The regulations (herein after "these Rules") are prescribed in accordance with the Paragraph 4 of Article 22 of the National Defense Law.

The Ministry of National Defense may commission to Private Entity(ies) the operation, with respect to the whole or part, of the Technology Industry Institution and its property and facilities under supervision of the Ministry of National Defense, which benefits the national defense technology industry and facilitates related to industrial development, in order to introduce the vitality and effectiveness of private business management, for effective utilization of resources and establishment of the national defense technology industry in the Private Entity(ies)

Paragraph (1)
The term "National Defense Technology Institutes referred to in these Rules means organizations of various levels under the supervision of the Ministry of National Defense conducting the activities with respect to the research and development, production and manufacturing or maintenance and repair in relation to the national defense technology industry.
Paragraph (2)
The internal divisions and the property and facilities of the Institutions prescribed in the preceding Paragraph shall be deemed as part of the Institutions.

The term "Private Entity(ies)" as referred to in these Rules means any partnership, sole proprietorship or private juristic person, which is duly organized or recognized under the laws of the Republic of China (hereinafter "our country", "ROC" or "Taiwan", where appropriate) except for those invested by foreigner(s) and such investment is not less than forty five percent of the total capital.

The term "competent authority" referred to in these Rules means the Ministry of National Defense.

The term “authority-in-charge” referred to in this regulation means the authority at a level immediately above the agency entrusting management.

The term "approving authority" referred to in these Rules means the authority at a level immediately above the authority-in-charge.

The powers and responsibilities of the competent authority are as follows:
Subparagraph (1)
Researching, making policy and the propaganda of government decrees relating to the commissioned operation.
Subparagraph (2)
Collecting and announcing the information relating to the commissioned operation.
Subparagraph (3)
Coordinating related matters between each approved authority and the authority-in-charge.
Subparagraph (4)
Interpreting or applying for interpretation of related laws and regulations.
Subparagraph (5)
Other related matters.

The authority-in-charge is empowered with and responsible for the followings:
Subparagraph (1)
Reviewing the proposal for management entrustment and reporting to approving authority.
Subparagraph (2)
Compiling and classifying market information and holding public presentation sessions.
Subparagraph (3)
Drafting the execution plan for management entrustment and reporting to approving authority.
Subparagraph (4)
Drafting redundancy plan for mass redundancy of workers, and reporting to approving authority for approval, notification, announcement and negotiation.
Subparagraph (5)
Supervising and assessing the results of management entrustment with private entities.
Subparagraph (6)
Enforcing rights and performing duties stipulated in management entrustment contracts.
Subparagraph (7)
Other matters related to management entrustment.

The approving authority is empowered with and responsible for the followings:
Subparagraph (1)
Approving the proposal for management entrustment and reporting to authority-in-charge for filing.
Subparagraph (2)
Approving the execution plan for management entrustment.
Subparagraph (3)
Approving the redundancy plan.
Subparagraph (4)
Supervising management entrustment affairs proceeded by authority-in-charge.
Subparagraph (5)
Other matters related to management entrustment.

Paragraph (1)
The National Defense Technology Institutions are empowered with and responsible for the followings:
Subparagraph (1)
Drafting proposal for management entrustment.
Subparagraph (2)
Drafting estimated base price bidding and its analysis.
Subparagraph (3)
Surveying individual intention to agree to severance compensation and inventorying for administration.
Paragraph (2)
All the affairs referred to in the preceding paragraph shall be reported to the authority-in-charge as considerations for drafting execution plan.

The authority-in-charge shall comply with the following requirements when conducting the commissioned operation prescribed in these Rules:
Subparagraph (1)
Combining private resources and enhancing the effectiveness of the operation.
Subparagraph (2)
The demands of national defense shall be of utmost priority.
Subparagraph (3)
Without any endangerment to the safety of national defense.
Subparagraph (4)
In addition to satisfying the original national defense demands of the National Defense Technology Institutes, the Private Entity(ies) may conduct other affairs with respect to other national defense demands or the promotion of industrial development.

Paragraph (1)
The authority-in-charge shall collect the royalty when conducting the commissioned operation in accordance with these Rules.
Paragraph (2)
The "royalty" referred to in the preceding Paragraph includes the contracting royalty and the operation royalty.
Paragraph (3)
The "contracting royalty" referred to in the preceding Paragraph means the fixed royalty the Private Entity(ies) shall pay in lump sum when entering into the contract of the commissioned operation. The "operation royalty" means the amount calculated with the agreed percentage in accordance with the annual sales volume of the Private Entity(ies) by operating the National Defense Technology Institutes or the property and facilities, excluding sales resulting from products or services provided to the agency(ies) supervised or governed by the competent authority as well as sales resulting from military goods produced or services provided by the institution commissioned for operation which is to supersede the same originally provided by the institutions or the property and facilities commissioned to the Private Entity(ies) for operation.
Paragraph (4)
The minimum operation royalty to be collected in each year shall be specified in the contract of the commissioned operation and the amount shall be calculated in accordance with the information set forth in the operation plans provided by the Private Entity(ies) in tender.

In order to prevent confidentiality leakage, security measures shall be taken in conducting the management entrustment prescribed in this regulation.

Failing the existence of a permissive rule to the contrary, the contract shall be awarded to the most advantageous tender where it qualifies the conditions for a contract to be awarded to the most advantageous tender.
Chapter (3) Management Entrustment Contract Requirements and Management of Contract Performance