Draft of new regulations on government procurement of services released

The Ministry of Finance publicly released the draft version of the “Government Procurement of Services Management Measures” on the 26th of June in order to gather public feedback. It is a common part of the Chinese legislative process for the government to release a draft version of a law or regulation for public consultation, so it can gather feedback from the public and interested parties. Up to now, the government policies in this field was based on a temporary version of the Measures.

A report by the Charity Times summarizes the major policy changes which the draft version seems to portend, and explains what they will mean for charitable organizations.

The new draft version of the regulations sets stricter standards to assess the results achieved in service programs procured by the government, with more quantitative indicators. The report foresees that social organizations which undertake such programs will definitely have to put more effort into their work in the future.

Another change contained in the new draft is a clarification of which government agencies are allowed to purchase services. The draft identifies nine different categories of organizations that are entitled to this, significantly broadening the purchasing base. The report claims this will be a doubtlessly positive development.

The new draft further clarifies what qualifications social organizations need to have in order to undertake government procurement programs. It is now required that they should have paid all their taxes and social insurance for three years, and have a good record of publicizing their information.

The proposed regulation also contains new rules regarding the management and use of funds used for government procurement of services. In particular, the purchasing entities are not allowed to act as guarantors towards financial institutions on behalf of the organizations undertaking the programs. There had previously been cases in Guangdong of social work organizations who had been awarded government procurement contracts but had not yet received the funds trying to get loans from financial institutions in order to run their programs.

The new draft further specifies two channels through which the details related to government procurement of services should be publicized. The first one is the web portal of the relevant government agency, and the second one is the official information platform for Chinese government procurement of services (http://www.ccgp.gov.cn/gpsr/).

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