Local Government Procurement Contracts 'Small-Amount Private Contracts' Requirements Eased... Promoting Regional Economic Revitalization

Partial Amendment to the Enforcement Decree of the Local Contract Act Passed at the Cabinet Meeting

[Asia Economy Reporter Lim Cheol-young] Going forward, the requirements for small-amount private contracts issued by local governments will be relaxed, which is expected to contribute to the economic vitality of small local businesses and help revitalize the regional economy.

On the 13th, the Ministry of the Interior and Safety announced that the partial amendment ordinance of the Local Contract Act Enforcement Decree, prepared to support regional economic revitalization by expanding contract opportunities for local small and medium-sized enterprises and to enhance the fairness and appropriateness of local contract work, has passed the Cabinet meeting.

First, the limit for small-scale private contracts that local governments can make will be doubled. Since July 2020, a special measure has been temporarily in place to double the limit for small-amount private contracts to alleviate difficulties faced by local businesses due to COVID-19. However, to institutionalize this special measure for boosting economic vitality through prompt contract execution and expanding participation of micro-enterprises, the Enforcement Decree of the Local Contract Act now includes a regulation to raise the limit for small-amount private contracts.

Additionally, the scope of private contracts for new technology products will be expanded. Currently, private contracts are allowed for products manufactured with new technologies under four laws, including the "Industrial Technology Innovation Promotion Act," to support the entry of new technology products into the procurement market. The amendment adds the eligibility for private contracts to new technology products under seven other laws currently in operation.

To further strengthen the transparency and fairness of local contracts, the evaluation method for selecting successful bidders will also be improved. Currently, when deciding the successful bidder through a two-stage bidding process for goods purchase and service contracts, the price evaluation criterion is set as the lowest price, but there is no regulation on the evaluation criteria for specifications and technical assessments, which has raised concerns about fairness. Therefore, to secure expertise in specification and technical evaluations and enhance fairness in selecting successful bidders, local governments will form specification and technical evaluation committees composed of external private experts to conduct reviews.

Furthermore, the process for local governments to revise or establish evaluation criteria for contract performance capability in general service contracts will change from prior consultation with the Ministry of the Interior and Safety to post-notification, thereby expanding local governments' autonomy and allowing them to reflect changes in regional conditions in the evaluation criteria.

Choi Byung-kwan, Director of the Local Finance and Economy Office, stated, “This improvement in the local contract system aims to revitalize the regional economy by relaxing contract requirements while enhancing the fairness of local contracts.” He added, “We hope this will help local small and medium-sized enterprises and small business owners facing difficulties due to high inflation and economic downturn by creating fair procurement conditions and expanding participation in public bidding.”

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