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ENFORCEMENT DECREE OF THE ACT ON FACILITATION OF PURCHASE OF SMALL AND MEDIUM ENTERPRISE-MANUFACTURED PRODUCTS AND SUPPORT FOR DEVELOPMENT OF THEIR MARKETS

Presidential Decree No. 21834, Nov. 20, 2009

Amended by Presidential Decree No. 21904, Dec. 24, 2009

Presidential Decree No. 21928, Dec. 30, 2009

Presidential Decree No. 21962, Dec. 31, 2009

Presidential Decree No. 22075, Mar. 15, 2010

Presidential Decree No. 22222, jun. 28, 2010

Presidential Decree No. 22220, jun. 28, 2010

Presidential Decree No. 22269, Jul. 12, 2010

Presidential Decree No. 22282, Jul. 21, 2010

Presidential Decree No. 22598, Dec. 31, 2010

Presidential Decree No. 22988, jun. 27, 2011

Presidential Decree No. 23348, Dec. 6, 2011

Presidential Decree No. 24432, Mar. 23, 2013

Presidential Decree No. 24492, Apr. 3, 2013

Presidential Decree No. 24528, May 6, 2013

Presidential Decree No. 24717, Sep. 9, 2013

Presidential Decree No. 25380, jun. 11, 2014

Presidential Decree No. 25751, Nov. 19, 2014

Presidential Decree No. 26248, May 26, 2015

Presidential Decree No. 26804, Dec. 30, 2015

Presidential Decree No. 26890, Jan. 12, 2016

Presidential Decree No. 27324, Jul. 6, 2016

Presidential Decree No. 28213, Jul. 26, 2017

Presidential Decree No. 28338, Sep. 19, 2017

Presidential Decree No. 29087, Aug. 7, 2018

Presidential Decree No. 29421, Dec. 24, 2018

CHAPTER I GENERAL PROVISIONS
 Article 1 (Purpose)
The purpose of this Decree is to prescribe matters delegated by the Act on Facilitation of Purchase of Small and Medium Enterprise-Manufactured Products and Support for Development of Their Markets and matters necessary for the enforcement of said Act.
 Article 2 (Definitions)
(1) "Corporations prescribed by Presidential Decree" defined in subparagraph 2 (c) of Article 2 of the Act on Facilitation of Purchase of Small and Medium Enterprise-Manufactured Products and Support for Development of Their Markets (hereinafter referred to as the "Act"), means the following:
1. The Korea Federation of Small and Medium Businesses under the Small and Medium Enterprise Cooperatives Act (hereinafter referred to as the "Korea Federation of Small and Medium Businesses");
2. The National Agricultural Cooperative Federation under the Agricultural Cooperatives Act;
3. The National Federation of Fisheries Cooperatives under the Fisheries Cooperatives Act;
4. The National Forestry Cooperatives Federation under the Forestry Cooperatives Act;
5. The Bank of Korea under the Bank of Korea Act;
6. Deleted; <by Presidential Decree No. 29087, Aug. 7, 2018>
7. The Korea Chamber of Commerce and Industry under the Chambers of Commerce and Industry Act.
(2) "Public institutions prescribed by Presidential Decree" defined in subparagraph 2 (d) of Article 2 of the Act, means public corporations, quasi-governmental institutions or any other public institution referred to in Article 5 of the Act on the Management of Public Institutions.
CHAPTER II FACILITATING PURCHASE OF SMALL AND MEDIUM ENTERPRISE-MANUFACTURED PRODUCTS AND OPERATING COMPETITIVE SYSTEM BETWEEN SMALL AND MEDIUM ENTERPRISES
 Article 2-2 (Preferential Procurement Contracts with Small and Medium Enterprises)
(1) A procurement contract that the heads of public institutions must conclude preferentially with small and medium enterprises pursuant to Article 4 (2) of the Act (hereinafter referred to as "preferential procurement contract") shall be concluded according to any of the following methods: <Amended by Presidential Decree No. 26248, May 26, 2015; Presidential Decree No. 28213, Jul. 26, 2017; Presidential Decree No. 29087, Aug. 7, 2018>
1. Where it is intended to procure goods or services, the estimated price (referring to the estimated price defined in subparagraph 1 of Article 2 of the Enforcement Decree of the Act on Contracts to Which the State Is a Party or subparagraph 1 of Article 2 of the Enforcement Decree of the Act on Contracts to Which a Local Government Is a Party; hereinafter the same shall apply) of which is less than 100 million won, a procurement contract shall be concluded following limited competitive tendering process open only to small enterprises defined in Article 2 (2) of the Framework Act on Small and Medium Enterprises or micro enterprises defined in Article 2 of the Act on the Protection of and Support for Micro Enterprises (including corporations or organizations which meet the standards determined and publicly notified by the Minister of SMEs and Startups, from among the corporations or organizations deemed as small and medium enterprises under Article 33 (1) of the Act; hereinafter referred to as "small or micro enterprises"): Provided, That where less than two small or micro enterprises participate in tendering process, or where tendering has failed due to a lack of qualified persons or any other reason though at least two small or micro enterprises participated therein, a procurement contract may be concluded following limited competitive tendering process open only to small and medium enterprises (excluding persons defined in subparagraph 1 (b) of Article 2 of the Act; hereafter in this Article and Article 2-3, the same shall apply);
2. Where it is intended to procure goods or services, the estimated price of which is at least 100 million won as well as less than the amount publicly notified by the Minister of Economy and Finance pursuant to Article 4 (1) of the Act on Contracts to Which the State Is a Party, a procurement contract shall be concluded following limited competitive tendering process open only to small and medium enterprises;
3. Where it is intended to procure goods or services commercialized, through a joint project prescribed by Ordinance of the Ministry of SMEs and Startups, by at least three small or micro manufacturing enterprises (referring to small or micro enterprises manufacturing goods or providing services directly; hereafter the same shall apply in this subparagraph) together with any small or medium enterprise cooperative under Article 3 of the Small and Medium Enterprise Cooperatives Act (hereinafter referred to as "cooperative"), a procurement contract may be concluded following limited competitive tendering process open only to such small or micro manufacturing enterprises, notwithstanding subparagraphs 1 and 2: Provided, That where at least three small or micro manufacturing enterprises, which are the entities of a joint project, are recommended to the head of a public institution at his or her request for recommendation to the relevant cooperative, a procurement contract shall be concluded following selective competitive tendering process open only to such small or micro manufacturing enterprises recommended.
(2) Article 7 (2) of the Act and Article 7 (3) and (4) of this Decree shall apply mutatis mutandis where the counter-party to a contract is determined pursuant to any subparagraph of paragraph (1), and Article 8 (4) shall apply mutatis mutandis where a procurement contract is concluded pursuant to the proviso to paragraph (1) 3. <Amended by Presidential Decree No. 26890, Jan. 12, 2016>
(3) The annual number of recommendations that each small or micro manufacturing enterprise can be accorded from a cooperative, annual limits on contracts and methods of recommendation under the proviso to paragraph (1) 3, and other matters necessary for procurement contracts concluded according to any method specified in any subparagraph of paragraph (1), shall be determined by the Minister of SMEs and Startups after consultation with the Administrator of the Public Procurement Service. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(4) “Amount prescribed by Presidential Decree” in Article 4 (3) of the Act means 10 billion won. <Newly Inserted by Presidential Decree No. 28338, Sep. 19, 2017>
[This Article Newly Inserted by Presidential Decree No. 24528, May 6, 2013]
 Article 2-3 (Exceptions to Preferential Procurement Contracts with Small and Medium Enterprises)
(1) In any of the following cases, the head of a public institution need not conclude a preferential procurement contract referred to in Article 2-2: <Amended by Presidential Decree No. 26890, Jan. 12, 2016; Presidential Decree No. 28213, Jul. 26, 2017>
1. Where less than two small and medium enterprises participate in tendering process referred to in the proviso to subparagraph 1 of Article 2-2 or subparagraph 2 of the same Article, or where tendering has failed due to a lack of qualified persons or any other reason, even though at least two small and medium enterprises participated therein;
2. Where it is intended to conclude a service contract for academic research, etc. with a non-profit corporation;
3. Where it is intended to procure goods or services specified by other statutes as the subject matter of preferential purchase or for which a negotiated contract or contract following selective competitive tendering process is permitted thereunder;
4. Where it is intended to conclude a contract other than a preferential procurement contract referred to in Article 2-2 due to a need of particular performance, technology, quality, etc., or on the grounds prescribed and publicly notified by the Minister of SMEs and Startups.
(2) Where the head of a public institution intends to conclude a procurement contract other than a preferential procurement contract in any case specified in any subparagraph of paragraph (1), he/she shall either state the ground for doing so in the relevant public notice of a tender or enter such ground into the Korea ON-line E-Procurement System under the Electronic Procurement Utilization and Promotion Act or the designated information processing system under Article 6-2 (2) of the Enforcement Decree of the Act on Contracts to which a Local Government is a Party. <Newly Inserted by Presidential Decree No. 26890, Jan. 12, 2016>
[This Article Newly Inserted by Presidential Decree No. 24528, May 6, 2013]
 Article 3 (Heads of Public Institutions Required to Notify Purchase Plans)
The heads of public institutions required to notify the Minister of SMEs and Startups of purchase plans and purchase records pursuant to Article 5 (1) of the Act shall be as follows: <Amended by Presidential Decree No. 22075, Mar. 15, 2010; Presidential Decree No. 22269, Jul. 12, 2010; Presidential Decree No. 22598, Dec. 31, 2010; Presidential Decree No. 22988, Jun. 27, 2011; Presidential Decree No. 24432, Mar. 23, 2013; Presidential Decree No. 24717, Sep. 9, 2013; Presidential Decree No. 25751, Nov. 19, 2014; Presidential Decree No. 26890, Jan. 12, 2016; Presidential Decree No. 28213, Jul. 26, 2017; Presidential Decree No. 29087, Aug. 7, 2018>
1. In cases of State agencies, any of the following persons:
