For the purpose of carrying out the basic guidelines of self-reliant defense, this Act is enacted for combining abilities from the government and the private sectors to achieve the prior goal of domestic weapons and equipment research and development (R&D), production, manufacture and logistic support.
The development of Defense Industry shall be accorded to this Act. If the relevant provisions of other acts are more favorable than those set forth in this Act, the acts with favorable provisions shall prevail.

The term “competent authority” referred to in this Act shall be the Ministry of National Defense.
The term “authorities-in-charge” referred to in this Act shall be the Ministry of National Defense, the Ministry of Economic Affairs and the National Science and Technology Council.

The terms used in this Act shall be defined as follows:
1. “Defense Industry” means any defense technology industry or related industries engaged in R&D, production, manufacture or maintenance of supplies for defense and the military, for the purpose of demand of defense.
2. “Foreign Supplier” means any juridical person, organization or group incorporates in accordance with the laws of a foreign country, and supplies regulated Military Material or assists domestic juridical persons, organizations or groups in R&D, production, manufacture or maintenance of regulated Military Material.
3. “Military Material” means any weapon, ammunition, operational asset, and other military software and hardware directly related to the national security and defense application by military personnel and complied with military specification.
4. “Level-1 Regulated Military Material” means any weapon, ammunition, and software and hardware applicable to military purpose and recognized by the competent authority that domestic juridical persons, organizations or groups have the potential to research, develop, produce, manufacture or maintain.
5. “Level-2 Regulated Military Material” means any weapon, ammunition, and software and hardware applicable to military purpose and recognized by the competent authority that domestic juridical persons, organizations or groups have the capability to research, develop, produce, manufacture or maintain, or operational asset that they have the potential to research, develop, produce, manufacture or maintain.
6. “Level-3 Regulated Military Material” means operational asset recognized by the competent authority that domestic juridical persons, organizations or groups have the capability to research, develop, produce, manufacture or maintain.
The regulations regarding the determination standards, procedure and other related matters of Level-1 to Level-3 regulated Military Material and the scope of weapon, ammunition, operational asset, and software and hardware applicable to military purpose under Subparagraphs 3 to 6 of the preceding paragraph shall be decided by the competent authority in consultation with other authorities-in-charge.

Domestic juridical persons, organizations or groups incorporated in accordance with R.O.C. laws may apply to the competent authority for level certificate of regulated Military Material suppliers (hereinafter referred to as “Level Certificate”).
After receiving an application prescribed in the preceding paragraph, the competent authority shall designate the impartial third party to conduct the level-review and assess them as level A, B or C, depending on the specific expertise in Defense Industry and the following items:
1. Technology standard.
2. The operation scale and experience in R&D, manufacture and maintenance of Military Material.
3. Creation of domestic product and employment opportunities.
4. Effects from collaboration of Industry, Academia, Research institute (hereinafter referred to as “IAR”) and collaboration with Foreign Suppliers.
5. Proof of effect from collaboration with Foreign Suppliers in R&D, manufacture and maintenance and that the product is certified by the foreign original manufacturers.
6. Records of genuinely performing the contracts with the government.
7. Records or audit result reports of the security of information and communication management and maintenance.
The impartial third party prescribed in the preceding paragraph shall have sufficient resource and capability to certify, and shall not have interests in the matters subject to the certified parties.
The competent authority shall grant a qualified instrument of Level Certificate of regulated Military Material in specific expertise in Defense Industry (hereinafter referred to as “Qualified Certificate”) to the supplier finished the level-review after conducting safety examination upon personnel, facility/equipment relating to the business of national defense, information system and safety related affairs of the supplier and the supplier meet the standards of examination (hereinafter referred to as “Qualified Supplier”).
The regulations regarding the conditions of applying for Level Certificate under Paragraph 1, fields of specialty in national defense, the standard and procedure of level-review under Paragraph 2, the grant, valid term, written matters, modification, abolishment and other related matters under the preceding paragraph shall be decided by the competent authority in consultation with other authorities-in-charge.

The competent authority shall regularly carry out safety examination upon Qualified Supplier and winning supplier of regulated Military Material every year. However, in exceptional circumstances, the competent authority may irregularly carry out safety examination if necessary.
The regulations regarding the object, content, method, place, procedure, standards of safety examination and other related matters under the preceding paragraph and Paragraph 4 of the preceding article shall be decided by the competent authority.

