GOVERNMENT PROCUREMENT LAW AMENDED

03/01/2002

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On 16 January 2002, the Legislative Yuan gave its third reading to an amendment to the Gov-ernment Procurement Law, which came into force on 6 February 2002. Thirty-three articles of the law were revised, one article repealed, and five new articles added. The main points of the amendment are as follows:

Increasing Procurement Efficiency

To increase the procurement efficiency, the amendment repealed various provisions that re-quired procuring entities to seek prior approval from their superior agencies for certain actions. Such provisions include Article 12 regarding selective tendering procedures, Article 22 re-garding restricted tendering procedures, Para-graph 1, Article 24 regarding turnkey procure-ment, Paragraph 1, Article 25 regarding permis-sion for joint tendering, Paragraph 3, Article 34 regarding the announcement of base price in tendering documentation, and Paragraph 2, Ar-ticle 48 regarding shortened time limits for sec-ond invitations for tender.

Emphasizing Flexibility

In Article 20, a new Item 5, "research and de-velopment matters," is added to the list of circumstances under which a procuring entity may apply the selective tendering procedures.

Three new items are added to Article 22, which defines the circumstances under which pro-curing entities may apply the restricted ten-dering procedures: Item 13, commissioning natural persons or academic or nonprofit or-ganizations to conduct research and devel-opment relating to science and technology, technology transfer, or administrative or aca-demic matters; Item 14, cultural or artistic procurements; and Item 15, procurement for resale and not for the procuring entity's own use.

In Article 28, the provisions that the time limit for submission of tenders for a first invitation for tender must be at least 14 days, and that the invitation for tender must be continuously displayed at the entrance to the procuring en-tity's premises, are repealed. In Paragraph 1, Article 48, the minimum time limit for a sec-ond invitation for tender after a first tendering proceeding was abandoned because of less than three suppliers, is also repealed.

In Paragraph 1, Article 30, a new Item 4, "where according to transaction practices or the procurement nature, it is unnecessary or impossible to collect a bid bond or perform-ance bond," is inserted as a further reason for a supplier to be excused from depositing a bid bond or performance bond. In Paragraph 2, Article 30, the provisions defining acceptable means of providing bid bonds and perform-ance bonds are relaxed: a promissory note, check or fixed-term deposit certificate may be issued by any financial institution, instead of only a bank; and "postal money order" is newly added as an acceptable form.

Paragraph 2, Article 37 now provides that a bank guarantee or insurance policy, under which the bank or insurance company as-sumes joint and several liability for perform-ance and compensation, may be given in place of a supplier's meeting the financial qualifica-tion criteria specified in the invitation for tender.

In line with the development of electronic commerce, a new Article 93-1 is added to al-low procurement to be conducted electroni-cally.

Ensuring Fairness of Procurement Proce-dures

In Paragraph 1, Article 50, a new Item 5, "there is major and abnormal similarity in the content of tendering submission between different suppliers" is inserted into the list of circum-stances under which a supplier may be ex-cluded from tender opening or award of con-tract.

A new Paragraph 5 is added to Article 87, to penalize the submission of tenders in the name of another person, or using another person's identity documents, or permitting another person to submit a tender in one's own name or using one's identity documents.

The application scope of Paragraph 1, Article 88, the anti bid-rigging provision, is broad-ened. The persons to whom this provision applies now include reviewers and supervisors for the procuring entity; the items to which this provision applies now include specifica-tions; and the actions to which this provision applies are no longer limited to attempts at bid rigging by manipulating the tender documents, but now cover illegal restrictions or reviews imposed on suppliers in respect of perform-ance-related matters, at the contract perform-ance stage.

In Paragraph 1, Article 101, which defines grounds for blacklisting a supplier in the Government Procurement Gazette, Item 2 is expanded to include using another person's name or identity documents, and using forged or improperly altered documents in the con-clusion or performance of a contract. A new Paragraph 2 provides that Paragraph 1 also applies to a supplier who provides a guarantee assuming joint and several liability with the contracted supplier for the performance of the contract, when instructed by the procuring entity to fulfill its obligations under the guar-antee.

Revising Dispute Resolution Procedures

The original Article 69 (repealed) regarding mediation of disputes over contract perform-ance, are now incorporated into Chapter 6, "Dispute Resolution", which provides that protest and complaint procedures only apply to disputes concerning the process of invita-tion for tender, tender review, or award of contract. Disputes regarding contract per-formance should be resolved through media-tion procedures. A new provision designed to boost the effectiveness of mediation requires that if a procuring entity intends to reject recommendations produced by mediation, or to reject a mediation plan, it must seek prior approval from its superior agency, and must state its reasons in writing to the Complaint Review Board and the supplier.

It is explicitly provided that the statutory time limits for filing protests and complaints run from the next day of the event giving rise to such protests and complaints. The time limit for an agency to respond to a protest is re-duced to 15 days.

The provision that a decision by the Complaint Review Board may be deemed equivalent to a mediation plan, is repealed.