; the procurement that allows multiple quotations also includes the procurement of goods or services with competitive conditions customized for the enterprise. The purchaser shall, to the extent feasible, purchase relatively low-value procurement items from as many suppliers as possible through competitive bidding.

State-owned enterprises need to pay attention to the differences between the bidding (inquiry) procedures stipulated in the Government Procurement Law: First, the purchaser can form a review team according to the complexity and technical requirements of the project, and whether it is necessary to hire experts from the enterprise advisory expert committee to participate in the review team is decided by the purchaser; Second, state-owned enterprises can require suppliers to quote once and cannot change the quotation, or can allow multiple quotations according to regulations; third, the receipt of only one or two quotations without exceeding the procurement budget cannot be considered invalid.

2. Inquiry and procurement

Inquiry procurement refers to a procurement method in which the procurement requirements are clear and the purchaser allows the bidder to quote multiple times in accordance with the established procedures and finally determine the contract counterpart after evaluation. If one of the following conditions is met, the inquiry-based procurement method can be adopted:(1) projects, goods and services that have clear procurement requirements but do not meet the bidding conditions, including small and medium-sized projects that are not subject to bidding within the enterprise, a few projects with strong confidentiality that are not suitable for public bidding or invitation to bid, and projects that are located in remote areas and few construction units come to bid. (2) small and medium-sized simple projects after the failure of the tender.

The characteristics of inquiry ratio procurement are that it has certain flexibility on the basis of maintaining competitiveness, and the procedures are simpler and more efficient. In the process of inquiry ratio procurement, the purchaser inquires, compares, communicates and negotiates with suppliers on various procurement factors and content details, and can also modify non-substantive terms and require suppliers to re-quote to maximize their own interests.

3 The difference between the two

For example, both methods require clear procurement requirements and apply to standardized, simple and low-value procurement projects. The difference is that competitive procurement is more suitable for low-value goods with a higher degree of standardization and less frequent procurement, and that the requirements for standardization of the subject matter are lower than those for competitive procurement, and are generally applicable to works, goods and services. In addition, the focus of competitive procurement is on "price", that is, price competition on the premise of meeting demand; the focus of inquiry procurement is to select the best solution through dialogue and comparison, and to compete on this basis.

1. Negotiations on cooperation

Cooperative negotiation refers to the procurement method in which the procurement needs are clear but the bidding conditions are not available, and the contract for goods or services can only be signed with the supplier through negotiation and the strategic partnership can be established. The cooperative negotiation procurement method can be adopted if one of the following conditions is met:(1) Procurement that requires long-term stable supply and cannot be met by bidding or other procurement methods. (2) Need to communicate face-to-face with specific suppliers to negotiate long-term cooperation in procurement.

Cooperative negotiation is the main way of enterprise strategy negotiation. Generally applicable to the procurement of strategic materials, bottleneck materials or supply chain needs. Especially when it comes to strategic materials, bottleneck materials or negotiations with the only supplier, the purchaser's position is at a disadvantage, at this time should pay attention to prevent procurement risks, such as limiting the contract share of the largest supplier, establishing a long-term mechanism for material reserves, and actively formulating emergency plans to find alternative partners. Especially for state-owned enterprises, there are many external unstable and uncertain factors such as global epidemics, economic and trade policy adjustments in major countries, and even political conflicts in some countries, which have a great impact on the import customs clearance and logistics of key raw materials and important parts of enterprises. Under the background of the era, supply chain thinking should be used to strengthen procurement management and improve work, prevent procurement risks, and ensure the safety and stability of the supply chain.

2. Competition negotiations

Competitive negotiation means that the purchaser negotiates with qualified suppliers on the procurement of projects, goods or services with clear procurement functional requirements and certain competitive conditions, the suppliers submit response documents and final quotations in accordance with the requirements of the negotiation documents, and the purchaser determines the procurement method of the transaction person from the candidates proposed by the negotiation team. Competition negotiation can be adopted if one of the following conditions is met:(1) there is an urgent need for the subject matter of procurement, and it is difficult to meet the production and operation needs of the enterprise by bidding or other procurement procedures, and the urgent need is not caused by the delay or predictability of the purchaser;(2) it is difficult to meet the needs of the purchaser by bidding or other procurement procedures for catastrophic events or favorable business opportunities;(3) the purchaser determines, other procurement methods are not suitable for protecting the basic national security or the core interests of the enterprise.

