Excellent procurement

Excellent product designation system

Legal basis for negotiated contracts

To improve the quality of procured goods
Introduced in 1996, this system designates products with excellent technology and quality, through thorough evaluation, among those produced by SMEs, as excellent products

♦ System giving priority to the products with technologies developed by SMEs

- A system introduced to support the sales channels for SMEs and inspire technology development by giving priority to the products with technologies developed by SMEs, such as excellent products, for 10% or more of the amount to be spent on purchasing goods for public institutions.
- Legal basis: Article 14, Paragraph 1 of the ⌈Act on Facilitation of Purchase of Small and Medium Enterprise-Manufactured Products and Support for Development of Their Markets⌋ and Article 13 of the Enforcement Decree of the same Act

Article 14, Paragraph 1 of the [Act on Facilitation of Purchase of Small and Medium Enterprise-Manufactured Products and Support for Development of Their Markets] and Article 13 of the Enforcement Decree of the same Act
Article 13 (Designation of Products Manufactured with Technology Developed by Small and Medium Enterprises Subject to Preferential Purchase)
“Products which meet the specific requirements prescribed by Presidential Decree, such as performance-certified products” in Article 14 (1) of the Act means any of the following:
1. A performance-certified product under Article 15 (1) of the Act;
2. [Enforcement Decree of the Government Procurement Act];
3. A product certified as a new exemplary product pursuant to Article 16 (1) of the [Industrial Technology Innovation Promotion Act];
4. A quality-certified software under Article 13 (1) of the [Software Industry Promotion Act], meeting the standards prescribed by Ordinance of the Ministry of SMEs and Startups;
5. Other products designated by the Minister of SMEs and Startups after consultation with the heads of relevant central administrative agencies.

♦ Indemnification of any loss arising from the purchase made by purchase personnel

- The person in charge of purchase in a public institution that has signed a contract to purchase products manufactured with technology developed by SMEs a preferential purchase shall not be held liable for any loss arising from the purchase of the products unless his/her intentional act or gross negligence is proven.
- Legal Basis: Article 14 Paragraph 3 of the ⌈Act on Facilitation of Purchase of Small and Medium Enterprise-Manufactured Products and Support for Development of Their Markets⌋

Article 26 Paragraph 1 subparagraph 3 (f) of the [Enforcement Decree of the Act on Contracts to Which the State is a Party]
Article 26 (Cases Applicable to Negotiated Contract)
① The cases for which a negotiated contract is permissible under the proviso to Article 7 (1) of the Act are as follows:

3. Where any of the following products produced by small and medium enterprises defined under subparagraph 1 of Article 2 of the [Small and Medium Enterprises Promotion Act] is manufactured or purchased from the small or medium enterprises concerned:
F. Products designated and publicly notified as excellent goods for procurement under Article 18 of the [Enforcement Decree of the Government Procurement Act]
Article 25 Paragraph 1 subparagraph 6 (d)-5 of the [Enforcement Decree of the Act on Contracts to Which a Local Government is a Party]

Article 25 (Cases Applicable to Negotiated Contract)

① The head of a local government or a person in charge of a contract may enter into a negotiated contract under the proviso to Article 9 (1) of the Act in any of the following circumstances:

<Subparagraph 6 (d)>

D. Where any of the following products produced by small and medium enterprises defined under subparagraph 1 of Article 2 of the Small and Medium Enterprises Promotion Act is manufactured or purchased from the small or medium enterprises concerned, and where it falls within the validity period certified or designated by the competent minister [if the validity period for certification or designation for the relevant product exceeds 3 years, this shall mean 3 years, and if the validity period for certification or designation has been extended by the competent minister, it shall include the extended period (it shall refer to 3 years if it exceeds 3 years)];
2) Products, which have been certified for its quality pursuant to Article 13 of the Software Industry Promotion Act;
5) Products designated and publicly notified as excellent goods for procurement under Article 18 of the [Enforcement Decree of the Government Procurement Act].
Article 14 Paragraph 3 of the [Act on Facilitation of Purchase of Small and Medium Enterprise-Manufactured Products and Support for Development of Their Markets]

Article 14 (Designation of Products Manufactured with Technology Developed by Small and Medium Enterprises Subject to Preferential Purchase)

③ The person in charge of purchase in a public institution that has signed a contract to purchase products manufactured with technology developed by SMEs a preferential purchase shall not be held liable for any loss arising from the purchase of the products unless his/her intentional act or gross negligence is proven.