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The government procurement of construction projects in Taiwan can perceivably be described as a two-phased legal concept, with the awarding of contracts serving as the main division between events corresponding to either public or private law, respectively. This study focused on the characteristics and issues relating to bid bonds used as guarantees during the tendering process, and their status as a component of the public law events prior to the awarding of contracts.
Even though disputes that occur before the awarding of contracts would fall under the public law phase, private law principles are applied, as private law is more complete and began development much earlier than public law in regards to such situations. As long as the private law principles do not conflict with the justifications and specifications of public law, the private law principles are used to supplement public law under the circumstances relating to disputes that transpire before awarding of contracts. Per the government procurement process, there exists legal requirements for bidders to submit payment for bid bonds prior to bidding, such that the bid bonds will not be reimbursed. This is to serve as a fairness and guarantee measure for the tendering process for the awarding of the contract to the winning bidder. However, the bid bond may sometimes be of significant amounts, and yet whether the bidders will be awarded a contract or not remains unknown. In instances of disputes occurring where the tendering entity improperly influences the tendering process, the tendering entity should be required to provide an appropriate guarantee measure to the bidders in order to maintain fairness for both parties. Another issue relating to bid bonds is where the Government Procurement Act includes a list of provisions stating why bid bonds are not reimbursable, using an indefinite legal concept as a means of covering anything that may not have been included, to determine whether bid bonds will be reimbursed at their own discretion. This method of practice by the tendering entity could lend itself to controversy, as it may be perceived as manipulating the legal purpose of having such laws in place, while also overstepping the boundaries of the law itself. Instead, the tendering entity should thoroughly examine the degree to which a bidder may have erred, using a penalty system for various degrees of severity, as well as whether or not the bidder rightfully breached the concept of the bid bonds as a guarantee measure of the tendering process. This study aimed to break through the “all or nothing” notion of bid bond reimbursement, using indefinite legal concepts and referencing the point deduction penalty system used in construction quality assessment as ways to propose a system where bidders are penalized for minor or secondary errors, as opposed to current condition where bid bonds would be not reimbursed at all.
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