When vehicle safety managers at public institutions seek to adopt new safety solutions, the first hurdle they face is the bidding process. It is standard practice for public institutions to go through a competitive bidding process when purchasing goods above a certain value, and this process—from initial review to contract signing—can take a considerable amount of time. In situations where safety incidents are a concern, this period can feel interminable.
A system designed to alleviate this burden is the Korea Public Procurement Service’s “Direct Contract for Innovative Products.” Products designated as “innovative products” can be procuredby public institutions through direct, one-on-one contracts without a bidding process, and procurement officers are protected by procurement immunity.
This article explains what direct contracts for innovative products are, when and how public institutions can utilize them, and how AI-based safe driving solutions can be adopted through this system.
First, let’s clarify the terminology.
a designation granted by the Public Procurement Service to products recognized for their public benefit and innovative nature. It is based on Article 27 of the “Act on Public Procurement” and remains valid for three yearsonce designated.
Obtaining this designation is a rigorous process. Products must either have been developed through national R&D projects or pass the innovation evaluation criteria separately established by the Public Procurement Service. Final designation is granted following review by a deliberation committee.
a methodof entering into a contract on a one-on-one basis without going through a bidding process. While public institutions are generally required to conduct a bidding process for purchases of 50 million won or more (under the National Procurement Act), Article 26 of the “Enforcement Decree of the National Procurement Act” specifies exceptions where direct contracts are permitted. The purchase of innovative products is one such exception.
a system that allows public institutions to directly purchaseproducts designated as “innovative products” by the Public Procurement Service without going through a bidding process. These products can be utilized for three years following their designation as innovative products.
The reason for establishing this system is clear: to reduce procedural burdens so that newly developed innovative technologies can be rapidly adopted in the public sector.
Direct contracts for innovative products are particularly valuable in the following situations:
Situations where the risk of vehicle accidents is mounting and it is difficult to wait for a regular bidding process. For example, in cases where incidents of drowsy driving by bus drivers or passenger safety accidents recur on route buses or commuter buses, proven innovative products can be rapidly introduced instead of spending months on the bidding process.
The government manages each public institution’s performance in innovative procurement to expand the purchase of innovative products by public institutions. Introducing innovative products in the vehicle safety sector allows institutions to simultaneously strengthen safety management and meet their innovative procurement targets.
Article 27 of the “Act on Public Procurement” provides a procurement liability exemption clause for the purchase of innovative products. If an innovative product is purchased in accordance with lawful procedures, the procurement officer can reduce their liability for the procurement decision, provided there is no intent or gross negligence. This alleviates the greatest burden that often causes hesitation in adopting new technologies.
Transportation companies contracted to operate public institutions’ commuter buses and official vehicles can leverage the designation of an innovative productas a key differentiator when proposing safety management solutions to the contracting authority (public institution). From the contracting authority’s perspective, this eliminates the burden of bidding while also securing a track record of innovative procurement.
The following organizations are highly likely to utilize direct contracts for innovative products.
The greater the importance of preventing vehicle accidents within an organization, the greater the potential benefits of utilizing innovative products.
The procedure for public institutions to procure innovative products through direct contracts is simpler than that for general procurement.
Search for innovative products designated by sector on the Innovation Marketplace (Innovation Procurement Platform) operated by the Public Procurement Service. In the vehicle safety sector, products such as AI video recognition systems, DTG integrated devices, and driver behavior analysis solutions are registered.
There are two options.
Most vehicle safety solutions are adopted through Path 1.
In accordance with Article 26 of the “Enforcement Decree of the National Contract Act,” a one-on-one contract is concluded with the manufacturer without a bidding process. The contract officer prepares a statement of reasons for the contract; however, since the legal basis for purchasing innovative products is clear, the burden is significantly reduced compared to a bidding process.
After the contract is signed, the solution is installed in vehicles, and operational data is managed. If the pilot purchase route was followed, a results report is required after a certain period.
Direct contracts for innovative products are becoming increasingly common in the field of vehicle safety. This is because AI-based video recognition solutions for safe driving are rapidly spreading across the transportation and public sectors.
Safety management obligations for vehicles in the public sector—such as local government official vehicles, public institution commuter buses, and vehicles operated by municipal and provincial agencies—are becoming increasingly stringent. Accidents result in administrative and legal liability, along with significant additional burdens such as a surge in public complaints and media coverage.