(a) The Minister of Economy and Finance; Minister of Education; Minister of Science and ICT; Minister of Foreign Affairs; Minister of Unification; Minister of Justice; Minister of National Defense; Minister of the Interior and Safety; Minister of Culture, Sports and Tourism; Minister of Agriculture, Food and Rural Affairs; Minister of Trade, Industry and Energy; Minister of Health and Welfare; Minister of Environment; Minister of Employment and Labor; Minister of Gender Equality and Family; Minister of Land, Infrastructure and Transport; Minister of Oceans and Fisheries; and Minister of SMEs and Startups;
(b) The Minister of the Office for Government Policy Coordination; Minister of Patriots and Veterans Affairs; Minister of Personnel Management; Minister of Government Legislation; and Minister of Food and Drug Safety;
(c) The Commissioner of the National Tax Service; Commissioner of the Korea Customs Service; Administrator of the Public Procurement Service; Commissioner of the Statistics Korea; Prosecutor General of Public Prosecutor's Office; Commissioner of the Military Manpower Administration; Commissioner of the Defense Acquisition Program Administration; Commissioner General of the Korea National Police Agency; Commissioner of the National Fire Agency; Administrator of the Cultural Heritage Administration; Administrator of the Rural Development Administration; Minister of the Korea Forest Service; Administrator of the Korean Intellectual Property Office; Administrator of the Korea Meteorological Administration; Administrator of the National Agency for Administrative City Construction; Administrator of the Saemangeum Development and Investment Agency; Commissioner of the Korea Coast Guard;
(d) The Chairperson of the Board of Audit and Inspection of Korea; Chairperson of the Korea Communications Commission; Chairperson of the Fair Trade Commission; Chairperson of the Financial Services Commission; Chairperson of the Anti-Corruption and Civil Rights Commission; and Chairperson of the Nuclear Safety and Security Commission;
2. In cases of local governments, any of the following persons:
(a) The Special Metropolitan City Mayor; a Metropolitan City Mayor; a Special Self-Governing City Mayor; a Do Governor; and a Special Self-Governing Province Governor;
(b) The Superintendent of Education of the Special Metropolitan City, of a Metropolitan City, of a Special Self-Governing City, of a Do, and of a Special Self-Governing Province;
(c) The head of a Si/Gun/Gu (referring to the head of an autonomous Gu);
3. In cases of corporations incorporated pursuant to any Special Act, any of the following persons:
(a) The Chairperson of the National Agricultural Cooperative Federation under the Agricultural Cooperatives Act;
(b) The Chairperson of the National Federation of Fisheries Cooperatives under the Fisheries Cooperatives Act;
(c) The Chairperson of the National Forestry Cooperatives Federation under the Forestry Cooperatives Act;
(d) The Governor of the Bank of Korea under the Bank of Korea Act;
(e) Deleted; <by Presidential Decree No. 29087, Aug. 7, 2018>
(f) The Chairperson of the Korea Federation of Small and Medium Business under the Small and Medium Enterprise Cooperatives Act;
(g) The Chairperson of the Korea Chamber of Commerce and Industry under the Chambers of Commerce and Industry Act;
4. The head of a public institution referred to in Article 5 of the Act on the Management of Public Institutions;
5. The head of a local public corporation or agency under the Local Public Enterprises Act;
6. The head of a local medical center under the Act on the Establishment and Management of Local Medical Centers.
 Article 4 (Notification of Purchase Plans and Purchase Records)
(1) The head of a public institution referred to in any subparagraph of Article 3 shall notify, each fiscal year, the Minister of SMEs and Startups of a purchase plan including its target ratio for purchase of small and medium enterprise-manufactured products and purchase records of such products for the preceding year, by January 31 of the relevant year, pursuant to Article 5 (1) of the Act. <Amended by Presidential Decree No. 26890, Jan. 12, 2016; Presidential Decree No. 28213, Jul. 26, 2017>
(2) When preparing purchase plans and purchase records under paragraph (1), the Administrator of the Public Procurement Service shall do so separately for domestic, Government-required commodities prescribed by the Government Procurement Act and the Enforcement Decree of the same Act and for contracts for facility construction delegated to him/her by the heads of relevant end-user institutions, respectively; and the heads of the other public institutions shall prepare purchase plans and purchase records, separately for contracts for purchase they have entrusted to the Administrator of the Public Procurement Service and for goods, services or construction works (hereinafter referred to as "products") purchased directly, respectively.
(3) The target ratio for purchase of small and medium enterprise-manufactured products under paragraph (1) shall be at least 50 percent of the total amount of products to be purchased by the relevant institution in the relevant year: Provided, That where the head of a public institution finds it impracticable to achieve the target ratio of at least 50 percent in light of the nature of the public institution, he/she may separately determine a target ratio for purchase after consultation with the Minister of SMEs and Startups. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(4) The Minister of SMEs and Startups shall publicly announce each public institution's annual target ratio for purchase of small and medium enterprise-manufactured products by April 30 each year. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
 Article 5 (Matters to be Included in Purchase Plans and Purchase Records)
(1) A purchase plan referred to in Article 5 (1) of the Act, shall include the following: <Amended by Presidential Decree No. 28213, Jul. 26, 2017; Presidential Decree No. 29087, Aug. 7, 2018>
1. The target ratio for purchase of small and medium enterprise-manufactured products to the total purchase, and the target amount of such products to purchase;
2. The target amount of each good, each construction work and each service to purchase;
3. The target ratio for purchase of products manufactured with technology developed by small and medium enterprises, subject to preferential purchase under Article 14 (1) of the Act (hereinafter referred to as "products manufactured with technology developed by small and medium enterprises, subject to preferential purchase"), and the target amount of such products to purchase;
4. The target ratio for purchase of products manufactured by female-owned businesses defined in Article 9 (3) of the Act on Support for Female-Owned Businesses, and the target amount of such products to purchase;
5. The target ratio for purchase of products of enterprises owned or operated by persons with disabilities under Article 9-2 (3) of the Act on the Facilitation of Entrepreneurial Activities of Persons with Disabilities, and the target amount of such products to purchase;
6. Any other matters deemed by the Minister of SMEs and Startups as necessary to increase the purchase of small and medium enterprise-manufactured products.
(2) The purchase records of small and medium enterprise-manufactured products referred to in Article 5 (1) of the Act shall include the following: <Amended by Presidential Decree No. 22988, Jun. 27, 2011; Presidential Decree No. 28213, Jul. 26, 2017>
1. Purchase records of products referred to in any subparagraph of paragraph (1): Provided, That where the purchase records of products referred to in paragraph (1) 1 or 4, are below the initial target, the reason for the failure to meet the target shall be included therein;
2. Records of direct purchase of each individual product selected and publicly notified by the Minister of SMEs and Startups pursuant to Article 12 (2) of the Act, if the relevant public institution's purchase records of construction works in the preceding year, exceed 100 billion won.
 Article 5-2 (Request for Submission of Purchase Records)
(1) The Minister of SMEs and Startups may request the head of a public institution referred to in any subparagraph of Article 3 to submit purchase records of small and medium enterprise-manufactured products, including the following, pursuant to Article 5 (4) of the Act: <Amended by Presidential Decree No. 28213, Jul. 26, 2017; Presidential Decree No. 29087, Aug. 7, 2018>
1. Purchase records of products referred to in any subparagraph of Article 5 (1);
2. Purchase records of products referred to in Article 5 (2) 2.
(2) The Minister of SMEs and Startups may request the head of a public institution to prepare the purchase records of small and medium enterprise-manufactured products referred to in paragraph (1), by the method specified in Article 4 (2). <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
[This Article Newly Inserted by Presidential Decree No. 22988, Jun. 27, 2011]
 Article 6 (Designation of Competing Products among Small and Medium Enterprises)
(1) Where the Minister of SMEs and Startups intends to designate a competing product among small and medium enterprises (hereinafter referred to as "competing product") pursuant to Article 6 (1) of the Act, he/she shall designate a competing product upon the recommendation of the Chairperson of the Korea Federation of Small and Medium Businesses (hereinafter referred to as the "Chairperson of the Federation") and after consultation with the head of a relevant central administrative agency, and publicly announce such product before the commencement of the fiscal year immediately following the year during which the term of validity of a competing product referred to in paragraph (4) expires. In such cases, the Chairperson of the Federation shall recommend the relevant product after fully reviewing the appropriateness, etc. of its designation as a competing product. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(2) If the Minister of SMEs and Startups deems it particularly necessary to additionally designate or to exclude any competing product, he/she may separately designate and publicly announce the competing product to be added or excluded after consultation with the head of a relevant central administrative agency, regardless of the deadline referred to in paragraph (1). <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(3) Where the head of a relevant central administrative agency intends to request exclusion of a product from designation as a competing product under the latter part of Article 6 (2) of the Act, he/she shall do so in writing stating the ground, necessity, etc. for the exclusion, taking into account the following:
