May 2017
Where procurement is conducted by a juristic person or organization subsidized by the government, if the subsidy meets relevant statutory criteria, the contractors are required to hire indigenous peoples during the performance of the contract, regardless of whether the subsidy is used for the public(Taiwan)
2017.2.23
Luke Hung
The Supreme Administrative Court rendered the 106-Pan-83 Decision of February 23, 2017 (hereinafter, the "Decision"), holding that where procurement is conducted by a juristic person or organization subsidized by the government, if the subsidy meets relevant statutory criteria, the contractors are required to hire indigenous peoples during the performance of the contract, regardless of whether the subsidy is used for the public.
According to the facts underlying this Decision, Company A was awarded a contract for a procurement project titled "Five-year Savings Insurance and Career Transition Subsidies for Computer-based Lottery Distributors" and organized by Taiwan Lottery (hereinafter, the "Procurement at Issue"). However, since the number of the indigenous peoples as hired failed to meet the requirement under Article 12, Paragraph 1 of the Law for Protecting the Employment Rights of Indigenous Peoples, the Council of Indigenous Peoples rendered the original disposition to compel the Appellee's payment of an indigenous peoples' employment fund. Dissatisfied, Company A brought the administrative action to set aside the original disposition pursuant to applicable procedures and prevailed in the first instance decision. As a result, the Council of Indigenous Peoples filed this appeal.
According to the Decision, a government's subsidy to a juristic person or organization for a procurement project is mostly provided for public interest. If the amount of such subsidy accounts for over half of the procurement amount and exceeds an announced monetary threshold, the juristic person or organization is required to follow the procedures and substantive requirements of the Government Procurement Law in handling procurement. Therefore, a contractor which is awarded a procurement contract is required to comply with Article 98 of the Government Procurement Law and Article 12 of the Law for Protecting the Employment Rights of Indigenous Peoples, and if its total number of employees in Taiwan is greater than 100, indigenous peoples should be employed during the performance of the contract, and the number employed should not be lower than one percent of the total work force. In case of employment shortfall, an employment fund should be paid to the Comprehensive Development Funds for Indigenous Peoples, regardless of whether the subsidy is used for the public (the majority of people or nonspecific third parties) in order to fulfill the legislative objectives of protecting the employment rights and economic lives of indigenous peoples under the Constitution and the Law for Protecting the Employment Rights of Indigenous Peoples.
It was further held in the Decision that the objective of the Procurement at Issue was to ensure professional insurance services for lottery distributors, and that subsidies from public welfare lottery "feedback" funds were also used to pay insurance premiums with lottery distributors being the actual beneficiaries. However, the National Treasury Administration subsidized the applicants (i.e., the implementation entities such as CTBC Bank and Taiwan Lottery; hereinafter, the "Entity Subject to Administrative Sanction"), set up the Dedicated Account for Five-Year Savings Insurance and Career Transition Subsidies at CTBC Bank and annually contributed exit reserve subsidies and the insurance surcharge for the year to such dedicated account so that the amount in the dedicated account may be utilized by Taiwan Lottery in the performance of the procurement contract at issue and wired to accounts designated by the distributors. The fact that the procurement was subsidized by the government was apparent. If the amount of subsidy exceeds 50% of the total procurement amount and the announced monetary threshold, the recipient should be governed by the Government Procurement Law, regardless of whether the subsidies are provided by wire transfer to accounts designated by individual distributors from the dedicated account.
It was further held in the Decision that since the Appellant did enjoy the benefit of procurement subsidized by the government, its status was no different from that of a contractor awarded a contract by a procuring agency and it should thus comply with relevant legal requirements. The original decision set aside the original disposition and the decision on administrative appeal simply on the ground that relevant legal requirements did not apply because the parties that were subsidized by the National Treasury Administration in the Procurement at Issue were lottery distributors (natural persons). Since the original decision was unlawful, it was reversed and remanded.
Luke Hung
The Supreme Administrative Court rendered the 106-Pan-83 Decision of February 23, 2017 (hereinafter, the "Decision"), holding that where procurement is conducted by a juristic person or organization subsidized by the government, if the subsidy meets relevant statutory criteria, the contractors are required to hire indigenous peoples during the performance of the contract, regardless of whether the subsidy is used for the public.
According to the facts underlying this Decision, Company A was awarded a contract for a procurement project titled "Five-year Savings Insurance and Career Transition Subsidies for Computer-based Lottery Distributors" and organized by Taiwan Lottery (hereinafter, the "Procurement at Issue"). However, since the number of the indigenous peoples as hired failed to meet the requirement under Article 12, Paragraph 1 of the Law for Protecting the Employment Rights of Indigenous Peoples, the Council of Indigenous Peoples rendered the original disposition to compel the Appellee's payment of an indigenous peoples' employment fund. Dissatisfied, Company A brought the administrative action to set aside the original disposition pursuant to applicable procedures and prevailed in the first instance decision. As a result, the Council of Indigenous Peoples filed this appeal.
According to the Decision, a government's subsidy to a juristic person or organization for a procurement project is mostly provided for public interest. If the amount of such subsidy accounts for over half of the procurement amount and exceeds an announced monetary threshold, the juristic person or organization is required to follow the procedures and substantive requirements of the Government Procurement Law in handling procurement. Therefore, a contractor which is awarded a procurement contract is required to comply with Article 98 of the Government Procurement Law and Article 12 of the Law for Protecting the Employment Rights of Indigenous Peoples, and if its total number of employees in Taiwan is greater than 100, indigenous peoples should be employed during the performance of the contract, and the number employed should not be lower than one percent of the total work force. In case of employment shortfall, an employment fund should be paid to the Comprehensive Development Funds for Indigenous Peoples, regardless of whether the subsidy is used for the public (the majority of people or nonspecific third parties) in order to fulfill the legislative objectives of protecting the employment rights and economic lives of indigenous peoples under the Constitution and the Law for Protecting the Employment Rights of Indigenous Peoples.
It was further held in the Decision that the objective of the Procurement at Issue was to ensure professional insurance services for lottery distributors, and that subsidies from public welfare lottery "feedback" funds were also used to pay insurance premiums with lottery distributors being the actual beneficiaries. However, the National Treasury Administration subsidized the applicants (i.e., the implementation entities such as CTBC Bank and Taiwan Lottery; hereinafter, the "Entity Subject to Administrative Sanction"), set up the Dedicated Account for Five-Year Savings Insurance and Career Transition Subsidies at CTBC Bank and annually contributed exit reserve subsidies and the insurance surcharge for the year to such dedicated account so that the amount in the dedicated account may be utilized by Taiwan Lottery in the performance of the procurement contract at issue and wired to accounts designated by the distributors. The fact that the procurement was subsidized by the government was apparent. If the amount of subsidy exceeds 50% of the total procurement amount and the announced monetary threshold, the recipient should be governed by the Government Procurement Law, regardless of whether the subsidies are provided by wire transfer to accounts designated by individual distributors from the dedicated account.
It was further held in the Decision that since the Appellant did enjoy the benefit of procurement subsidized by the government, its status was no different from that of a contractor awarded a contract by a procuring agency and it should thus comply with relevant legal requirements. The original decision set aside the original disposition and the decision on administrative appeal simply on the ground that relevant legal requirements did not apply because the parties that were subsidized by the National Treasury Administration in the Procurement at Issue were lottery distributors (natural persons). Since the original decision was unlawful, it was reversed and remanded.
