[Exclusive] Government became the first buyer, but... Innovative products worth 52.2 billion won see 'zero' follow-up purchases

[Financial News] About one in four innovative products for which the government directly became the 'first buyer' and opened up sales channels did not lead to any additional public purchases. The government spent more than 52.2 billion won on its initial purchases of these products alone. Although the scale of pilot purchases continues to grow, the government does not track whether the products lead to private-sector sales or exports, prompting calls for better follow-up performance management.
According to data the office of Democratic Party of Korea lawmaker Jung Tae-ho obtained from the Public Procurement Service (PPS) on the 28th, 232 of the 907 innovative products purchased through pilot programs between 2019 and 2024, or 25.5%, had received no follow-up public purchases as of August this year. The total contract value for the pilot purchases of these 232 products was 52.22 billion won.
The innovative product program was introduced to create an initial market and support companies' innovative growth by having the public sector become the first buyer of innovative products. It began as a PPS pilot project in 2019, and multiple government ministries now designate innovative products. Designated products are eligible for contracts without competitive bidding and purchase liability exemptions.
The scale of pilot purchases is growing rapidly. From 2019 through August this year, a total of 341.26 billion won was spent on 1,528 products. Pilot purchases rose from 2.28 billion won in 2019 to 52.77 billion won last year. This year, they reached 67.59 billion won through August alone, already exceeding last year's full-year total by 28.1%.
A significant number of products have also shown measurable results. Of the products purchased through pilot programs between 2019 and 2024, 654 subsequently led to additional purchases by public institutions. Follow-up public purchases totaled 1.4455 trillion won, 6.5 times the 220.9 billion won spent on pilot purchases during the same period.
However, whether the products survived in the real market after the government opened their initial sales channels remains a blind spot in oversight. When the lawmaker's office asked the PPS for private-sector sales and export figures after the pilot purchases ended, the agency replied, "We do not possess the relevant data." It is not even known whether the 232 products, for which follow-up public purchases stopped after the government spent large sums to buy them, established themselves in private or overseas markets or failed to secure sales channels.
Jung Tae-ho said, "The innovative product program is intended to provide an initial sales channel and a foundation for innovative growth by having the government take the lead in purchasing innovative technology products and serve as a catalyst. The PPS must not stop at expanding pilot purchases. It is urgent to establish a system that manages follow-up results, including whether products actually gain a foothold in private markets and generate exports."
[email protected] Kim Kyung-min Reporter