Two Bidding Models - Access to Taiwan's Mega Infrastructure Program
Design of the Models
Taiwan law provides for two models for private parties to participate in governmental infrastructure projects. One is the model under the Government Procurement Act (“GPA Model”) and the other is the Public-Private Partnerships Law (“PPP Model”). The most significant difference between the two models lies in the funding entity. The government provides all the funding under GPA Model; by contrast, the private institutions are responsible for all or most of the funding under PPP Model.
Under GPA Model, the bidders’ consideration focuses on the ability to accomplish the bid requirements. Since the government is the funding party, it has a superior position, whether under contractor, hire-of-work or any other agreements, and thus closely monitors all respects of the project. It is also the government’s obligation to pay the compensation for the work of the companies.
There are three tendering procedures of GPA Model: (a) Open Tender (b) Selective Tender, and (c) Limited Tender. In Open Tender procedures, the government posts public notice so that all qualified bidders may participate. In Selective Tender procedures, before the bid submission, the companies first have to pass the qualification assessment by the government. Compared to the first two tendering procedures, Limited Tender is expedited but applicable only in exceptional cases, where the government will, under certain conditions, invite two or more companies for price comparison or only one company for price negotiation. Notably, public notice is not always required for Limited Tender procedures.
Since the project is self-funded by the private party, on top of the ability to fulfill the bid requirements, the bidders need to carefully evaluate the investment return,especially in the case of infrastructure project which requires a huge investment of money. Contracts entered into under PPP Law are concession agreements. The company and the government are theoretically in a partnership relationship. As consideration, the government grants an investment right (i.e. right of concession) to the company, and monitors the projects in accordance with its rights and obligations under the concession agreements.
PPP Ideas, by Government or Private Parties
The PPP procedures are different for Government- proposed Projects and Non-government-proposed Projects. In the first scenario, the government sets the basic requirements for the infrastructure project, based on which the bidders subsequently make overall plans. In contrast, for the Non-government-proposed Projects, the government reviews the projects initially proposed by private parties, determining the minimum functions and benefits of such project, and then invite the private entities to participate in the bidding.
Probable Models to be Used for the Program
Considering that the government has determined the basic requirements for certain constructions and that the budget has been passed, GPA Model is probably commonly used for the Forwarding-looking Program. Under Taiwan’s GPA commitments for WTO, constructions over NT$250 million and services projects of central government over NT$6.52 million, where the tender values are higher than the value limitation set for Limited Bid, must be open to foreign bidders. Therefore, it is likely that the government will apply Open Bid and Selective Bid to projects that are required to be open for international bidders. However, for certain projects where the government is unable to take the lead, due to its lack of knowledge, efficiency or funds, PPP Model is still probable.
Preliminary Preparation for Accessing the Program
Public notices for the government procurement and PPP projects are posted on the Government Procurement Gazette and the Government e-Procurement System
(https://web.pcc.gov.tw/pishtml/pisindex.html). Interested international bidders could keep an eye on the latest information and begin to make preparation for those bids in advance.
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