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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

Act No. 15219, Dec. 19, 2017

Act No. 16578, Nov. 26, 2019

 Article 1 (Purpose)
The purpose of this Act is to promote smooth administration of contracts by prescribing 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 awarded through international tendering procedures and contracts to which a national of the Republic of Korea is the counterparty (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 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 awarded through international tendering procedures shall cover contracts awarded by a government agency for goods, construction works, or services in the amount not less than that determined and publicly notified by the Minister of Economy 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 awarded through international tendering procedures:
1. Where goods or services necessary for manufacturing for the purpose of resale or sale are procured;
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 the main clause, with the exception of the subparagraphs, of paragraph (1) shall be prescribed by Presidential Decree according to the Agreement on Government Procurement.
(3) If the head of each central government agency defined under Article 6 of the National Finance Act (hereinafter referred to as “head of each central government agency”) or the public official to whom contracting is delegated or entrusted under Article 6 (hereinafter referred to as “contract officer”), deems it necessary in the light of the purposes, nature, etc. of a contract, he or 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 footing, and the parties shall perform the terms and conditions of the contract in good faith.
(2) In cases of international tendering procedures under Article 4 (1), in compliance with the principle of reciprocity, neither the head nor contract officer of each central government agency shall make any special agreement or attach any condition that discriminates 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.
(3) In concluding a contract, neither the head nor contract officer of each central government agency shall make any special agreement or attach any condition that unreasonably restricts the counterparty’s interests under the contract prescribed in this Act and relevant statutes and regulations (hereinafter referred to as “unreasonable special agreement, etc.”). <Newly Inserted by Act No. 16578, Nov. 26, 2019>
(4) Any unreasonable special agreement, etc. under paragraph (3) shall be invalid. <Newly Inserted by Act No. 16578, Nov. 26, 2019>
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 5-2 (Integrity Agreement)
(1) In order to enhance transparency and fairness in contracts to which the State is a party, the head or contract officer of each central government agency shall require a tenderer or counterparty to promise that he or 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 enter into 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 counterparty fails to keep such promise.
(2) Specific terms and conditions of an integrity agreement, the procedures for entering into 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 and Termination of Contract upon Breach of Integrity Agreement)
If a tenderer or counterparty fails to comply with the integrity agreement, the head or contract officer of each 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 counterparty may be permitted to continue to perform the relevant contract with approval therefor from the head of each 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 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 each central government agency deems it necessary for handling affairs regarding contracts within his or her jurisdiction, he may appoint a public official of his or her agency as a public official in charge of affairs related to contracting (hereinafter referred to as “contract manager”) to delegate his or her authority for affairs regarding contracts and may appoint another public official of his or her agency to act on behalf of the contract manager or to take charge of part of the affairs assigned to the contract manager.
(2) The head of each central government agency may entrust affairs to be assigned to the contract manager to a public official of another central government agency, as prescribed by Presidential Decree.
(3) The head of each central government agency may entrust affairs regarding contracts within his or her jurisdiction to another government agency, as prescribed by Presidential Decree.
(4) The delegation or entrustment of affairs to be assigned to a contract manager, the appointment of an acting contract manager, or the partial allotment of affairs under paragraphs (1) and (2) may be substituted by the designation of a public office already established in an agency affiliated with each central government agency.
(5) No person shall serve as a contract manager 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 contract officer of each central government agency intends to award a contract, he or she shall call for open tenders for the contract: Provided, That if it is deemed necessary in the light of the purpose, nature, size, etc. of a contract, the head or contract officer of each central government agency may place restrictions on qualifications for participants or nominate participants to invite competitive tenders or may enter into a negotiated contract, as prescribed by Presidential Decree.
(2) Where competitive tenders are invited pursuant to the main clause 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 contract performance capacity, including the level of difficulty of performing the contract, performance records, 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.
(3) Where there is competition among tenders eligible for preferential purchase prescribed in other statutes in awarding a contract under paragraph (1), a counterparty to the contract shall be chosen taking into account the purpose and scale of the contract, consideration for the socially disadvantaged, etc. <Newly Inserted by Act No. 15219, Dec. 19, 2017>
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 8 (Public Tender Notice)
(1) Where the head or contract officer of each central government agency calls for competitive tenders, he or she shall give a public announcement or notification of matters regarding the tendering procedures.
