Newsletter
The period of limitation with respect to "ban from bidding government contract" and "recovery of the refunded or returned bid bond"
Where a procuring entity finds that a supplier meets one of the circumstances prescribed in Article 101 of the Government Procurement Act, the entity shall publish the name of the supplier and the relevant circumstance on the Government Procurement Gazette, which prohibits the supplier from participating in tendering, or being awarded or sub-contracted, within one year or three years (usually called "ban from bidding government contract"). Since the Government Procurement Act does not expressly prescribe the period of limitation with respect to the power to impose "ban from bidding government contract", the rulings regarding the length of the period of limitation among the courts are inconsistent. The resolution of the June 2012 Joint Conference of the Presiding Justices and Justices of the Supreme Administrative Court unifies the legal opinion, ruling that the period of limitation with respect to the power to impose the "ban from bidding government contract" shall be subject to Paragraph 1 of Article 27 of the Administrative Penalty Act, which stipulates that the power to impose administrative penalty is expired upon the lapse of a period of three years. As a consequence, this resolution is followed in the practice of government procurement complaint procedure and administrative litigation.
Paragraph 2 of Article 27 of the Administrative Penalty Act stipulates "The period specified in the preceding paragraph shall commence from the day the act in breach of duty under administrative law is complete, except where the consequence of such an act occurs at a later day, in which case the period shall commence from the day on which the consequence occurs." Regarding the commencement of the period of limitation for the circumstances of "ban from bidding government contract" prescribed in Subparagraphs 1 to 14 of Article 101 of the Government Procurement Act, the Procurement and Public Construction Commission recently issue a conference memorandum in which the conclusions with respect to the commencement of the period are as follows:
1. Subparagraph 1 "where the supplier allows any others to borrow its name or certificate to participate in a tender": The period shall commence from the date of tender opening. Where there is no tender opening, the period shall commence from the day the tender is delivered to the procuring entity.
2. Subparagraph 2 "where the supplier borrows or assumes any other’s name or certificate or uses forged documents or documents with unauthorized alteration to tendering, contracting, or performing a contract": Where the document is used to tender a contract, the above Re Subparagraph 1 is applied. Where the document is used for contracting (or execution of contract), the period shall commence from the date of tender opening or from the day the document is delivered to the procuring entity when there is no tender opening. Where the document is used to perform a contract, the period shall commence from the day the document is delivered to the procuring entity, or any designated personnel or place.
3. Subparagraph 3 "where the supplier has substantially reduced the work or materials without obtaining a prior approval": The period shall commence from the day the act is complete, except where the consequence of such an act occurs at a later day, in which case the period shall commence from the day on which the consequence occurs.
4. Subparagraph 4 "where the supplier forges or alters without authorization documents related to tendering, contracting, or contract performance": same as the above Re Subparagraph 2.
5. Subparagraph 5 "where the supplier participates in tendering during the period when its business operation has been suspended by a disciplinary action": The period shall commence from the date of tender opening or from the day the document is delivered to the procuring entity when there is no tender opening.
6. Subparagraph 6 "where the supplier has committed any of the offenses prescribed in Articles 87 to 92 hereof, and has been sentenced by a court of the first instance": The period shall commence from the date of announcement of the court decision or from the day that the written judgment is delivered to the supplier when there is no announcement in the court.
7. Subparagraph 7 "where the supplier refuses to execute a contract without due cause after award": The period shall commence from the due date to execute a contract indicated in the tender documentation or set by the procuring entity.
8. Subparagraph 8 "where an inspection indicates any serious non-conformity with the contractual requirements": The period shall commence from the day the inspection is complete.
9. Subparagraph 9 "where the supplier does not fulfill its obligation of guarantee after inspection and acceptance": The period shall commence from the due date prescribed in the contract or set by the procuring entity.
10. Subparagraph 10 "where the time-limit for contract performance is seriously delayed due to causes attributable to the supplier": Where the supplier completes the performance of contract, the period shall commence from the due date of improvement prescribed in the contract or set by the procuring entity. Where the supplier completes the performance of contract, the period shall commence from the day the supplier is ready to the inspection and issue the notice to the entity which is responsible for inspection.
11. Subparagraph 11 "where the supplier is in breach of the requirement of Article 65 by assigning a contract to others": The period shall commence from the final day another supplier performs the contract for the supplier.
12. Subparagraph 12 "where a contract is rescinded or terminated for causes attributable to the supplier": The period shall commence from the day the notice of rescission or termination is delivered to the supplier.
13. Subparagraph 13 "where the supplier is under the procedure of bankruptcy": The period shall commence from the day the bankruptcy court order is announced or the day the court order is delivered to the supplier.
14. Subparagraphs 14 "where the supplier seriously discriminates women, aborigines, or personnel of disadvantaged groups": The period shall commence from the day the act of discrimination is complete or the day on which the consequence occurs.
Furthermore, when a supplier meets one of the circumstances prescribed in Subparagraphs 1 to 14 of Article 101 of the Government Procurement Act, the refunded or returned bid bond might be recovered by the procuring entity when any of the circumstances prescribed in Article 31 also exists. The period of limitation with respect to the power to recover the refunded or returned bid bond shall be subject to Article 131 of the Administrative Procedure Act which stipulates that a right of claim under public law is extinguished by prescription if not exercised within five years. According to the resolution of the November 2013 Joint Conference of the Presiding Justices and Justices of the Supreme Administrative Court, the period of limitation to recover the refunded or returned bid bond shall commence from the day the entity is reasonably expected to recover the bid bond, which is a factual issue for the court to decide in a specific case. Therefore, the period of limitation and the commencement of period with respect to "ban from bidding government contract" and "recovery of the refunded or returned bid bond" are different. As a consequence, it shall be noted that the entity may possibly recover the refunded or returned bid bond even if the power to impose "ban from bidding government contract" is expired.