Focus on Framework Agreement
The Optimal Logic of Framework Agreement Procurement
■ Take Ogawa
The “Interim Measures for the Administration of Government Procurement Framework Agreement Procurement Methods” (Order No. 110 of the Ministry of Finance, hereinafter referred to as Order No. 110) recently issued by the Ministry of Finance defines a framework agreement as a procurement method. The procurement of the framework agreement is carried out in two stages. In the first stage, shortlisted suppliers are collected. The price priority method and the quality priority method are used to evaluate and rank the suppliers, and the shortlisted suppliers are determined according to the supplier ranking. The second stage adopts the methods of direct selection, secondary bidding and sequential queuing, and determines the transaction suppliers from the shortlisted suppliers. What logic does the framework agreement procurement follow to select transaction suppliers? This article discusses some superficial views on this.
Selecting the best through competition is the essence of government procurement
Fair competition is a basic principle of government procurement. Fair competition includes two elements: competition and fairness. If there is only fairness and no competition in government procurement activities, it will form lazy governance, reduce the efficiency of government procurement funds, and even lead government procurement to betting, gambling, luck, and taking turns in the wrong way. Some places restrict competition by adopting non-competitive prices, setting minimum prices, or stipulating uniform quotations in government procurement, and then use lots to determine suppliers. In some places, an alternative database, a directory database, and a qualification database are established, and the projects are allocated in turn or randomly selected. These phenomena are all outstanding manifestations of fairness without competition. And only competition is not fair, and it is even more unacceptable. The “Administrative Measures for Government Procurement of Goods and Services Tendering and Bidding” (Order No. 87 of the Ministry of Finance, hereinafter referred to as Order No. 87), which is issued in conjunction with the Government Procurement Law Departmental regulations such as the Measures, the Interim Measures for the Administration of Competitive Negotiated Procurement Methods in Government Procurement, and the Administrative Measures for Government Procurement of Public-Private Partnership Projects are all systems to standardize government procurement procedures and ensure fairness in government procurement. If there is a violation of procedural regulations in government procurement, which affects the fairness of procurement, the procurement results shall be invalid.
The Optimal Elements of Competitive Procurement
Among the various procurement methods of government procurement, in addition to the single-source procurement method, the others are competitive procurement methods. Of course, the competition intensity of different procurement methods is different. Among them, the most competitive one is public bidding. Invitation bidding, competitive negotiation, competitive negotiation and inquiry procurement, because the purchaser can choose more than 3 suppliers from the qualified suppliers to participate in the competition, the scope of participating suppliers is limited, and the suppliers are limited. The intensity of competition among them is weaker than that of public bidding. As for the framework agreement procurement method, since more than one supplier is determined to be shortlisted, the competing suppliers do not necessarily have to be ranked first in order to make a deal. Therefore, the competition intensity is weaker than other procurement methods. In the preliminaries of the 100-meter run in track and field competitions, this is the reason why the players do not perform at their full level, because the top three in each group can enter the final.
What are the elements of merit in competitive procurement? According to the common understanding of competitive procurement, the best element of competitive procurement must be price, and the bid evaluation method in international bidding is generally the lowest bid evaluation method, regardless of factors other than price. In my country’s relevant legislation on competitive procurement, the elements of competitive selection have been expanded to other factors other than price. The Measures, the Measures for the Administration of Government Procurement of Public-Private Partnership Projects and Order No. 87 stipulate that the evaluation method includes the comprehensive evaluation method or the comprehensive scoring method in addition to the lowest bid price method or the lowest evaluated bid price method. The comprehensive evaluation method or comprehensive scoring method is to comprehensively evaluate or evaluate the target price, technology, business, service and other factors, and rank the suppliers according to the results of the comprehensive evaluation or evaluation.
For a specific procurement target, price and quality are a pair of contradictory factors. Therefore, when the purchaser chooses the evaluation method, it is generally necessary to weigh the interests of all parties, strike a balance between price and quality, and choose the appropriate evaluation method and evaluation standard. What evaluation method the purchaser chooses also shows the purchaser’s orientation to the purchase result. When the purchaser has limited funds, the purchase target has a uniform quality standard, or the quality of the products in the market is not very different, the purchaser can choose to only compete for price, that is, to use the lowest evaluation price method for evaluation; or use price as the main evaluation factor, that is, to use comprehensive evaluation. Scoring method but with a larger weight on price. The Measures for the Management of Government Procurement Demands willGeneral Equipmentproperty management services are classified as such procurement projects, and the purchaser should use the price as the awardcontractmain consideration. Some purchasers are not sensitive to price but sensitive to quality, that is, the purchaser has abundant funds and the quality of the target is extremely critical. For example, analytical instruments, medical equipment, core components, control systems, etc., should adopt a comprehensive scoring method. And the weight of the price factor can be lower.
