The Public Procurement Service (PPS) is taking strict measures to eradicate so-called ‘cheating price’ companies that register goods on the Korea ON-line E-Procurement System (KONEPS) at prices higher than the market price.
On the 7th, the PPS announced that it will expand and operate market price monitoring of ‘Multiple Award Schedule (MAS)’ items registered on KONEPS.
MAS is a system where unit price contracts are signed with multiple suppliers for goods with equal or similar quality, performance, and efficiency, and these goods are registered on KONEPS so that demand agencies can directly select and purchase items without separate contract procedures.
However, the MAS price must adhere to the principle of being the ‘most favored price,’ meaning contracted suppliers must maintain procurement contract prices below or equal to market supply prices.
Nonetheless, some companies violate this principle, causing demand agencies to receive goods at prices higher than the market price.
In this regard, the PPS is inspecting violations of the obligation to maintain favored prices through ‘MAS market price monitoring,’ such as MAS suppliers selling products in the market at prices lower than procurement prices.
The main inspection targets are electronic and home appliances such as computers, copiers, air purifiers, and electronic whiteboards, which frequently appear in prices on private online shopping malls.
Last year, during the monitoring process, the PPS took price reduction measures on 35 specifications across 13 product names, including tablet computers, which were found to be priced lower than the procurement contract price, saving approximately 2.37 billion KRW in purchase budgets.
Especially this year, the inspection targets have been expanded beyond home appliances to include smart educational equipment, exercise equipment, and pest control supplies?items related to public life and safety?and the number of specifications has increased from 6,261 to 7,633 (a 21.9% increase). The PPS has steadily increased the number of inspected specifications from 4,619 in 2021, 5,145 in 2022, 5,441 in 2023, 6,261 in 2024, to 7,633 this year.
Furthermore, starting this year, inspections (price surveys) will be conducted more than twice annually, including not only the same models as MAS contracted items but also similar models with equal or superior performance and specifications.
If it is confirmed that MAS suppliers have violated the obligation to maintain favored prices, the PPS plans to strengthen the fairness and reliability of procurement prices through measures such as price reductions, suspension of transactions on KONEPS, and recovery of unjust profits.
Lim Gi-geun, Administrator of the PPS, stated, “To ensure suppliers receive fair compensation in the public procurement market, eliminating ‘cheating prices’ must come first. The PPS will strengthen inspections of price violations on KONEPS to prevent illicit practices from taking root in the procurement market and will manage the market to establish a fair procurement order through strict responses to violations.”
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