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ACT ON CONTRACTS TO WHICH THE STATE IS A PARTY

Act No. 4868, Jan. 5, 1995

Amended by Act No. 5454, Dec. 13, 1997

Act No. 5453, Dec. 13, 1997

Act No. 6836, Dec. 30, 2002

Act No. 7722, Dec. 14, 2005

Act No. 8050, Oct. 4, 2006

Act No. 8852, Feb. 29, 2008

Act No. 11377, Mar. 21, 2012

Act No. 11547, Dec. 18, 2012

Act No. 12028, Aug. 13, 2013

Act No. 12860, Dec. 30, 2014

Act No. 14038, Mar. 2, 2016

Act No. 14839, Jul. 26, 2017

 Article 1 (Purpose)
The purpose of this Act is to promote smooth administration of contracts by providing for basic matters regarding contracts to which the State is a party.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 2 (Scope of Application)
This Act shall apply to contracts to which the State is a party, including government procurement contracts entered into through international tendering procedures and contracts entered into between the State as a party and a national of the Republic of Korea as the counter-party (including contracts that become sources of revenue).
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 3 (Relationship to Other Acts)
Except as otherwise provided for in any other Act, contracts to which the State is a party shall be governed by the provisions of this Act.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 4 (Scope of Government Procurement Contracts Made through International Tendering Procedures)
(1) The scope of government procurement contracts made through international tendering procedures shall cover contracts made by a government agency for goods, construction works, or services in the amount not less than the amount determined and publicly notified by the Minister of Strategy and Finance pursuant to the Agreement on Government Procurement and international norms based on the aforementioned Agreement: Provided, That the following cases shall be excluded from transactions subject to a government procurement contract made through international tendering procedures:
1. Where goods or services are procured as necessary for manufacturing for the purpose of resale or sale;
2. Where products from a small or medium enterprise are manufactured and purchased pursuant to the Act on Facilitation of Purchase of Small and Medium Enterprise-Manufactured Products and Support for Development of their Markets;
3. Where agricultural, fishery, or livestock products are purchased pursuant to the Grain Management Act, the Act on Distribution and Price Stabilization of Agricultural and Fishery Products, or the Livestock Industry Act;
4. Other cases specified by Presidential Decree in conformity with the provisions of the Agreement on Government Procurement.
(2) The scope of government agencies and goods, construction works, and services referred to in paragraph (1) shall be prescribed by Presidential Decree in conformity with provisions of the Agreement on Government Procurement.
(3) If the head of a central government agency defined under Article 6 of the National Finance Act (hereinafter referred to as “head of a central government agency”) or the public official to whom contracting is delegated or entrusted under Article 6 (hereinafter referred to as “contracting officer”) deems it necessary in the light of the purposes, nature, etc. of a contract, he/she may procure goods or services through international tendering procedures, as prescribed by Presidential Decree, even where the case does not fall under paragraph (1).
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 5 (Principles of Contracting)
(1) A contract shall be concluded by agreement of parties to the contract on equal footings, and the parties shall perform terms and conditions of the contract in good faith.
(2) In compliance with the principle of reciprocity, neither the head nor the contracting officer of a central government agency shall attach any special term or condition, discriminative against nationals of Contracting States to the Agreement on Government Procurement and goods produced or services provided by such States and in favor of nationals of the Republic of Korea and goods produced or services provided from the Republic of Korea, to international tendering procedures under Article 4 (1).
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 5-2 (Integrity Agreement)
(1) In order to improve transparency and fairness in contracts to which the State is a party, the head or contracting officer of a central government agency shall require a tenderer or contractor to promise that he/she will not offer or receive money, goods, entertainment, or any other benefit directly or indirectly in the course of making or accepting a tender or signing or performing a contract (and even after the completion of the relevant project or the delivery of goods) and make an agreement (hereinafter referred to as “integrity agreement”) on condition that the relevant tender or tender acceptance may be revoked or the relevant contract may be cancelled or terminated, if the tenderer or contractor does not keep such promise.
