Chapter 1 General Principles
These regulations are prescribed pursuant to paragraph 3 of Article 30 of the Government Procurement Act (hereinafter referred to as the “Act”).
The terms referred to in paragraph 2 of Article 30 of the Act are defined as follows:
1. financial institution: a bank, credit cooperative association, credit department of farmers’ or fishermen’s associations or Chunghwa Post Co., Ltd. that has been approved by the central competent authorities in target enterprises to issue promissory note, check or certificate of deposit;
2. financial institution’s promissory note: an instrument issued by a financial institution assuring the payment of a stipulated sum of money to the payee or bearer of the check unconditionally on the due date at the same financial institution or any branches thereof;
3. financial institution’s check: an instrument issued by a financial institution entrusting another financial institution to pay a stipulated sum of money to the payee or bearer of the check unconditionally at sight;
4. financial institution’s certified check: a check that a financial institution has marked on it as “accepted”, “certified” or other synonyms and duly signed;
5. postal money order: a money order issued and to be cashed by Chunghwa Post Co., Ltd.;
6. government bond: a debt instrument issued by this nation’s government entities ; the debt instrument issued in a registered form shall be pledged or registered as public guarantee ;
7. financial institution’s certificate of deposit pledged to the procuring entity: a certificate of deposit or transferable bearer’s certificate of deposit that has been pledged to the procuring entity;
8. bank: an institution established pursuant to Article 2 of the Banking Act;
9. irrevocable standby letter of credit confirmed by a bank: an irrevocable standby letter of credit issued by a foreign bank not registered for business within this nation;
10. bank’s written joint and several guarantee: a letter of joint guarantee issued by a bank to assume joint and several liability; and
11. insurer: an institution established, approved and a business license issued pursuant to the Insurance Act.
The financial institution’s certificate of deposit pledged to the procuring entity referred in the subparagraph 7 of the preceding paragraph may be substituted by the beneficial certificates of trust funds issued by the investment and trust company.
An entity conducting procurement shall, except where the deposit of bid bond or guarantee bond may be waived, provide in the tender documentation the types, amount, and ways of deposit, refund and termination of bid bond, guarantee bond, and other guarantees to be deposited by a supplier.
Where foreign suppliers are permitted to participate in procurement and that a foreign currency in its equivalent value may be used for bid bond or guarantee bond, an entity shall prescribe in the tender documentation the types and ways of deposit with respect to such foreign currency.
The equivalent foreign currency referred to in the preceding paragraph shall, unless otherwise provided in the tender documentation, be calculated at the closing spot buying rate of the foreign exchange transaction at the Bank of Taiwan on the business day before the date of deposit.
A bid bond or guarantee bond shall be deposited in the name of the tenderer or the winning tenderer.
A supplier may deposit bid bond or guarantee bond in two or more forms as those provided in paragraph 2 of Article 30 of the Act. For a deposited bid bond, the supplier may, upon the consent of the entity, change the form by which it was deposited.
Where the tender documentation requires a supplier to deposit a bid bond, it shall also prescribe that the supplier shall deposit the bid bond, prior to the closing time for submission of tenders, to a designated place of receipt or a designated account held with a financial institution. Except for cash, a supplier may send the bid bond by enclosing it in the tender.
Where the tender documentation requires a supplier to deposit a guarantee bond or provide other guarantees, it shall also prescribe the deadline for deposit and place of receipt or account held with a financial institution.
Where a supplier deposits a bid bond or guarantee bond in the form of a financial institution’s pledged certificate of deposit, a designated depositing financial institution shall not be required as a restriction; where a supplier requests for creation of pledge at a financial institution, the pledgee shall not be required to undertake such action jointly.
A bid bond or guarantee bond may be deposited via electronic means approved by the responsible entity.
Where a bid bond or guarantee bond is deposited in the form of a financial institution’s promissory note, check, certified check or postal money order, such instruments shall be made payable at sight and the entity shall be the payee. Where the payee is not designated, the bearer entity shall be the payee.
Where a bid bond or guarantee bond is deposited in the form of a financial institution’s pledged certificate of deposit, bank issued or confirmed irrevocable standby letter of credit, bank’s written joint and several guarantee, insurer’s insurance policy of joint and several guarantee or other guarantees, the entity shall be named as the pledgee, beneficiary, guarantee beneficiary or insured, as the case may be.
The types of guarantee bond are as follows:
1. performance bond: a bond used for guaranteeing the performance of contract by the supplier in accordance with the requirements of the contract;
2. refund bond for advance payment: a bond used for guaranteeing supplier’s return of the portion of the advance payment it received but has not been set off yet against actual payment;
3. warranty bond: a bond used for guaranteeing the warranty liability undertaken by the supplier;
4. price difference bond: a bond used for guaranteeing that the supplier’s abnormally low tender price will not lead to compromised quality of performance, failure to perform contract in good faith, or any other extraordinary situations; and
5. others as determined by the responsible entity.