The government has finalized a plan to improve the national contract system by institutionalizing safety management principles throughout the public contracting process. In response to a series of major industrial accidents at construction sites, the government will establish a systematic safety evaluation process covering bidding, awarding, and contract execution stages. Additionally, strong sanctions will be introduced in the public bidding market for companies involved in major industrial accidents.
On August 20, Deputy Minister of Economy and Finance Lim Kigeun announced at the '3rd Procurement Policy Deliberation Committee of 2025,' held at the Kensington Hotel in Yeouido, Seoul, that the 'National Contract System Improvement Plan' containing these measures was reviewed and approved. The government expects this initiative to strengthen the public sector's leading role in eradicating major accidents and to encourage companies to recognize safety as a core element of corporate competitiveness.
Strengthening Safety Evaluation at All Stages of Public Bidding, Awarding, and Contract Execution
First, at the public bidding stage, safety certification and the presence of safety professionals will be added to the current 11 criteria, such as construction capability, as reasons for limited competition. As a result, only companies with proven safety capabilities will be allowed to participate in bids for projects with a high risk of safety accidents.
At the stage of selecting the successful bidder, the evaluation has so far focused on construction costs and technical capability. Going forward, violations of the Serious Accidents Punishment Act will be newly established as a penalty item. The existing 'construction evaluation' (assessment of construction quality and safety management performance), previously applied only to comprehensive evaluations for projects over 30 billion KRW, will be expanded to simplified comprehensive evaluations for projects between 10 billion and 30 billion KRW. In particular, for projects over 10 billion KRW, the safety evaluation, previously operated as a bonus point system, will be converted to a scoring system. As a result, obtaining a high safety score will have a substantial impact on the outcome of the bid.
During contract execution, mechanisms to secure safety-related costs will also be strengthened. The standards for indirect labor costs and safety management expenses will be raised, and ordering organizations will be required to reflect them. The basis for calculation will be specified in the bid announcement to prevent omissions. In addition, if a safety issue arises at the site, the contractor will be legally allowed to request a temporary suspension of construction. If the ordering organization approves the suspension, the contractor will be exempt from delay penalties.
The government has also proposed measures to ease the burden on companies investing in safety. If there is no fault on the part of the contractor in the event of delays in long-term ongoing projects, the ordering organization will pay the cost of extending the construction period to prevent gaps in safety management. In addition, the minimum bid price for projects subject to eligibility screening (under 10 billion KRW) will be raised by two percentage points from the current level to ensure appropriate construction costs for small and medium-sized construction companies. Raising the minimum bid price for the procurement of goods in manufacturing sites is also under consideration. The contract guarantee rate for construction contracts will be reduced from the current 15% to 10% to lessen the burden on companies.
Strong Sanctions for Companies Responsible for Major Accidents Due to Lack of Safety Awareness
Despite institutional support, the government will introduce strong sanctions for companies where major industrial accidents occur. Under the current Occupational Safety and Health Act, bidding qualifications are restricted only if two or more people die simultaneously. In the future, companies with multiple fatalities in a single year will also be subject to sanctions. The period of sanctions will be extended, and repeat offenders will face harsher penalties.
To prevent companies from evading sanctions through corporate splits or name changes, new legal grounds will be established so that restrictions on bidding qualifications are automatically succeeded. The government plans to complete revisions to contract laws and related regulations by November, following consultations with relevant ministries and experts. Amendments to expand restrictions on bidding qualifications will be pursued with the goal of passing them during the regular session of the National Assembly.
Pursuing Improvements to the Public Procurement Innovation Ecosystem
Meanwhile, the government will also pursue improvements to the public procurement innovation ecosystem so that innovative companies can enter the procurement market stably. By 2030, the annual purchase volume of innovative products will be expanded to about 3 trillion KRW, and the number of innovative products will increase from the current 2,508 to 5,000.
The scope of Venture Nara designation will be expanded from existing venture and startup companies to include youth, technology-innovation, and management-innovation companies. The number of institutions designating innovative products will increase from 16 to 18, and the evaluation method will be reformed to assess both public value and innovation. The number of opportunities for companies to apply will also be increased from three to four times a year.
Deputy Minister Lim emphasized, "By simultaneously strengthening safety management in the contracting process, supporting companies' safety investments, and imposing strong sanctions on companies responsible for major accidents, we will eliminate companies lacking safety awareness from the public bidding market."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