(2) Specific terms and conditions of an integrity agreement, the procedure for the execution of such agreement, and other details thereof shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11547, Dec. 18, 2012]
 Article 5-3 (Cancellation, Termination, etc. of Contract upon Breach of Integrity Agreement)
If a tenderer or contractor does not comply with the integrity agreement, the head or contracting officer of the competent central government agency shall revoke the relevant tendering procedure or acceptance of the relevant tender or shall cancel or terminate the relevant contract: Provided, That if such revocation, cancellation, or termination is anticipated to be severely detrimental to public interest, a contractor may be permitted to continue to perform the relevant contract with approval therefor from the head of the competent central government agency, as prescribed by Presidential Decree, taking into consideration the seriousness of misconduct, such as offering money, goods, entertainment, or other benefit, the progress of performance of the relevant contract, the amount of a loss incurred to the State by suspending the performance of the contract, and other circumstances.
[This Article Newly Inserted by Act No. 11547, Dec. 18, 2012]
 Article 6 (Delegation and Entrustment of Administrative Affairs regarding Contracts)
(1) If the head of a central government agency deems it necessary for handling administrative affairs regarding contracts within his/her jurisdiction, he/may appoint a public official in his/her agency as a public official in charge of contracting (hereinafter referred to as “contracting officer”) to delegate his/her authority for administrative affairs regarding contracts and may appoint another public official in his/her agency to act on behalf of the contracting officer or to take charge of part of the administrative affairs assigned to the contracting officer.
(2) The head of a central government agency may entrust administrative affairs to be assigned to the contracting officer to a public official in another central government agency, as prescribed by Presidential Decree.
(3) The head of a central government agency may entrust administrative affairs regarding contracts within his/her jurisdiction to another government agency, as prescribed by Presidential Decree.
(4) The delegation or entrustment of administrative affairs to be assigned to a contracting officer, the appointment of an acting contracting officer, or the partial allotment of administrative affairs under paragraphs (1) and (2) may be substituted by the designation of a public office already established in an agency affiliated to the competent central government agency.
(5) No person shall serve as a contracting officer without the financial guarantee prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 7 (Method of Contracting)
(1) Where the head or contracting officer of a central government agency intends to make a contract, he/she shall call for open tenders for the contract: Provided, That if it is deemed necessary in the light of the purposes, nature, size, etc. of a contract, the head or contracting officer of a central government agency may place restrictions on the qualification for participants or designate participants to invite competitive tenders or may execute a negotiated contract, as prescribed by Presidential Decree.
(2) Where competitive tenders are invited pursuant to the body of paragraph (1), tenderers shall undergo a pre-qualification process to be qualified for making a tender in accordance with the standards and procedures for pre-qualification necessary for evaluating the capability of performing the contract, including the level of difficulty in the performance of the contract, records of performance, technical capacity, financial position, social reputation, and the level of fidelity to the performance of a contract, and only pre-qualified persons may be invited to make a tender.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 8 (Public Tender Notice, etc.)
(1) Where the head or contracting officer of a central government agency calls for competitive tenders, he/she shall give a public notice or advice of matters regarding the tendering procedure.
(2) The methods, contents, and timing of the public notice or advice of tendering procedures under paragraph (1), and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 9 (Tender Bond)
(1) The head or contracting officer of a central government agency shall require persons who make a competitive tender to pay a tender bond: Provided, That a tenderer may be fully or partially exempted from a tender bond in the cases specified by Presidential Decree.
(2) The amount of a tender bond under paragraph (1), the method of payment of such tender bond, and other necessary matters shall be prescribed by Presidential Decree.
(3) When a successful tenderer fails to execute the relevant contract, the head or contracting officer of a central government agency shall revert the relevant tender bond to the National Treasury. In such cases, when a successful tenderer has been fully or partially exempted from a tender bond under the proviso to paragraph (1), he/she shall revert the amount equivalent to the tender bond to the National Treasury, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 10 (Determination of Successful Tenderer in Competitive Tendering Procedure)
(1) In a competitive tendering procedure that becomes a source of revenue, a person who tenders the highest price shall be determined as the successful tenderer: Provided, That the foregoing shall not apply to cases where criteria for the successful bidder are prescribed by Presidential Decree, taking into consideration purposes of the contract, tendered prices, the quantity, etc.
