The Supreme Administrative Court rendered the 107-Pan-746 Decision of December 24, 2018 (hereinafter, the “Decision”), holding that If the entirety of the portion in a government procurement project that shall be performed by the contractor on its own under the original contract is performed by another supplier on behalf of the contractor, this would constitute a subcontract under the Government Procurement Law, but the internal relationship between the suppliers is not a pertinent issue.
According to the facts underlying this Decision, the Appellee conducted the “procurement project at issue” and a contract was finally awarded to the Appellant, with whom a service procurement contract (hereinafter, the “Contract at Issue”) was executed. The Appellee subsequently found, as a result of its investigation, that the Appellant had subcontracted the entirety of the portion of work the Appellant had agreed to perform to another party in violation of Article 65 of the Government Procurement Law. Therefore, the Appellee not only notified the Appellant to terminate the contract at issue with the performance bond forfeited but also informed the Appellant that this matter would be posted in the Government Procurement Gazette pursuant to Article 101, Paragraph 1, Subparagraph 11 of the same law. Dissatisfied, the Appellant brought an administrative action. After the original trial court dismissed the Appellant’s action, the Appellant appealed.
According to this Decision, the gist of Article 65, Paragraph 2 of the Government Procurement Law indicates that as long as the entirety of the portion which should be performed by the contractor on its own under the original contract is performed by another supplier, this would constitute a “subcontract” under Paragraph 1 of the same article. As for the internal relationship between the bid winner and such other supplier who performs the contract on its behalf as well as the plurality of the suppliers performing the contract on behalf of the original contractor, they are not pertinent issues. Therefore, now that the original decision held that the Appellant had subcontracted performance objects such as the transportation and uploading of rice stipulated under the Contract at Issue to another party, there was no need to explore if the subcontract constitutes any important portion of the Contract at Issue. Even if the Appellant did engage in communication with the rice supplier and notify the subcontractor of when and where the delivery should be made, such act was actually required of the implementation of the subcontract and could hardly be regarded as an act conducted by the contractor on its own to perform the Contract at Issue. Therefore, since the original disposition was deemed legal, the Appellant’s appeal was dismissed.