On the 11th, the Korea Federation of Small and Medium Enterprises (KBIZ) announced that it held the "4th Small and Medium Enterprises Public Procurement Policy Research Meeting" at the KBIZ in Yeouido, Seoul.
The Small and Medium Enterprises Public Procurement Policy Research Meeting is a gathering of public procurement experts initiated by KBIZ in August 2023, aimed at preparing improvement measures and uncovering new agendas related to public procurement policies that have focused on budget savings and management.
During the event, active discussions were held on the systems that need to be improved to revitalize small and medium enterprises' entry into the public procurement market in response to rapidly changing domestic and international political and economic conditions.
Concerns were raised that the current system makes it impossible for all institutions to supply all products when sanctions are imposed on unscrupulous suppliers, arguing that only specific products and specific institutions should be restricted in order to invigorate the management of small and medium enterprises.
To ensure fair pricing in the public procurement market, there were discussions about allowing corporations to participate in determining the estimated price and raising the bid floor rate from the current 80-84% to around 88%.
In particular, there was consensus that a system is needed to reflect price increases of raw materials if they surge after the conclusion of procurement contracts. While it is possible to reflect price increases of specific materials in construction contracts in the contract amount, in the case of product manufacturing contracts, all costs, including materials and supplies, labor costs, and expenses, must rise for adjustments to be made to the contract amount, which rarely occurs, making it difficult to utilize the system effectively.
Thus, it has been suggested that the payment-linked system introduced in the civil market in 2023 be implemented in the public procurement market to reflect increases in raw material prices in the contract price.
Kim Gi-moon, president of KBIZ, noted, "The public procurement market accounts for about 10% of the national gross domestic product, and small and medium enterprises supply 64.6% of this, making it a crucial market for small and medium enterprises," adding, "The procurement contract system should not only consider the economic efficiency of purchasing contracts but also serve as a means to realize the national policy supporting small and medium enterprises. Active improvements to the system should be made based on voices from the small and medium enterprise sector following the inauguration of the new government."