(2) In a competitive tendering procedure that imposes a burden on the National Treasury, a tenderer who meets any of the following criteria shall be determined as the successful tenderer:
1. A person who is recognized as capable of performing the contract and tenders the lowest price;
2. A person whose tender is the most favorable to the State according to the criteria specified for evaluation in the tender notice or tender guidance;
3. A person whose tender conforms to criteria the most, where such criteria are specially prescribed by Presidential Decree, taking into consideration the nature, size, etc. of contract.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 11 (Preparation of Written Contract and Formation of Contract)
(1) When the head or contracting officer of a central government agency executes a contract, he/she shall prepare a written contract, clearly specifying the following matters therein: Provided, That preparing a written contract may be omitted in the cases specified by Presidential Decree:
1. Purposes of contract;
2. Amount of contract;
3. Period of performance;
4. Contract bond;
5. Burden of risk;
6. Penalty for delay;
7. Other necessary matters.
(2) Where a written contract is prepared pursuant to paragraph (1), the contract shall be finally concluded when the public official in charge and the counter-party to the contract print their names and affix their seals or signatures on the contract.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 12 (Contract Bond)
(1) The head or contracting officer of a central government agency shall require a person who intends to enter into a contract with the State to pay a contract bond: Provided, That a person may be fully or partially exempted from a contract bond in the cases specified by Presidential Decree.
(2) The amount of a contract bond under paragraph (1), the method of payment of a contract bond, and other necessary matters shall be prescribed by Presidential Decree.
(3) If the counter-party to a contract fails to perform his/her obligation under the contract, the head or contracting officer of a central government agency shall revert the relevant contract bond to the National Treasury. In such cases, when the counter-party has been fully or partially exempted from a contract bond under the proviso to paragraph (1), he/she shall revert the amount equivalent to the contract bond to the National Treasury, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 13 (Supervision)
(1) If the head or contracting officer of a central government agency deems it necessary to ensure proper performance of a contract when he/she makes a contract for construction works, manufacturing, or services, he/she may directly supervise the performance of the contract in accordance with the contract, design documents, and other relevant documents or may authorize public officials in the central government agency to supervise the performance of the contract as necessary: Provided, That a specialized institution may be designated particularly for supervision, as necessary, in cases of a contract specified in Presidential Decree.
(2) A person who supervises the performance of a contract pursuant to paragraph (1) shall make records of supervision.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 14 (Inspection)
(1) When the counter-party to a contract fully or partially performs the contract, the head or contracting officer of a central government agency may directly inspect the performance of the contract in accordance with the contract, design documents, and other relevant documents or may authorize public officials in the central government agency to inspect the performance of the contract as necessary: Provided, That a specialized institution may be designated particularly to conduct inspections, as necessary, in cases of a contract specified in Presidential Decree.
(2) A person who conducts an inspection pursuant to paragraph (1) shall make records of inspection: Provided, That making records of inspection may be omitted in the cases specified by Presidential Decree.
(3) Notwithstanding paragraph (1), the head or contracting officer of a central government agency may omit the inspection under the aforementioned paragraph, if the goods subject to inspection are the products specified by Presidential Decree, such as products, the quality of which has been certified under any other Act or subordinate statute or products manufactured by a person whose capability of quality management has been accredited.
(4) In cases of a contract for the purchase of goods or a contract for the manufacturing of goods, expenses incurred in inspections or tests necessary due to the nature of the goods, and a loss caused by deformation or destruction in the course of such inspections or tests shall be borne by the counter-party to the contract.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 15 (Payment of Price)
(1) In cases of a contract for construction works, manufacturing, purchasing, or services, or any other contract that imposes a burden on the National Treasury, the head or contracting officer of a central government agency shall pay the price therefor after conducting an inspection or making an inspection record: Provided, That the foregoing shall not apply to cases where an international practice or other exceptional situation exists.
(2) The price under paragraph (1) shall be paid by the deadline specified by Presidential Decree after the date on which the counter-party submits an invoice for the payment of the price, but interest for the number of days overdue shall be paid, as prescribed by Presidential Decree, if it is impracticable to pay the price by the deadline.
