July 2022
Luke Hung and Sally Yang
In view of complaints from construction associations that home isolation due to epidemic quarantine during the outbreak of the COVID-19 pandemic has resulted in shortages of personnel, undermined the attendance of work or site work, and created the issue that the critical paths of a project cannot proceed normally. The Public Construction Commission (hereinafter, the “PCC”) issued the Gong-Cheng-Guan-1110008961 Circular of May 5, 2022 (hereinafter, the “Circular”) to explain how this issue should be addressed.
According to the PCC, since Taiwan is currently not under Level 3 epidemic alert and relevant epidemic control measures have been properly relaxed, it is still difficult to address this issue in a general manner as different types of projects in different counties or cities in Taiwan are subject to different impact from the epidemic. Although the PCC formulated the Methods for Handling the Delay or Suspension of Public Construction Projects to Accommodate Severe Pneumonia with Novel Pathogens (hereinafter, the “COVID-19 Delay or Suspension Measures”) on June 18, 2021, still the circular applies only during Level 3 epidemic alert.
For the “methods of handling individual site cases,” the explanation of the Circular is highlighted below:
1. The contractor may produce extension evidence for verification and determination by the procuring agency.
On March 6, 2009, the PCC issued the Gong-Cheng-Qi-1090100202 Circular of March 6, 2020, stating that since the Essential Requirements for Procurement Contracts prescribed by the PCC specifies: “if the procuring agency or the contractor is unable to perform the contract on time due to force majeure such as a natural disaster or an incident or for reasons not attributable to the parties to the contract, the performance period may be extended; and if performance becomes impossible, the liability under the contract may be exempted.” Relevant provisions are also included in the relevant model procurement contracts, and contractors may apply to the procuring agency for an extension of the performance period on such a basis.
Therefore, if a manufacturer encounters problems such as labor impact and delay in material delivery in the implementation of public works, it can refer to the above-mentioned circular and the contractual requirements in that particular case, and attach relevant evidence to its application for an extension, which should be verified and determined by the procuring agency.
2. The procuring agency should set up a procurement work and review team to help with a determination.
If it is not easy to determine the degree of impact or it is not easy for the contractor to provide evidence (e.g., entry of foreigners, labor shortages, delay in material replenishment, epidemic prevention measures affecting the work rate, etc.), the procuring agency should be requested to establish a procurement work and review team in accordance with Article 11-1 of the Government Procurement Act and the Regulations Governing the Organization and Operation of the Working and Evaluation Group of Procurement by Entities to assist by providing consultation on the handling of such controversies or disputes and to avoid making a judgment by a single official-in-charge.
3. In addition, the PCC has established a public construction consultation mechanism, which can help clarify and resolve the differences in the perception of contract provisions between the procuring agency and the contractor or apply for dispute mediation pursuant to applicable requirements.
In addition, this Circular also indicated that for “the handling of common sites,” reference can be made to the relevant guidelines issued by the Central Epidemic Command Center, such as the Guidelines for Continuous Operation of Enterprises in Response to the Severe Pneumonia with Novel Pathogens (COVID-19) Epidemic, and the Recommendations on the Contingency Handling of Essential Operations of Various Agencies (Organizations) and Enterprises in Support of Epidemic Prevention and Control to Maintain the Normal Functioning of Society, etc.
Summary
Since the epidemic situation in Taiwan has not reached Level 3 epidemic alert this year, there is no room for applying the COVID-19 Delay or Suspension Measures previously prescribed by the PCC. As the PCC clearly indicated in this Circular, the issue of the inability to proceed with the critical paths of a project normally due to epidemic control quarantine during the outbreak of the epidemic should be addressed by applying the provisions on force majeure as stipulated in the procurement contract. Such a handling approach will increase the uncertainty of a contractor’s extension application. For the avoidance of doubt, contractors are advised to prepare complete written evidence as much as possible and clarify the affected project items and the number of days of the affected critical paths of a project to facilitate their application to the procuring agency for a construction extension or mediation.