Laws of the Guangdong Province

Rules of the Shenzhen Municipality on Prevention of Contracting-out, Illegal Subcontracting and Affiliating in Construction Projects

(Deliberated and adopted at the 33^rd Executive Meeting of the Third Session of the Shenzhen Municipal People' s Government, and promulgated on July 27, 2001)

Chapter I General Provisions

       Article 1 In order to strengthen the administration of construction projects, prevent contracting-out, illegal subcontracting and affiliating in construction projects, maintain and improve the market order, these rules are hereby formulated in accordance with Law of the People' s Republic of China on Construction, the State Council' s Regulations on the Administration of the Quality of Construction Projects, and other related laws, regulations, and in the light of the practical conditions of the Shenzhen City.

       Article 2 These rules shall apply to construction of houses and their auxiliary facilities, installation of accessory lines, pipelines and equipments, decoration and fitting-up, construction and installation of urban infrastructural facilities, and other construction activities of construction projects.

       Article 3 The administrative departments in charge of construction shall be responsible for unitary supervision and administration of contracting-out, illegal subcontracting, and affiliating acts in construction projects, the departments in charge of the related industries and the units in these industries shall provide support and assistance.

       Anyone shall have the right to inform against contracting-out, illegal subcontracting, and affiliating acts in construction projects, the administrative department in charge of construction shall take up the case and investigate and deal with it accordingly, and notify the informer of the result of the investigation and punishment.

Chapter II Determination of Contracting-out, Illegal Subcontracting, and Affiliating Acts

       Article 4 The following acts shall be determined as contracting-out acts:

(1)   after contracting a construction project, the contractor unit has failed to perform agreed duties and obligations according to the contract and contracted out the entire contracted construction project to others;

(2)   after contracting a construction project, the contractor unit has failed to perform agreed duties and obligations according to the contract, dismembered  the entire contracted construction project and then contracted out separately to other units in the name of subcontracting;

(3)   the other acts of contracting out construction projects prescribed by laws, regulations, and rules.

If a contractor unit has failed to send a team of project management for its

contracted construction or the number of its technological and managerial personnel is apparently lower than a normal level, it shall be dealt with as contracting-out acts.

       Article 5 The following acts shall be determined as illegal subcontracting acts:

(1)   a general contractor unit has subcontracted a project to the units which do not have appropriate qualifications;

(2)   when there is no agreement in a general contract and there is no approval from a construction unit, the contractor unit has contracted out part of its contracted construction project to other units for completion;

(3)   a general contractor unit undertaking construction has subcontracted the principal part of the project to other units for construction;

(4)   a subcontractor unit has subcontracted its contracted construction project;

(5)   the other illegal acts to subcontract construction projects prescribed by laws, regulations, rules.

Article 6 The following acts shall be determined as affiliating acts:

(1)   allowing others to contract projects in the name of this unit through leasing, loaning its qualification certificate or charging administration fees, etc.;

(2)   the units, individuals without qualification certificates or the units of lower qualifications, through various channels or in various ways, use the name of the units, which have qualification certificates or higher qualifications, to contract projects.

Article 7 If there is one of the following situations, it shall be dealt with as

affiliating acts:

(1)    the agreed unit in charge of construction according to a contract has no proprietary relationship with the unit actually doing construction on the spot;

(2)    the agreed unit in charge of construction according to a contract and the unit actually doing construction on the spot have no unitary financial management;

(3)    the agreed unit in charge of construction according to a contract has no legal relationship with the project manager and core engineering managerial personnel in respect of personnel transfer, appointment and removal, engagement, and social insurance;

(4)    the agreed unit in charge of construction according to a contract has no legal relationship with the workers on the spot of construction in respect of construction labor recruitment and social insurance.

Chapter III Responsibilities of a Unit in Charge of Construction

       Article 8 A unit in charge of construction shall strengthen internal management, prohibit any form of contracting-out, illegal subcontracting and affiliating acts relating to a construction project.

       Article 9 A unit in charge of construction shall not sign with a construction unit and execute a contract concerning the same construction project which is inconsistent with the project contract reported to the administrative department in charge of construction for record.