(3) The interest accruing under paragraph (2) may be offset against the penalty for delay under Article 26 for an identical contract.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 16 (Advance Payment of Price)
Except as otherwise provided for expressly in any other Act or subordinate statute, the head or contracting officer of a central government agency shall require the counter-party to a contract for the sale or lease of an asset or for the supply of services or any other contract that becomes a source of revenue to pay the price in advance.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 17 (Warranty of Contract for Construction Works)
When the head or contracting officer of a central government agency concludes a contract for construction works, he/she shall specify the term of warranty. In such cases, the term of warranty shall not exceed the period specified in Article 671 of the Civil Act.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 18 (Warranty Bond)
(1) In cases of a contract for construction works, the head or contracting officer of a central government agency shall require the counter-party to the contract to pay a warranty bond to guarantee the repair of defects in the construction works: Provided, That the counter-party to a contract may be fully or partially exempted from a warranty bond in the cases specified by Presidential Decree.
(2) The amount of the warranty bond under paragraph (1), the time to pay such warranty bond, the method of payment of such warranty bond, the period of deposit of such warrant bond, and other necessary matters shall be specified by Presidential Decree.
(3) Article 12 (3) shall apply mutatis mutandis to the forfeiture of a warranty bond to the National Treasury: Provided, That the budget for the repair of defects is lacking or inadequate, the warranty bond may be used directly for the repair of such defects.
(4) The remainder of a warranty bond, left over after using it pursuant to the proviso to paragraph (1), shall be transferred to the National Treasury.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 19 (Adjustment of Contract Amount According to Price Fluctuation, etc.)
When it is necessary to adjust the contract amount due to price fluctuation, a design modification, or an amendment to terms and conditions of contract after a contract for construction works, manufacturing, or services or any other contract that imposes a burden on the National Treasury is concluded, the head or contracting officer of the competent central government agency shall adjust the contract amount, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 20 (Conclusion of Contract before Beginning of Fiscal Year)
Notwithstanding Article 20 of the Management of the National Funds Act, the head or contracting officer of a central government agency may conclude a contract in advance before the beginning of a fiscal year within budget limit finalized for the pertinent year, as prescribed by Presidential Decree, if the contract is not suspensible in its nature, such as a contract for lease, transportation, or storage.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 21 (Continuing Expenditure and Long-Term Continuing Contract)
(1) With regard to a project involving continuing expenditure, as defined under Article 23 of the National Finance Act, the head or contracting officer of a central government agency shall specify the total amount and annual installments in concluding a contract.
(2) The head or contracting officer of a central government agency may execute a long-term continuing contract, if it is necessary in its nature to maintain a contract for years or if it takes years to perform a contract, such as a contract for lease, transportation, storage, or supply of electricity, gas, or water. In such cases, the head or contracting officer of a central government agency shall ensure that such contract be performed within budget limit for each fiscal year.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 22 (Unit Price Contract)
If it is necessary to continuously maintain a contract for manufacturing, repair, processing, trading, supply, or use for a certain period, the head or contracting officer of the competent central administrative agency may execute a unit price contract within budget limit for each year.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 23 (Contract by Rough Estimate)
(1) If the head or contracting officer of a central administrative agency is unable to specify a price in advance for any of the following contracts, he/she may execute a contract by rough estimate, as prescribed by Presidential Decree:
1. A contract for manufacturing a prototype from development;
2. A service contract for testing, survey, or research;
3. A contract made with a public institution, as defined under the Act on the Management of Public Institutions, for entrustment or delegation of performance under a relevant Act or subordinate statute;
4. A contract for urgent recovery from a disaster with no time to specify it.
(2) Necessary matters for the procedure, guidelines, etc. for the ex post facto settlement of a contract made by rough estimate under paragraph (1) shall be prescribed by Presidential Decree.
(3) When the head or contracting officer of a central administrative agency executes a contract by rough estimate pursuant to paragraph (1), he/she shall notify prospective tenderers of the procedure, guidelines, etc, for the ex post facto settlement under paragraph (2) through the public tender notice.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 24 (Consolidated Contract)
(1) With regard to construction works in which another government agency, a local government, or a public institution or a quasi-government agency, prescribed in the Act on the Management of Public Institutions, is involved in an identical place, the head or contracting officer of a central administrative agency may execute a contract for placing an order jointly with the authorities involved (hereinafter referred to as “consolidated contract”).
(2) The head of the authorities involved in executing a consolidated contract shall cooperate in matters necessary for executing the contract.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 25 (Joint Contract)
(1) The head or contracting officer of a central administrative agency may execute a joint contract with two or more counter-parties if he/she it necessary with regard to a contract for construction works, manufacturing, or any other purpose.