(2) The methods, contents, and timing of the public announcement or notification 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 8-2 (Preparation of Estimated Price)
(1) The head or contract officer of each central government agency shall, in advance, prepare the estimated price of an item for which tenders are to be invited or a negotiated contract, etc. are to be concluded, according to the relevant specifications, design documents, etc., to use the price as a standard for determining a successful tenderer and the contract amount: Provided, That in cases prescribed by Presidential Decree, such as where a contract is concluded with another State agency or local government, the estimated price may not be prepared or be omitted.
(2) Where the head or contract officer of each central government agency prepares the estimated price under the main clause of paragraph (1), he or she shall reflect an appropriate price to ensure the quality, safety, etc. of the object of the relevant contract, taking into account the contract quantity, the period of performance, the conditions of supply and demand, the terms and conditions of the contract, etc.
(3) The timing for preparing the estimated price under the main clause of paragraph (1), the methods and standards for determining the price, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 16578, Nov. 26, 2019]
 Article 9 (Tender Bond)
(1) The head or contract officer of each central government agency shall require persons who intend to make a competitive tender to pay a tender bond: Provided, That a tenderer may be wholly or partial 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 thereof, and other necessary matters shall be prescribed by Presidential Decree.
(3) When a successful tenderer fails to enter into the relevant contract, the head or contract officer of each central government agency shall vest the relevant tender bond in the National Treasury. In such cases, when a successful tenderer has been wholly or partially exempted from a tender bond under the proviso of paragraph (1), he or she shall vest the amount equivalent to the tender bond in 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 a successful tenderer: Provided, That the foregoing shall not apply where criteria for successful bidders 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, any of the following tenderers shall be determined as a successful tenderer:
1. A person who is recognized as capable of performing a contract and tenders the lowest price;
2. A person whose tender offer is the most favorable to the State according to the evaluation criteria specified in the tender notice or tender guidance;
3. A person whose tender offer most closely conforms to criteria, where such criteria are specially prescribed by Presidential Decree, taking into consideration the nature, size, etc. of the contract.
(3) Notwithstanding paragraph (2), the head or contract officer of each central government agency shall not determine a person who tenders less than 98/100 of the sum of the following expenses as a successful tenderer, in cases of a competitive tendering procedure for construction works whose estimated price is less than 10 billion won: <Newly Inserted by Act No. 16578,, Nov. 26, 2019>
1. Material costs, labor costs, and expenses;
2. Value-add tax on the costs under subparagraph 1.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 11 (Preparation of Contract and Formation of Contract)
(1) When the head or contract officer of each central government agency enters into a contract, he or she shall prepare a contract, clearly specifying the following matters therein: Provided, That preparing a contract may be skipped in the cases specified by Presidential Decree:
1. Purpose of the contract;
2. Amount of the contract;
3. Period of performance;
4. Contract bond;
5. Burden of risk;
6. Penalty for delay;
7. Other necessary matters.
(2) Where a contract is prepared pursuant to paragraph (1), the contract shall be finally concluded when the public official in charge and the counterparty 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 contract officer of each 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 wholly 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 thereof, and other necessary matters shall be prescribed by Presidential Decree.
(3) If the counterparty to a contract fails to perform his or her obligation under the contract, the head or contract officer of each central government agency shall vest the relevant contract bond in the National Treasury. In such cases, when the counterparty has been wholly or partially exempted from a contract bond under the proviso of paragraph (1), he or she shall vest the amount equivalent to the contract bond in 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 contract officer of each central government agency deems it necessary for the purpose of ensuring proper performance of a contract when he or she enters into a contract for construction works, manufacturing, or services, he or she shall directly supervise the performance of the contract in accordance with the contract, design documents, and other relevant documents or authorize public officials of the central government agency to supervise the performance of the contract as necessary: Provided, That a specialized institution may be designated separately 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 (Inspections)
(1) When the counterparty to a contract fully or partially performs the contract, the head or contract officer of each central government agency shall directly inspect the performance of the contract in accordance with the contract, design documents, and other relevant documents or authorize public officials of the central government agency to inspect the performance of the contract as necessary: Provided, That a specialized institution may be designated separately to conduct inspections, as necessary, in cases of a contract specified by 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 skipped in the cases specified by Presidential Decree.
