A Study On The Building Of Trust Mechanism In China’s Government Procurement

The experimental work of Chinese government procurement began in the middle of1990s in last century, and in2002, the Government Procurement Law of the People’sRepublic of China came into practice, which marked the formal establishment of theChinese government procurement system. Following the expansion of the governmentservice function and the rapid development of the economy, the importance of governmentprocurement, which is one of the basic management means of public financial expenditures,has been becoming more and more prominent. In addition to the basic function ofproviding public goods, government procurement also serves as the tool to achieve the goalof social policy. Without the general public’s trust in the government and its procurementsystem, as well as the trust between the parties involved in the procurement, governmentprocurement can not perform its functions very well. After a decade of development, wehave achieved some success in the government procurement, but at the same time, we mustrecognize that there are still many problems, which results in serious trust crisis in this area.The distrust among the parties will increase the procurement cost and reduce theprocurement efficiency, which makes it impossible to save public funds through thegovernment procurement. Also, the government procurement trust has a close relationshipwith the government trust. The trust crisis in the government procurement will certainlylead to the government trust crisis. The general public’s distrust of the governmentprocurement as a whole, in essence, means that they doesn’t trust the government, whichwill raise doubts about the legitimacy of the government. At present, our governmentprocurement system has suffered grievous criticism for its trust problems. So it is of greattheoretical and practical significance to give a full and systematic analysis of the trustproblems in the government procurement realm, to find out the root cause of trustproblems, and then to propose methods to solve the trust crisis.In order to study the trust problem in the government procurement, we should firstgive an overall review of the trust theory, and then analyze the function of the trust, as wellas finding out the trust generative mechanism. Based on that, this paper proposes to discussthe trust problem at micro-, meso-and macro-levels. The trust at the micro-level has beengenerated from personality characteristics, interpersonal communications and rational calculation in the special social situation; the trust at the meso-level means trust of theabstract system and the regime; and at the macro-level, it is mainly from the point of moraland culture to explain the cause of trust. This paper also proposes innovatively that trust isthe self-balance mechanism for maintaining the cooperative order.On the one hand, the trust problem in government procurement relates to thereliability of the government procurement system itself, on the other hand, it relates to thetrust between the various parties involved under the system of regulations. The reliabilityof the system itself derives from its uniformity, scientificity and authority. But there aremany conflicts between Government Procurement Law of the People’s Republic of Chinaand Law of the People’s Republic of China on Bid Invitation and Bidding, which makesthe reliability of the system in question. The trust relationship in the field of governmentprocurement is very complicated. If only there is principle-agent relationship, there mustbe the trust relationship between the client and the agent. Since there is a longprinciple-agent chain in the field of government procurement, so there exist many trustrelationships between each other, for example, general public’s trust in government,department of finance’s trust in the centralized procurement institution, procuremententity’s trust in social intermediary organizations, etc. The macro-level trust in thegovernment procurement means the general public’s trust in the government procurementsystem and their trust in the government as the regulator of the government procurement.And the micro-level trust or trust at the practical level in the government procurementmeans the trust relationships among the parties involved in the procurement, such asgovernment as the purchasing entities, including government procurement staff and the bidevaluation committee, which is a temporary organization, procurement agencies andsuppliers. After fully analyzing influencing factors of trust in government procurement andtheir status quo, this paper gives an overall study of the direct causes for the lack of trust,and then proposes that the market-oriented trend in the government procurement is theleading cause of the trust crisis in the field of government procurement. The governmentprocurement authority, as one of the administrative powers of the government, should beexercised by the government. If the government itself cannot exercise its power well, howcould we expect the social intermediary organization, as a private body for its end ofmaximizing profits, to reasonably use the public funds? And how could we guarantee thegovernment effectively supervises the exercise of the procurement authority which theydelegate? In fact, the market–oriented trend in the government procurement means thewithdrawal of government responsibilities. Only by rebuilding a responsible, clean, opengovernment and a government by law can we resume the public trust in the government, and improve the government credibility so as to establish and maintain the public trust inthe government procurement.The key of rebuilding the micro-level trust mechanism in government procurement isto set up a scientific and appropriate system and to ensure its implementation. Throughcomparative research on the UNCITRAL Public Model Law on Procurement (ML), theWTO Government Procurement Agreement (GPA), the Directive2004/18/EC of theEuropean Parliament and of the Council of31March2004on the Coordination ofProcedures for the Award to Public Works Contracts, Public Supply Contracts and PublicService Contracts, and the Federal Acquisition Regulation of America (FAR), the paperdiscusses from two aspects to reconstruct the micro-level trust relationships between theprocurement parties in our government procurement field: the structural elements of thegovernment procurement system and the acquisition process. From the structural elements,it includes scientifically defining the scope of the procurement entity, making sure ofqualifications of the suppliers, improving the professional ethics, skills of the procurementofficers and etc., to improve the credibility of the procurement bodies. The crux lies inbuilding various kinds of external trust safeguard mechanisms based on the control of theacquisition process and the guarantee of the integrity behavior of purchasing parties. So thepaper argues that we should set up eight mechanisms from three aspects, namely,restricting the behavior of the procurement entity, taking disciplinary action againstdishonesty and cultivating credibility, for building the trust relationship. Those eightmechanisms include power check-and-balance mechanism, avoidance interest conflictmechanism, effective competition mechanism, administrative accountability mechanism,administrative remedy and compensation mechanism, information disclosure mechanism,credibility cultivation mechanism and rights relief mechanism.