"Paving the Way for SMEs to 'Receive Fair Prices'"... Minimum Bid Acceptance Rate for Military Supplies Raised by 2%p

[Financial News] To alleviate the financial difficulties of small and medium-sized defense and military contractors and to ensure fair compensation for public contracts, the minimum bid acceptance rate for military procurement contracts will be uniformly raised by 2 percentage points.
The Public Procurement Service (PPS) announced on the 15th that it has revised and is fully implementing the 'Detailed Standards for Qualification and Contract Performance Capability Assessment of Military Supplies' as a follow-up measure to the '2026 Economic Growth Strategy' and as part of support for the government's national agenda.
The core of this revision is to raise the minimum bid acceptance rate across the entire supply chain of military equipment to alleviate the burden of low-price bidding competition on small and medium-sized enterprises, and to significantly establish and supplement credibility evaluation criteria related to industrial safety and localization of parts.
First, for the qualification review of military supplies, the minimum bid acceptance rate for amounts below the notified price will rise by 2 percentage points from the existing 84.245% to 86.245%, and for amounts above the notified price, it will rise by 2 percentage points from 82.995% to 84.995%. Similarly, for the contract performance capability review of military supplies, the minimum bid acceptance rate across all ranges will be raised from the existing 87.995% to 89.995%. This measure fully expands to the military supplies sector, following the Public Procurement Service's earlier 2 percentage point increase in the minimum bid acceptance rates for qualification and contract performance capability reviews of general goods last May and July.
A new 'industrial safety' credibility assessment item has also been established to ensure the safety of on-site workers. Companies that have experienced serious accidents are penalized with 3 points, while companies holding the KOSHA Management System (KOSHA-MS) certification are given 1 point, thereby encouraging companies to strengthen their autonomous safety management.
In addition, a new credibility bonus of 1 point has been established for small and medium-sized enterprises (SMEs) that have achieved the localization of core components directly linked to supply chain security, and this will be applied preferentially in the assessment of military procurement contract performance capability. The evaluation method for "Excellent Employment Stability Companies," which assesses the ratio of long-term employees to total employment, has also been reformed. To prevent loopholes where the long-term employee ratio is artificially inflated by reducing the total workforce, the system has been modified to exclude from evaluation companies whose average total workforce over the past six months has decreased compared to the same period of the previous year.
Kang Seong-min, Deputy Administrator of the Public Procurement Service, stated, "This amendment is intended to ensure that small and medium-sized enterprises (SMEs) involved in manufacturing and supplying on-site receive fair compensation, and to actively support worker safety and the localization of core technologies." He added, "We will continue to support the innovative growth of companies and build a trusted military procurement ecosystem."
Meanwhile, the increase in the minimum bid acceptance rate for military supplies is expected to provide relief to small and medium-sized enterprises (SMEs) supplying military goods, which have been struggling due to the recent rise in global raw material prices and inflation. Concerns regarding losses or quality degradation have been consistently raised in the defense and military sectors due to low minimum bid acceptance rates, despite the significant volatility of raw material prices. Analysts predict that guaranteeing appropriate unit prices through this measure will not only improve the profitability of SMEs but also lead to enhanced quality of military supplies—such as clothing, food, and general equipment—and the maintenance of a stable national defense supply chain.

[email protected] Kim Won-jun Reporter