(3) Notwithstanding paragraph (1), the head or contract officer of each central government agency may skip the inspection under the same 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 statutes or regulations 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 damage caused by deformation or destruction in the course of such inspections or tests shall be borne by the counterparty 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 contract officer of each 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 counterparty submits an invoice for the payment of the price, but interest for the number of days the payment is overdue shall be paid, as prescribed by Presidential Decree, if it is impracticable to pay the price by the deadline.
(3) 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 in any other statute or regulation, the head or contract officer of each central government agency shall require the counterparty 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 contract officer of each central government agency concludes a contract for construction works, he or 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 contract officer of each central government agency shall require the counterparty to the contract to pay a warranty bond to guarantee the repair of defects in the construction works: Provided, That the counterparty to a contract may be wholly 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 timing for the payment,, the method of payment, the period of deposit thereof, and other necessary matters shall be specified by Presidential Decree.
(3) Article 12 (3) shall apply mutatis mutandis to the vesting of a warranty bond in the National Treasury: Provided, That where the budget for the repair of defects is lacking or insufficient, 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 of paragraph (3), 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)
Where it is necessary to adjust the contract amount due to a price fluctuation, a design modification, or other modifications of the terms and conditions of a contract (including cases caused by force majeure such as an act of God or war) after concluding a contract for construction works, manufacturing, or services, or any other contract that imposes a burden on the National Treasury, the head or contract officer of each central government agency shall adjust the contract amount, as prescribed by Presidential Decree. <Amended on Nov. 26, 2019>
[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 National Funds Act, the head or contract officer of each central government agency may conclude a contract in advance before the beginning of a fiscal year within budgetary limits finalized for the pertinent year, as prescribed by Presidential Decree, if the contract maynot be suspended due to 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 contract officer of each central government agency shall specify the total amount and annual installments in concluding a contract.
(2) The head or contract officer of each central government agency may enter into a long-term continuing contract, if it is necessary in its nature for the purpose of maintaining 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 contract officer of each central government agency shall ensure that such contract be performed within budgetary limits for each fiscal year.
[This Article Wholly Amended by Act No. 11377, Mar. 21, 2012]
 Article 22 (Unit Price Contracts)
If it is necessary to continuously maintain a contract for manufacturing, repair, processing, trading, supply, or use for a certain period, the head or contract officer of each central administrative agency may enter into a unit price contract within budgetary limits 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 contract officer of each central administrative agency is unable to set a price in advance for any of the following contracts, he or she may enter into a contract by rough estimate, as prescribed by Presidential Decree:
1. A contract for manufacturing a prototype for development;
2. A service contract for testing, survey, or research;
3. A contract entered into with a public institution, as defined under the Act on the Management of Public Institutions, for entrustment or delegation of performance under a relevant statute or regulation;
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 contract officer of each central administrative agency enters into a contract by rough estimate pursuant to paragraph (1), he or she shall notify prospective tenderers of the procedure, guidelines, etc., for the ex post facto settlement under paragraph (2) through public tender notice, etc.
