Local Governments to Curb Preferential Negotiated Contracts... 'Local Assembly Act' to Be Enacted Within the Year

Introduction of Caps on Negotiated Contracts... Review by Contract Review Committee

Restrictions on Local Councilor Appointments with Establishment of 'Ethics Review Advisory Committee'

Comprehensive Audit of Public Fund Management... "Pursuing Rigorous Institutional Improvements"

The Ministry of the Interior and Safety is set to overhaul the system to eradicate the practice of preferentially awarding negotiated contracts within local governments and to enhance transparency in the execution of public funds.

On August 13, Kim Minjae, Vice Minister of the Ministry of the Interior and Safety, held a briefing at the Government Complex Seoul to announce measures to prevent improper negotiated contracts and embezzlement by local public officials.

Vice Minister Kim emphasized that a series of recent incidents involving undue influence by some local councilors and embezzlement of public funds by public officials should not be dismissed as merely individual misdeeds, but must be addressed through fundamental improvements to the system itself.

Kim Minjae, Deputy Minister of the Ministry of the Interior and Safety, is announcing improvement measures on "Prevention of Private Contracts by Local Council Members and Embezzlement by Local Public Officials" on the 13th at the briefing room of the Government Seoul Building in Jongno-gu, Seoul. Provided by the Ministry of the Interior and Safety

Local Governments to Limit Repeated Private Contracts with the Same Suppliers by Frequency and Value

The Ministry of the Interior and Safety announced that the core of these measures is the introduction of caps on the frequency and value of negotiated contracts. This is aimed at preventing local governments from repeatedly entering into private contracts with the same suppliers.

For local governments such as those in Sejong, Jeju, and basic local governments, negotiated contracts with the same supplier will be limited to five times per year, or up to 200 million won. For metropolitan local governments, the cap will be set at seven times per year, or up to 300 million won.

The restrictions apply to negotiated contracts for general enterprises with an estimated value of 20 million won or less per single quote and for women-owned or disabled-owned enterprises, contracts of 50 million won or less per single quote.

However, in unavoidable cases, such as a lack of suppliers in the region, contracts can exceptionally proceed following a review by a Contract Review Committee. The results of this review are to be reported to city, county, or district authorities for city and county contracts, and to the Ministry of the Interior and Safety for metropolitan city contracts, thereby strengthening post-contract oversight.

In addition, the Ministry will require that, in addition to the company name, the business registration number be disclosed for negotiated contracts. This will allow residents, the media, and assemblies to directly verify whether there are repeated contracts with the same supplier and whether the caps have been breached.

Pursuing the Enactment of a Local Assembly Act... Strengthening Local Councilors' Ethics

The Ministry of the Interior and Safety also plans to pursue the enactment of a Local Assembly Act within this year to prevent undue influence from local councilors. This act aims to establish internal mechanisms for assemblies to control problematic members, with a significant emphasis on strengthening ethical review functions.

The new bill will include provisions for an "Ethics Review Advisory Committee," composed of civilian members, to meticulously examine the content of outside employment reports by local councilors and scrutinize any links to for-profit activities. The committee will have the authority to restrict appointments to standing committees.

For example, if a local government plans river facility improvement works, a local councilor who also serves as the president of a construction company closely related to the project could be recommended for a leave of absence from the outside position or may be barred from service on the relevant standing committee, such as the Construction and Transportation Committee.

Furthermore, referencing the National Assembly Act, local councilors will be required to register and disclose their private interests and relationships.

Additionally, if a local government intends to enter into a negotiated contract with a local councilor’s private associate, the councilor must report that relationship to the Ethics Review Advisory Committee. If the committee deems the arrangement inappropriate, it may recommend that the local government reconsider the contract.

Nationwide Audit of Public Fund Management... Mandatory Use of 'e-Hojo+Bill' for Local Governments

The Ministry of the Interior and Safety will conduct a nationwide audit of public fund management by local governments and establish measures to prevent the recurrence of misappropriation and embezzlement.

The audit will focus on identifying transactions where the account holder name differs from the account owner, transactions under the name of the responsible public official, and improper use of ordinary deposit accounts.

The Ministry will also require all local governments to use the electronic payment request system 'e-Hojo+Bill.' The relevant directive will be amended by next month to provide the legal basis for mandating the use of this electronic payment system.

Since its introduction in 2024, 'e-Hojo+Bill' has been gradually expanded. It is a system in which business operators directly register their account information and request payments, ensuring that payments are made only to the registered accounts. As a result, responsible public officials cannot arbitrarily input or change the supplier's account information.

Vice Minister Kim stated, "Acts that undermine legitimate contracting procedures and the principles of public fund execution erode public trust in the government. We will promote rigorous institutional improvements to root out preferential negotiated contracts and prevent mishandling of public funds."

This content was produced with the assistance of AI translation services.