The “cheapest wins” trap in government procurement
In government procurement of agency services, “pick the cheapest” used to be the norm—but low-price awards often failed to guarantee quality. China’s National Intellectual Property Administration (CNIPA) and the Ministry of Finance jointly issued the Trial Government Procurement Standards for Patent and Trademark Agency Services, shifting the lever from the demand side: capping the price-factor weight at 10%–15% so that “competing on quality” replaces “competing on price”.
1. Why the Standards were issued
IP agency is the core of the IP service industry. China has over 6,000 patent agencies and more than 41,000 trademark agencies, with agency rates around 90% for domestic patent and trademark filings. Yet the sector suffers from low-price competition, imprecise requirements and unreasonable pricing. The Standards implement the State Council’s 2023–2025 patent-commercialization action plan, which calls for “a quality-oriented bidding mechanism for patent agency and other services,” and were officially issued on 26 December 2024.
2. Approach: “one orientation, three sets of standards”
Quality orientation
Quality through fair price: the price-factor weight is set at 10%–15% of the total score, steering procurement from price to quality.
Quality through precision: procurers are encouraged to define service content and quality requirements by type, importance and deadline, and to strengthen acceptance management.
Three sets of standards
Service content and quality standards; agency and personnel requirements; and reference standards for performance evaluation.
3. Seven parts of the Standards
They cover instructions for use, procurement items, service content and quality standards, agency and personnel requirements, commercial terms, government-procurement policies to implement, and reference performance-evaluation standards.
Service content & quality: general requirements on compliance, timeliness, confidentiality, conflict of interest, document management and complaint handling; a list specifying content, quality, document and deadline requirements for each service type.
Agency & personnel: requirements on qualification, credit rating, competency and stability; team leaders, patent attorneys, trademark agents and process staff must meet experience, credit and language standards.
Performance evaluation: three dimensions—credit & stability, service quality, service experience—with data indicators such as grant rate, rejection rate, deemed-withdrawal rate and invalidation-success rate.
4. What procurers and agencies should watch
Procurers: refine requirements, make acceptance rigorous, and base evaluation on data, selecting agency services that truly protect innovation through “quality for a fair price.”
Agencies: shift from “lowest price” to “quality + team,” build credit and service-data assets, and win projects on professional capability.
FAQ
Q: Why is the price weight set at 10%–15%?
A: To steer procurement from “price wins” to a quality orientation, ensuring fair price for quality and avoiding low-price/low-quality awards.
Q: Which procurements do the Standards apply to?
A: Government-procurement projects of patent and trademark agency services funded by fiscal money; procurers may adjust content and indicators as needed.
Q: What does performance evaluation look at?
A: Credit and stability of the agency and staff, service quality, and service experience, with data indicators such as grant rate, rejection rate and invalidation-success rate.
Q: How should agencies respond?
A: Strengthen team qualification and stability, improve service-data performance, and win government projects through “quality for a fair price.”
Related tools & services: Zhihai Tools (patent form-check); Free Patent Annuity Monitoring; Trademark Class Lookup.
This article introduces the intellectual property system of the People’s Republic of China (China); please refer to the latest official regulations for specifics. It is provided for general information only and does not constitute official interpretation or legal advice.
Source: Interpretation by China’s National Intellectual Property Administration (CNIPA) and the Ministry of Finance on the Trial Government Procurement Standards for Patent and Trademark Agency Services (2025-01-17). Original: CNIPA.