[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, 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 contract officer of each central administrative agency may enter into 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 entering into a consolidated contract shall cooperate in matters necessary for entering into the contract.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 25 (Joint Contract)
(1) The head or contract officer of each central administrative agency may enter into a joint contract with two or more counterparties if he or she deems 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 counterparties 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 counterparty to a contract delays his or her performance of the contract without good cause, the head or contract officer of each central administrative agency shall require the counterparty 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 of 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 (Restrictions on Qualifications for Participation by Inappropriate Business Entities in Tendering Procedures)
(1) If the head of each central government agency finds a person falling under any of the following (hereinafter referred to as “inappropriate business entity”), he or she shall place restrictions on qualification for participation by 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 the central government agencies shall place restrictions on qualifications for participation by 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 performing a contract;
2. A person who agrees on the tender price, order amount, contract contents, etc. with tenderers or counterparties 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 signing or performing a contract;
3. A person who subcontracts in violation of the restrictions on subcontracts under 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 of the ordering agency or who changes the condition of subcontracts approved by the ordering agency;
4. A person who does damage to the State in the procedure of tendering or acceptance of tendering or the procedure of signing and performing the contract by fraud or other illegal acts;
5. A person against whom a request is made by the Fair Trade Commission to restrict qualifications for participation in a tendering, due to the violation of the Monopoly Regulation and Fair Trade Act or the Fair Transactions in Subcontracting Act;
6. A person against whom a request is made by the Minister of SMEs and Startups to restrict qualifications for participation in a tendering under 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 under Article 27-3 (1); the State Contract Disputes Conciliation Committee under Article 29 (1); the Central Deliberation Committee on Construction Technology, the Special Deliberation Committee on Construction Technology and the consultative committee on technology under the Construction Technology Promotion Act; and other committees prescribed by Presidential Decree) regarding the tendering or acceptance of tendering or signing and performing the contract;
8. Any of the following persons, as prescribed by Presidential Decree:
(a) A person who could hinder fair competition by forging or falsifying the documents relevant to tendering or contract or by interfering therewith ;
(b) A person who could impede proper performance of a contract by failing to conduct or interfering with the acts relevant to signing or performing the contract;
(c) A person deemed inappropriate to participate in tendering due to the violation, etc. of other statutes or regulations.
(2) Deleted. <by Act No. 5454, Dec. 13, 1997>
(3) The head or contract officer of each central administrative agency shall not enter into a negotiated contract with a person whose qualifications 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 qualifications for participation in tendering procedures is subject to restrictions placed under paragraph (1) or where any other unavoidable situation exists. <Amended by Act No. 11547, Dec. 18, 2012>
(4) Notwithstanding paragraph (1), the head of each central government agency shall not place restrictions on the qualifications for participating in a tendering where five years have passed since the day of termination of the acts falling under the subparagraph of paragraph (1) (in cases falling under subparagraphs 5 and 6, referring to the day when a request is made by the Minister of SMEs and Startups or the Korea Fair Trade Commission): Provided, That it shall be seven years from the day of termination of the violation in cases falling under acts prescribed in subparagraphs 2 and 7. <Newly Inserted by Act No. 14038, Mar. 2, 2016; Act No. 14839, Jul. 26, 2017>
(5) Where the head of each central government agency places restrictions on qualifications for participating in tendering pursuant to paragraph (1), he or she shall disclose the details of restrictions as prescribed by Presidential Decree. <Newly Inserted by Act No. 14038, Mar. 2, 2016>
 Article 27-2 (Penalty Surcharges)
(1) Where restrictions shall be placed on qualifications for participation by an inappropriate business entity in tendering procedures under Article 27 (1), the head of each 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 qualifications for participation in tendering procedures in any of the following cases:
1. Cases specified by Presidential Decree where violation by the inappropriate business entity was caused by an evidently unforeseeable change in the economic situation or where 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 entered into yet) involved in the violation;
2. Cases specified by Presidential Decree where it is evident that a competitive tendering procedure is not effectively completed due to restrictions on qualifications 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 entered into yet) involved in the violation.
(2) Where the head of each central government agency intends to impose a penalty surcharge under paragraph (1), he or she shall refer the case to the Committee for Imposition of Penalty Surcharges under Article 27-3 for deliberation, 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 the amount 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 deliberate on whether to impose a penalty surcharge and whether the amount of a penalty surcharge is appropriate, the Ministry of Economy and Finance shall establish the Committee for Imposition of Penalty Surcharges under its jurisdiction.
(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 on Condition of Direct Payment of Subcontract Price)
(1) When the head of each central government agency finds that the counterparty 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 or she shall notify the heads of other central government agencies of the counterparty and his or her violation without delay.
