These regulations are prescribed pursuant to paragraph 2 of Article 22 of the Government Procurement Act (hereinafter referred to as the “Act”).

An entity shall conduct the selection of information service providers publicly and objectively. Where the value of the service fees reaches the threshold for publication, the provisions of these regulations shall apply to the method for the selection of providers and the calculation of service fees.

The term "information services " referred to in subparagraph 9 of paragraph 1 of Article 22 of the Act means services related to computer hardware and software, including overall planning, system integration and organization, system inspection and evaluation, system management, network management, software development, software inspection and testing, software maintenance, hardware maintenance, hardware operation, plant infrastructure management, support services, network services, consultant services, database setup and storage, data processing, data input, training and promotion services, and so forth.

Where an entity is involved in the handling of a major information-related project which is newly-emerged, or where an entity conducts an important replacement and renewal of equipment, the entity may entrust the providers for the whole of the work of a integrated information service on computer hardware and software, telecommunication infrastructure, human resources and skills, and so forth.

Unless otherwise provided by laws and regulations, an entity that entrusts a provider for information service may prescribe in the invitation documents the following items, according to the nature and the practical need of each case:
1. Service required and content of the work involved.
2. Qualification or resources and documents to be submitted by the provider regarding computer software and hardware, telecommunication infrastructure, human resources, experiences and performance record, and so forth.
3. The present operation system environment of information of the entity and related computer software and hardware or telecommunication infrastructure.
4. Schedule of work.
5. Where the service involves the provision of material or equipment, the specifications related thereto.
6. Inspection and acceptance items and standard.
7. Method for the calculation of fees and their payment.
8. Proposal on the information service that shall be provided by the provider and the contents thereof, such as schedule of the main project items, quantity, price, detailed plan, chapter layout or page limitation of the documentation, and so forth.
9. The ownership of intellectual property right.
10. Where the provider is required to present briefing during selection, the procedures that shall be followed..
11. Items for evaluation, evaluation criteria and selection methods..
12. Methods of price negotiation and contract award with regard to the winning provider.
13. Any other necessary matters.

Where an entity entrusts a provider for the whole of the work of a integrated information service, the entity shall evaluate requirements of the project and prescribe a service standard for the provider. The entity shall prescribe in the invitation documents the items of the preceding Article and the following items according to the nature and practical need of each case:
1. The business scope and administration objectives of the entity.
2. The objective of entrusting a service provider.
3. The service required and scope of work.
4. The schedule of work and contract period.
5. The service items required:
a) Requirement on information and telecommunication.
b) Functional requirement on operation environment.
c) Requirement on information security and maintenance of confidentiality.
d) Requirement on the handling of changes.
e) Requirement on auditing.
f) Requirement on quality assurance.
g) Any other important matters.
6. Service stanards.
a) Service standards on information operation system.
b) Service standards on computer software and hardware and telecommunication infrastructure maintenance services.
c) Service standards on the whole system service.
d) Service standards on the change of service.
e) Other service standards related to the information operation services.
7. Method of services provision.
8. Criteria for performance evaluation.
9. The present structure and resources within the entity on information operation and related computer software and hardware, telecommunication infrastructure and manpower related to the information services, and so forth.
10. Protection of rights and transfer of the entity’s information staffs.
11. Transitional operation plan.
12. Proposal on the information service that shall be provided by the provider and the contents thereof, such as professional technical skills, service standard, method of service provision, protection of rights and transfer of the entity’s information staffs, organization and management of the project, financial arrangement, transitional operation project, method used for fees calculation, schedule of the main project items, quantity, price, detailed plan, handing of unforeseeable problems existed in the system, chapter layout or page limitation of the documentation, and so forth.
13. Any other necessary matters.
The length of schedule and contract period referred to in subparagraph 4 of the preceding paragraph shall not exceed 10 years.
The requirement on the handling of changes referred to in item 4 of subparagraph 5 of paragraph 1 shall include the procedures and fees calculation principles relating to adjustments on the service contents and items that are required to be made as a result of the changes in related laws and regulations or policy or the progress in the information technology.
Where the property rights of the present infrastructure of computer software and hardware and telecommunication within the entity, as referred to in subparagraph 9 of paragraph 1, will be transferred to the winning provider , the price referred to in paragraph 8 of the preceding Article shall indicate calculation that combines the discount price of the present infrastructure of computer software and hardware and telecommunication and the fees for the contracted period.

Unless otherwise provided by laws and regulations, the evaluation items referred to in subparagraph 11 of Article 5 may, according to the nature and practical need of each case, include the following:
1. The qualification or resources that the provider possesses or supplies regarding computer software and hardware, telecommunication infrastructure, manpower, experience and performance record, and so forth.
2 The capability of the provider to deliver professional skills.
3. The capability of the provider for quality assurance.
4. The experience and capability of the project manager and major staff involved in the project.
5. The capability of the provider to ensure information security and maintenance of confidentiality.
6. The capability to perform the contract on time.
7. The capability of the provider to provide support and maintenance.
8. The Price.
9. The provision of educational training.
10. The implementation method of the project..
11. The completeness and feasibility of the proposal, and the level of understanding of the service items.
12. Any other necessary matters.
For procurement of software development services, the capability of the provider to deliver professional skills referred to in subparagraph 2 of the preceding paragraph may, under the premise of zero cost or low cost, include the capability of developing and integrating the interface of common application programs that can be freely accessed, used, modified and distributed.