1. The possibility of competitive tendering process open only to small and medium enterprises under Article 7 (1) of the Act (hereinafter referred to as "competitive tendering process open only to small and medium enterprises"), for the product in question;
2. The necessity for fostering small and medium enterprises in relation to the product in question.
(4) Any designation of a competing product designated and publicly announced pursuant to the former part of paragraph (1), shall remain effective for three years from the date its designation becomes effective: Provided, That any designation of a competing product designated pursuant to paragraph (2) becomes ineffective on the date any designation of a competing product designated pursuant to paragraph (1) becomes ineffective.
(5) Except as otherwise expressly provided for in paragraphs (1) through (4), details necessary for designating competing products, such as procedures for designating competing products, shall be determined and publicly notified by the Minister of SMEs and Startups. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
 Article 7 (Exceptions to Competitive Tendering Process Open Only to Small and Medium Enterprises)
(1) "Extenuating circumstances prescribed by Presidential Decree" in Article 7 (1) of the Act means any of the following: <Amended by Presidential Decree No. 24528, May 6, 2013; Presidential Decree No. 26890, Jan. 12, 2016>
1. Where the head of a public institution purchases small and medium enterprise-manufactured products specified as subject to preferential purchase or permitted to be purchased under negotiated contract, by this Act and other statutes;
2. Where the head of a public institution concludes a negotiated contract with a small or micro enterprise recommended by a cooperative, pursuant to Article 8;
3. Where it is intended to newly call for tenders through competitive tendering process other than competitive tendering process open only to small and medium enterprises, after tendering has failed because no qualified small and medium enterprises participated in competitive tendering process open only to small and medium enterprises or due to any other reason;
4. Where it is intended to make a purchase by other than competitive tendering process open only to small and medium enterprises due to the relevant public institution's special circumstances, including where particular technology or services are required.
(2) Where the head of a public institution intends to enter into a procurement contract by other than competitive tendering process open only to small and medium enterprises in any case specified in any subparagraph of paragraph (1), he/she shall either state the ground for doing so in the relevant public notice of a tender or enter such ground into the Korea ON-line E-Procurement System under the Electronic Procurement Utilization and Promotion Act or the designated information processing system under Article 6-2 (2) of the Enforcement Decree of the Act on Contracts to which a Local Government is a Party. <Newly Inserted by Presidential Decree No. 26890, Jan. 12, 2016>
(3) "Method prescribed by Presidential Decree" in the proviso to Article 7 (2) of the Act means any of the following methods to determine a successful tenderer: <Amended by Presidential Decree No. 26890, Jan. 12, 2016>
1. A contract with multiple suppliers referred to in Article 7-2 of the Enforcement Decree of the Government Procurement Act;
2. Competitive tendering process in a desired quantity referred to in Article 17 of the Enforcement Decree of the Act on Contracts to which the State is a Party, or Article 17 of the Enforcement Decree of the Act on Contracts to which a Local Government is a Party;
3. Tendering in two-step competitions, etc. referred to in Article 18 of the Enforcement Decree of the Act on Contracts to which the State is a Party or Article 18 of the Enforcement Decree of the Act on Contracts to which a Local Government is a Party;
4. Any other method of determining a successful tenderer, other than examining the capabilities to fulfill contracts prescribed in the Act on Contracts to which the State is a Party or any other contract-related statutes.
(4) Where procurement prices of competing products considerably decrease or where small and medium enterprises suffer any other highly significant impact by a method of determining a successful tenderer, other than examining the capabilities to fulfill contracts under paragraph (3), the Minister of SMEs and Startups may request the head of the relevant public institution to hold consultations on the method, etc. of determining a successful tenderer, and the head of the public institution so requested shall reflect the outcomes of the consultations, except in extenuating circumstances. <Amended by Presidential Decree No. 26890, Jan. 12, 2016; Presidential Decree No. 28213, Jul. 26, 2017>
(5) "Contracting consortium which meets the requirements prescribed by Presidential Decree" in Article 7 (3) of the Act, means a contracting consortium satisfying all the following requirements: <Amended by Presidential Decree No. 26890, Jan. 12, 2016>
1. At least three small or micro enterprises shall be included therein;
2. All the small and medium enterprises that constitute a contracting consortium shall obtain the confirmation of direct production pursuant to Article 9 (1) of the Act.
(6) With regard to competitive tendering process open only to small and medium enterprises, the head of a public institution shall determine the final successful tenderer by examining the capabilities of relevant small and medium enterprises to fulfill the relevant contract, starting from a tenderer whose tender price is the lowest and not exceeding the budget price, in accordance with the detailed standards for evaluating capabilities to fulfill contracts determined and publicly notified by the Minister of SMEs and Startups under Article 7 (4) of the Act. In such cases, he/she shall reflect, in the detailed standards for evaluating the capabilities to fulfill contracts, matters to increase the opportunities for small or micro enterprises to be jointly awarded a contract under Article 7 (3) of the Act. <Amended by Presidential Decree No. 26890, Jan. 12, 2016; Presidential Decree No. 28213, Jul. 26, 2017>
(7) "Those prescribed by Presidential Decree, such as small and medium enterprise cooperatives" in the latter part of Article 7 (4) of the Act means cooperatives that satisfy all the requirements specified in any subparagraph of Article 9 (2). <Amended by Presidential Decree No. 26890, Jan. 12, 2016>
(8) Except as otherwise expressly provided for in paragraphs (1) through (7), matters necessary for operating a system for competitive tendering open only to small and medium enterprises for competing products, such as verifying small and medium enterprises, shall be determined and publicly notified by the Minister of SMEs and Startups. <Amended by Presidential Decree No. 26890, Jan. 12, 2016; Presidential Decree No. 28213, Jul. 26, 2017>
 Article 8 (Negotiated Contracts Concluded upon Recommendation of Cooperatives)
(1) The head of a public institution may conclude a negotiated contract with any small or micro enterprise recommended by a cooperative pursuant to paragraph (2).
(2) Where the head of a public institution intends to conclude a negotiated contract for competing products according to any of the following grounds, he/she may request the relevant cooperative to recommend small or micro enterprises which have the capabilities to fulfill the contract and also satisfy the purchasing conditions. In such cases, the public institution shall conclude a contract with any of the small or micro enterprises recommended by the cooperative, by determining the price pursuant to Article 30 (2) of the Enforcement Decree of the Act on Contracts to which the State is a Party or Article 30 (2) of the Enforcement Decree of the Act on Contracts to which a Local Government is a Party: <Amended by Presidential Decree No. 22282, Jul. 21, 2010>
1. Article 26 (1) 5 (a) of the Enforcement Decree of the Act on Contracts to which the State is a Party;
2. Article 25 (1) 5 of the Enforcement Decree of the Act on Contracts to which a Local Government is a Party.
(3) Upon receipt of a request for recommendation from the head of a public institution under paragraph (2), the relevant cooperative shall recommend at least five small or micro enterprises upon receipt of applications therefrom: Provided, That the cooperative may recommend the same number of small or micro enterprises as applicants if three or four small or micro enterprises submit an application for recommendation, and at least two small or micro enterprises if the estimated price is less than 20 million won. <Amended by Presidential Decree No. 24528, May 6, 2013>
(4) Public institutions requesting recommendations, cooperatives making recommendations, and small or micro enterprises submitting an application for recommendation pursuant to paragraph (2) or (3) shall use the comprehensive information network for public procurement (hereinafter referred to as "purchase information network") under Article 25 (2) of the Act.
(5) Details about the annual limits on negotiated contracts that each small or micro enterprise is permitted to conclude upon the recommendation of a cooperative, the annual limits on recommendation it can be accorded from a cooperative, the method of recommendation, the method, etc. of using the purchase information network referred to in paragraph (4) shall be prescribed and publicly notified by the Minister of SMEs and Startups. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
 Article 9 (Eligibility for Participation, etc. in Competitive Tendering Process Open Only to Small and Medium Enterprises)
(1) Any small or medium enterprise (excluding cooperatives) participating in competitive tendering process open only to small and medium enterprises pursuant to Article 8 (1) of the Act shall meet all the following requirements:
1. Facilities capable of directly producing and supplying competing products;
2. The requirements specified in any subparagraph of Article 12 (1) of the Enforcement Decree of the Act on Contracts to which the State is a Party.
(2) Where a cooperative intends to participate in competitive tendering process open only to small and medium enterprises pursuant to Article 8 (1) of the Act, it shall meet all the following requirements and may participate in such competitive tendering process only for the products it produces or supplies: Provided, That if it is deemed necessary for at least two cooperatives to participate in competitive tendering process open only to small and medium enterprises, in order to ensure fair competition, the Minister of SMEs and Startups may publicly notify relevant products separately: <Amended by Presidential Decree No. 22222, Jun. 28, 2010; Presidential Decree No. 24432, Mar. 23, 2013; Presidential Decree No. 28213, Jul. 26, 2017>
