(Extension of Deadline for Payment of Penalty Surcharge and Payment in Installments) (1) If a penalty surcharge that an improper businessman shall pay in accordance with Article 27-2 of the

Act exceeds ten percent of the contract price or a penalty surcharge imposed upon a small or medium business entity, under Article 2 of the Framework Act on Small and Medium Enterprises, exceeds one billion won and it is found that the person that shall pay the penalty surcharge is hardly able to pay the full amount of the penalty surcharge in a lump sum in any of the following cases, the head of the competent central government agency may extend the deadline for payment or may permit the person to pay it in installments:

1. Where the person has sustained a severe loss in his/her property due to a disaster, theft, or other event;

2. Where the person’s business is in a critical crisis due to the deterioration of business conditions;

3. Where the person is anticipated to face a severe hardship in financial situation if the person is forced to pay the penalty surcharge in a lump sum;

4. Where the person is in any other situation similar to those specified in subparagraphs 1 through 3.

(2) A person intending to apply for the extension of the deadline for the payment of a penalty surcharge or for the payment of a penalty surcharge in installments pursuant to paragraph (1) shall file an application with the head of the competent central government agency within 30 days from the date on which the

person is notified of the payment of the penalty surcharge, along with documents proving the grounds for the extension of the deadline for the payment of the penalty surcharge or for the payment of the penalty surcharge in installments.

(3) The deadline for payment under paragraph (1) shall not be extended by more than one year from the date immediately after the deadline for payment.

(4) Where a person is permitted to pay a penalty surcharge in installments pursuant to paragraph (1), the interval between deadlines for payment in installments shall not exceed three months, and the number of installments shall not exceed three installments.

Article 76-5 (Composition of Committee for Imposition of Penalty Surcharges)

(1) The Committee for Imposition of Penalty Surcharges that shall be established pursuant to Article 27-3 of the Act (hereafter in this Chapter, referred to as the “Committee”) shall be comprised of not more than 15 members, including one chairperson.

(2) The Vice Minister II of the Ministry of Strategy and Finance shall serve as the chairperson of the Committee, while other committee members shall be comprised of the following persons, taking gender equality into account: <Amended by Presidential Decree No. 25751, Nov. 19, 2014; Presidential Decree No. 28211, Jul. 26, 2017>

1. One person each designated by the head of each competent government agency, from among public officials who belong to the Senior Civil Service Corps of the Ministry of Strategy and Finance, the Ministry of National Defense, the Ministry of the Interior and Safety, the Fair Trade Commission, and the Public Procurement Service: Provided, That the number of persons from the Public Procurement Service shall be two;

2. Not more than eight civilian members commissioned by the Minister of Strategy and Finance from among the following persons who have abundant knowledge and experience in a field related to contracting:

(a) A person that has served as an adjunct or higher-ranking professor in law, economics, or business administration in a university defined under the Higher Education Act;

(b) A person that holds a license as an attorney at law and has engaged or engages in a business related to the license for at least five years;

(c) A person that has abundant knowledge and experience in business affairs related to government procurement contracts and whose qualification is recognized as equivalent to the criteria prescribed in items (a) and (b) above.

(3) The term of office of a civilian member under paragraph (1) 2 shall be two years, but may be renewed consecutively.

(4) The term of office of a committee member newly commissioned due to the resignation of a committee member who is not a public official shall coincide with the remaining term of office of his/her predecessor.

Article 76-6 (Chairperson’s Duties)

(1) The chairperson shall represent the Committee and shall administer all business affairs of the Committee.

(2) If the chairperson is unable to perform his/her duties due to a cause beyond control, the committee member designated by the Minister of Strategy and Finance shall act on behalf of the chairperson.

Article 76-7 (Exclusion of, Challenge against, and Evasion of Committee Members) (1) A committee member shall be excluded from deliberation on any of the following cases:

1. Where a committee member or a person who is or was the spouse of the committee member is the improper businessman at issue (including executive officers of the improper businessman, if the improper businessman is a corporation or organization; hereafter the same shall apply in this subparagraph and subparagraph 2) or a person that holds a right or owes an obligation jointly with the improper businessman;

2. Where a committee member is or was a relative of the improper businessman at issue;

3. Where a committee member or the institution or corporation to which a committee member belongs has given testimony, made a statement, given advice, conducted a study, provided services, or presented an expert opinion in connection with the case at issue;

4. Where the case at issue is related to a contract awarded by a committee member of the central government office to which a committee member belongs (referring to the bureau to which a committee member belongs in cases of the Public Procurement Service);

5. Where a committee member, as a public official of a central government agency, has conducted an investigation or examination in connection with the case at issue.

(2) If an improper businessman involved in a case has a ground to believe that it is hard to expect impartial deliberation by a committee member, he/she may file a challenge against the committee member. In such cases, the committee chairperson shall determine whether to accept the challenge without referring the challenge to the Committee for resolution.

(3) If a committee member finds that he/she might be excluded or challenged on the ground for exclusion under any subparagraph of paragraph (1) or the ground for challenge under paragraph (2), he/she shall voluntarily evade deliberation on the case at issue.