(2) A contract prepared pursuant to paragraph (1) shall be finally formed when the public official in charge and all counter-parties print their names and affix their seals or signatures thereon.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 26 (Penalty for Delay)
(1) If the counter-party to a contract delays his/her performance of the contract without justification, the head or contracting officer of the competent central administrative agency shall claim the counter-party to pay a penalty for delay.
(2) The amount of a penalty under paragraph (1), the method of payment, and other necessary matters shall be prescribed by Presidential Decree.
(3) The proviso to Article 18 (3) shall apply mutatis mutandis to the penalty for delay under paragraph (1).
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 27 (Restriction, Etc. on Qualification for Participation of Inappropriate Business Entities in Tendering Procedures)
(1) If the head of a central government agency finds a person falling under any of the following (hereinafter referred to as “inappropriate business entity”), the head shall place restrictions on qualification for participation of such inappropriate business entity in a tendering procedure for a period not exceeding two years, as prescribed by Presidential Decree, and shall immediately notify the heads of other central government agencies of the restrictions. In such cases, upon receipt of such notice, the heads of central government agencies shall place restrictions on qualification for participation of such inappropriate business entity in tendering procedures, as prescribed by Presidential Decree: <Amended by Act No. 11547, Dec. 18, 2012; Act No. 14038, Mar. 2, 2016; Act No. 14839, Jul. 26, 2017>
1. A person who acts in a poor, coarse or unfair manner or has engaged in an illegal act in the course of signing a contract;
2. A person who agrees on the tender price, order amount or contract contents, etc. with tenderers or counter parties to the contract in advance or colludes for tender acceptance of a specific person or selection of the subject of delivery of goods in the procedure of a competitive tender, or execution of or signing a contract;
3. A person who subcontracts in violation of the restrictions on subcontracts pursuant to the Framework Act on the Construction Industry, the Electrical Construction Business Act, the Information and Communications Construction Business Act, the Software Industry Promotion Act and other Acts (excluding the cases of violating the duty of notifying subcontracts) and a person who subcontracts without the approval by the ordering agency or changes the condition of subcontracts approved by the ordering agency;
4. A person does damages to the State in the procedure of tendering or acceptance of tendering or the procedure of signing and executing the contract by a fraud or other illegal acts;
5. A person for whom there is a request by the Fair Trade Commission to restrict the qualification of participating tendering, due to the violation of the Monopoly Regulation and Fair Trade Act or the Fair Transactions in Subcontracting Act;
6. A person for whom there is a request by the Minister of the SMEs and Startups to restrict the qualification of participating tendering pursuant to Article 27 (5) of the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises;
7. A person who offers a bribe to the relevant public official (including the members of the Committee for Imposition of Penalty Surcharges pursuant to Article 27-3 (1); the State Contract Disputes Conciliation Committee pursuant to Article 29 (1); the Central Deliberation Committee on Construction Technology, the Special Deliberation Committee on Construction Technology and the consultative committee on technology pursuant to the Construction Technology Promotion Act; and other committees prescribed by Presidential Decree) regarding the tendering or acceptance of tendering or signing and executing the contract;
8. Any of the following persons, as prescribed by Presidential Decree:
(a) A person assumed to hinder a fair execution of competition by forging or falsifying the documents relevant to tendering or contract or disturbing tendering or contract;
(b) A person assumed to interfere a proper performance of contracts by failing to conduct or disturbing the acts relevant to signing or executing contract;
(c) A person deemed inappropriate to participate in tendering due to the violation, etc. of other Acts.
