Member Article

Are bidders required to partner with a Taiwan company to participate in the bidding process?

Foreign companies may participate in the bidding process on their own, so long as they meet the bidding qualifications.

Most public engineering projects permit either bidding by a single company or by a joint bid. So long as a company is able to meet the qualifications for the procurement project, it may submit a bid on its own. If the bidder is unable to meet some of the qualifications, it may search for another local or foreign company as a partner for a joint bid or become a subcontractor of the qualified bidders. For example, if the project requires a Taiwan certificate of “Comprehensive Construction Enterprise”, a foreign firm may have no choice but to be a partner or a subcontractor to a qualified Taiwan bidder.

Procurement projects that permit joint bids will typically set a maximum number of partners for the joint bid (for example, no more than 5 companies per joint bid), to avoid creating too much complexity among the project members.

When forming a bidding consortium, are the members required to accept joint liability?

In principle, the members of a consortium will be jointly liable for the procurement contract.

Since foreign companies are typically less familiar with Taiwan practices and since all procurement project documents need to be in Chinese language, it is common for foreign companies to form a consortium with a Taiwan company to participate in the bidding process.

In this situation, the consortium members must enter into a “Joint Bidding Covenant”, which is required to be included in the bid document. By the Covenant, one member will be designated as the representative of the consortium (also the main contact window) and will be deemed to be acting on behalf of the consortium. Notices delivered to the representative will be deemed to have been delivered to all members. If the consortium is awarded the bid, each consortium member will be jointly liable for the procurement contract.

Usually, the members will also have a “consortium agreement” (in addition to the relatively simple Joint Bidding Covenant) to define in detail the division of the project items, the right/obligations toward each other, as well as the indemnity for/from each other in the event the consortium or certain members are held liable under the procurement contract.

Are foreign bidders required to provide proof of creditworthiness?

Public engineering projects in Taiwan generally require bidders to submit proof of creditworthiness, including proof from a check clearing institution that the bidder has not been previously rejected by any financial institutions or had any record of bounced checks. Since foreign bidders are often unable to provide such proof, the bidding guidelines may allow foreign bidders to submit audited financial statements for the past three years in lieu of proof of creditworthiness. Such financial statements may be required to be notarized and legalized with a Chinese translation by a Taiwan-authorized institution.

Can the bid bond be denominated in a foreign currency?

In principle, foreign bidders are not permitted to submit a bid bond denominated in a foreign currency.

In practice, the bid bond can take a number of forms, including cash, bank check, certified check, postal money order, bearer government bonds, pledged certificate of deposit (either pledged to the procuring entity or a transferrable certificate of deposit), irrevocable letter of credit, or a written guarantee by a bank or insurance company. However, the bid bond cannot be denominated in a foreign currency.