1. At least 1/2 of the members of the relevant cooperative shall be small and medium enterprises (limited to small and medium enterprises defined in Article 2 of the Framework Act on Small and Medium Enterprises) that meet all the requirements specified in any subparagraph of paragraph (1): Provided, That if the relevant cooperative is a cooperative prescribed and publicly notified by the Minister of SMEs and Startups, such as a cooperative incorporated based on any manufacturing method or raw materials; and less than 1/2 of its entire members produce any competing product, at least 1/2 of its members producing such competing product shall be small and medium enterprises that meet all the requirements referred to in any subparagraph of paragraph (1);
2. The relevant cooperative shall prepare and implement standards for quality control and follow-up management of competing products;
3. The articles of incorporation shall specify that the relevant cooperative is permitted to participate in competitive tendering process open only to small and medium enterprises;
4. The relevant cooperative shall have at least two full-time employees who have completed at least ten hours each year, of education recognized by the Minister of SMEs and Startups as relevant to public procurement;
5. The relevant cooperative shall satisfy other matters determined by Ordinance of the Ministry of SMEs and Startups after consultation with the Fair Trade Commission in order to enhance the effectiveness of competitive tendering process, such as the standards for the market share to be held by cooperatives participating in tenders in a market for competitive tendering process open only to small and medium enterprises.
(3) Deleted. <by Presidential Decree No. 28338, Sep. 19, 2017>
 Article 9-2 (Requirements for Revocation, or Suspension, of Eligibility for Participating in Competitive Tendering Process)
(1) "Cases determined by Presidential Decree as inappropriate for participating in competitive tendering process open only to small and medium enterprises" in Article 8 (3) 4 of the Act means that a small or medium enterprise participating in competitive tendering process open only to small and medium enterprises falls under any of the following:
1. Where a cooperative that meets all the requirements specified in any subparagraph of Article 9 (2) (hereinafter referred to as "qualified cooperative") encourages its members (hereinafter referred to as "its members") participating in competitive tendering process open only to small and medium enterprises, to engage in subcontracting activities, or fails to take appropriate measures, knowing that its members engage in subcontracting activities;
2. Where a qualified cooperative is found to have included any member failing to meet the requirements specified in any subparagraph of Article 9 (1) in competitive tendering process open only to small and medium enterprises when the cooperative participated in such tendering process;
3. Where the relevant small and medium enterprise becomes subject to restricted qualification for participation in tendering placed by the head of a central government agency or the head of a local government, for committing any activity specified in any subparagraph of Article 76 (1) of the Enforcement Decree of the Act on Contracts to which the State is a Party or any subparagraph of Article 92 (1) of the Enforcement Decree of the Act on Contracts to which a Local Government is a Party.
(2) Where a small or medium enterprise falls under Article 8 (3) 1 through 3 of the Act or any subparagraph of paragraph (1), the head of a public institution shall notify the Minister of SMEs and Startups of such fact. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
[This Article Newly Inserted by Presidential Decree No. 22988, Jun. 27, 2011]
 Article 9-3 (Dominant or Subordinate Relationship)
"Dominant or subordinate relationship prescribed by Presidential Decree" referred to in Article 8-2 (1) 2 of the Act means any of the following relationships:
1. The parent-subsidiary relationship referred to in Article 3-2 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises;
2. Any of the following relationships between a large enterprise and a small or medium enterprise:
(a) Where the representative, largest shareholder or biggest equity holder of a large enterprise defined in subparagraph 2 of Article 2 of the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises (hereafter in this subparagraph, referred to as "large enterprise") or any executive (referring to an executive defined in subparagraph 5 of Article 2 of the Monopoly Regulation and Fair Trade Act; hereafter in this subparagraph, the same shall apply) of such large enterprise concurrently serves as an executive of a small or medium enterprise or is assigned as an executive to a small or medium enterprise;
(b) Where a large enterprise is delegated by a small or medium enterprise to engage, and thus engages, in the main business or operating activities or the main part of transactions of such small or medium enterprise;
(c) Where a large enterprise leases its assets to, or guarantees the payment of debts for, a small or medium enterprise, of a value or amount equivalent to an amount exceeding the total number of stocks issued or the total amount of investment (referring to the total amount of assets in cases of a sole proprietor) made by such small or medium enterprise;
(d) Where a large enterprise or a person in a relationship specified in Article 3-2 (1) 1 (a) of the Enforcement Decree of the Framework Act on Small and Medium Enterprises with a large enterprise, appoints or dismisses the chief executive officer of a small or medium enterprise; or appoints, or is able to appoint, at least 50/100 of its executives according to a contract or agreement with another major shareholder (referring to a shareholder who owns at least 10/100 of the total number of issued voting stocks on his/her own account in whosever name or exercises de facto control over important matters relating to the management of the relevant small or medium enterprise by appointing or dismissing its executives or by any other means) of the small or medium enterprise;
(e) Where a large enterprise invests, lends, or guarantees at least 51/100 of the total cost incurred in starting a business which produces competing products, such as the cost of establishing a factory (referring to rental charges, if the factory is leased out) and the cost of installing production facilities, for a small or medium enterprise.
[This Article Newly Inserted by Presidential Decree No. 24492, Apr. 3, 2013]
 Article 9-4 (Standards for Scope of Same Kind of Business)
The scope of the same kind of business referred to in Article 8-2 (5) of the Act shall be determined based on whether it produces the competing products designated by the Minister of SMEs and Startups pursuant to Article 6 (1) of the Act. <Amended by Presidential Decree No. 25380, Jun. 11, 2014; Presidential Decree No. 28213, Jul. 26, 2017>
[This Article Newly Inserted by Presidential Decree No. 24492, Apr. 3, 2013]
 Article 9-5 (Matters to be Considered in Determining whether Participation in Competitive Tendering Process is Restricted)
"Matters prescribed by Presidential Decree, including division, etc. due to extenuating circumstances, such as inheritance or a court ruling" in the former part of Article 8-2 (6) of the Act, means any of the following: <Amended by Presidential Decree No. 25380, Jun. 11, 2014>
1. Whether division, etc. referred to in Article 8-2 (1) 1 of the Act, has occurred due to extenuating circumstances, such as inheritance or a court ruling (hereafter in this Article, referred to as "division, etc.");
2. Whether an enterprise established after division, etc. and an enterprise surviving division, etc., are included in a group of enterprises in a parent-subsidiary relationship referred to in subparagraph 1 of Article 9-3;
3. Whether an enterprise subject to division, etc., has previously participated in competitive tendering process open only to small and medium enterprises before the date of division, the date of division-merger or the date of physical division;
4. Whether an enterprise incorporated in the course of division, etc., leases any production factory, production facilities, etc. from a surviving enterprise, or jointly owns it with a surviving enterprise;
5. Whether an enterprise incorporated in the course of division, etc. or an enterprise surviving division, etc., is likely to hinder fair competition by participating in competitive tendering process open only to small and medium enterprises.
[This Article Newly Inserted by Presidential Decree No. 24492, Apr. 3, 2013]
 Article 9-6 (Standards for Restrictions on Middle-Standing Enterprises' Participation in Competitive Tendering Process Open Only to Small and Medium Enterprises)
“Standards prescribed by Presidential Decree" in the latter part of Article 8-3 (1) of the Act and Article 8-3 (3) and (4) of the Act, means the standards specified in attached Table 1, respectively.
[This Article Newly Inserted by Presidential Decree No. 27324, Jul. 6, 2016]
 Article 10 (Confirmation, etc. of Direct Production)
(1) "That prescribed by Presidential Decree" in the main sentence of Article 9 (1) of the Act means ten million won.
(2) "Cases prescribed by Presidential Decree" in Article 9 (1) 1 of the Act, means any of the following: <Amended by Presidential Decree No. 22282, Jul. 21, 2010>
1. Where a negotiated contract is concluded under Article 26 (1) 5 (a) of the Enforcement Decree of the Act on Contracts to which the State is a Party;
2. Where a negotiated contract is concluded under Article 25 (1) 5 of the Enforcement Decree of the Act on Contracts to which a Local Government is a Party.
(3) "Person prescribed by Presidential Decree" in Article 9 (1) 2 of the Act, means any of the following: <Amended by Presidential Decree No. 22282, Jul. 21, 2010; Presidential Decree No. 22988, Jun. 27, 2011>
1. A corporation or organization referred to in Article 33 (1) 1 through 3 of the Act;
2. A party to a negotiated contract specified in Article 26 (1) 4 (a), (c) or (d) of the Enforcement Decree of the Act on Contracts to which the State is a Party.
