In case the tender instructions do not specify the reasons why a bid bond will not be returned or will be recovered, even if a supplier is subject to circumstances under the subparagraphs of Article 31, Paragraph 2 of the Government Procurement Law, the procuring agency shall still not withhold or recover the bid bond (Taiwan)

2019.1.31
Luke Hung

The Supreme Administrative Court rendered the 108-Pan-50 Decision of January 31, 2019 (hereinafter, the “Decision”), holding that in case the tender instructions do not specify the reasons why the bid bond will not be returned or will be recovered, even if a supplier is subject to circumstances under the subparagraphs of Article 31, Paragraph 2 of the Government Procurement Law, the procuring agency shall still not withhold or recover the bid bond.

According to the facts underlying this Decision, the Appellee participated in the procurement project at issue conducted by the Appellant and was subsequently found by a district prosecutors office as a result of its investigation to have violated the provision of the last part of Article 87, Paragraph 5 of the Government Procurement Law, which provides: “…this shall also apply if another person is allowed to borrow the name or papers of the principal to participate in a tender.”  The Appellee was also subject to a deferred prosecution disposition.  Therefore, the Appellant recovered the bid bond of NT$1.39 million posted by the Appellee via the original disposition in accordance with Article 31, Paragraph 2, Subparagraph 2 of the Government Procurement Law.  Dissatisfied, the Appellee brought an administration action pursuant to applicable procedures.  The original trial court subsequently ruled in favor of the Appellee and set aside the original disposition.  Dissatisfied, the Appellant filed this appeal.

Article 30, Paragraphs 1 and 3 of the Government Procurement Law provides: “(Paragraph 1) A procuring agency conducting a tender shall stipulate in its tender documents that the bidders should pay a bid bond…(Paragraph 3) The types, amounts and payment, return and manners of termination of the bid bonds, deposits and other types of guarantee shall be set by the competent authority.” In addition, “…under Article 30, Paragraph 1 and the first part of Article 31, Paragraph 1 of the Government Procurement Law, a procuring agency conducting a tender is required to stipulate in the tender documents that all bidders are required to post a bid bond and return the bid bonds without interest to bidders who are not awarded the contract.  Therefore, bid bonds posted by bidders are used to guarantee smooth procurement by the procuring agency and to ensure the fairness of the tender.  To ensure thorough implementation of the requirements, Article 31, Paragraph 2 of the Government Procurement Law provides that the bid bond will not be returned or will be recovered if it has been returned in any of the circumstances set forth in the tender documents…” (compare a resolution adopted during the Court’s First Joint Meeting of Chief Judges in November 2013).

Therefore, according to this Decision, the above requirements and explanation show that a procuring agency may withhold or recover a bid bond only when the bidder is subject to any statutory circumstance under the subparagraphs of Article 31, Paragraph 2 of the Government Procurement Law and it has been stipulated by the procuring agency in the tender documents that the bid bond will not be returned or will be recovered if it has been returned under such circumstances.  If the tender instructions do not specify the reasons why the bid bond will not be returned or will be recovered, even if a supplier is subject to circumstances under the subparagraphs of Article 31, Paragraph 2 of the Government Procurement Law, the procuring agency shall still not withhold or recover the bid bond.

It was further pointed out in this Decision that since the Appellant for this matter had failed to substantiate that it was indeed stipulated in the tender documents that the bid bond would not be returned and would be recovered if it had been returned, even though the Appellee was subject to any circumstance set forth in the subparagraphs of Article 31, Paragraph 2 of the Government Procurement Law, the Appellant still should not recover the bid bond posted by the Appellee, and the determination on the complaint review, objection handling results and the original disposition were reversed.  Since there was no legal violation, the appeal was dismissed.