(2) Upon receipt of the notice given pursuant to paragraph (1), the head or contract officer of each central administrative agency shall permit the counterparty to a contract referred to in paragraph (1) to participate in a tendering procedure, only when the counterparty submits a letter of confirmation in which he or 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 counterparty intends to make a tender in a tendering procedure for 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 (Restrictions on Qualifications for Participation by Persons Who Have Evaded Taxes in Tendering Procedures)
(1) The head of each central administrative agency shall place restrictions on qualifications for participation by 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 (Raising Objections)
(1) In the process of concluding a government procurement contract of at least the amount prescribed by Presidential Decree (Article 4 shall apply in cases of an international tendering procedure), a person who has been disadvantaged by any of the following acts conducted by the head or contract officer of the relevant central government agency may raise an objection, seeking revocation or rectification of such act: <Amended Act No. 16578, Nov. 26, 2019, Nov. 26, 2019>
1. Matters relating to the scope of a government procurement contract for which international tendering is called under Article 4 (1);
1-2. Matters relating to an unreasonable special agreement, etc. under Article 5 (3);
2. Matters relating to qualifications for participation in tendering procedures under Article 7;
3. Matters relating to a public tender notice, etc. under Article 8;
4. Matters relating to the determination of a successful tenderer under Article 10 (2);
5. Other matters specified by Presidential Decree.
(2) An objection shall be raised to the head of the relevant central government agency within 15 days from the date the act constituting the cause for the objection occurred or within 10 days from the date the person who raised the objection becomes aware that such act was conducted.
(3) The head of the relevant central government agency shall examine an objection within 10 days from the date the objection is filed, take necessary measures such as rectification, and notify the applicant of the results thereof.
(4) A person who has an objection to a measure taken under paragraph (3) may file a request for re-deliberation, seeking conciliation by the State Contract Disputes Conciliation Committee under Article 29, within 15 days from the date he or she is notified of such measure.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 28-2 (Agreement on Methods of Dispute Settlement)
(1) The head or a contract officer of each central government agency may determine how to resolve disputes among the parties to the contract at the time of signing a contract, to efficiently resolve disputes that may occur under the contract to which the State is a party.
(2) The method of resolving disputes under paragraph (1) shall be determined by agreement among the parties to the contract:
1. Conciliation by the State Contract Disputes Conciliation Committee under Article 29;
2. Arbitration under the Arbitration Act.
[This Article Newly Inserted by Act No. 11547, Dec. 19, 2017]
 Article 29 (State Contract Disputes Conciliation Committee)
(1) In order to examine and mediate disputes that may occur under the contract to which the State is a party, the Ministry of Economy and Finance shall establish the State Contract Disputes Conciliation Committee (hereinafter referred to as the “Committee”) under its jurisdiction. <Amended by Act No. 15219, Dec. 19, 2017>
(1) The Committee shall be comprised of not more than 15 persons, including one chairperson. <Amended by Act No. 14038, Mar. 2, 2016>
(3) The chairperson of the Committee shall be a member of the Senior Executive Service designated by the Minister of Economy and Finance, and the members shall be commissioned by the Minister of Economy and Finance from among those belonging to the central administrative agency prescribed by Presidential Decree, who are designated by the head of the relevant agency and any of the following persons, in consideration of gender: <Newly Inserted by Act No. 14038, Mar. 2, 2016>
1. A person who has worked as an associate professor or at a higher position in law, finance, trade, or accounting at universities and colleges under 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 qualifications;
3. A person who has abundant knowledge of and experience in the affairs of accounting and procurement contracts of the Government, who is deemed to satisfy the standards prescribed in subparagraph 1 or 2.
