Article 31, Paragraph 2, Subparagraph 8 of the Government Procurement Law provides: "The procuring agency may provide in the tender documentation that the bid bond deposited shall not be refunded or returned to the tenderer and the refunded or returned bid bond shall be recovered if any of the following circumstances exists:…(8) The competent authority entity found that there is a violation of laws and regulations which affects the fairness of the procurement." The Supreme Administrative Court rendered the 103-Pan-493 Decision of September 11, 2014 (hereinafter, the "Decision"), affirming that although a charade that tender is participated by different bidders is created by bidding suppliers and the tender does not result in an incorrect result due to tender failure resulting from less than three bidders, still the fairness of the procurement has been affected. Therefore, a disposition may be rendered to recover bid bonds on such basis in accordance with Article 31, Paragraph 2, Subparagraph 8 of the Government Procurement Law.

According to the facts underlying the Decision, Appellee Urban Environmental Technologies Co., Ltd. participated in the procurement tender titled "The Project for Expansion and Functional Upgrade of the Sewerage Processing Plant for the Kaohsiung Coastal Industrial Zone" (hereinafter, the "Procurement Project at Issue") organized by the Appellant, the Industrial Development Bureau of the Ministry of Economic Affairs. The bid opening took place on December 8, 2009. The tender failed since there were less than three bidders. As a result, the Appellee took back its bidding documents and bid bond on the spot. The Appellant subsequently informed the Appellee to recover a bid bond of NT$5.67 million in accordance with Article 31, Paragraph 2, Subparagraph 8 of the Government Procurement Law based on the disposition rendered by the Taichung District Prosecutors Office on deferred prosecution of the Appellee and Ta Fa Pipe Materials Industrial Co., Ltd. for engaging in "other acts that violate laws and regulations and undermine procurement fairness" under Article 50, Paragraph 1, Subparagraph 7 of the same law during the Procurement Project at Issue. Dissatisfied, the Appellee filed an objection and a complaint, which were rejected. The Appellee then filed an administrative lawsuit, and the original trial court ruled to set aside the decision on the complaint, the outcome of handling the objection and the original disposition. Dissatisfied, the Appellant filed this appeal.

According to the Decision, Article 87, Paragraphs 3 and 6 of the Government Procurement Law provide: "A person who commits fraud or uses any other illegal means to make the supplier unable to tender or cause the opening of tenders to have an incorrect result shall be punished with imprisonment for not more than five years; in addition thereto, a fine of not more than one million New Taiwan Dollars may be imposed," and "an attempt to commit an offense specified in paragraphs 1, 3 or 4 is punishable." The Public Construction Commission (hereinafter, the "PCC") issued the Gong-Cheng-Ci-89000318 Circular of January 19, 2000 to indicate that if any personnel of a supplier commit the offense set forth in Article 87, it should be deemed, in accordance with Article 31, Paragraph 2, Subparagraph 8, that such supplier has engaged in an act that undermines the fairness of procurement in violation of laws and regulations, and the bid bond should be forfeited or recovered. The PCC also issued the Gong-Cheng-Ci-10200364300 Circular of October 31, 2013 to reiterate that this is the general interpretation for the types of legal violations determined in accordance with Article 31, Paragraph 2, Subparagraph 8 of the Government Procurement Law.

It was further pointed out in the Decision that according to a resolution adopted during the 1st Joint Meeting of Presiding Judges of the Supreme Administrative Court for July 2014, if suppliers have agreed before bidding among themselves, out of the criminal intent to cause an incorrect result of bid opening, not to engage in price competition and to create a charade that different suppliers are bidding, this will disrupt the price competition function of a tender since this would be sufficient to cause the bid review personnel of the procuring agency to misbelieve that these suppliers do have competitive relations. Even though the result of the bid award may not necessarily be decisively affected due to the impossibility to learn about the bidding prices of certain bidders and competitors in advance, still their objective bid winning opportunities have been substantively enhanced, and this still incurs the risk of causing an incorrect result of bid opening. The representatives of Supplier A and Supplier B (which are related suppliers) agreed to engage in false competition whereas in reality they did not engage in price competition and separately participated in the procurement tender as Supplier A and Supplier B. Although the result of bid opening was tender failure or no bid winner, such representatives should still be deemed to have jointly committed an attempted rather than unrealized offense by causing an incorrect result of bid opening by fraudulent means under Article 87, Paragraphs 3 and 6 of the Government Procurement Law. The procuring agency can certainly render a disposition to recover bid bonds from Supplier A and Supplier B.

It was concluded in the Decision that the representative of the Appellee did commit an attempted offense during the period of the Procurement Project at Issue to cause an incorrect result of bid opening by fraudulent means under Article 87, Paragraphs 3 and 6 of the Government Procurement Law as indicated in the facts set forth in the disposition on deferral prosecution at issue. Such deceptive or unfair method is sufficient to undermine the fairness of procurement and is an act sufficient to undermine the fairness of procurement in violation of laws and regulations pursuant to the general interpretation set forth in the January 19, 2000 Circular from the competent authority i.e. the PCC. Since the condition set forth in Article 31, Paragraph 2, Subparagraph 8 of the Government Procurement Law is satisfied, the Appellant can certainly render a disposition to recover the bid bond from the Appellee. The opinions in the decision of the original trial court should be reversed for inappropriate application of laws.