The construction industry has expressed support for the Ministry of Economy and Finance's proposed revisions to the public procurement bidding system. The simplified comprehensive evaluation bidding system, which applied to projects valued between 10 billion and 30 billion won, will be replaced by a technical qualification evaluation system, raising expectations for improved bidding practices.
On July 1, the Korea Construction Association described the ministry's announcement of the "Rationalization Plan for Public Procurement Bidding" as a much-needed policy to restore order in bidding practices.
Concerns had been raised regarding excessive involvement from estimation agencies in the simplified comprehensive evaluation bidding market for projects valued between 10 billion and 30 billion won. The structure favored bids closer to the average bid price, known as the "equilibrium price," allowing estimation agencies to significantly influence its formation, leading to repeated bids at the same price, known as 동가투찰 (dongga tuchal).
The association has consistently urged the ministry and the Public Procurement Service to abolish the simplified comprehensive evaluation system due to these issues. In response, the ministry has decided to eliminate the simplified system and transition the 10 billion to 30 billion won range to a technical qualification evaluation system. This new system will assess not only bid prices but also the ability to perform the project and technical capabilities.
The government also plans to implement measures to ensure appropriate project costs, applying a 90% bid rate to standard market prices for the relevant evaluation range.
In the context of a sluggish construction market and rising project costs, the revision of the public procurement bidding system is seen as a significant factor that could help small construction companies defend their profitability and normalize the bidding market.
While welcoming the new policy, the association emphasized the need for careful establishment of evaluation criteria for project execution capabilities, considering that projects under 30 billion won are primarily participated in by local small construction firms.
Han Seung-gu, president of the Korea Construction Association, stated, "In the face of a comprehensive crisis marked by declining construction investment, soaring material and labor costs, and stricter labor and safety regulations, a foundation has been established for small firms to compete fairly and transparently."
He added, "We deeply appreciate the Ministry of Economy and Finance for understanding the industry's difficulties and announcing improvement measures, and we will continue to strive for safety and quality through diligent construction to enhance the quality of life for the public."
* This article has been translated by AI.
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