The Ministry of Finance and Economy said on the 10th that when raw material prices rise due to the Middle East war, private companies can adjust upward the amounts of construction, goods, and service contracts signed with the government and local governments.
That day, the ministry held a meeting of the Emergency Economic Headquarters combined with an economic-related ministers' meeting at Government Complex Seoul and released "support measures for public contracts related to the Middle East war." The National Contract Act specifies the conditions under which contract amounts can be adjusted and terms extended. As multiple ministries had difficulty interpreting the law, the competent ministry released public contract handling guidelines.
The ministry said, "If raw material prices surge, contract amounts can be adjusted even within 90 days from the contract signing date or the adjustment base date." The adjustment base date is the day the contract amount was readjusted after the contract due to price changes. Contracts eligible for amount adjustment are those in which total construction costs have risen by 3% or more.
Even if total construction costs have risen by less than 3%, if the price of a specific construction material has gone up, the contract amount for that material can be adjusted through the "single-item price fluctuation adjustment system." However, not all materials are eligible. Only materials that exceed 0.5% of the net construction cost and have risen by 15% or more compared with the bid date or the previous adjustment date qualify.
The ministry also said that if the supply of raw materials becomes difficult, the timelines across all areas of public contracts—including construction, goods procurement, and service provision—can be extended. In such cases, the penalty for delay may also be waived. Labor costs, supervision fees, and other actual expenses arising from the extension can be reflected by adjusting the contract amount within the range that does not exceed those costs. The ministry also said, "When bidding for public contracts, the bid bond may be replaced with a letter of undertaking instead of being paid in cash."
The government will also strengthen price monitoring for major construction materials. The Public Procurement Service will release on the 20th the prices of about 6,300 key items procured by the government. The agency regularly surveys item prices to reflect them in construction costs for government-ordered projects, and this release is part of that effort. Originally, prices were released only twice a year, but going forward, oil products and naphtha will be released weekly. Materials with a high share in construction, such as steel products and gypsum board, will be released monthly.