39 Trillion Won Procurement Contracts in First Half of Year Executed Swiftly... "65% of Total Procurement Contracts"

65% of Total Procurement Contracts Executed in First Half
Early Orders Encouraged through Reduced Procurement Fees
Procurement Procedure Simplification and Period Reduction Implemented

The Public Procurement Service (PPS) will rapidly execute procurement contracts worth 39 trillion won in the first half of this year. This is to support the government's swift fiscal execution, marking the largest scale of procurement contracts in the first half ever.

On the 23rd, PPS announced the rapid execution plan for procurement projects and the Lunar New Year holiday procurement sector livelihood measures, including this content.

Provided by Public Procurement Service

According to the rapid execution plan, PPS intends to conclude contracts worth 39 trillion won, accounting for 65% of the total procurement contracts, in the first half of the year.

To this end, procurement fee incentives of up to a 15% reduction will be provided to requesting agencies in the first half. Additionally, to align with rapid execution, PPS plans to announce procurement plans early in January and February for goods, services, and construction sectors so that procurement companies can prepare production schedules such as raw material purchases in advance.

For rapid execution, PPS will shorten the mandatory review periods for large-scale construction projects: the total project cost review period will be reduced from 15 days to 10 days, the prior review period for construction costs from 10 days to 7 days, and the design adequacy review period from 40 days to 30 days.

Furthermore, before issuing technically complex bids such as turnkey projects, PPS will provide a "contract method pre-review service" to shorten the time required for technical reviews of construction costs, licenses, and construction methods from 20 days to 10 days.

Along with speeding up the bidding and contracting processes, PPS will also focus on expanding advance payments and prompt payment of contract amounts to ensure that the effects of rapid execution are tangibly felt on-site.

Key measures include applying temporary contract exceptions to shorten the bid announcement period and increasing the advance payment ratio from the current 70% to 80%. The payment period for advance payments and subcontractor payments will also be shortened from 14-15 days to within 5 days.

Pre-qualification (PQ) for bidders, which overlaps with the comprehensive evaluation system, will be temporarily omitted until June this year to shorten contract periods from 50 days to 40 days. Large-scale technical bids such as turnkey projects, which often fail, will be converted to negotiated contracts or design-build separate contract methods to prevent delays in national projects, as part of the rapid execution plan.

Additionally, as part of the Lunar New Year livelihood measures in the procurement sector, PPS plans to pay construction payments early at construction sites it manages and intensively manage to prevent delays in subcontractor payments. PPS currently manages 35 construction sites worth 1.9 trillion won. The construction payments expected to be paid early before the holiday are estimated to be about 30 billion won.

Im Gi-geun, Administrator of PPS, said, “PPS will promote the largest-ever rapid execution in cooperation with demand agencies in the first half of this year, ensuring that the effects of rapid execution are tangibly felt at procurement sites. We will also make every effort to ensure that the economic recovery warmth reaches subcontractors, material and equipment companies, and on-site workers participating in the procurement market through the Lunar New Year livelihood stabilization measures.”