In the future, government ministries and public institutions will be able to purchase necessary goods and services directly without going through the Korea Public Procurement Service, even if the procurement service has signed a unit price contract. Currently, when purchasing goods and services for which the Korea Public Procurement Service has signed unit price contracts with manufacturers, they must buy them through the national procurement system.
According to the government on the 3rd, the Korea Public Procurement Service plans to announce a procurement reform plan focused on these details within this month. In July, the procurement service established a procurement reform task force and has been identifying tasks to enhance the transparency of procurement administration.
According to the Korea Public Procurement Service, a key reform measure is the abolition of mandatory purchasing of contract items. Mandatory purchasing of contract items means that if the Korea Public Procurement Service has signed a unit price contract with a manufacturer for a specific item, the demanding agencies, such as ministries and public institutions, must purchase that item through the national procurement system. For example, if the procurement service signed a unit price contract with a manufacturer for 500 won per pen, the ministries and public institutions cannot autonomously buy pens when needed; they can only purchase them through the national procurement system.
As a result, it became impossible for demanding agencies to negotiate with manufacturers, and there was an issue where some products had to be purchased under less favorable conditions than the market in terms of price or quality. In this regard, President Lee Jae-myung raised his voice in 2020 while he was the governor of Gyeonggi Province, saying, "After comparing the prices of items on the national procurement system, it was found that 90 cases were more expensive than market prices. We need to create a fair procurement system."
The Korea Public Procurement Service will eliminate mandatory purchasing of contract items and enhance the purchasing autonomy of demanding agencies. At the same time, the procurement service plans to put in place safeguards to prevent adverse effects, such as officials from demanding agencies purchasing goods from known companies at inflated prices, as the system is abolished. They are reviewing measures to limit the abolition of mandatory purchasing of contract items to those below a specific price or certain demanding agencies. A source from the procurement service explained, "We are looking for ways for demanding agencies to purchase rationally without harming the corporations."
The Korea Public Procurement Service will also abolish the performance requirements for delivery related to artificial intelligence (AI) items. This aligns with the government's efforts to make a large-scale financial investment aimed at a major transition in AI, and the procurement service intends to play its role in this context. With the abolition of performance requirements, AI companies will be able to contract with the procurement service even without existing delivery performance records, facilitating their entry into the procurement market.
Baek Seung-bo, the head of the Korea Public Procurement Service, said at a Cabinet meeting held in July, "For the formation of the AI market, I believe it is important for the government to take on the risk and buy the products," noting that "the industry has previously suggested that the government actively create AI demand."
In addition, regulations on government contracts that aim to evade price verification will be strengthened. Government contracts refer to those that are modified specifications of general products based on requests from demanding agencies, leading to higher prices as they are tailored for those agencies alone. There is a possibility that manufacturers may exploit this by making minor changes, like replacing a small component in a general product, and supplying it at a higher profit margin. Therefore, the procurement service has decided not to allow contracts whose specifications are modified for the purpose of avoiding competition.
The Korea Public Procurement Service will also conduct a comprehensive review of 760 regulations and guidelines applicable in the procurement process to explore rationalization measures. To facilitate easy access for small and medium enterprises to the procurement market, the bidding process and expenses will be reduced, and for corporations that do not uphold social values, the market threshold will be raised.