Public Procurement Service: Joint Contracting Allowed for Up to Two of the Top 10 Companies

by Jeong Ilwoong

Published 25 Apr.2023 10:55(KST)

The top 10 construction companies will now be allowed to jointly participate in large-scale projects with up to two companies.

On the 25th, the Public Procurement Service announced that it will improve regulations that have restricted joint contracts between companies ranked within the top 10 based on construction capability evaluation amounts in technical bids, allowing up to two companies to participate in joint contracts.

The regulatory improvement for technical bids is scheduled to be implemented from June after going through administrative notice and regulatory review procedures.

The improvement direction allows two companies included in the top 10 enterprises in technical bids to mutually participate in joint contracts, but considering the market impact, joint contracts between the top 10 companies will remain prohibited for projects under 200 billion KRW until the end of this year.

Additionally, considering the scale and difficulty of the project and the competitiveness of the bidding, measures to prohibit joint contracts among the top 10 companies for individual projects or to expand participation to three or more companies will be explored if necessary.

The Public Procurement Service explained that this regulatory improvement reflects changes in the technical bidding market environment since 2016 and is the first such change in 15 years.

Since 2016, the participation of the top 10 companies in technical bids has significantly decreased, reflecting field voices that the original purpose of the system?to increase bidding competitiveness and reduce budgets?has been lost.

Above all, in light of recent repeated failures in technical bidding, the Public Procurement Service added that there was a judgment that measures to increase the participation of the top 10 companies in technical bids are necessary.

Lee Jong-wook, Administrator of the Public Procurement Service, said, “We expect the regulatory improvement on joint contracts in technical bids to act as a catalyst to accelerate the competition of construction companies’ technical capabilities,” and added, “The Public Procurement Service will continue to actively pursue regulatory relaxation and system improvements within the public construction market to fully utilize the creativity and technical abilities of the private sector.”