(4) Where the Minister of SMEs and Startups intends to determine requirements for confirming direct production pursuant to Article 9 (2) of the Act, he/she shall take into account the following: <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. Major facilities and equipment;
2. The minimum factory area;
3. The minimum number of personnel required;
4. Essential qualifications;
5. Any other matters to be considered in light of the nature of each product, such as essential raw materials.
(5) Where the head of a public institution intends to verify direct production before or after the conclusion of a product procurement contract, he/she may do so based on information registered in the purchase information network.
 Article 10-2 (Imposition of Penalty Surcharges)
(1) The standards for computing turnover and imposing a penalty surcharge under Article 11-2 (1) of the Act, shall be as specified in attached Table 2.
(2) Where the Minister of SMEs and Startups intends to impose a penalty surcharge pursuant to Article 11-2 (1) of the Act, he/she shall notify the person subject to imposition of the penalty surcharge that he/she must pay the penalty surcharge, expressly stating the type of relevant violation and the amount of the penalty surcharge in writing (including notice by electronic document, if requested by the person subject to imposition of a penalty surcharge). <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(3) A person in receipt of a notice under paragraph (2) shall pay the penalty surcharge to the receiving institution prescribed by the Minister of SMEs and Startups, within 60 days from the date of notice of the payment: Provided, That where the person is unable to pay the penalty surcharge within the period due to a natural disaster or other extenuating circumstance, he/she shall pay it within 30 days from the date such grounds cease to exist. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(4) Upon receipt of a penalty surcharge under paragraph (3), the receiving institution shall issue a receipt to the person who has paid the penalty surcharge, and notify the Minister of SMEs and Startups of such fact, without delay. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
[This Article Newly Inserted by Presidential Decree No. 27324, Jul. 6, 2016]
 Article 11 (Increase, etc. in Direct Purchase of Construction Materials)
(1) "The construction project in an amount at least equivalent to that prescribed by Presidential Decree" in the main sentence of Article 12 (3) of the Act, means a construction project, the budget price of which is at least four billion won, in cases of general construction projects specified in attached Table 1 of the Enforcement Decree of the Framework Act on the Construction Industry; and a construction project, the budget price of which is at least 300 million won, in cases of specialized construction projects specified in attached Table 1 of the Enforcement Decree of the same Act; electrical construction projects under the Electrical Construction Business Act; information and communications construction projects under the Information and Communications Construction Business Act; or fire-fighting system installation projects under the Fire-Fighting System Installation Business Act. <Amended by Presidential Decree No. 28338, Sep. 19, 2017>
(2) Where the head of a public institution places an order for a construction project referred to in paragraph (1), the purchase of any product selected and publicly announced by the Minister of SMEs and Startups pursuant to Article 12 (2) of the Act (hereinafter referred to as "product subject to direct purchase") shall be done by any of the following methods: <Amended by Presidential Decree No. 28338, Sep. 19, 2017>
1. In cases of falling under any of the following: He/she shall directly purchase a product subject to direct purchase by reflecting it in the design as government-supplied materials for the relevant construction project: Provided, That in cases of falling under item (a), where the estimated price of a detailed item constituting a product subject to direct purchase is less than five million won, he/she may directly purchase such detailed item:
(a) Where the estimated price of a product (excluding an item falling under item (b)) is not less than 40 million won;
(b) Where the estimated price of a product subject to direct purchase falling under any of the following item (b) is not less than ten million won:
(i) A product to be preferentially purchased in accordance with statutes related to property and physical safety of the people; rationalization of energy use; promotion of technology development; environmental conservation, etc.;
(ii) A product designated by the Minister of SMEs and Startups after consultation with the heads of the relevant central administrative agencies, for which special performance, specifications, marks, etc. are deemed necessary;
2. In cases of not falling under any item of subparagraph 1: He/she may directly purchase a product subject to direct purchase.
(3) Where the head of a public institution fails to make direct purchase under the proviso to Article 12 (3) of the Act for any reason, he/she shall publicize such reason when giving public notice of a tender.
(4) Detailed matters for direct purchase of materials for construction projects, other than those prescribed in paragraph (1) through (3) shall be determined and publicly notified by the Minister of SMEs and Startups. <Newly Inserted by Presidential Decree No. 28338, Sep. 19, 2017>
CHAPTER III ASSISTANCE IN PREFERENTIAL PURCHASE OF PRODUCTS MANUFACTURED WITH TECHNOLOGY DEVELOPED BY SMALL AND MEDIUM ENTERPRISES
 Article 12 (Preferential Purchase of Products Manufactured with Technology Developed by Small and Medium Enterprises, etc.)
(1) “Persons prescribed by Presidential Decree” in Article 13 (2) of the Act, means any of the following:
1. A person that obtains financial assistance, such as contributions or subsidies, from the Government or a local government directly or indirectly;
2. An educational institution referred to in Article 3 of the Pension for Private School Teachers and Staff Act.
(2) Pursuant to Article 13 (2) of the Act, each fiscal year, the Minister of SMEs and Startups may request the head of a public institution referred to in any subparagraph of Article 3 to submit a report on its purchase plan, which includes the target ratio for purchase of products manufactured with technology developed by small and medium enterprises, subject to preferential purchase, and purchase records of such products for the preceding year, by January 31 of the relevant year. <Newly Inserted by Presidential Decree No. 26890, Jan. 12, 2016; Presidential Decree No. 28213, Jul. 26, 2017>
(3) The target ratio for purchase of products manufactured with technology developed by small and medium enterprises, subject to preferential purchase under paragraph (2), shall be at least ten percent of the amount of small and medium enterprise-manufactured goods purchased: Provided, That where the head of a public institution finds it impracticable to achieve the target ratio of ten percent in light of business purposes of the public institution and the nature of purchase of goods, he/she may separately determine a target ratio for purchase after consultation with the Minister of SMEs and Startups. <Amended by Presidential Decree No. 26890, Jan. 12, 2016; Presidential Decree No. 28213, Jul. 26, 2017>
(4) The Minister of SMEs and Startups shall publicly announce the annual target ratio for purchase of products manufactured with technology developed by small and medium enterprises, subject to preferential purchase for each public institution by April 30 each year after consultation with the head of each public institution. <Amended by Presidential Decree No. 26890, Jan. 12, 2016; Presidential Decree No. 28213, Jul. 26, 2017>
(5) A public institution shall notify the Minister of SMEs and Startups or the head of relevant central administrative agency of the details of measures for preferential purchase taken, such as relevant products (including the specifications thereof), the contracting method and the contracting price, if it has taken such measures pursuant to Article 13 (3) of the Act;, and the reason for a failure to take measures for preferential purchase, if it has not taken such measures, within 60 days from the date it first received the request prescribed in Article 13 (2) of the Act. <Amended by Presidential Decree No. 22988, Jun. 27, 2011; Presidential Decree No. 26890, Jan. 12, 2016; Presidential Decree No. 28213, Jul. 26, 2017>
(6) Except as otherwise expressly provided for in paragraphs (1) through (5), matters relating to operation, etc. of the preferential purchase system shall be prescribed and publicly notified by the Minister of SMEs and Startups. <Amended by Presidential Decree No. 26890, Jan. 12, 2016; Presidential Decree No. 28213, Jul. 26, 2017>
(7) "Large-scale national project that conforms to the standards, etc. for the amount prescribed by Presidential Decree" in Article 13 (4) of the Act, means a national project, the total project cost of which is at least 50 billion won and which receives financial assistance of at least 30 billion won from the State. <Newly Inserted by Presidential Decree No. 27324, Jul. 6, 2016>
 Article 12-2 (Establishment and Operation of Support Centers for Preferential Purchase of Products Manufactured with Technology Developed by Small and Medium Enterprises)
(1) A support center for the preferential purchase of products manufactured with technology developed by small and medium enterprises referred to in Article 13-2 of the Act shall be established in each regional SMEs and Startups office. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(2) The head of a department responsible for public procurement in each regional SMEs and Startups office shall serve concurrently as the head of the relevant support center for the preferential purchase of products manufactured with technology developed by small and medium enterprises referred to in Article 13-2 of the Act. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(3) The head of a support center referred to in paragraph (2) may designate at least one employee to perform its business.
[This Article Newly Inserted by Presidential Decree No. 27324, Jul. 6, 2016]
 Article 13 (Designation of Products Manufactured with Technology Developed by Small and Medium Enterprises Subject to Preferential Purchase)
"Products which meet the specific requirements prescribed by Presidential Decree, such as performance-certified products" in Article 14 (1) of the Act means any of the following: <Amended by Presidential Decree No. 27324, Jul. 6, 2016; Presidential Decree No. 28213, Jul. 26, 2017>
1. A performance-certified product under Article 15 (1) of the Act;
