Chinese Academy Audit Finds No Link Between Price and Quality in Local Government Procurement
Yicai Global
/SOURCE : Yicai
Chinese Academy Audit Finds No Link Between Price and Quality in Local Government Procurement

(Yicai Global) Jan. 17 -- An audit conducted by a Chinese think tank has found no correlation between price and quality in local government procurement.

"Transaction prices have always been a core critical object in government procurement," states a report published yesterday by the Institute of International Law of the Chinese Academy of Social Sciences (CASS). "However, our assessment concludes that problems of noncorrelation between prices and quality grades in government procurement still arise."

The report shows that not only do procurement prices for the same goods vary greatly in different areas, but even in the same area at the same time. Furthermore, instances where low-grade products are more expensive than high-grade ones of the same series and brand also frequently occur.

The report cites the example of a high-grade Lenovo Think Centre M8500T-D231 model desktop system bought in July 2015 during central government bulk procurement at a unit price of CNY4,530 (USD675), whereas, a low-grade Think Centre M4500t-D305 sourced in another city was priced at CNY4,930. At the same time, a Think Centre M6500t procured in the supply agreement of a provincial government came stickered at CNY5,414 per unit.

The inherently public nature of government procurement means that unregulated behavior or corruption greatly impacts the public interest and the credibility of government procurement, the report said. Hence, disclosing this procurement information is crucial.

The audit found four problems in procurement information disclosure. First, disclosure platforms lack uniformity and their information is fragmentary. Second, governments fail to prudently perform their disclosure information. Third, the information many local governments do disclose is not readily accessible. Fourth, the disclosure of project information based on a supply agreement method is also unsatisfactory.

The evaluators recommend bolstering consciousness of procurement information disclosure, as is regulating and simultaneously further transparentizing government procurement, furthering the construction of disclosure platforms, promoting their standardization and establishing strict public review, auditing and accountability mechanisms.

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