       Article 10 When undertaking a construction project, a unit in charge of construction shall provide a performance guarantee for the unit contracting out the construction project; a general contractor unit may require the subcontractor units to provide performance guarantees.

       Article 11 A unit in charge of construction shall go through the formalities of labor recruitment, social insurance according to law, and supervise and urge the subcontractor units to do so, supervise and stop the subcontractor units from contracting-out, illegal subcontracting, and affiliating acts. If it is found that a subcontractor unit has got into contracting-out, illegal subcontracting, and affiliating acts, the construction unit and the administrative department in charge of construction shall be informed immediately.

Chapter IV Responsibilities of a Construction Unit

       Article 12 A construction (supervision) unit shall supervise and urge units in charge of construction to go through the formalities of labor recruitment, social insurance, supervise and stop units in charge of construction from contracting-out, illegal subcontracting, and affiliating acts. If it is found that a unit in charge of construction has got into contracting-out, illegal subcontracting, and affiliating acts, the administrative department in charge of construction shall be informed immediately.

       Article 13 A construction unit shall not designate subcontractor units for partitioned, itemized or specialized projects of a contract by which a general contractor has undertaken construction.

       It shall be prohibited to practice fraud in invitation to bid and submission of bids, to select a unit in charge of construction in secret while inviting to bid in public, or to collude with a unit in charge of construction in contracting out a project or constructing by affiliation.

       Article 14 It shall be prohibited to dismember a project for contracting-out. A construction unit shall not divide a construction project, which should be completed by one contractor unit, into several parts and contract them out to different contractor units.

       Article 15 A construction unit shall not sigh with a unit in charge of construction and execute a contract concerning the same construction project which is inconsistent with the project contract reported to the administrative department in charge of construction for record. When applying for a construction permit, the construction unit shall report the contract for undertaking the project to the administrative department in charge of construction for record.

       Article 16  A construction unit shall not ask a unit in charge of construction to pay for construction or force the contractor to offer a bid below the actual cost.

       Article 17 When signing a contract for undertaking a project with a unit in charge of construction, a construction unit shall provide for the unit in charge of construction a guarantee to pay for the project.

Chapter V Legal Liabilities

       Article 18 If a unit in charge of construction has violated Article 8 by contracting-out or illegal subcontracting, the administrative department in charge of construction shall order correction, impose a fine of more than 0.5% but less than 1% of the contract price; stopping business for rectification, reduction of the qualification level, and confiscation of illegal earnings may also be ordered according to the related laws, regulations.

       Article 19 If a unit in charge of construction has violated Article 8 by affiliating, the administrative department in charge of construction shall order correction, impose a fine of more than 2% but less than 4% of the contract price; the stop of business for rectification, reduction of the qualification level, and confiscation of illegal earnings may also be ordered according to the related laws, regulations.

       Article 20 All the illegal acts of a unit in charge of construction shall be recorded by the administrative department in charge of construction as a basis to do annual inspection of qualifications.

       Article 21 If a construction unit has violated Article 13 by designating subcontractor units, selecting a construction unit in secret while inviting to bid in public, or colluding with a unit in charge of construction in contracting-out a project or constructing by affiliation, the administrative department in charge of construction shall order correction, and impose a fine of more than 0.5% but less than 1% of the contract price of the project which has been subcontracted by designation or contracted out, affiliated for construction. The construction unit shall make reshuffle and rearrangements for the management team of the project.

       Article 22 If a construction unit has violated Article 14 by dismembering a project for contracting-out, the administrative department in charge of construction shall order correction, and impose a fine of more than 0.5% but less than 1% of the contract price of the project.

       Article 23 If a construction unit has violated Article 15 by forcing a contractor to undertaking a project below the actual cost, the administrative department shall order correction, and impose a fine of more than 200,000 but less than 500,000 RMB; in case of asking a unit in charge of construction to pay for construction, a fine of more than 0.5% but less than 1% of the sum which has been paid shall be imposed.

       Article 24 If the person in charge of a construction unit and other directly responsible persons have taken acts in violation of laws, discipline, and need the administrative sanction, the sanction shall be imposed according to law.

       Article 25 If there is violation of these rules and circumstances are serious enough to constitute a crime, the criminal responsibility shall be investigated into by the judicial offices according to law.

Chapter VI Supplementary Provisions