Lawmakers yesterday proposed legislation that would require defense contractors to reserve part of the funds they receive from the government for defense-related research and development.
The proposal, which aims to revitalize the nation’s defense industry, was sponsored by Democratic Progressive Party legislators Liu Shyh-fang (劉世芳), Tsai Shih-ying (蔡適應), Chiu Chih-wei (邱志偉) and Chou Chun-mi (周春米), and New Power Party Legislator Freddy Lim (林昶佐), and was cosigned by 28 other lawmakers.
Companies awarded defense contracts of more than NT$100 million (US$3.25 million) should furnish 0.3 to 0.5 percent of the contract to a national defense industry development fund, which the government would establish, the bill says.
Photo: CNA
Should the bill pass into law, Aerospace Industrial Development Corp (漢翔航空) would have to pay at least NT$200 million of an advanced jet trainer program’s NT$69 billion contract value, a source familiar with defense contracting said on condition of anonymity.
Several defense contractors have expressed their misgivings, saying that the mandatory contributions would squeeze profit margins and reduce their willingness to bid for government contracts, the source said.
However, contractors have welcomed other aspects in the bill, the source said.
The legislation would allow the government to award contracts on a basis other than the lowest bid, the source said, adding that the government should be able to offset the negative effects of the mandatory contributions with tax credits.
The bill also calls for companies to have their military certification revoked if they or any of their personnel are indicted for leaking classified information, corporate espionage or corruption.
Authorities should restrict sanctioned companies from reapplying for military licenses for one to three years and immediately halt any projects they are handling, it says.
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