Article 76-8 (Withdrawal of Designation, Dismissal and Discharge of Members)

(1) Where a member of the Committee falls under any of the following cases, a person who has designated such member pursuant to the main sentence of Article 76-5 (2) 1 may withdraw the designation thereof:

1. Where the member becomes unable to perform his/her duties due to a mental or physical disability;

2. Where the member has committed irregularities in relation to his/her duties;

3. Where the member is deemed unfit to be a member due to dereliction of duty, injury to dignity, or for other reasons;

4. Where the member makes it clear that it is difficult for him/her to perform his/her duties;

5. Where the member fails to avoid deliberation though he/she falls under Article 76-7 (1) or (2).

(2) Where a nongovernmental member under Article 76-5 (2) 2 falls under any of the subparagraphs of paragraph (1), the Minister of Strategy and Finance may dismiss the relevant member.

Article 76-9 (Request for Deliberation)

(1) Where the head of a central government agency intends to request the Committee to deliberate on whether to impose a penalty surcharge or whether the amount of a penalty surcharge is appropriate pursuant to Article 27-2 (2) of the Act, he/she shall submit a written statement with the following descriptions therein to the Committee:

1. The name and address of the improper businessman at issue (referring to the name of the corporation, if the improper businessman is a corporation, its principal place of business, and the name of its representative);

2. Reasons why it is necessary to impose the penalty surcharge;

3. The amount of the penalty surcharge imposed and the ground for determining the amount.

(2) The written statement under paragraph (1) shall be accompanied by the following documents:

1. A document certifying the cause to impose restrictions on participation in tendering or penalty surcharge on the improper businessman and relevant facts;

2. Other evidential documents necessary for deliberation.

(3) If it is impracticable to determine whether to impose a penalty surcharge and whether the amount of a penalty surcharge is appropriate only with the documents specified in paragraphs (1) and (2), the Committee may request the head of the competent central government agency to supplement documents within a reasonable period set by the Committee. In such cases, the period required for the supplementation of documents shall not be included in the period specified for deliberation under Article 76-9 (1).

Article 76-10 (Deliberation)

(1) The Committee shall notify the results of deliberation to the head of a central government office within 60 days from the date on which it receives a request for deliberation from the head of the central government agency: Provided, That the period may be extended by not more than 30 days in an exceptional situation.

(2) If necessary, the Committee may require an improper businessman and the head of the competent central government agency to submit documents relevant to the matter on which deliberation is requested and may request specialized institutions to present expert opinions and to conduct examinations, tests, etc.

(3) The Committee shall give opportunities to express opinions to the improper businessman at issue, the head of the competent central government agency, and their representatives before closing deliberation and making a decision, and if necessary, may summon the improper businessman, the head of the competent central government agency, their representatives, and witnesses or relevant experts to the Committee to hear their opinions.

Article 76-11 (Committee’s Meetings)

(1) The chairperson shall convene the Committee’s meetings and shall preside over the meetings.

(2) A meeting of the Committee shall be duly formed with the attendance of a majority of current members, and a resolution shall be adopted by concurring votes of a majority of members present at the meeting.

(3) The Committee shall appoint one secretary that shall carry out administrative affairs of the Committee.

(4) Except as otherwise provided in paragraphs (1) through (3), matters necessary for the operation of the Committee shall be determined by the chairperson of the Committee.

Article 76-12 (Subcommittees)

(1) In order to efficiently carry out business affairs of the Committee, it shall establish a subcommittee for construction projects and a subcommittee for goods and services (hereafter referred to as “subcommittees”

in this Chapter).

(2) The subcommittee for construction projects shall take charge of deliberation on the imposition of penalty surcharges in connection with projects, such as projects for construction and telecommunications.

(3) The subcommittee for goods and services shall take charge of deliberation on the imposition of penalty surcharges in connection with the manufacture and purchase of goods and services.

(4) Each subcommittee shall be comprised of not more than ten members, including one chairperson.

(5) The chairperson and members of each subcommittee shall be appointed by the chairperson of the Committee, from among members of the Committee, but persons that are not members of the Committee may be appointed or commissioned as members of a subcommittee, if expertise in a matter on which deliberation is requested is required.

(6) The competent subcommittee shall first examine a case on which the Committee is requested to deliberate, prepare a draft decision, and present the draft decision to the Committee.

(7) Articles 76-10, 76-11 and 76-13 shall apply mutatis mutandis to the deliberation by a subcommittee, a subcommittee’s meetings, and allowances for members that attend a subcommittee. In such cases, the term

“Committee” shall be construed as “subcommittee”, and the term “chairperson of the Committee” as

“chairperson of a subcommittee.” <Amended by Presidential Decree No. 27475, Sep. 2, 2016>

(8) Except as otherwise provided in paragraphs (1) through (7), matters necessary for the operation of subcommittees shall be determined by the chairperson of the Committee.

Article 76-13 (Allowances)

Allowances may be paid to committee members and related experts that attend a meeting of the Committee within budgetary limits: Provided, That the foregoing shall not apply where a committee member that is a public official attends a meeting of the Committee in direct connection with an affair within the scope of his/her duties.

Article 77 Deleted. <by Presidential Decree No. 15614, Feb. 2, 1998>

CHAPTER VI CONTRACTS FOR LARGE CONSTRUCTION