Finance ministry scraps unfair public contract exemptions to boost fairness

The finance ministry said Tuesday it will abolish or revise 22 special contract exemptions used by public institutions to restore fairness in the procurement market and support innovative enterprises. Vice Minister Heo Jang emphasized during the fourth Procurement Policy Deliberation Committee meeting that the government will continue driving innovation in the contracting system by supporting smooth market entry for new technologies while boldly rectifying unreasonable practices.

A comprehensive survey conducted in July identified 60 active special exemptions, of which 18 will be eliminated entirely and four modified to address issues restricting competition or infringing on supplier rights. The removed provisions include sole-source contracts with firms linked to retired employees for facility maintenance and non-competitive consulting agreements based solely on custom rather than formal estimates.

The remaining 38 exemptions deemed necessary for regional cooperation or essential public services will be retained under a newly overhauled management framework introducing specific approval criteria tied to core institutional missions and a maximum three-year review period, extendable only once. The ministry will also mandate annual performance assessments and public disclosure of operational status to ensure transparency.

Separately, the ministry approved measures to expand the designation authority for Type I innovative products beyond central government ministries to include major local governments such as Seoul and Gyeonggi Province. Since its launch in 2020, the program has designated 3,078 products and generated 1.1 trillion won ($809 million) in public procurement sales last year alone. The updated guidelines replace the current dual extension system with a single three-year term.