2. A product designated as an exemplary commodity to be procured pursuant to Article 18 (1) of the Enforcement Decree of the Government Procurement Act;
3. A product certified as a new exemplary product pursuant to Article 16 (1) of the Industrial Technology Innovation Promotion Act;
4. A quality-certified software under Article 13 (1) of the Software Industry Promotion Act, meeting the standards prescribed by Ordinance of the Ministry of SMEs and Startups;
5. Other products designated by the Minister of SMEs and Startups after consultation with the heads of relevant central administrative agencies.
 Article 14 (Collecting Certification Expenses)
(1) Expenses that the Minister of SMEs and Startups or any testing institute referred to in Article 15 (6) of the Act (hereinafter referred to as "testing institute") may collect in relation to performance certification pursuant to Article 15 (7) of the Act shall be as follows: <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. Personnel expenses and travel expenses of inspectors who take a business trip to inspect factories;
2. Expenses incurred in conducting tests to inspect products, performance tests, etc.;
3. Expenses incurred in formulating specifications for certification expressly stating the testing standards for products, testing methods, etc.
(2) Matters necessary for the certification expenses referred to in paragraph (1), shall be prescribed and publicly notified by the Minister of SMEs and Startups. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
 Article 15 (Scope of Coverage of Performance Liability Insurance)
(1) The performance liability insurance services referred to in Article 18 (3) of the Act (hereinafter referred to as "performance liability insurance services") shall provide coverage for performance of products manufactured with technology developed by small and medium enterprises, subject to preferential purchase, which have been designated pursuant to Article 14 (1) of the Act.
(2) The scope of coverage of performance liability insurance shall be the value of a product to be covered, and the details thereof shall be as follows: <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. Expenses incurred in repairing or replacing the product in question;
2. Other expenses deemed by the Minister of SMEs and Startups as necessary for compensating for damage.
(3) Deleted. <by Presidential Decree No. 22988, Jun. 27, 2011>
 Article 16 (Payment, etc. of Subsidies)
(1) Where a small or medium enterprise certified under Article 15 (3) of the Act requests the expenses specified in Article 14 (1) 1 through 3 after undergoing inspections on its products required for performance certification or inspections on its factories conducted by a testing institute, the Minister of SMEs and Startups may partially subsidize such expenses. In such cases, the relevant small or medium enterprise shall submit a test report, etc. expressly stating the results of performance tests, to the Minister of SMEs and Startups. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(2) Where the Minister of SMEs and Startups intends to subsidize funds required for performance certification and performance liability insurance services (hereafter in this Article, referred to as "subsidies") pursuant to Article 19 (1) of the Act, he/she shall enter into an agreement with the relevant testing institute or performance liability insurer. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(3) An agreement referred to in paragraph (2) shall include the following:
1. Tasks and details of the business;
2. A person responsible for conducting the business;
3. Matters concerning the payment, etc. of subsidies;
4. Matters concerning amending the agreement.
(4) A testing institute or performance liability insurer that has entered into an agreement pursuant to paragraph (2) shall submit, to the Minister of SMEs and Startups, the business results of the pertinent year and a business plan for the following year, by December 31 each year. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(5) The Minister of SMEs and Startups may pay subsidies in installments, taking into account the progress of performance certification and performance liability insurance business. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(6) Upon receipt of subsidies, the relevant testing institute or performance insurer shall manage the subsidies in a separate account therefor and use the subsidies only for performance certification and performance liability insurance business.
(7) The Minister of SMEs and Startups may inspect the actual operational conditions, etc. of a testing institute or performance liability insurer, and may suspend payment of subsidies to, or fully or partially recover the subsidies already paid from, a testing institute or performance liability insurer if it uses subsidies for any purpose other than originally intended purposes specified in paragraph (6) without just cause. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(8) A small or medium enterprise intending to obtain subsidies for expenses incurred in obtaining performance certification pursuant to paragraph (1) may apply for such subsidies using the purchase information network, and any other matters concerning assistance to performance certification and performance liability insurance business shall be prescribed and publicly notified by the Minister of SMEs and Startups. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
 Article 17 (Assistance in Cost Accounting for Products Manufactured with Technology Developed by Small and Medium Enterprises subject to Preferential Purchase, etc.)
(1) A small or medium enterprise, which intends to be subsidized for expenses incurred in cost accounting for products manufactured with technology developed by small and medium enterprises, subject to preferential purchase, etc. pursuant to Article 20 (1) of the Act, shall file an application for subsidization with the Minister of SMEs and Startups for subsidization. In such cases, an application for subsidization may be filed through the purchase information network. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(2) A small or medium enterprise filing an application for subsidization pursuant to paragraph (1) shall submit a document, etc. issued by a cost accounting service institution meeting the requirements determined by Ordinance of Ministry of SMEs and Startups, proving the expenses incurred in cost accounting. <Amended by Presidential Decree No. 24432, Mar. 23, 2013; Presidential Decree No. 28213, Jul. 26, 2017>
(3) Upon receipt of a document submitted under paragraph (2), the Minister of SMEs and Startups may subsidize the relevant small and medium enterprise for some of expenses incurred in cost accounting, after examining the results of cost accounting, the reasonableness of the expenses, etc. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(4) Except as otherwise expressly provided for in paragraphs (1) through (3), matters necessary for the detailed standards, procedures, etc. for assistance in cost accounting shall be prescribed and publicly notified by the Minister of SMEs and Startups. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
CHAPTER IV ENSURING EFFICIENCY IN PURCHASE AND IMPLEMENTATION CAPACITY
 Article 18 (Duties, etc. of Public Procurement Assistance Managers)
(1) A public procurement assistance manager designated pursuant to Article 21 (1) of the Act shall perform the following duties:
1. Examining the appropriateness of public institutions' plans to increase public procurement prepared pursuant to Article 5 (1) of the Act;
2. Reviewing the appropriateness of contracts and orders placed under Article 7 (1) of the Act;
3. Investigating whether construction materials have been directly purchased pursuant to Article 12 (3) of the Act;
4. Investigating whether measures for preferential purchase have been taken under Article 13 (2) of the Act;
5. Examining whether purchase of competing products by other than competitive tendering process open only to small and medium enterprises pursuant to Article 7 (1) 4 is appropriate;
6. Performing other duties necessary to efficiently support the public procurement system, such as fact-finding surveys, education and consultations.
(2) Any of the following persons shall be eligible to become a public procurement assistance manager under Article 21 (1) of the Act: <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. A public official of the Ministry of SMEs and Startups;
2. A person involved in accounting or auditing business, who is recommended by the head of the relevant public institution upon request by the Minister of SMEs and Startups;
3. Any other person designated by the Minister of SMEs and Startups.
(3) The Minister of SMEs and Startups may order a public procurement assistance manager to request necessary data from a public institution or to conduct an investigation by visiting the public institution in order to perform the duties referred to in paragraph (1), and the head of the public institution shall fully cooperate in such request or investigation. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(4) The Minister of SMEs and Startups may hear opinions of experts related to contracts or tenders in order to enhance effectiveness of public procurement assistance managers' business. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(5) Details about the designation procedures for, operation, etc., of public procurement assistance managers, shall be prescribed and publicly notified by the Minister of SMEs and Startups. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
 Article 18-2 Deleted. <by Presidential Decree No. 27324, Jul. 6, 2016>
 Article 19 (Protection of Small and Medium Subcontractors)
"Amount prescribed by Presidential Decree" in the main sentence of Article 22 of the Act, means any of the following amounts, as relevant:
1. In cases of manufacturing or repair of goods: 300 million won;
2. In any of the following construction projects: 300 million won:
(a) Specialized construction projects specified in the Framework Act on the Construction Industry;
(b) Electrical construction projects specified in the Electrical Construction Business Act;
(c) Information and communications construction projects specified in the Information and Communications Construction Business Act;
(d) Fire-fighting system installation projects specified in the Fire-Fighting System Installation Business Act;
3. In cases of general construction projects specified in the Framework Act on the Construction Industry: Five billion won.
 Article 20 (Provision of Information on Public Institutions and Small and Medium Enterprises)
