'Small-Amount Private Contracts' Limit Doubled... Supporting Livelihood Recovery from 'COVID-19'

Legislative Notice on Partial Amendment of the Enforcement Decree of the Local Contract Act

[Asia Economy Reporter Jo In-kyung] The Ministry of the Interior and Safety announced on the 24th that it will publicly notify the draft partial amendment to the Enforcement Decree of the Local Contract Act on the 25th, which significantly relaxes the procedures of the local contract system to an unprecedented level in response to the worsening living conditions and management difficulties of local businesses caused by the novel coronavirus infection (COVID-19).

The amendment first temporarily doubles the limit for small-scale private contracts that ordering agencies can quickly purchase without bidding procedures until the end of this year.

Accordingly, for comprehensive construction projects, private contracts, which previously applied only to projects under 200 million KRW, have been expanded to projects under 400 million KRW, and for specialized construction projects, the limit has increased from 100 million KRW to 200 million KRW. Electrical and information communication works can be contracted privately up to 160 million KRW, and goods or service contracts up to 100 million KRW.

Additionally, 'prevention and containment of infectious diseases' has been added as a reason for urgent private contracts, enabling active support for COVID-19 related projects and establishing a legal basis for rapid response to similar infectious diseases in the future.

Previously, to expedite contract execution, private contracts were allowed only when re-announced bidding failed or no successful bidder was found after competitive bidding. However, until the end of this year, private contracts can be made without re-announced bidding even after a single failed bidding.

Furthermore, disaster safety certification products developed for public safety are now allowed as targets for private contracts to prevent disasters and minimize damage.

In addition, to reduce the burden on local small and medium-sized enterprises, bid and contract deposits will be reduced by 50% until the end of this year, and the statutory deadlines for inspection, acceptance, and payment have been temporarily shortened from within 14 days to within 3 days to ensure prompt payment to contractors.

Ko Gyu-chang, Director of the Local Finance and Economy Office at the Ministry of the Interior and Safety, said, "With this amendment to the enforcement decree, the time required for contract procedures such as bidding will be shortened, and the effect of expanded fiscal execution will quickly spread to the private sector. We hope that the burden on local companies will be alleviated and that it will help compensate for the worsening living and financial conditions caused by COVID-19."

This content was produced with the assistance of AI translation services.