Unless otherwise provided by the preceding article or other laws and regulations, the evaluation items referred to in subparagraph 11 of Article 5 may, in the event of entrusting integrated information services, include the following items in the invitation documents according to the nature and practical need of each case:
1. Organizational and operational plans of the provider on human resources.
2. Capability of the provider for project management.
3. Capability of the provider for finance.
4. Capability of the provider for transitional project management.
5. Substantial added efficiency and benefits.
6. Risk assessment as regards the provider’s capability on performing contract faithfully.

For the selection of a provider by entity which publicly invites providers to tender for the provision of information services, and where the invitation documents have prescribed the qualification requirements of the provider, the entity shall first assess the qualification of the provider. Unless the qualification of the provider fulfills the requirements prescribed in the invitation documents, the evaluation process for the provider shall cease to proceed further.
The entity shall notify the provider the result of its evaluation and shall state reasons of rejection to providers that have not been selected.

The number of winning providers selected by the procurement evaluation committee may be more than one.
The relevant regulations for selection of the most advantageous tender of the Act shall apply mutatis mutandis to the selection procedures referred to in the preceding paragraph.

The price negotiation and contract award between the entity and the winning provider shall be conducted by one of the following methods, and the method adopted shall be stated in the invitation documents:
1. Where only one winning provider is selected, price negotiation shall be followed.
2. Where two or more winning providers are selected, price negotiation shall be conducted in a sequence according to the ranking of the winning providers, commencing from the provider which attains the first ranking. In the event where two or more providers are of the same ranking, the provider with the lowest bid price shall have priority in the price negotiation.

The award of contract referred to in the preceding Article shall be handled in accordance with one of the following methods:
1. Where the invitation documents have stated a fixed price or rate for the service fees, the contract shall be awarded according to the fixed price or rate.
2. Where the invitation documents have not stated a fixed price or rate for services fees, paragraph 2 of Article 53 and Article 54 of the Act shall apply to award of contract in excess of the government estimate or nullification of tenders.
The provision of Article 46 of the Act shall apply where an entity sets the government estimate pursuant to subparagraph 2 of the preceding paragraph. Where the tender price of a supplier participating in price negotiation is reasonable and within the budget amount, and that price reduction is not required, the entity may set the government estimate in accordance with the tender price, and award the contract at the tender price.

Where an entity entrusts a provider for its information service, the calculation of service fees shall, according to the type, nature, scale, scope of work, duration of the work, and so forth, be selected among the following methods and shall prescribe explicitly in the contract the chosen method:
1. Payment by total price or unit price.
2. Monthly, daily or hourly payment.
3. Cost plus fee.
The service fees calculated according to the methods referred to in the preceding paragraph shall be evaluated and approved by taking into account the fees generally charged. Where additional fees are to be paid after approval, the coverage of the items and amount of such fees shall be stated clearly in the contract. In the event where an item is not included in the contract, payment for such item shall not be made.

The total price or unit price method is applicable where the scope of work involved are clearly defined, where the total value of the service fees can be accurately estimated, or where the total value of service fees can be calculated by using the unit price of each service item.

The method of monthly, daily or hourly payment is applicable where the scope of work involved is small, the duration of the project is short, and only a few professional staffs are required. The method is also applicable where the total fees cannot be estimated accurately because of the inability to clearly define the scope of work involved.
The salary or wages payable for the service fees referred to in the preceding paragraph may be calculated according to one of the following methods. Fees apart from salary or wages may be calculated and paid additionally.
1. The amount of monthly payment is calculated according to the monthly salary rates of the staffs specified in the contract.
2. The amount of daily payment is calculated according to the daily wage rates of the staffs specified in the contract.
3. The amount of hourly payment is calculated according to the hourly wage rates of the staffs specified in the contract.

