The law firm Cheongchul's Shin Jun-seon Attorney conducted an interview with 'The Power' regarding 'bidder qualification limitation penalties'.

Due to the amendment of the Act on the Operation of Public Institutions, from September 27, 2024, unfair bidders will be able to substitute their bidder qualification limitations by paying a certain amount of penalties. This reflects the penalty system already stated in the existing National Contract Act and Local Contract Act in the law on the operation of public institutions, with the intention of easing the rigidity of penalties and reducing the management burden on small and medium-sized enterprises. 

The law firm Cheongchul's Shin Jun-seon Attorney stated, “The amended law on the operation of public institutions and administrative rules will apply only to the reasons for bidder qualification limitations that occur after September 27, 2024. Therefore, companies that receive prior notice of restriction actions after implementation should examine whether this can be substituted with penalties and analyze the criteria for penalty calculation to understand the expected amount. Additionally, each company should emphasize to public institutions that their violations of contractual order are at a minor level, and actively explain that the bid restriction may hinder effective competition, requesting to replace it with imposition of penalties. Through this, it is important to defend the restrictions on bidder qualifications and to develop a business strategy that secures continuous bidding opportunities.”

Furthermore, it was added, “This amendment is expected to have a positive impact on small and medium-sized enterprises. Small and medium-sized enterprises that heavily depend on public bidding faced the issue of being completely excluded from the public procurement market for a certain period if they were subject to bidding qualification restrictions. On the other hand, with the introduction of the method of paying penalties, they will be able to respond more flexibly than before.” 

Detailed information can be found in the full text of the published interview.

Bidder Qualification Limitations in Public Institutions can be Substituted with Penalty Payments