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Bidding process unfair, lawsuit says

By Li Wenfang (China Daily)
Updated: 2009-11-04 08:23

A major Chinese air conditioner maker is suing the finance bureau of Guangzhou, alleging that bids for a government job were mishandled, causing a waste of 4.4 million yuan ($650,000) in taxpayers' money.

The case at Tianhe District People's Court in Guangzhou began on Monday.

The Guangzhou Gree Air Conditioner Sales Co lost to Guangdong Petrochemical Engineering Construction Group Co in a government bid for air conditioners for Panyu Central Hospital.

Guangdong Petrochemical's bid was 21.5 million yuan, which is 4.4 million yuan higher than Gree's offer.

Guangzhou Gree was marked as the No 1 candidate for the job by the bid evaluation committee in November last year. However, officials at Panyu Central Hospital said that Gree's bidding document was not in line with some technicalities.

Finance bureau officials of the Panyu district requested that the procurement center of Guangzhou government review the case. Procurement officials later invited the same bid evaluation committee that had first assessed the bids to reassess the case.

This time, however, the committee ruled that Guangzhou Gree was an invalid bidder given the flaws in its bidding document.

Later Guangdong Petrochemical Engineering Construction Group Co, which quoted the highest price in the bidding, was announced the winner.

Guangzhou Gree filed a complaint, which was rejected by the Panyu finance bureau. Gree officials then applied for administrative review by the finance bureau of Guangzhou, which was also rejected.

Gree then filed a lawsuit against the finance bureau.

Lawyer for Guangzhou Gree, Gu Liaohai, said that when Gree's bidding document was first questioned, company officials made written corrections to reassure its manufacturing capacity, stressing the parts questioned were merely wording mistakes.

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Gu questioned the lack of transparency in the matter, as well as the fairness of the procurement process. Gu questioned why the same bid evaluation committee made two different rulings.

The final review of the case was carried out illegally, with the confidential bidding document made public after the winner was announced, Gu said.

Gu described the government procurement sector as being in a vicious cycle in which companies rarely file lawsuits for unfair treatment for fear of offending the government.

Without the lawsuits, watchdog agencies do not pay much attention to such cases and procurers basically have the freedom to pick whatever supplier they want, making the bidding process a farce, he said.

The lawyer for the Guangzhou finance bureau admitted in court that the same evaluation committee should not have been invited for the review twice.

But he defended the bureau, saying it legally exercised administrative review in maintaining the decision of the Panyu finance bureau and that the bureau fulfilled its supervisory role.