Contract Amounts for Public Procurement Can Be Adjusted Even Within 90 Days of Signing to Ease Difficulties from Middle East War

[Financial News] The government will allow contract amounts for public procurement to be adjusted even within 90 days of signing, in order to ease the difficulties facing procurement companies due to the war in the Middle East. When contract performance is delayed because of disruptions in the supply of materials, liquidated damages will also be waived.
On the 10th, Deputy Prime Minister and Minister of the Ministry of Finance and Economy Koo Yun-cheol chaired a joint meeting of the Emergency Economic Headquarters and the Council of Economic Ministers at Government Complex Seoul and announced support measures for public contracts related to the war in the Middle East.
The government will allow contract amounts to be adjusted even within 90 days from the contract signing date or the previous adjustment reference date when sharp increases in raw material prices make adjustments necessary. Previously, such adjustments were only possible after more than 90 days had passed.
For construction contracts, the government plans to use the unit price adjustment system for individual materials to revise contract amounts for specific items such as asphalt concrete when their prices surge. Under this system, if the price of a specific standardized material that accounts for more than 0.5% of the net construction cost rises by at least 15% compared with the bid date or the previous adjustment date, the contract amount can be adjusted for that material alone.
Across all areas of public contracts, the government will extend delivery deadlines when contract performance is delayed due to disruptions in the supply of raw materials, and will waive liquidated damages when contract periods are extended. Within the limit of not exceeding actual costs, contract amounts may also be revised to reflect changes. In all public contract sectors, bid bonds will be actively exempted, and where necessary, bid bonds may be replaced with a written payment undertaking.
The government will also strengthen price monitoring by shortening the survey cycle for major construction materials. Following the regular survey announcement on the 20th, the current semiannual price survey cycle will be significantly shortened, and when prices rise by 5% or more compared with the previous survey, the changes will be promptly reflected in construction costs and published. Through a public-private consultative body involving price survey institutions and related associations, the list of materials surveyed in each cycle will be updated to reflect market conditions.
To enable swift price variation adjustments, the government will support both companies and public ordering agencies. It will encourage companies to use standard forms provided by the Public Procurement Service (PPS) and urge public ordering agencies to utilize services for calculating price variation rates, thereby expediting contract amount adjustments. Signs of price increase due to price variation (ES) will be posted on the website every month and gradually expanded to individual notifications. The notification service for signs of price variation increases (ES) is scheduled to be established in the second half of this year.
syj@fnnews.com Reporter Seo Young-jun Reporter