If responsible person, agent, employee or staff member of the Qualified Supplier have committed the following crimes or committed during the period of employment, and has been sentenced to imprisonment with final decisions and not been permitted of probation, commutable fines or commuting to community service, and the Qualified Certificate has been abolished, the competent authority shall restrict it from applying for Level Certificate at least one year and up to five years:
1. Committed the crimes of Paragraphs 1 or 3 of Article 32, Paragraphs 1 or 3 of Article 33 or Article 34 of The Classified National Security Information Protection Act.
2. Committed the crimes of Paragraphs 1 to 3 of Article 109, Paragraphs 1 or 2 of Article 111 or Paragraphs 1 or 3 of Article 132 of Criminal Code of the Republic of China.
3. Committed the crimes of Subparagraph 5 of Paragraph 1 of Article 4, Subparagraph 3 of Paragraph 1 of Article 5 or Paragraphs 1 to 4 of Article 11 of Anti-Corruption Act.
4. Committed the crimes of Paragraphs 1 or 2 of Article 13-1 or Paragraphs 1 or 2 of Article 13-2 of Trade Secrets Act.
5. Committed the crimes of Paragraph 1 or 2 of Article 5-1 of National Security Act.
6. Committed the crimes of Paragraphs 1 to 3 of Article 20, Article 21 or Paragraphs 1 to 3 of Article 22 of Criminal Code of the Armed Forces.
For those who committed the crimes specified in the preceding paragraph and have been sentenced to imprisonment with final decisions and have not been permitted of probation, commutable fines or commuting to community service, the competent authority may restrict them from being responsible persons, agents, employees or staff members of other Qualified Suppliers for a certain period.

If necessary, the competent authority may designate or confer with relevant authorities to supply proper manpower and equipment and assist in security maintenance due to the applications by Qualified Supplier.
The regulations regarding the items, standards and related matters of the Qualified Supplier’s applications and fees under the preceding paragraph shall be decided by the competent authority.

Exporting regulated Military Material or technique, document or diagram related to R&D, production, manufacture or maintenance of the regulated Military Material shall be approved by the competent authority. The competent authority and other authorities-in-charge shall evaluate jointly before the approval of exporting Level-1 Regulated Military Material.
If exporting regulated Military Material, technique, document or diagram prescribed in the preceding paragraph without approval, the competent authority may abolish their Qualified Certificates or restrict them from applying for Level Certificate for a certain period.
The regulations regarding the conditions of application, procedure, evaluation, the period of restricting from application set in the preceding paragraph and other related matters of approval of exporting regulated Military Material or technique, document or diagram under Paragraph 1 shall be decided by the competent authority in consultation with other authorities-in-charge.

The competent authority and the Ministry of Economic Affairs shall target advancing domestic certification system in accordance with certification by foreign original manufacturers as their goal, and shall assist Qualified Suppliers to be certified by foreign original manufacturers.
The competent authority and the Ministry of Economic Affairs shall give Qualified Suppliers guidance in expanding overseas market in Military Material, and assist them to apply for subsidy of promoting trade business.

The competent authority and the Ministry of Economic Affairs shall encourage Foreign Suppliers and Qualified Suppliers to conduct industry cooperation and investment in each other.
The competent authority may broker the government, private funds or venture capitals to jointly invest in Qualified Suppliers with the potential of research and development.

In order to promote self-reliant defense technology via increasing the energy of IAR in defense R&D and manufacture, the Executive Yuan shall designate specialized authority or unit to overall establish interagency budget plans, negotiations, supervision and relevant systems of non-highly-sensitive defense technology, and promote the following issues:
1. Check those able to be offered as key items in non-highly-sensitive defense technology.
2. Draft comprehensive projects of IAR’s cooperation.
3. Matters of encouraging IAR to cultivate professionals.
4. Call conferences for censoring projects. The members attending shall include scholars, specialists and representatives of relevant authorities.
5. Coordinate the budgets of various central competent authorities in charge.
6. Supervise the implementing effect of the concerning budgets.
The specialized authority or unit prescribed in the preceding paragraph shall regularly report to the Legislative Yuan on the circumstances of self-reliant defense and industry development, budget items, and development of cultivating IAR professionals.