(2) Deleted. <by Act No. 5454, Dec. 13, 1997>
(3) The head or contracting officer of a central administrative agency shall not execute a negotiated contract with a person whose qualification for participation in tendering procedures is subject to restrictions placed under paragraph (1): Provided, That the foregoing shall not apply where no appropriate contractor or manufacturer exists, except persons whose qualification for participation in tendering procedures is subject to restrictions placed under paragraph (1) or where any other inevitable situation exists. <Amended by Act No. 11547, Dec. 18, 2012>
(4) Notwithstanding paragraph (1), the head of a central government agency shall not place a restriction on the qualification for participating tendering where five years have passed since the day of termination of the acts falling under each subparagraph of paragraph (1) (in the cases of subparagraphs 5 and 6, referring to the day when there is a request by the Minister of SMEs and Startups or Korea Fair Trade Commission): Provided, That it shall be seven years from the day of termination of the violation in the cases of acts pursuant to subparagraphs 2 and 7. <Newly Inserted by Act No. 14038, Mar. 2, 2016; Amended by Act No. 14839, Jul. 26, 2017>
(5) Where the head of a central government agency places a restriction on the qualification of participating tendering pursuant to paragraph (1), he/she shall disclose the details of restriction as prescribed by Presidential Decree. <Newly Inserted by Act No. 14038, Mar. 2, 2016>
 Article 27-2 (Penalty Surcharge)
(1) Where restrictions shall be placed on qualification for participation of an inappropriate business entity in tendering procedures under Article 27 (1), the head of a central government agency may impose a penalty surcharge not exceeding the amount specified in any of the following subparagraphs, whichever is relevant, in substitution for restrictions on qualification for participation in tendering procedures in any of the following cases:
1. Cases specified by Presidential Decree as cases where a violation of the inappropriate business entity was caused by an evidently unforeseeable change in the economic situation or the liability of the inappropriate business entity is insignificant: An amount equivalent to 10/100 of the amount of the contract (referring to an estimated price, if no contract has been executed yet) involved in the violation;
2. Cases specified by Presidential Decree as cases where it is evident that a competitive tendering procedure is not effectively completed due to restrictions on qualification for participation in tendering procedures: An amount equivalent to 30/100 of the amount of the contract (referring to an estimated price, if no contract has been executed yet) involved in the violation.
(2) Where the head of a central government agency intends to impose a penalty surcharge under paragraph (1), he/she shall refer the case to the Committee for Imposition of Penalty Surcharges under Article 27-3 for examination, as prescribed by Presidential Decree.
(3) The amount of a penalty surcharge under paragraph (1) and other necessary matters shall be prescribed by Presidential Decree.
(4) If a person upon whom a penalty surcharge has been imposed under paragraph (1) fails to pay it by the deadline for payment, the penalty surcharge shall be collected in the same manner as delinquent national taxes are collected.
[This Article Newly Inserted by Act No. 11547, Dec. 18, 2012]
 Article 27-3 (Committee for Imposition of Penalty Surcharges)
(1) In order to determine whether to impose a penalty surcharge and examine whether the amount of a penalty surcharge is appropriate, the Ministry of Strategy and Finance shall establish the Committee for Imposition of Penalty Surcharges as its affiliated organ.
(2) Matters necessary for the organization, operation, etc. of the Committee for Imposition of Penalty Surcharges under paragraph (1) shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11547, Dec. 18, 2012]
 Article 27-4 (Participation in Tendering Procedures On Condition of Direct Payment of Subcontract Amounts)
(1) When the head of a central government agency finds that the counter-party to a contract violates Article 34 (1) of the Framework Act on the Construction Industry or Article 13 (1) or (3) of the Fair Transactions in Subcontracting Act, he/she shall notify the heads of other central government agencies of the counter-party and his/her violation without delay.
(2) Upon receipt of the notice given pursuant to paragraph (1), the head or contracting officer of a central administrative agency shall permit the counter-party to a contract referred to in paragraph (1) to participate in a tendering procedure, only when the counter-party submits a letter of confirmation in which he/she agrees that the authorities awarding the contract shall pay subcontract amounts directly to subcontractors in paying the contract price under Article 15 (1), if such counter-party intends to make a tender in a tendering procedure of which public tender notice is given within one year from the date of such notice.
[This Article Newly Inserted by Act No. 11547, Dec. 18, 2012]
 Article 27-5 (Restriction on Qualification for Participation of Persons who Have Evaded on Taxes, etc. in Tendering Procedures)
(1) The head of a central administrative agency shall place restrictions on qualification for participation of a person who has evaded taxes, etc. as prescribed by Presidential Decree and for whom two years have not elapsed from the date on which the judgment of conviction becomes final.
(2) Article 27 (3) shall apply mutatis mutandis in cases of the conclusion of a negotiated contact with a person who has been restricted from participating in a tender pursuant to paragraph (1).