(4) The term of office of an commissioned member under the subparagraph of paragraph (3) shall be two years, and his or her term may be renewed. <Newly Inserted by Act No. 14038, Mar. 2, 2016>
(5) The term of a member newly commissioned due to the resignation of a commissioned member referred to in the subparagraphs of paragraph (3) shall be the remaining term of his or her predecessor. <Newly Inserted by Act No. 14038, Mar. 2, 2016>
(6) The commissioned member under the subparagraphs of paragraph (3) shall not be dismissed against his or her will during his or her term, except where he or she is sentenced to imprisonment without labor or heavier punishment or is not able to conduct his or 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 in paragraphs (2) through (7), the procedures for 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 Committee may issue an order to defer the relevant tendering procedure or suspend the signing of the relevant contract until conciliation is completed 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 conduct examination and conciliation within 50 days from the date a petition for examination and conciliation is filed, except in an exceptional circumstances. <Amended by Act No. 15219, Dec. 19, 2017>
(2) If neither the petitioner nor the head of the competent central government agency raises an objection against the conciliation concluded pursuant to paragraph (1) within 15 days after conciliation is completed, 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 contract officers to improve their qualities.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 33 (Submission of Statements on Results of Contracts)
The head of each central government agency shall submit a report on performance of contracts to the Minister of Economy and Finance, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 34 (Consultation on Statutes regarding Contracting)
When the head of each central government agency drafts a statute or regulation with regard to contracting, he or she shall, in advance, consult with the Minister of Economy and Finance thereon.
[This Article Wholly Amended by Act No. 11547, Dec. 18, 2012]
 Article 35 (Legal Fiction as Public Officials in Applying Penalty Provisions)
A person who is not a public official among members of the following committees shall be deemed a public official in application 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. 11547, Dec. 30, 2014]
ADDENDA <Act No. 4868, Jan. 5, 1995>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Article 2 (Transitional Measures)
A contract entered into pursuant to the Budget and Accounts Act before this Act enters into force shall be deemed a contract entered into pursuant to this Act.
Article 3 Omitted.
Article 4 (Relationships to Other Statutes)
A citation of Chapter Ⅵ of the Budget and Accounts Act or any provision of said Chapter of said Act by any other statute 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 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: Provided, That amended provisions of Articles 5-2, 5-3, 14 (3) and (4), 23, 27-2 through 27-4, 28 (1) and (4), and 29 (1) enter into force six month after the date of its promulgation.
Article 2 (Applicability to Integrity Agreements)
The amended provisions of Article 5-2 shall begin to apply from the first tendering procedure, of which a public tender notice or notification is given after the amended provisions enter into force: Provided, That the amended provisions shall begin to apply from the first negotiated contract entered into after this Act enters into force where a negotiated contract shall be made pursuant to the proviso of Article 7 (1).
Article 3 (Applicability to Integrity Agreements)
The amended provisions of Article 27-2 shall apply where the first reason for imposing 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 begin to apply from the first notice given after the amended provisions enter into force.
Article 5 (Applicability to Raising of Objection)
The amended provisions of Articles 28 (1) and (4) and 29 (1) shall begin to apply from the first contract, of which a public tender notice is given, or the first contract entered into after the amended provisions enter into force.
Article 6 (General Transitional Measures)
Contracts, of which a public tender notice was given, or contracts entered into, before this Act enters into force shall be governed by the previous provisions.
ADDENDUM <Act No. 12028, Aug. 13, 2013>
This Article shall enter into force six months after the date of its promulgation.
ADDENDUM <Act No. 12860, Dec. 30, 2014>
This Article shall enter into force six months after the date of its promulgation.
ADDENDUM <Act No. 14038, Mar. 2, 2016>
This Article shall enter into force six months after the date of its promulgation.
ADDENDA <Act No. 14839, Dec. 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 the enforcement date of which has yet to arrive, among the Acts amended pursuant to Article 5 of the Addenda, shall enter into force on the respective dates the relevant Acts enter into force.
Articles 2 through 6 Omitted.
ADDENDUM <Act No. 15219, Dec. 19, 2017>
This Act shall enter into force three months after the date of its promulgation: Provided, That the amended provisions of Article 7 (3) shall enter into force on the date of its promulgation.
ADDENDA <Act No. 16578, Nov. 26, 2019>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation: Provided, That the amended provisions of Article 19 shall enter into force three months after the date of its promulgation.
Article 2 (Applicability to Determination of Successful Tenderer and Raising of Objections)
(1) The amended provisions of Article 10 (3) shall begin to apply from the first tendering procedure which is publicly announced or notified after this Act enters into force.
(2) The amended provisions of Article 28 (1) shall begin to apply from the first tendering procedure which is publicly announced or notified after this Act enters into force: Provided, That where a negotiated contract is concluded pursuant to the proviso of Article 7 (1), the provisions shall begin to apply from the first contract concluded.