The government or relevant non-departmental public bodies may reward Qualified Supplier according to policies, the specific expertise and necessity in Defense Industry.
The reward prescribed in the preceding paragraph may be done by the following ways:
1. Donation/subsidization.
2. Fund, technology investment or authorization.
3. Priority to procure Military Material.
4. Offer finance and favorable interest rate.
The regulations regarding timing, objects, conditions, standards and other related matters of reward under the last two paragraphs shall be decided by the competent authority in consultation with relevant authorities.

If in need of domestically testing regulated Military Material, Qualified Supplier may apply to the competent authority for assistance. If encountering any restrictions or obstructions in R&D, production, manufacture or maintenance, the competent authority and other authorities-in-charge may offer assistance. If the regulated Military Material was procured from abroad and Qualified Supplier became capable to produce, manufacture, maintain and obtained technology transferred from the original manufacturer, the unit demanding regulated Military Material cannot deliver abroad for maintenance without the approval of the competent authority.
The regulations regarding the conditions, scope, procedure, standards of service fee, damages and other related matters of applying for assistance to test regulated Military Material under Paragraph 1 shall be decided by the competent authority.

The procurement of regulated Military Material shall put quick commissioning and upgrade into consideration.
The procurement prescribed in the preceding paragraph shall be carried out according to those treaties and agreements applicable to ROC.

The procurement of Level-1 Regulated Military Material is not subject to Government Procurement Act and its enforcement rules which governs that planning and designing suppliers cannot submit tenders afterwards, receive the award of contract or assist tendering suppliers.

If adopting limited tendering procedures toward the procurement of Level-1 Regulated Military Material, the tendering procedure is not subject to Paragraph 1 of Article 22 of Government Procurement Act.
The competent authority may require the tendering supplier to explain its potentiality of R&D, production, manufacture or maintenance or require them of explanation for support from Foreign Suppliers depending on the qualification.
Level-1 Regulated Military Material may be procured from abroad under the circumstances which the competent authority in consultation with other authorities-in-charge evaluated that procuring from abroad is more favorable to economic benefits and national security, and have been ratified by the Executive Yuan.
The evaluation prescribed in the preceding paragraph shall include accomplishing technology transfers, promoting domestic R&D, production, manufacture and logistic support.

The procurement of Level-2 or Level-3 Regulated Military Material shall be done with selective tendering procedures and the contract shall be awarded to the most advantageous tender in principle, unless it happens to fit in with what Paragraph 1 of Article 22 of Government Procurement Act rules.
The competent authority may require the tendering supplier to explain its capabilities of R&D,production, manufacture or maintenance or require them of explanation for support from Foreign Suppliers depending on the qualification.
The evaluative items and score allocation upon awarding the procurement of Level-2 or Level-3 Regulated Military Material shall include the rate of domestic production, bonus for the class of suppliers, analyses of reasonable costs, quotas and items that suppliers cooperated with Foreign Suppliers or industries and so forth. The concerning evaluative items and score allocation shall be decided by the competent authority in consultation with other authorities-in-charge.

If the procurement of regulated Military Material cannot be awarded after tender opening for two times, the competent authority may approve to procure from abroad after evaluation in consultation with other authorities-in-charge.
The evaluation prescribed in the preceding paragraph shall include accomplishing technology transfers, promoting domestic R&D, production, manufacture and logistic support.

The key part and Material for researching, producing, manufacturing and maintaining regulated Military Material shall not be from the mainland China, Hong Kong, Macau or the juridical person, organization or group in the third region invested by the people/resident, juridical person, group, or other organizations from those areas. However, if in special necessity and approved by the competent authority in consultation with other authorities-in-charge, the previous limitation is not applicable.
The recognition of juridical person, organization or group in the third region invested prescribed in the preceding paragraph shall apply mutatis mutandis Paragraph 2 of Article 3 of the Regulations Governing Permission for People from the Mainland Area to Invest in Taiwan.

The competent authority, other authorities-in-charge and relevant authorities shall fulfill complementary measures within two years after this Act be promulgated.

The effective date of this Act shall be decided by the decree of the Executive Yuan.