Competition negotiation, a procurement method, is mainly used to solve problems such as time-critical and urgent needs. Unlike cooperative negotiations, competitive negotiations require certain competitive conditions and strict procedures.

3. Competition consultation

Competitive negotiation refers to the complex projects with vague procurement requirements or requiring suppliers' opinions and certain competitive conditions. The purchaser and qualified suppliers discuss and negotiate on the procurement of projects, goods and services, and finally improve and determine the procurement documents and contract terms. The purchaser conducts financial negotiations with suppliers in turn according to the negotiation report and negotiation order submitted by the consultation group after evaluation, the first supplier to reach an agreement is the supplier's procurement method. One of the following conditions is met:(1) the procurement requirements can only provide functional indicators or relatively broad technical specifications, and the procurement of projects that need to be discussed with suppliers;(2) The procurement objectives are generally clear but can be achieved in different paths and schemes. The purchaser needs to determine the optimal procurement path scheme through dialogue with the supplier and select the project procurement that best meets the purchaser's needs;(3) Procurement of large and complex projects that require negotiation of financial indicators after the procurement plan is determined;(4) Procurement of large and complex projects with large contract amounts after the tender fails.

The outstanding feature of competitive negotiation is that the procurement demand is relatively vague or needs to consult suppliers, which is suitable for procurement projects with high degree of specialization, complex technology and large amount of money.

1. Single-source direct procurement

Single-source direct procurement refers to the procurement of works, goods or services that are procured from a single supplier for advice or quotation under seller's market conditions. Single-source direct procurement may be used if one of the following conditions is met:(1) the subject matter of the procurement can only be obtained from a supplier, or a supplier has exclusive rights related to the subject matter of the procurement, there is no other reasonable choice or substitute, and it is impossible to use any other procurement method. (2) Unforeseen emergencies in production and operation cannot be used in other ways and can only be purchased from a specific supplier. (3) If the purchaser originally purchases goods, equipment, technology or services from a supplier, it needs to be matched with existing goods, equipment, technology or services. (4) Purchasing from a supplier is in line with the protection of the basic national security interests or the core interests of the enterprise; or is conducive to the realization of national social and economic policies. (5) The purchase amount is small, the demand technical specifications are simple and universal, the market price is transparent and the competition is high, and the selected purchase items can be directly compared and judged.

State-owned enterprises adopting single-source direct procurement should pay attention to the differences with the single-source procurement procedures stipulated in the Government Procurement Law: first, the government adopting single-source procurement needs to go through publicity procedures, while state-owned enterprises adopting single-source direct procurement should be approved by the enterprise procurement management department or belong to the items in the single-source procurement list, and do not need to be publicized; Second, the total amount of government purchase funds cannot exceed 10% of the original contract purchase amount, there is no such restriction on state-owned enterprise procurement. In addition, when state-owned enterprises adopt the procurement method of single-source direct procurement, they have no right to choose the subject matter of the procurement, so they should pay attention to the transparency of the procurement process and strengthen the supervision of the rationality of the procurement method and the openness of the procurement process.

2. Multi-source direct procurement

Multi-source direct procurement refers to the procurement of works, goods and services by soliciting proposals or quotations from multiple suppliers under buyer's market conditions without competitive elements. Multi-source direct procurement should meet one of the following conditions:(1) the production needs of the enterprise, there are multiple suppliers can provide and do not meet the bidding or other competitive conditions, the purchaser makes a price offer, multiple suppliers commit and sign a contract procurement. (2) The quality of the source of goods is evaluated, the purchaser determines the price according to the quality level, and the purchaser signs a contract with many suppliers.

In multi-source direct procurement, there is no competition between suppliers, but due to the large demand of the purchaser, it is difficult for any supplier to meet the demand of the purchaser and multiple supplies are required. The price of the purchase target is often transparent in the market, as long as the quality meets the demand, the common multi-source direct purchase, such as the purchase of raw milk by dairy production enterprises. It is important to note that multi-source direct procurement does not apply to procurement where the price or other elements of the subject matter of the procurement change frequently.