Focus on Sound Fiscal Management... Songpa-gu Improves Public Contract Operations

Songpa-gu, Turning Point to Enhance Financial Soundness Amid Difficult Crisis... Public Contract Improvement Plan Includes Transparent Disclosure of All Contract Processes and 16 Projects in 4 Areas ▲Public System Establishment ▲Criteria for Determining Private Contract Amounts ▲Practical Manual Training

Songpa-gu (District Mayor Seo Gang-seok) will fully implement improvements to public contracts focused on sound fiscal management, as the difficult financial situation is expected to continue this year following last year.

Seo Gang-seok, Mayor of Songpa-gu, explained the background, saying, “Due to the economic slowdown and real estate market recession, the financial situation is very difficult not only for the central government but also for local governments. In the case of Songpa-gu, the situation is even tougher due to a significant decrease in property tax, a major revenue source. However, we will turn this crisis into an opportunity by enhancing fiscal soundness and efficiency through improvements in public contract operations.”

Accordingly, the district will promote 16 projects in 4 areas throughout this year, focusing on efficiency, expertise, and transparency in public contract operations. The project areas include ▲ Establishing a fair and transparent contract system ▲ Improving negotiated contracts ▲ Supporting enhancement of job competency and integrity ▲ Improving contract systems.

First, a separate system will be established to disclose all contract processes.

Previously, only partial details of some completed contracts were disclosed on the district office website, but this year, a ‘Contract Information System’ will be built to transparently disclose the entire process of all contracts, including order plans, bid announcements, bid opening results, and payment status. Additionally, for competitive bidding and electronically disclosed negotiated contracts, step-by-step SMS services will be provided to contract parties to thoroughly inform them of potentially overlooked information.

Also, the district will independently establish ‘criteria for determining negotiated contract amounts.’ This is a response to the recent increase in the proportion of negotiated contracts due to various reasons such as failed competitive bids and the use of patented products.

For single-estimate negotiated contracts, prices are determined within a certain negotiation rate by contract type. However, there have been concerns about budget waste because a uniform negotiation rate is often applied without reflecting project characteristics or the appropriateness of cost calculations. Therefore, the district plans to actively negotiate prices by considering various factors such as ▲ review of detailed statements ▲ investigation of transaction precedents ▲ bid rates under local contract regulations ▲ construction volume.

The expertise of contract operation staff will also be enhanced.

Local contracts involve many related laws and subordinate regulations, and procedures vary by type, making the role of the person in charge very important. To strengthen the capabilities of staff, a ‘Practical Manual’ containing contract-related laws, system improvements, latest authoritative interpretations, audit findings, and major inquiries, as well as a ‘Pre-Inspection Checklist’ by contract type, will be produced and distributed.

Furthermore, the district plans to sequentially improve unreasonable systems or practices through the establishment of a budget and accounting working group and quarterly contract status analyses.

In addition, the district plans to stimulate the local economy by providing contract operation educational materials to small businesses and social enterprises with limited experience in public projects within the region, thereby increasing local business participation.

Mayor Seo Gang-seok stated, “2024 marks the midpoint of the 8th elected term, a time when major projects must be stably promoted to create visible changes in the city. Through improvements in public contracts, we will efficiently invest finances to enhance urban competitiveness and enrich the lives of our residents.”