(1) "Information prescribed by Presidential Decree, such as whether a person is classified as a small or medium enterprise" in Article 25 (1) of the Act, means any of the following: <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. Information to verify eligibility to participate in competitive tendering process open only to small and medium enterprises;
2. Information to examine capabilities to fulfill contracts;
3. Information to verify the credit status of the relevant small and medium enterprise when concluding a contract;
4. Information to verify the reliability of product quality;
5. Information to determine whether the relevant product amounts to the products manufactured with technology developed by small and medium enterprises, subject to preferential purchase;
6. Public institutions' annual purchase plans for, and purchase records, of small and medium enterprise-manufactured products;
7. Information on negotiated contracts executed upon the recommendation of cooperatives;
8. Information on assistance for performance certification or cost accounting;
9. Any other information prescribed by the Minister of SMEs and Startups to facilitate public institutions' purchase of small and medium enterprise-manufactured products.
(2) The Minister of SMEs and Startups shall take necessary measures to enable public institutions and small and medium enterprises to freely use the purchase information network. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(3) The Minister of SMEs and Startups shall inspect the information and data on small and medium enterprises registered in the purchase information network, on a regular or frequent basis; and if a small or medium enterprise is found to have provided false information or data (hereinafter referred to as "false information"), he/she may publish such fact in the purchase information network or the information processing system publicly notified by the Minister of Economy and Finance, and delete the information on such small and medium enterprise, therefrom. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(4) If it is necessary to publish the fact that false information has been provided and to delete such information from the purchase information network pursuant to paragraph (3), the Minister of SMEs and Startups shall provide the relevant small or medium enterprise with an opportunity to provide explanations or to submit explanatory materials. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
CHAPTER V SUPPORT FOR DEVELOPMENT OF MARKETS, ETC. FOR SMALL AND MEDIUM ENTERPRISES
 Article 21 (Support Agencies, etc. for Development of Markets)
"Agencies or organizations prescribed by Presidential Decree" in Article 26 (2) of the Act, means any of the following agencies or organizations: <Amended by Presidential Decree No. 22220, Jun. 28, 2010; Presidential Decree No. 24432, Mar. 23, 2013; Presidential Decree No. 28213, Jul. 26, 2017>
1. Small and Medium Business Corporation referred to in Article 68 of the Small and Medium Enterprises Promotion Act;
2. Korea Trade-Investment Promotion Agency under the Korea Trade-Investment Promotion Agency Act;
3. Korea Trade Insurance Corporation referred to in Article 37 of the Trade Insurance Act;
4. Korea Institute of Design Promotion referred to in Article 11 of the Industrial Design Promotion Act;
5. Korea Institute for Industrial Economics and Trade established pursuant to Article 8 of the Act on the Establishment, Operation and Fostering of Government-Funded Research Institutes, Etc.;
6. Korea Institute of Science and Technology Information and Korea Institute of Industrial Technology established pursuant to Article 8 of the Act on the Establishment, Operation and Fostering of Government-Funded Science and Technology Research Institutes, Etc.;
7. Korea Institute for Advancement of Technology and Korea Testing Laboratory established pursuant to Article 38 or 41 of the Industrial Technology Innovation Promotion Act;
8. Korea Federation of Small and Medium Business referred to in Article 3 of the Small and Medium Enterprise Cooperatives Act;
9. Small and Medium Business Distribution Center established under Article 69 of the Small and Medium Enterprises Promotion Act;
10. National IT Industry Promotion Agency established under Article 26 of the Information and Communications Technology Industry Promotion Act;
11. Korea International Trade Association established with permission from the Minister of Trade, Industry and Energy under Article 32 of the Civil Act;
12. Any other agency or organization deemed necessary by the Minister of SMEs and Startups.
 Article 22 (Connected Production Support Projects)
(1) In order to support connected production by small and medium enterprises under Article 28 (1) of the Act, the Minister of SMEs and Startups shall engage in the following activities: <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. Arranging transactions related to receiving and placing orders by small and medium enterprises;
2. Establishing a database for the information on relevant businesses to arrange transactions referred to in subparagraph 1;
3. Other matters necessary to support connected production by small and medium enterprises.
(2) If necessary to support connected production by small and medium enterprises under paragraph (1), the Minister of SMEs and Startups may arrange for persons, other than small and medium enterprises, to participate in any activity referred to in paragraph (1). <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
 Article 23 (Standards, Procedures, etc. for Assistance for Collective Trademark)
(1) In order to obtain assistance for expenses for the development of a collective trademark, etc. pursuant to Article 28 (2) of the Act, at least five small and medium enterprises shall participate in developing a single collective trademark.
(2) The Minister of SMEs and Startups shall exclude any of the following types of business from those eligible for assistance under paragraph (1): <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. A type of business classified as a business operating ballrooms, golf courses, skiing facilities, drinking places or saunas or as a gambling and betting business, according to the Korean Standard Industrial Classification publicly notified by the Commissioner of the Statistics Korea under the Statistics Act;
2. A type of business publicly notified by the Minister of SMEs and Startups, as deemed unfit for assistance which is provided for sound development of small and medium enterprises.
(3) Small and medium enterprises intending to obtain assistance under Article 28 (2) of the Act shall select any of the following persons as the representative of the relevant project for a collective trademark (hereafter in this Article, referred to as "trademark representative"), and have the trademark representative submit to the Minister of SMEs and Startups an application for assistance for a collective trademark determined by the Minister of SMEs and Startups, along with a plan to promote the project and the rules on introducing and using collective trademarks: <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. A cooperative;
2. A small or medium enterprise representing the project for a collective trademark;
3. A corporation established by small and medium enterprises in order to perform the project for a collective trademark.
(4) Where a collective trademark selected as eligible for assistance falls under any of the following cases, the Minister of SMEs and Startups may suspend assistance therefor: <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. Where a small or medium enterprise that has introduced and used the relevant collective trademark (hereinafter referred to as "participating enterprise") operates any business specified in any subparagraph of paragraph (2);
2. Where the number of participating enterprises falls below five;
3. Where the number of participating enterprises falls below five, excluding participating enterprises which do not engage in business due to suspension, discontinuation, etc. of business;
4. Where products under a collective trademark are not produced or sold for at least one year without just cause;
5. Where any participating enterprise harms consumers by selling inferior products under a collective trademark or by cheating them;
6. Where it is deemed impracticable to normally promote a project for a collective trademark due to disputes, etc. between the trademark representative and participating enterprises or between participating enterprises themselves.
(5) Detailed standards and procedures necessary to provide assistance for the development, publicity, etc. of a collective trademark, shall be prescribed and publicly notified by the Minister of SMEs and Startups. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
 Article 24 (Designation of and Assistance for Small and Medium Exporting Enterprises and Promising Items)
(1) "Small and medium enterprises meeting the standards prescribed by Presidential Decree" in Article 30 (1) 1 of the Act, means enterprises meeting all the following requirements: <Amended by Presidential Decree No. 26890, Jan. 12, 2016; Presidential Decree No. 28213, Jul. 26, 2017>
1. Small and medium enterprises that operate a manufacturing business, service business related to the manufacturing industry, or knowledge-based service business;
2. Small and medium enterprises that meet the standards prescribed and publicly announced by the Minister of SMEs and Startups for the number of full-time workers or sales growth rates.
(2) "Small and medium enterprises meeting the standards prescribed by Presidential Decree" in Article 30 (1) 2 of the Act, means enterprises meeting all the following requirements: <Amended by Presidential Decree No. 26890, Jan. 12, 2016; Presidential Decree No. 28213, Jul. 26, 2017>
1. Small and medium enterprises that operate manufacturing business, service business related to the manufacturing industry, or knowledge-based service business;
2. Small and medium enterprises that meet the standards prescribed and publicly announced by the Minister of SMEs and Startups for exports, the number of full-time workers, or sales growth rates.
(3) "Items meeting the standards prescribed by Presidential Decree" in Article 30 (1) 3 of the Act, means items determined in consideration of the following selection standards: <Amended by Presidential Decree No. 23348, Dec. 6, 2011>
1. Export growth rates in the last three years;
2. The scale of the export market;
3. The market share in the last three years and the possibility of expansion thereof;
4. Comparative advantage in terms of technology and prices, compared with competing countries;