Selection elements and evaluation methods of framework agreement procurement
According to Order No. 110, the evaluation methods in the first stage include the price priority method and the quality priority method. The price priority method is a review method in which only the target price is compared during the review, and the suppliers are ranked according to the target price. The best element is price. The price priority method and the lowest bid price method that has been reviewed in the Bidding and Bidding Law, the lowest bid price method that meets the procurement needs, quality and services in the Government Procurement Law of the People’s Republic of China, and the lowest bid price method in Order No. 87, all belong to The same kind of evaluation method. The quality priority method is a review method that does not compare prices but only compares quality, and sorts suppliers according to the quality of the target. The best element is quality. In practice, it can be understood that the quality priority method is a review method that reduces the weight of the price factor to zero in the comprehensive scoring method. The evaluation factors of the quality priority method include not only narrow quality factors, but also broad quality factors, that is, all factors related to quality. Target performance indicators, technical parameters, machining accuracy, after-sales service plan, service level, training, acceptance plan, delivery schedule, etc., can all be classified as quality factors. Order No. 110 does not stipulate the specific method of quality evaluation of the quality priority method. Therefore, the purchaser can quantify the quality factors into comparable parameters such as scores, grades, and coefficients, and sort them according to the total scores, total grades, and total coefficients. It can be seen that the price priority method and the quality priority method are comparison methods based on price preference or quality preference, and they have gone to two extremes among many possible comparison factors.
During the review of the price priority method, some suppliers that meet the minimum quality requirements and have the lowest price are shortlisted suppliers, and those that do not belong to the lowest price range are eliminated. Suppliers that do not meet the minimum quality requirements or exceed the maximum limit unit price are rejected and then eliminated.
During the evaluation of the quality priority method, the price factor usually has a unified standard. Several suppliers that meet the minimum quality requirements and have the highest quality evaluation are shortlisted, and the suppliers that do not belong to the highest quality evaluation are eliminated. Suppliers that do not meet minimum quality requirements are rejected and then eliminated.
The Optimal Logic of Framework Agreement Procurement
Compared with other procurement methods of government procurement, the biggest difference between the framework agreement procurement method is that the transaction is completed in two stages. The transaction is conducted in two stages, involving two-stage merit-based arrangements. Due to the different requirements for the two stages of closed framework agreement and open framework agreement in Order No. 110, this article will discuss them separately.
Optimal logic of closed framework agreement:
The Closed Framework Agreement involves competition in identifying shortlisted suppliers in the first phase. Items with government pricing and government-guided prices, as well as testing, experimentation and other instruments and equipment that have special requirements for quality, may adopt the quality priority method, and other projects should adopt the price priority method. The price priority method is the norm, while the quality priority method is a special case. Only projects that meet specific requirements can use the quality priority method.
The closed framework agreement adopts one of the three methods of direct selection, secondary bidding and sequential queuing when determining the transaction supplier in the second stage. The direct selection method is the main method to determine the second-stage transaction supplier. Except that the framework agreement has clearly adopted the method of secondary bidding or sequential queuing, the suppliers determined to be concluded in the second stage shall be directly selected from the shortlisted suppliers in the first stage. When the direct selection method is adopted in the second stage, the purchaser will definitely select the best supplier or product target among the shortlisted suppliers with comparable prices. The secondary bidding method is to select the suppliers who meet the bidding requirements from the shortlisted suppliers in the first stage to participate in the secondary bidding, and determine the supplier with the lowest quotation as the transaction supplier.
If the price priority method is adopted in the first stage, a number of suppliers that meet the requirements and the lowest price are selected to be shortlisted, then the direct selection method is adopted in the second stage, and the supplier with the best quality is selected from the suppliers with the lowest price and little difference. If the first stage adopts the quality priority method and selects several suppliers with the best quality, the second stage adopts the second bidding method, and selects the supplier with the best quality from the suppliers with the same price to complete the transaction. This method of selecting transaction suppliers is in line with the logic of the general public: choose the best quality when the price is comparable, and choose the lowest price when the quality is comparable, that is, “the first-stage price priority method + the second-stage direct selection method”, or “First-stage quality priority method + second-stage secondary bidding method”. The above methods can be summarized as “first choose cheap and then choose the best, or first choose the best and then choose the cheap”.
Of course, if the purchase quantity in the second stage is large enough to affect the price in the first stage, even if the price priority method is adopted in the first stage, the second stage can still use the second bidding method to select the transaction supplier.
The optimal logic of the open framework protocol:
The first stage of the open framework agreement is non-competitive. As long as the supplier meets the requirements of the framework agreement and the supplier puts forward audit requirements at any time, the solicitor should allow them to join the ranks of the shortlisted suppliers of the framework agreement. In the second stage of the open framework agreement, the supplier for the transaction is selected directly.
Although there is no competition when the supplier joins the open framework agreement, the price of the supplier will not be outrageous. The reason is that the shortlisted suppliers of the open framework agreement either have the characteristics of market monopoly and are in a strong position relative to the purchaser. ; Either the purchaser is composed of a large number of service objects such as natural persons or enterprises and institutions. There are so many natural persons or enterprises and institutions that it is difficult to uniformly organize the selection of transaction suppliers, or it should no longer designate service providers for service objects. At this time, the service object can choose the transaction supplier by “voting with their feet”. If the price of the shortlisted supplier is outrageous, no one will choose the transaction.
(The author is an expert of China Bidding and Bidding Association)
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(Article source: China Government Procurement News)