Strengthening Transparency in Local Public Institution Contracts through the 'Cheongnyeom Seoyakje' Pledge System

[Asia Economy Reporter Jo In-kyung] From now on, companies contracting with local public institutions must submit a 'Integrity Pledge' stating that they will not offer bribes or special favors. Violating the pledge will result in sanctions such as cancellation of the bid award or contract termination.

The Ministry of the Interior and Safety announced that the partial amendments to the "Local Public Enterprises Act" and the "Act on the Operation of Local Government Investment and Subsidized Institutions," which introduce the Integrity Pledge system, were promulgated on the 9th. The enforcement will begin six months after promulgation, starting in December.

The amendment mandates that when local public institutions (local public corporations, public organizations, and local government investment and subsidized institutions) enter into contracts, bidders or parties to private contracts must submit an Integrity Pledge. The pledge must include provisions prohibiting the offering of money, entertainment, or employment favors to employees of local public institutions during bidding, award, contract conclusion, or execution processes.

If a bidder or party to a private contract violates the contents of the Integrity Pledge by providing money, entertainment, employment favors, etc., to employees of local public institutions, the local public institution must cancel the bid award decision or rescind or terminate the contract, except in cases where other laws specifically allow exceptions.

This is significant in that the system, which was introduced in 2013 for projects ordered by the national government, local governments, and national public institutions, has now been expanded to include local public institutions.

Ko Gyu-chang, Director of the Local Finance and Economy Office at the Ministry of the Interior and Safety, said, "We expect that the introduction of the Integrity Pledge system will enhance the transparency and fairness of contract execution by local public institutions."

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