Rather than putting forth numerous new suggestions this year, the Committee would like to extend our cooperation to the government to assist in fully implementing the recommendations made in previous White Papers. We encourage the government to engage in a consultative manner with our member companies and/or go through third-party market professionals to consider the merits of implementing the previous suggestions.
In addition, the Committee wishes to thank the Public Construction Commission (PCC) for holding an open dialogue with industry on Article 227 of the Civil Code, which was introduced into the model contract terms and conditions last year. As highlighted in our 2020 White Paper, 11 of the 12 types of model contracts now include new language under the “Rights and Liability” clause to exempt injurious performance from the normal liability limits. This change was made by adding a reference to Article 227, paragraph 2 of the Civil Code. This carve-out language did not reflect a fair and balanced contractual approach or the typical practice in the international market. Discussions with the PCC resulted in removal of the new language – an example of the government working with our member companies to arrive at a mutual agreeable solution. The new language of one type of model contract has been removed now, and we hope the other 10 could be followed up.
With regard to other past suggestions, the Committee strongly believes that their adoption would improve the capability and expand the capacity of the Taiwan supply chain, introduce greater innovation in the engineering and construction industry, and result in the completion of more projects according to the planned schedule and the safety, quality and cost requirements. Given the plethora of current or planned public and private mega-projects, the demand for qualified engineering & construction (E&C) firms is greater than ever before. For example, achievement of the government’s ambitious 50/30/20 energy plan by 2025 would be greatly improved by the participation of international E&C firms, particularly in the gas-to-power market. Besides the energy market, the Forward Looking Infrastructure plan includes an abundance of transportation projects, a market sector that would also benefit from increased participation from international E&C firms.
Our past suggestions center around themes which, if properly implemented, will support the government in the delivery of its ambitious public infrastructure plans. These themes will help the country develop its local E&C expertise and expand the market capability through greater participation by international firms in the government procurement market. Revising the model contract terms to bring about a fairer and more balanced approach in terms of risk and reward will encourage greater participation by local and international firms and enhance transparency in the government procurement markets. The introduction of innovation and lessons learned from the international markets will improve the certainty of project delivery regarding cost, schedule, and quality. And setting reasonable project budgets and not using the lowest price tender as the selection criteria for critical projects will result in a higher quality of delivery and projects that are delivered in a safe and efficient manner.
Finally, the Committee wants to acknowledge the efforts of the National Development Council (NDC) to help resolve our White Paper suggestions in its coordination meeting held on March 3. We note, however, that one meeting is insufficient. Such sessions need to be held on a regular basis, chaired by the NDC Minster, and attended by the relevant government procurement entities in order to make the changes needed to implement and close out the past years’ suggestions. Our member companies are eager to engage with and support the government in this task.
A summary of the key suggestions from the past is set out below, grouped by theme with the year in which the suggestions were raised in past White Papers shown in parentheses. Rather than our restating the merits of each suggestion in this year’s document, we invite the government and other interested parties to review past White Papers – available on the AmCham website – to refresh themselves about the details. Some of these suggestions have been partially implemented (for example, Nos. 4 and 6), while No. 7 is undergoing a trial, but not in sufficient fashion to gain the true benefit.
Attract more foreign companies to participate in the government procurement market (2016).
Remove unreasonable provisions in the Government Procurement Law (2016).
Improve the terms and conditions in model contracts (2020).
Amend the Model Contract Terms & Conditions to allow contractors to submit change notices (2017, 2018, 2019).
Allow International Arbitration Rules to be applied (2017).
Use “Most Advantageous Tender” rather than “Lowest Price” as a preferred selection process for critical projects (2017, 2018, 2019).
Encourage the use of alternative methodology in public infrastructure projects (2017, 2018, 2019, 2020).
Revise the design consultancy fee guidelines (2020).
Suggestion 1: Issue tender documents for major or key projects in both Chinese and English.
In keeping with the government’s aim to create a “Bilingual Nation” by 2030, we recommend that the government require all Procurement Entities to issue tender documents for projects of major importance in both Chinese and English. Improving Taiwan’s ability to conduct business in English is one way to enhance Taiwan’s competitiveness. However, many of the tender documents are issued only in Chinese. Requiring the process to be conducted in both English and Chinese would underscore the government’s commitment to making the country bilingual and send a strong message to both the local and international communities. Currently international bidders have to spend time to translate the Procurement tender documents. Then the bidder must translate their proposal into Chinese and have certain documents certified as true originals by the Taipei Economic and Cultural Representative Office in the bidder’s home country. This process takes a significant amount of time and effort, and often the tendering period is short and extensions to the required return date are not easily granted. Tendering in Chinese thus does not encourage participation by international E&C firms in government procurements.
The Committee also wishes to restate its request that any proposed changes to laws, Government Procurement Agreement rules or implementation guidelines, government procurement conditions, or the Committee’s White Paper suggestions be subject to the 60-day notice and comment period so the Committee may provide feedback on the suitability of the proposed change – and in the case of White Paper issues to ensure that the change is likely to meet the full intent of the Committee’s suggestion. The Committee asks the authorities to implement a fairer and more transparent communications channel.