Public Procurement Service Strengthens Response to Violations of 'Preferential Price Maintenance Obligation' on Nara Marketplace

The Public Procurement Service (PPS) is strengthening its response to violations of the 'Obligation to Maintain Preferential Prices.' This obligation requires that the procurement contract prices of goods registered on the Korea ON-line E-Procurement System (KONEPS) be maintained at the same or lower than market transaction prices, ensuring the most favored price.

According to the PPS on the 4th, goods under Multiple Award Schedule (MAS) contracts registered on KONEPS must comply with the obligation to maintain preferential prices.

MAS is a contract method where unit price contracts are signed with multiple suppliers for goods of equivalent or similar quality, performance, and efficiency, which are then registered on the KONEPS comprehensive shopping mall. This allows demand agencies to directly select and purchase these goods from KONEPS without separate contract procedures.

However, contrary to its original intent, there is a widespread perception among demand agencies that MAS prices are higher than market prices. The strengthened response to violations of the obligation to maintain preferential prices focuses on increasing the intensity of investigations and the severity of penalties against companies violating this obligation, which has contributed to this perception.

For companies that fail to comply with the obligation to maintain preferential prices, measures such as reducing contract unit prices on the shopping mall, suspending transactions, and recovering unjust profits may be taken. Based on this, the PPS plans to promptly investigate violations, strengthen price management, and expand market price monitoring.

Investigations into reports of preferential price violations will be conducted swiftly by deploying maximum available investigative personnel, and rewards for whistleblowers will be increased to encourage reporting.

Additionally, even if investigations do not commence due to differences in specifications, delivery conditions, or seller information, the contract department will be notified as necessary to re-verify whether any violations exist.

Currently, transaction suspensions due to preferential price violations can be applied for periods ranging from one to six months, and in some cases, the suspension period may be reduced by up to half. However, going forward, the application of reduction rules will be strictly limited if the procurement company is at fault.

Products that have caused social controversy through media reports or have been continuously subject to disputes over appropriate pricing will be designated as vulnerable goods, with strengthened price management. Guidelines for calculating appropriate prices to be used during contracting will also be developed and promoted.

The PPS plans to expand and operate market price inspections for MAS contract goods registered on KONEPS. Price inspections will be conducted up to three times annually for 66 product names and 6,261 specifications. The PPS explained that it will also focus on checking violations for similar specifications with equivalent performance and features to MAS contract goods.

Im Gi-geun, Administrator of the PPS, stated, “The starting point for a fair public procurement market is eliminating unfair practices. Through strict responses to violations, we will send a clear signal to the market and create a public procurement market that adheres to principles and basic order.”