Partial Amendment to the Enforcement Decree of the State Contract Act Approved at the Cabinet Meeting
[Asia Economy Reporter Kwangho Lee] The national contract bidding announcement period, which used to last up to 40 days, will be shortened to 5 days. Additionally, the limit for small-value private contracts will be temporarily doubled until the end of this year.
The Ministry of Economy and Finance announced on the 28th, during the Cabinet meeting, that it reviewed and approved the 'Partial Amendment to the Enforcement Decree of the National Contract Act,' which significantly relaxes the national contract system procedures to an unprecedented level in response to the worsening livelihood conditions caused by the novel coronavirus disease (COVID-19).
This amendment is a follow-up measure to the 'Domestic Demand Supplement Plan through Prepayment and Prepurchase' announced at the 4th Emergency Economic Meeting on the 8th and will take effect from the 1st of next month.
First, by adding "early execution of the budget under national fiscal policy" as an urgent bidding reason in the contract guidelines, emergency bidding issuance will be mandatory until the end of this year, shortening the bidding announcement period from a maximum of 40 days to 5 days.
Also, the limit for small-value private contracts, which allows ordering agencies to purchase quickly without bidding procedures, will be temporarily doubled until the end of this year. For goods and services, the limit increases from 50 million KRW to 100 million KRW; for comprehensive construction, from 200 million KRW to 400 million KRW; for specialized construction, from 100 million KRW to 200 million KRW; and for electrical and information communication construction, from 80 million KRW to 160 million KRW.
Furthermore, to expedite contract processing, until the end of this year, private contracts will be allowed without re-announcing bids even if the first bidding fails once. Previously, private contracts were only permitted when it was clear that re-announced competitive bidding would fail again.
The scope of application is broadly recognized to include cases where bidding announcements were made before the enforcement date of May 1 but private contracts are to be concluded after the enforcement.
In addition, "prevention and containment of infectious diseases" has been added as a reason for urgent private contracts to enable emergency private contracts related to COVID-19 projects. This establishes a legal basis to respond swiftly to similar infectious diseases in the future beyond supporting COVID-19 related projects.
To reduce the burden on procurement participating companies, until the end of this year, the bid bond rate will be lowered from 5% to 2.5% of the bid amount, and the contract bond rate from 10% to 5% of the contract amount. The inspection and acceptance period has been shortened from 14 days to 7 days, and the payment period from 5 days to 3 days to ensure prompt payment to procurement participants.
A Ministry of Economy and Finance official stated, "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 is expected to rapidly spread to the private sector. We expect that the burden on procurement participating companies will be reduced, helping to mitigate the worsening livelihood and fiscal conditions caused by COVID-19."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