By adopting AI safe driving solutions—designated as innovative products—through direct contracts, the following benefits can be achieved simultaneously:
A.I.Matics’ aidis an integrated solution that uses AI to analyze accident risk factors inside and outside the vehicle in real time. It combines driver behavior detection, external hazard detection, passenger safety management, and automatic operation data logging into a single device.
The key features of aid are as follows.
In particular, numerous implementation cases have been accumulated in the public sector, including route buses, commuter buses, and government vehicles. A pilot project conducted by the Korea Transportation Safety Authority on 500 route buses confirmed a 99.7% reduction in drowsy driving, a 93.4% reduction in failure to watch the road ahead, and an overall 55% reduction in accident rates.
View the A.I.MATICS aid solution
In a case study involving the deployment of the solution on approximately 2,400 commuter buses operated by a leading domestic manufacturing conglomerate, the following results were confirmed.
| Metrics | Effect |
|---|---|
| Insurance Costs per Bus | Approx. 1.47 million won (68%) reduction |
| Safe Driving Score | 50.9 points → 76.9 points (73% increase) |
| Traffic Signal Violations | 41% decrease |
| Total Accidents (AID+ADAS) | Approx. 44% decrease |
These results demonstrate that the same safety management benefits can be expected in the public sector as well.
To summarize the points discussed so far in a single sentence:
Public institutions can quickly adopt vehicle safety solutions through direct contracts for innovative products without going through a bidding process; procurement officers are protected by procurement indemnity; and they can simultaneously meet their innovative procurement targets.
Vehicle safety accidents impose administrative, legal, and reputational risks on public institutions simultaneously. Direct contracts for innovative products are one of the fastest ways to reduce those risks.
Check the following five points.
| No. | Checkpoint | Status |
|---|---|---|
| 1 | Does our organization operate or manage any vehicles (commuter buses, official vehicles, vehicles belonging to affiliated organizations, etc.)? | ⬜ |
| 2 | Is there a need to strengthen vehicle safety management (including concerns regarding accidents, public complaints, or legal liability)? | ⬜ |
| 3 | Is achieving the annual innovative procurement target a burden? | ⬜ |
| 4 | Are there any solutions whose implementation is being delayed due to the burden of the bidding process? | ⬜ |
| 5 | If you are a contracted transportation provider, do you plan to propose a safety management solution to the client? | ⬜ |
If you answered “Yes” to three or more of these questions, you should consider utilizing the direct contract option for innovative products.
👉Get advice on introducing direct contracts for innovative products in public institutions
A. In accordance with Article 26 of the “Enforcement Decree of the National Procurement Act” and Article 25 of the “Enforcement Decree of the Local Procurement Act,” this system is available to central administrative agencies, local governments, and public institutions alike. This includes government ministries, local governments, public corporations, and institutions governed by the Act on the Operation of Public Institutions.
A. For innovative products, direct contracts are permitted without a separate limit. However, the contracting officer must prepare a statement of reasons for the direct contract and follow internal approval procedures. This structure exempts such purchases from the mandatory bidding requirement that applies to general purchases of 50 million won or more.
A. Pursuant to Article 27 of the “Act on Public Procurement,” officials who purchase innovative products through standard procedures are exempt from liability even if product-related issues arise afterward. This system alleviates the greatest burden that often discourages the adoption of new technologies.
A. When a contracted transportation company purchases an innovative product directly, it is considered a standard transaction. However, if the contracted transportation company proposes an innovative product to the contracting authority (public institution) and the contracting authority makes the purchase, a negotiated contract is possible. From the perspective of the contracted transportation company, this serves as a proposal strategy that can reduce the bidding burden for the contracting authority.
A. Each public institution is assigned an annual target for the purchase of innovative products, and its performance in meeting these targets is regularly reviewed. The operation of the Innovative Procurement Target System is central to the government’s innovative procurement policy, and institutions with low performance are subject to requests for improvement.
A. In the field of vehicle safety, solutions based on AI image recognition and driver behavior analysis are designated as innovative products and are currently in use. Specific designated products and methods of use can be found on the Public Procurement Service’s Innovation Marketplace; however, it is most accurate to contact suppliers directly to confirm the latest information.
This article is intended to provide general information. Procedures and regulations regarding direct contracts for innovative products may vary depending on the circumstances of individual agencies and the latest official notices; therefore, please refer to the Korea Public Procurement Service’s Innovation Marketplace and supplier guidelines at the time of actual purchase.