[This Article Newly Inserted by Act No. 12028, Aug. 13, 2013]
 Article 28 (Petition for Objection)
(1) A person whose interest is prejudiced by an act conducted by the head or contracting officer of a central administrative agency with regard to any of the following matters in the course of handling a government procurement contract for an amount equivalent to or greater than the amount specified by Presidential Decree (Article 4 shall apply where it occurs in the course of an international tendering procedure) may file a petition for objection, seeking the revocation or rectification of such act:
1. A matter regarding the scope of a government procurement contract for which international tendering is called under Article 4 (1);
2. A matter regarding qualification for participation in tendering procedures under Article 7;
3. A matter regarding the public tender notice, etc. under Article 8;
4. A matter regarding the determination of a successful tenderer under Article 10 (2);
5. Other matters specified by Presidential Decree.
(2) A petition for objection shall be filed to the head of the competent central government agency within fifteen days from the date on which the act constituting the cause of the petition was conducted or within ten days from the date on which the petitioner becomes aware that such act was conducted.
(3) The head of a central government agency shall examine a petition for objection within ten days from the date on which the petition for objection is filed, take necessary measures, such as rectification, and notify the petitioner of the results thereof.
(4) A person who has an objection against a measure taken under paragraph (3) may file an petition for review, seeking conciliation by the State Contract Disputes Conciliation Committee under Article 29.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 29 (State Contract Disputes Conciliation Committee)
(1) In order to examine petitions filed for review under Article 28 (4) and conciliate the parties involved, the Ministry of Strategy and Finance shall establish the State Contract Disputes Conciliation Committee (hereinafter referred to as the “Committee”) as its affiliated organ.
(2) The Committee shall consists of up to 15 members including one chairperson. <Amended by Act No. 14038, Mar. 2, 2016>
(3) The chairperson of the Committee shall be a public official belonging to the senior executive service designated by the Minister of Strategy and Finance, and the members shall be the persons appointed by the Minister of Strategy and Finance among those belonging to the central administrative agency prescribed by Presidential Decree, who are designated by the head of the relevant agency, and persons falling under any of the following, in consideration of genders: <Newly Inserted by Act No. 14038, Mar. 2, 2016>
1. A person who has a career as an associate professor or at higher rank in law, finance, trade or accounting in universities and colleges pursuant to the Higher Education Act for not less than five years;
2. A person qualified as a lawyer, who has been engaged in or once engaged in the affairs relevant to the qualification;
3. A person who has abundant knowledge and experience in the affairs of accounting and procurement contracts of the Government, who is deemed to satisfy the standards of subparagraph 1 or 2.
(4) The term of office of the appointed member pursuant to each subparagraph of paragraph (3) shall be two years, and he/she may be reappointed. <Newly Inserted by Act No. 14038, Mar. 2, 2016>
(5) The term of the member newly appointed due the resignation of the appointed member pursuant to each subparagraph of paragraph (3) shall be the remaining term of his/her predecessor. <Newly Inserted by Act No. 14038, Mar. 2, 2016>
(6) The appointed member pursuant to each subparagraph of paragraph (3) shall not be dismissed against his/her will during his/her term, except in the cases where he/she is sentenced to imprisonment without prison labor or heavier punishment or is not able to conduct his/her duties due to mental and physical weakness for a long term. <Newly Inserted by Act No. 14038, Mar. 2, 2016>
(7) No member of the Committee shall participate in the examination and conciliation of the items directly concerned with the member. <Newly Inserted by Act No. 14038, Mar. 2, 2016>
(8) Except as provided for in paragraphs (2) through (7), the procedure of the operation, examination and conciliation of the Committee, and other necessary matters shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 14038, Mar. 2, 2016>
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 30 (Suspension of Contracting Procedures)
(1) Where the Committee commences examination and conciliation, it shall notify the petitioner and the head of the competent central government agency of the commencement.
(2) The Committe may issue an order to defer the relevant tendering procedure or suspend the execution of the relevant contract until conciliation proceedings are closed if it deems it necessary to do so, considering the opinions from the head of the competent central government agency.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 31 (Examination and Conciliation)
(1) The Committee shall examine a petition for review and conciliate the parties involved within 50 days from the date on which the petition for review is filed, except in an exceptional situation.
