August 2017
If it is not true that a bid winner has no intention to participate in the tender, but it merely entrusts the entirety or major portion of the original procurement contract to be performed by other suppliers after the bid award, such behavior is contract assignment rather than license borrowing. Therefore, the bid bond is not recoverable(Taiwan)
Angela Wu
The Supreme Administrative Court rendered the 105-Pan-323 Decision of June 22, 2016 (hereinafter, the "Decision"), holding that since entrusting the entirety or major portions of the original procurement contract to be performed by other suppliers is contract assignment, not license borrowing, the bid bond is not recoverable.
In this Decision, the Appellant participated in the procurement tender organized by the Appellee, was awarded the contract and finished the performance of the contract. The Appellee subsequently believed that the Appellant had allowed another party to borrow its company's name or license to participate in the tender of the procurement project at issue and notified the Appellant via the original disposition that the NT$8 million bid bond for the procurement project would be recovered since the Appellant was subject to Article 31, Paragraph 2 of the Government Procurement Law. Dissatisfied, the Appellant brought this administrative action.
According to this Decision, the so-called "permitting another party to participate in a tender by borrowing its name or license" (known as "license borrowing") means that the supplier does not intend to participate in a tender but is simply willing to permit another party to participate in the tender by borrowing its name or license, the bid bond should be forfeited or recovered; if it is not true that the supplier does not wish to participate in the tender and the supplier only entrusts the entirety or the main portions of the original procurement contract to be performed by another supplier on its behalf, that is an act of contract assignment, not license borrowing. The procuring agency can only rescind or terminate the contract or forfeit the bond, request joint and several performances, and seek damages, but cannot recover or withhold the bid bond. If it is not the contract assignment mentioned above and only part of the contract is performed by another supplier, it is subcontracting, which is permitted by law.
It was further pointed out that the Appellant asserted in the original trial that it actually had worked with the company who was not a party to this lawsuit under subcontracting relations and submitted the contract between them. In addition, the bid bond in this case was paid by the Appellant, which suggests that this was not simply a relationship of license borrowing. After such company collapsed halfway through the project, the Appellant singlehandedly completed the project. Therefore, the original trial court should have but did not carefully investigate whether the relationship between the Appellant and the company which was not a party to this case was license borrowing or contract assignment or subcontracting and upheld the original disposition only based on the prosecutor's indictment and the first-instance decision. Since the original decision was rendered rashly, it was reversed and remanded.
The Supreme Administrative Court rendered the 105-Pan-323 Decision of June 22, 2016 (hereinafter, the "Decision"), holding that since entrusting the entirety or major portions of the original procurement contract to be performed by other suppliers is contract assignment, not license borrowing, the bid bond is not recoverable.
In this Decision, the Appellant participated in the procurement tender organized by the Appellee, was awarded the contract and finished the performance of the contract. The Appellee subsequently believed that the Appellant had allowed another party to borrow its company's name or license to participate in the tender of the procurement project at issue and notified the Appellant via the original disposition that the NT$8 million bid bond for the procurement project would be recovered since the Appellant was subject to Article 31, Paragraph 2 of the Government Procurement Law. Dissatisfied, the Appellant brought this administrative action.
According to this Decision, the so-called "permitting another party to participate in a tender by borrowing its name or license" (known as "license borrowing") means that the supplier does not intend to participate in a tender but is simply willing to permit another party to participate in the tender by borrowing its name or license, the bid bond should be forfeited or recovered; if it is not true that the supplier does not wish to participate in the tender and the supplier only entrusts the entirety or the main portions of the original procurement contract to be performed by another supplier on its behalf, that is an act of contract assignment, not license borrowing. The procuring agency can only rescind or terminate the contract or forfeit the bond, request joint and several performances, and seek damages, but cannot recover or withhold the bid bond. If it is not the contract assignment mentioned above and only part of the contract is performed by another supplier, it is subcontracting, which is permitted by law.
It was further pointed out that the Appellant asserted in the original trial that it actually had worked with the company who was not a party to this lawsuit under subcontracting relations and submitted the contract between them. In addition, the bid bond in this case was paid by the Appellant, which suggests that this was not simply a relationship of license borrowing. After such company collapsed halfway through the project, the Appellant singlehandedly completed the project. Therefore, the original trial court should have but did not carefully investigate whether the relationship between the Appellant and the company which was not a party to this case was license borrowing or contract assignment or subcontracting and upheld the original disposition only based on the prosecutor's indictment and the first-instance decision. Since the original decision was rendered rashly, it was reversed and remanded.