5. The share of exports by small and medium business enterprises.
(4) and (5) Deleted. <by Presidential Decree No. 23348, Dec. 6, 2011>
(6) Applications, procedures, etc. for the designation of small and medium enterprises referred to in paragraph (1) or (2) shall be prescribed and publicly notified by the Minister of SMEs and Startups. <Amended by Presidential Decree No. 23348, Dec. 6, 2011; Presidential Decree No. 28213, Jul. 26, 2017>
 Article 25 (Agencies Providing Export Statistics of Small and Medium Enterprises)
"Agencies or organizations prescribed by Presidential Decree, such as the Korea Customs Service" in Article 31 (2) of the Act, means agencies or organizations related to exports, including central administrative agencies, local governments, the Korea International Trade Association, etc.
CHAPTER VI SUPPLEMENTARY PROVISIONS
 Article 26 (Special Corporations, etc. Deemed as Small and Medium Enterprises)
"Corporations or organizations prescribed by Presidential Decree" in Article 33 (1) 5 of the Act, means corporations or organizations falling under Article 26 (1) 4 (a), (c) or (d) of the Enforcement Decree of the Act on Contracts to which the State is a Party. <Amended by Presidential Decree No. 22282, Jul. 21, 2010; Presidential Decree No. 22988, Jun. 27, 2011; Presidential Decree No. 27324, Jul. 6, 2016>
 Article 27 (Entrustment, etc. of Authority)
(1) The Minister of SMEs and Startups shall entrust the following duties to the Korea Federation of Small and Medium Business pursuant to Article 34 (2) of the Act: <Amended by Presidential Decree No. 22988, Jun. 27, 2011; Presidential Decree No. 28213, Jul. 26, 2017>
1. Verifying cooperatives' eligibility to participate in competitive tendering process open only to small and medium enterprises under Article 8 (2) of the Act;
2. Receiving requests for the verification of direct production, verifying direct production, and issuing direct production confirmation certificates under Article 9 (4) of the Act;
3. Receiving objection filings, and making and notifying determinations on objections filed under Article 10 of the Act;
4. Revoking the confirmation of direct production, and holding a hearing under Article 11 of the Act;
5. Any of the following duties to collect or provide information under Article 25 of the Act:
(a) Collecting, registering, revising and reproducing information on small and medium enterprises and public institutions to construct and operate the purchase information network, and providing the information;
(b) Publishing the fact that false information has been provided in the purchase information network, and deleting such information therefrom.
(2) Where the Chairperson of the Federation intends to delete information on the small or medium enterprise that has provided false information pursuant to paragraph (1) 5 (b), he/she shall report such fact to the Minister of SMEs and Startups in advance, and shall submit an annual report on operation of the purchase information network to the Minister of SMEs and Startups, by January 31 of the following year. <Amended by Presidential Decree No. 22988, Jun. 27, 2011; Presidential Decree No. 28213, Jul. 26, 2017>
 Article 28 (Review of Regulation)
The Minister of SMEs and Startups shall review the appropriateness of the following matters every three years (referring to the day before each third anniversary from the base date), counting from any of the following base dates, whichever is relevant, and shall take measures, such as making improvements: <Amended by Presidential Decree No. 28213, Jul. 26, 2017; Presidential Decree No. 29421, Dec. 24, 2018>
1. Method of concluding a preferential procurement contract with a small and medium enterprise referred to in Article 2-2: January 1, 2016;
2. Eligibility to participate in competitive tendering process open only to small and medium enterprises under Article 9: January 1, 2016;
3. Deleted; <by Presidential Decree No. 29421, Dec. 24, 2018>
4. The scale of a construction project subject to direct purchase of construction materials; the method of direct purchase; and publication of a reason for a failure to make direct purchase, under Article 11: January 1, 2016;
5. Persons subject to preferential purchase of products manufactured with technology developed by small and medium enterprises, etc., the target ratio and procedures for purchase of such products, under Article 12: January 1, 2016;
6. Designation of products manufactured with technology developed by small and medium enterprises, subject to preferential purchase under Article 13: January 1, 2016.
[This Article Newly Inserted by Presidential Decree No. 26804, Dec. 30, 2015]
CHAPTER VII PENALTY PROVISIONS
 Article 29 (Criteria for Imposing Administrative Fines)
The criteria for imposing administrative fines referred to in Article 37 (1) of the Act shall be as specified in the attached Table.
[This Article Newly Inserted by Presidential Decree No. 26890, Jan. 12, 2016]
ADDENDA
Article 1 (Enforcement Date)
This Decree shall enter into force on November 22, 2009.
Article 2 Omitted.
Article 3 (Relations with other Acts)
A citation of the previous Enforcement Decree of the Act on Facilitation of Purchase of Small and Medium Enterprise-Manufactured Products and Support for Development of their Markets or any provisions thereof in any other statute as at the time this Decree enters into force, shall be deemed a citation of this Decree or the corresponding provisions of this Decree in lieu of the previous Enforcement Decree of the Act on Facilitation of Purchase of Small and Medium Enterprise-Manufactured Products and Support for Development of their Markets or any provisions thereof, if such corresponding provisions exist herein.
ADDENDA <Presidential Decree No. 21904, Dec. 24, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2010.
Articles 2 through 6 Omitted.
ADDENDA <Presidential Decree No. 21928, Dec. 30, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2010.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 21962, Dec. 31, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That ㆍㆍㆍ <omitted> ㆍㆍㆍ, the amended provisions of Article 3 (1) through (6) and (8) of the Addenda, shall enter into force on January 1, 2010.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 22075, Mar. 15, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on March 19, 2010. (Proviso Omitted.)
Article 2 Omitted.
ADDENDA <Presidential Decree No. 22220, Jun. 28, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 6, 2010.
Articles 2 and 3 Omitted.
ADDENDUM <Presidential Decree No. 22222, Jun. 28, 2010>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 22269, Jul. 12, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
Article 2 Omitted.
ADDENDA <Presidential Decree No. 22282, Jul. 21, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force three months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 9 Omitted.
ADDENDUM <Presidential Decree No. 22598, Dec. 31, 2010>
This Decree shall enter into force on the date of its promulgation.
ADDENDUM <Presidential Decree No. 22988, Jun. 27, 2011>
This Decree shall enter into force on July 1, 2011: Provided, That the amended provisions of Article 3 and attached Tables 1 and 2, shall enter into force on January 1, 2012.
ADDENDUM <Presidential Decree No. 23348, Dec. 6, 2011>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 24432, Mar. 23, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 4 Omitted.
ADDENDUM <Presidential Decree No. 24492, Apr. 3, 2013>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 24528, May 6, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Conclusion of Preferential Procurement Contracts with Small and Medium Enterprises)
The amended provisions of Articles 2-2 and 2-3 shall begin to apply to the first public notice of a tender (excluding public notice of a re-tender) given after this Decree enters into force.
ADDENDUM <Presidential Decree No. 24717, Sep. 9, 2013>
This Decree shall enter into force on the date of its promulgation.
ADDENDUM <Presidential Decree No. 25380, Jun. 11, 2014>
This Decree shall enter into force on June 19, 2014.
ADDENDA <Presidential Decree No. 25751, Nov. 19, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That amendments to Presidential Decrees already promulgated before this Decree enters into force, but which have not yet entered into force, among Presidential Decrees amended pursuant to Article 5 of the Addenda, shall enter into force on the dates the respective relevant Presidential Decrees enter into force.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 26248, May 26, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on May 28, 2015.
Articles 2 through 7 Omitted.
ADDENDUM <Presidential Decree No. 26804, Dec. 30, 2015>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 26890, Jan. 12, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Transitional Measures concerning Administrative Fines)
A disposition for imposing an administrative fine for an offense committed before this Decree enters into force, shall not be included in the calculation of the number of offenses under the amended provisions of the attached Table.
ADDENDUM <Presidential Decree No. 27324, Jul. 6, 2016>
This Decree shall enter into force on July 7, 2016.
ADDENDA <Presidential Decree No. 28213, Jul. 26, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 6 Omitted.
ADDENDA <Presidential Decree No. 28338, Sep. 19, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force three months after date of its promulgation: Provided, That the amended provisions of Article 2-2 (4) shall enter into force on September 22, 2017.
Articles 2 (Transitional Measures concerning Direct Purchase of Materials for Construction Projects)
Notwithstanding the amended provisions of Article 11, the previous provisions shall apply to a construction project, for which the head of a public institution placed an order before this Decree enters into force.
ADDENDA <Presidential Decree No. 29087, Aug. 7, 2018>
Article 1 (Enforcement Date)
This Decree shall enter into force three months on the date of its promulgation: Provided, That the amendments to the main sentence of Article 2-2 (1) 1 shall enter into force on January 1, 2019.
Article 2 (Applicability to Preferential Procurement Contracts with Small and Medium Enterprises)
The amendments to the main sentence of Article 2-2 (1) 1 shall begin to apply to the first tender (excluding a re-tender or publicly re-announced tender) to be publicly announced on or after the enforcement date under the proviso to Article 1 of the Addenda.
ADDENDUM <Presidential Decree No. 29421, Dec. 24, 2018>
This Decree shall enter into force on January 1, 2019.