As IT system failures persist... Government pushes for large companies' participation in public SW projects

Ministry of Science and ICT to Promote Amendment of the Software Promotion Act

As administrative network failures continue, the government is pushing to establish a system that lifts restrictions on large corporations' participation in public software (SW) projects.

On the 27th, the Ministry of Science and ICT announced that it is promoting an amendment to the Software Promotion Act, which would allow large corporations to bid on public software projects above a certain scale.

Earlier, in June, the Ministry of Science and ICT disclosed an improvement plan allowing large corporations to participate in projects worth over 100 billion won, which are highly complex and technically challenging.

Currently, it is reported that the ministry is considering lowering the threshold from 100 billion won to permit large corporations to participate in public SW projects of smaller amounts as well.

The current Software Promotion Act restricts large corporations belonging to the Mutual Investment Restriction Corporate Group (Sangchuljipdan) from participating in bids regardless of the project amount. The asset threshold for Sangchuljipdan was raised in 2016 from 5 trillion won to 10 trillion won.

The law restricting large corporations' participation in public software projects has been in effect since 2013, marking its 10th year this year.

The intent was to prevent the concentration of large corporations in the public market and to provide new opportunities for small and medium-sized enterprises (SMEs) and mid-sized companies. However, there have been criticisms that the technological gap between large corporations and SMEs has not narrowed, resulting in frequent failures in public administrative networks built by smaller companies.

There are arguments that the exclusion of large corporations has led to fragmented orders targeting small-scale companies, and that this exposes vulnerabilities in quickly identifying causes and responding to crises when problems occur, thus large corporations should be allowed to participate in public software projects.

However, there is also considerable opposition claiming that restrictions on large corporations are not the fundamental cause of the recurring error incidents.

An Hong-jun, head of industrial policy at the Korea Software Industry Association, stated, "The restriction on large corporations' participation is not the fundamental issue behind the administrative network failures," adding, "Fundamentally, the budget for public software projects needs to be increased, and frequent changes in project requirements lead to quality degradation, which is a bigger management issue."