Amendments to the Government Procurement Act were passed on April 30, 2019 and announced on May 22, 2019. Among which, the amendments related to “suspension of rights” are as follows:

‍

1. Amendments to "reasons for suspension of rights":

(1) Adding "serious violation" to the criteria constitutes a suspension of rights.

When a contractor breaches a contract, based on the interpretation of the rule of proportionality, suspension of rights is not automatically applied but are contingent upon whether such a breach is serious. The Public Construction Commission of the Executive Yuan has rendered such interpretation in its letter Gong-Cheng-Chi-Zi No. 09600151280 dated April 16, 2007. However, since such interpretation is not expressly stated in the law, in practice, there are still government agencies which are not aware of such interpretation, and would suspend contractors’ rights for small matters.

This amendment adds the criteria of "serious violation" to Subparagraph 4 (where the supplier forges or fraudulently alters documents related to tendering, or contract performance), Subparagraph 9 (where the supplier does not fulfill its obligation of warranty after inspection and acceptance), and Subparagraph 12 (where a contract is rescinded or terminated for causes attributable to the contractor) of Paragraph 1 of Article 101. It also requires the government agencies to examining whether the breach constitutes a "serious violation", and shall consider factors such as the "degree of damage to the agency," "how imputable the contractor is," and the "actual remedies or compensatory measures that the contractor has taken" (adding Paragraph 4 of the same Article).

(2) Adding "bribery" to the reason for suspension of rights

This amendment adds "offering, promising, or delivering improper benefit to procurement personnel" as a reason for suspension of rights (addition of Subparagraph 15 of Paragraph 1 of the same Article) in order to prevent and deter bribery by contractors which disrupt the procurement order.

‍

2.  Adding the procedure of "Statement of Opinion"

To  protect a contractor's interests in the procedure right, this amendment adds Paragraph 3 of Article 101 to require the procurement agency to provide the contractor an opportunity to express its opinion before the disposition of a suspension of rights is issued. In addition, it also requires an agency to establish a "procurement and review committee" to examine if a contractor has met the criteria for sanction to ensure that suspension of rights is issued prudently and objectively.

‍

3. Amendment to the duration for the suspension of rights

With respect to serious breaches as provided in Subparagraphs 7 to 12 of Paragraph 1 of Article 101 of the Government Procurement Act, this amendment calculates the duration for the suspension of rights using a "tiered" approach. That is, for violations, contractor’s name will be published on the Government Procurement Gazette, and the contractor will be suspended for three months when its name is published on the Government Procurement Gazette for its first violation; six months for the second violation; one year for the third violation.

‍

The provisions regarding “suspension of rights” in the Government Procurement Act have been a focus and source of the perplexity of many who are involved in government procurement affairs. This amendment has provided more favorable treatment to contractors regarding the reasons, procedures and duration for the suspension of rights. However, it is yet to be observed if the actual application of this amendment can meet the goals of "promoting contractor participation and economic development" and "maintain the proper order of government procurement."

‍