Ministry of Finance: Promote the solution to the problem of abnormally low prices in government procurement.

Notice on Promoting the Solution of Abnormally Low Price Issue in Government Procurement To all central budget units, financial departments of provinces, autonomous regions, municipalities directly under the Central Government, and financial bureaus of Xinjiang Production and Construction Corps: In order to rectify the "internal competition" in the government procurement field and establish a market order of high quality, fair competition, the Ministry of Finance hereby issues the following notice on promoting the solution of the abnormally low price issue in government procurement: 1. Strengthen government procurement demand management Procuring entities should base their procurement needs on actual work requirements, comprehensively consider bid-winning (transactional) information of similar projects, market supply and industry development status, market prices of materials, labor, industry cost standards, etc., conduct market research, and form scientific, complete, and clear procurement needs. They should reasonably set a maximum price limit to provide a basis for competitive bidding by suppliers. For procurement projects where the maximum price limit is not set, the budget amount of the procurement project shall be used as the maximum price limit. Procuring entities should consider factors such as technology, cost-effectiveness, and promotion of competition, and establish procurement packages rationally according to professional types and fields. They can introduce the concept of total cost of ownership, require suppliers to provide prices for operations, maintenance, upgrades, specialized consumables, disposal costs within the agreed period in the procurement documents, as evaluation factors, and stipulate in the procurement contract that suppliers should provide specialized consumables or related services to the procuring entity at a price not higher than their quoted price within the agreed period. For procurement projects that use a comprehensive scoring method, prices, technology, commercial factors, etc. should be determined reasonably according to relevant regulations. Procuring entities should focus on the management of information technology construction projects and the procurement of office equipment with high consumable usage such as copiers, printers, laboratory equipment, medical equipment, etc. For information technology construction projects, procurers should require suppliers to strictly implement relevant open, compatibility standards and specifications, provide services according to the contract, and suppliers shall not charge fees from relevant service recipients beyond what is stipulated by the country and the contract during system operation. 2. Strengthen the review of abnormally low prices in government procurement (a) Procuring entities should clearly stipulate in the procurement documents that if any of the following situations occur in the procurement evaluation, the evaluation committee should initiate a review of abnormally low bid (response): 1. If the bid (response) price is lower than 50% of the average bid (response) price of all suppliers who have passed the compliance review, then the bid (response) price < 50% of the average bid (response) price of all suppliers who have passed the compliance review; 2. If the bid (response) price is lower than 50% of the bid (response) price of the second lowest-priced supplier who has passed the compliance review, then the bid (response) price < 50% of the bid (response) price of the second lowest-priced supplier who has passed the compliance review; 3. If the bid (response) price is lower than 45% of the maximum price limit of the procurement project, then the bid (response) price < 45% of the maximum price limit of the procurement project; 4. If the evaluation committee, based on professional judgment, believes that the supplier's quoted price is too low, which may affect the quality of the product or raise concerns about the supplier's ability to perform honestly. Procuring entities can adjust the numerical standards for initiating reviews of abnormally low bids (responses) based on specific project circumstances, but not exceeding 65%. If there are regulations on supplier quotations in relevant laws and regulations, the regulations shall be followed. (b) After the evaluation committee initiates a review of abnormally low bids (responses), if it falls under any of the situations mentioned above, the relevant suppliers should be required to provide a reasonable explanation for the bid (response) price at the evaluation site within a reasonable period of time, along with written explanations and necessary supporting documents related to the reasonableness of the bid, including but not limited to raw material costs, labor costs, manufacturing expenses, etc. Generally, suppliers should be given a reasonable time of no less than 30 minutes. In the case of situation 3, if the supplier has already submitted written explanations and necessary supporting documents along with the bid (response) documents, they may not need to resubmit them at the evaluation site. The evaluation committee should use professional experience to judge the reasonableness of bids based on bid prices of similar projects, prices of similar products in the market, industry labor cost standards, and industry average costs published by relevant industry associations guided by national departments. If a bidding supplier cannot provide written explanations or supporting documents, or the explanations and documents they provide do not prove the reasonableness of their bid, the evaluation committee consider their bid as invalid. Procuring entities and procurement agencies should provide conveniences for the evaluation committee to promptly obtain relevant information such as bid prices of similar projects, market prices of similar products, industry labor cost standards, industry average costs published by relevant industry associations, etc. The evaluation committee should strictly adhere to evaluation work discipline when querying information through channels such as the internet, and should not engage in actions that undermine the fairness of the evaluation process. The reasons for initiating the review of abnormally low bids (responses), review opinions, and review results should be recorded in the evaluation report, and submitted along with the relevant written explanations and supporting documents provided by suppliers. Related browsing histories and search records of the evaluation committee should also be archived. (c) Financial departments at all levels should strengthen the guidance and supervision of evaluation experts and further clarify the responsibilities of evaluation experts. If financial departments find during complaint handling or supervision checks that the evaluation committee did not conduct the required review of abnormally low bids as stipulated, corrective actions should be taken according to the law, and legal responsibilities of evaluation experts should be pursued. 3. Strengthen government procurement compliance acceptance management Procuring entities should implement acceptance responsibilities, organize acceptance work in accordance with the law, and ensure that the acceptance content includes compliance with each technical and commercial requirement. For suppliers who have triggered the abnormally low bid (response) review process but are still awarded the contract, procurers should pay close attention to their performance commitments and actual performance. For procurement projects that can be implemented in stages, phased assessments, acceptances, and payments should be carried out to monitor supplier performance progress in a timely manner. If a supplier awarded the contract refuses to sign the government procurement contract without valid reasons, legal action should be taken; if a supplier fails to fulfill the contract or fails to meet acceptance requirements as specified in the contract, the procurer should pursue their breach of contract liability according to the law. All departments and regions should fully understand the significance of resolving the abnormally low price issue in government procurement, strengthen organizational leadership, make detailed arrangements, enhance supervision and guidance, and combine with actual work. By improving standard texts of procurement documents, adding functionalities to transaction systems, strengthening performance guarantees, increasing efforts in holding parties accountable for breach of contract, etc., further refining work measures to ensure that all requirements are implemented. This notice shall be implemented from February 1, 2026. This article is compiled from the official website of the Ministry of Finance and edited by GMTEight: Jiang Yuanhua.