The method of cost plus fee is applicable to cases where the nature of project plan is complicated, the service fees are difficult to estimate, and the result on the performance of the contract is uncertain.
Service fees referred to in the preceding paragraph may include the following:
1. Direct fees:
a) Direct salary or wages:
This includes the actual salary or wages payable to the information service staffs directly involved in providing the services, including project manager, system analyst, program designer, system manager and machinery operator, plus a certain percentage of the above amount for fees related to the staff for paid leaves and special day-off; bonuses paid not on a regular basis; and those which shall be paid by employers by law such as: labor insurance premium, the arrear wage payment fund premium, national health insurance premium, and labor pension.
b) Management fees:
This includes the salary or wages, as well as the insurance, and pension allowance, of management and accounting staffs who are not within the category for payment under direct salary or wages, office expenditure, bills for water, electricity, heater and air-conditioner, depreciation or rental on furniture, machinery, equipment, etc., administrative cost, transportation cost of machinery and equipment, cost of mail and telephone, cost on contracting business, advertising cost, cost incurred in the preparation for commencing and ending of work , cost incurred for attending vocational and technical conference domestically or internationally held, cost on the development of market and human resources, research cost or professional communication cost for special business purpose, related taxes, and so forth. The total amount of management fees however shall not exceed 100% of the amount of the direct salary or wages deducted by bonuses paid not on a regular basis.
c) Other direct fees:
This includes the direct fees incurred during the process of implementing the entrusted project that are not included in the direct salary or wages. This includes fees such as business travel, after hour work, data collection, patent, training of operation and maintenance staffs, software and hardware for computers, rent of telecommunication infrastructure and production of program, chart and report copying and printing, related taxes, certification fees by the accountant, and so forth.
2. Fees for work:
Means compensations paid to the provider for providing information service, including risks, profit, and related taxes.
3. Business tax.
The fees incurred for the paid leaves and special day-off as referred to in item 1 of subparagraph 1 of the preceding paragraph may be prescribed at a certain percentage of the actual salary or wage based on actual needs. Entities may priscribe the percentage and terms of payment in the tender documentation, and the payment may be made without receipts of the staffs. However, the percentage shall not exceed 16% of the actual salary or wage.
Bonuses paid not on a regular basis as referred to in item 1 of subparagraph 1 of paragraph 2 may be prescribed at a certain percentage of the actual salary or wage based on actual needs. Entities may priscribe the percentage and terms of payment in the tender documentation, and the payment shall be made with receipts of the staffs. However, the percentage shall not exceed 30% of the actual salary or wage.
Labor insurance premium, the arrear wage payment fund premium, national health insurance premium, and labor pensions which shall be paid by employers by law as referred to in item 1 of subparagraph 1 of paragraph 2 shall be paid by entities after verification.
The fees for work referred to in subparagraph 2 of paragraph 2 shall be set as a fixed amount and shall not be a variable amount that increases proportionately to the amount of the direct salary or wages and management fees. The total amount of the fees for work shall not exceed 25% of the combined value of both the direct salary or wages and the management fees deducted by bonuses paid not on a regular basis.

An entity that entrusts a provider for information service and that the cost plus fees for work method is adopted, may state in the invitation documents the conditions that the provider may be awarded incentive fee for delivering service at lower costs or better efficiency.
Methods of payment of incentive fee referred to in the preceding paragraph, which shall be clearly stated by the entity in the invitation documents, if applicable, shall be as follows:
1. Where the service fee payable has been lowered, a given percentage of the amount of the contract price thus reduced and saved.
2. Where the actual performance evaluated is better than that agreed in the contract, the calculation method defined in the contract applies.
The given percentage referred to in subparagraph 1 of the preceding paragraph shall not exceed 50%. The amount payable referred to in subparagraph 2 of the preceding paragraph shall not exceed 10% of the total contract value or 10% of the limit of the contract price.

In the event where an entity applies the method of cost plus fee for work, the entity shall prescribe and state the following items in the contract:
1. The provider shall record every entry of fees or costs incurred, and shall provide documentary proof. The entity shall have the right to visit the office of the provider for the purpose of examination and audit.
2. The upper limit on cost and the handling procedures when such cost exceeds the limit.
The documentary proof referred to in subparagraph 1 of the preceding paragraph shall include invoices, receipts, record or statements of all of the items; except otherwise provided in the contract, photocopies may be used as proof.

The contract may prescribe that the provider shall be entitled to receive a partial payment of service fees in advance after signing the contract. The remaining fees are payable monthly or by installments. The amount and conditions of each payment shall be clearly stated in the contract.
In principle, the advance fees referred to in the preceding paragraph shall not exceed 30% of the total contract value or 30% of the upper limit of the total price payable.

Where the time frame for fulfilling the contract is longer than a year, the entity that entrusts a provider for information service may prescribe in the contract that the contract value may be adjusted starting from the second year according to the given price index, the applicable adjusting items, the adjusting method and the maximum amount of adjustment.

An entity that entrusts a provider for information service shall state in the invitation documents the ownership of any intellectual property rights derived from the work of the information service provided by the provider, and the legal obligation of the provider to handle and become responsible for matters that involve the infringement of rights of a third party.
The entity may acquire the right referred to in the preceding paragraph, in part or in whole, or be authorized to exercise such right, according to the needs of the entity.

These regulations may apply mutatis mutandis to a tender where an entity entrusts a provider for information service not in accordance with subparagraph 9 of paragraph 1 of Article 22 of the Act.

These regulations shall take effect on May 27, 1999.
The amendment to these regulations shall take effect on the date of promulgation.

Note:
In case of discrepancies between the Chinese version and this English version, the Chinese version shall prevail.