(2) If neither the petitioner nor the head of the competent government central government agency raises an objection against the conciliation concluded pursuant to paragraph (1) within 15 days after conciliation proceedings are closed, the conciliation shall be as effective as consent judgment.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 32 (Training of Public Officials in Charge of Contracting)
The Government may train public officials in charge of contracting to improve their qualities.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 33 (Submission of Reports on Performance of Contracts)
The head of each central government agency shall submit a report on performance of contracts to the Minister of Strategy and Finance, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 34 (Consultation on Acts and Subordinate Statutes regarding Contracting)
When the head of a central government agency drafts a bill for an Act or subordinate statute with regard to contracting, he/she shall consult with the Minister of Strategy and Finance thereon.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 35 (Legal Fiction as Public Official for Purposes of Penalty Provisions)
A person who is not a public official among members of the following Committees shall be deemed a public official for the purposes of Articles 129 through 132 of the Criminal Act:
1. The Committee for Imposition of Penalty Surcharges established under Article 27-3;
2. The State Contract Disputes Conciliation Committee established under Article 29;
3. Committees prescribed by Presidential Decree, which perform the pre-qualification and advisory services on tenders, tender acceptance, or signing or performing contracts.
[This Article Newly Inserted by Act No. 12860, Dec. 30, 2014]
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Article 2 (Transitional Measure)
A contract executed pursuant to the Budget and Accounts Act before this Act enters into force shall be deemed a contract executed pursuant to this Act.
Article 3 Omitted.
Article 4 (Relationship to Other Acts)
A citation of Chapter Ⅵ of the Budget and Accounts Act or any provision of the said Chapter of the said Act by any other Act in force as at the time this Act enters into force shall be deemed a citation of this Act or the corresponding provision of this Act.
ADDENDA <Act No. 5453, Dec. 13, 1997>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 1998. (Proviso Omitted.)
Article 2 Omitted.
ADDENDUM <Act No. 5454, Dec. 13, 1997>
This Act shall enter into force on January 1, 1998. (Proviso Omitted.)
ADDENDA <Act No. 6836, Dec. 30, 2002>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2003.
Articles 2 through 7 Omitted.
ADDENDUM <Act No. 7722, Dec. 14, 2005>
This Act shall enter into force three months after the date of its promulgation.
ADDENDA <Act No. 8050, Oct. 4, 2006>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2007. (Proviso Omitted.)
Articles 2 through 12 Omitted.
ADDENDA <Act No. 8852, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 7 Omitted.
ADDENDUM <Act No. 11377, Mar. 21, 2012>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 11547, Dec. 18, 2012>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Article 2 (Applicability to Integrity Agreements)
The amended provisions of Article 5-2 shall apply to tendering procedures, of which a public tender notice or advice is given after the amended provisions enter into force: Provided, That the amended provisions shall apply to negotiated contracts executed after this Act enters into force where a negotiated contract shall be made pursuant to the proviso to Article 7 (1).
Article 3 (Applicability to Integrity Agreements)
The amended provisions of Article 27-2 shall apply where the first reason for posing restrictions on participation in a tendering procedure under the amended provisions of Article 27 arises after the amended provisions enter into force.
Article 4 (Applicability to Participation in Tendering Procedures on Condition of Direct Payment of Subcontract Amounts)
The amended provisions of Article 27-4 (2) shall apply to notices given on or after the amended provisions enter into force.
Article 5 (Applicability to Petitions for Objection, etc.)
The amended provisions of Articles 28 (1) and (4) and 29 (1) shall apply to contracts, of which a public tender notice is given, or contracts executed, on or after the amended provisions enter into force.
Article 6 (General Transitional Measure)
Contracts, of which a public tender notice was given, or contracts executed, before this Act enters into force shall be governed by the former provisions.
ADDENDUM <Act No. 12028, Aug. 13, 2013>
This Act enters into force six months after the date of its promulgation.
ADDENDUM <Act No. 12860, Dec. 30, 2014>
This Act enters into force six months after the date of its promulgation.
ADDENDUM <Act No. 14038, Mar. 2, 2016>
This Act shall enter into force six months after the date of its promulgation.
ADDENDA <Act No. 14839, Jul. 26, 2017>
Article 1 (Enforcement Date)
(1) This Act shall enter into force on the date of its promulgation. Provided, That the provisions amending any Act that was promulgated before this Act enters into force but has yet to enter into force, among the Acts amended pursuant to Article 5 of the Addenda, shall enter into force on the respective date the relevant Act enters into force.
Articles 2 through 6 Omitted.