Hapcheon County Raises Limit for Single-Quote Negotiated Contracts

From July 1, All Government Offices to Adopt New Limit
Maximum Raised from 15 Million Won to 22 Million Won (Including VAT)

Hapcheon County in South Gyeongsang Province announced that, starting July 1, it will raise the maximum amount for single-quote negotiated contracts from less than 15 million won (including VAT) to up to 22 million won (including VAT), applying this change to all government offices.

A single-quote negotiated contract is a method under the Local Contract Act in which a contract is concluded by receiving a quote from a single company, within a specified limit, without competitive bidding from multiple firms. While this approach offers the advantages of simplicity and speed, it also has drawbacks such as undermining fairness due to the exclusion of competition, encouraging the practice of splitting orders to circumvent regulations, and creating equity issues among contractors.

Hapcheon County Office building.

To address these issues, Hapcheon County lowered the contract limit to 15 million won and conducted a pilot program targeting selected government offices starting July 1, 2024. From the beginning of this year until June 30, the program was expanded to include all government offices.

However, the results of the pilot program showed that the number of contracts under 15 million won actually increased, making it difficult to assess the effectiveness of the system. In addition, there were ongoing opinions that system improvements were needed, taking into account the sluggish local construction market.

As a result, during a five-minute free speech session at the Hapcheon County Council, the need to restore the legal limit to 22 million won was raised. The Hapcheon County Specialized Construction Association also communicated the opinions of field operators through its own survey.

Hapcheon County conducted an analysis of negotiated contract trends and profitability over the past three years, held meetings and gathered feedback from the Specialized Construction Association, and comprehensively reflected the government's direction for improving local contract systems, such as raising the minimum bid rate by 2 percentage points. Based on these factors, the county decided to raise the limit to 22 million won.

A Hapcheon County official stated, "We raised the limit for negotiated contracts to reflect the reality that local companies are struggling to secure reasonable profits due to recent increases in labor and material costs. Going forward, we will continue to prioritize fairness in contract awards and ensure construction quality by selecting companies with proven capabilities."