2024.10.08. The Fair Economy — Last year, a large number of the 854 public institutions failed to meet the legal mandatory purchase ratio for small and medium-sized enterprise (SME) products.
Oh Se-hui, a Democratic Party of Korea lawmaker on the National Assembly's Committee on Industry, Trade, Energy and SMEs, said she analyzed data from the Ministry of SMEs and Startups on public procurement performance for SME products over the past five years (2019-2023). She found that 63 agencies fell short of their targets, with a shortfall totaling about 3 trillion won. In addition, 33 agencies used pre-consultations to significantly lower their targets and then exceed them, amounting to about 2.2913 trillion won.
By year, the shortfall amounts were: 597.8 billion won in 2019, 1.808 trillion won in 2020, 361.7 billion won in 2021, 35.4 billion won in 2022, and 107.4 billion won in 2023.
Under current law, the public procurement system for SME products mandates that public institutions purchase at least 50% of their goods from SMEs. This system aims to improve the competitiveness of SMEs and support their market access, and failure to comply results in disadvantages in the management evaluation of public institutions.
However, the score reflected in actual public agency performance evaluations is a mere 0.0375 points out of 100, raising questions about its effectiveness.
In particular, some public agencies are exploiting the prior consultation clause by setting targets significantly lower than their actual purchase ratios, thereby claiming over-achievement to avoid penalties in management evaluations.
Oh said, "It is highly inappropriate that the failure to comply with the public procurement system, established at the public level to support SMEs, is repeated every year," and pointed out, "It is necessary to strengthen the penalties for non-compliance with the public procurement system and to devise detailed measures to prevent tricks that exploit legal and institutional loopholes."
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