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Laws of the Republic of Korea |
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ENFORCEMENT DECREE OF THE DEFENSE ACQUISITION PROGRAM ACT
Presidential Decree No. 19321, Feb. 8, 2006
Amended by Presidential Decree No. 19507, Jun. 12, 2006 Presidential Decree No. 20120, Jun. 28, 2007
Presidential Decree No. 20675, Feb. 29, 2008
CHAPTER GENERAL PROVISIONS
Article 1 (Purpose)
The purpose of this Decree is to prescribe the matters delegated by the Defense Acquisition Program Act and necessary matters for the enforce- ment thereof.
Article 2 (Classification of Weapons Systems)
The weapons systems pursuant to subparagraph 3 of Article 3 of the Defense quisition Program Act (hereinafter referred to as the Act ) shall be as follows:
1. Weapons systems for command and control, and communications, such as communications networks, etc.;
2. Weapons systems for surveillance and reconnaissance, such as radar, etc.;
3. Mobile weapons systems, such as tanks, armored personnel carriers, etc.;
4. Ship weapons systems, such as battleships, etc.;
5. Air weapons systems, such as combat aircraft, etc.;
6. Firepower weapons systems, such as self-propelled artillery, etc.;
7. Defense weapons systems, such as guided anti-air weaponry, etc.; and
8. Other weapons systems, such as software, equipment, etc. for simula- tion analysis and simulation exercises.
CHAPTER TRANSPARENCY AND
SPECIALIZATION OF
EXECUTION OF DEFENSE
ACQUISITION PROGRAM
Article 3 (Implementation of Real-Name Policy System) ENFORCEMENT DECREE OF THE DEFENSE ACQUISITION PROGRAM ACT Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 2 -
(1) The major policies through which the real-name policy system shall be implemented pursuant to the provisions of Article 5 (1) of the Act means matters subject to deliberation and coordination by the Defense Acquisition Program Promotion Committee (hereinafter referred to as the "Committee") pursuant to the provisions of Article 9 (2) of the Act. (2) Where the plans, reports, etc. on the major policies are made out pursuant to the provisions of paragraph (1), the Minister of National De- fense and the Administrator of the Defense Acquisition Program Ad- ministration shall have the position, post and names of the participants, and the details of opinions, plans, reports, etc. recorded and preserved by relevant department. When they are corrected or modified in the course of a decision or execution, he/she shall have the grounds for such correction or modification, the relevant persons and the relevant details recorded.
(3) Where the Minister of National Defense and the Administrator of the Defense Acquisition Program Administration hold public hearings, seminars, meetings of the relevant persons, etc. pursuant to the provi- sions of paragraph (1), he/she shall cause the department in charge to record the date and time when they wear held, names of participants, details of remarks, voting, etc.
Article 4 (Presentation and Contents of Integrity Pledge) (1) Where the Minister of National Defense has appointed or entrusted the members of the Committee or the subcommittees pursuant to the provisions of Article 10 (1) of the Act, he/she shall have them present a pledge of integrity.
(2) Where the public official belonging to the Defense Acquisition Program Administration, the officer or staff belonging to the Agency for Defense Development or the Agency for Defense Technology and Quality Assurance is appointed, advanced, promoted, transferred, or his/her position is changed, the Administrator of the Defense Acquisition Program Admin- istration shall have him/her present a pledge of integrity. (3) Where a defense contractor, general enterprise (hereinafter referred to as a "defense contractor, etc.") or research institute pursuant to the provisions of Article 6 (1) 4 of the Act participates in the defense acqui- sition program and registers for a bid, the Administrator of the Defense Acquisition Program Administration shall have it submit a pledge of Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 3 -
integrity.
(4) Matters to be included in the pledge of integrity pursuant to the provisions of Article 6 (2) 3 of the Act shall be as listed in the following subparagraphs:
1. Matters concerning the prohibition of profiteering by the person himself/herself, or by a third person by taking advantage of his/her position;
2. Matters concerning the prohibition of mediation and solicitation that obstruct fair execution of duties;
3. Matters concerning the prohibition of unjust conduct that obstructs free competition in bidding, such as revealing bid prices in advance and collusion for a successful bid by a specific person, etc.; and
4. Matters concerning the prohibition of unjust subcontracting. Article 5 (Standards for Qualifications, Term of Office, etc. of Ombudsmen) (1) The ombudsmen pursuant to the provisions of Article 6 (5) of the Act shall consist of three persons or less.
(2) The ombudsmen pursuant to the provisions of paragraph (1) shall be commissioned by the Administrator of the Defense Acquisition Program Administration from among the persons recommended by the nonprofit non-governmental organizations (hereinafter referred to as a "nonprofit non-governmental organization") pursuant to the provisions of Article 2 of the Assistance for Nonprofit Non-Governmental Organizations Act. (3) Anyone who has any of the following qualifications shall be entitled to be an ombudsman: Provided, That where any person, his/her spouse, direct ascendant or descendant has worked for a research institute, de- fense contractor, etc. as an officer or staff within two years before he/ she has been commissioned as an ombudsman, he/shall not be eligible to be an ombudsman:
1. A person who is or has been in a position of associate professor or above at a department relating to the defense industry, department of accounting, law or public administration in a school pursuant to the provisions of Article 2 of the Higher Education Act;
2. A person who is qualified as a lawyer, accountant, professional engineer or patent attorney and is experienced in related business for at least three years;
3. A person who has been a public official as the head of a department ENFORCEMENT DECREE OF THE DEFENSE ACQUISITION PROGRAM ACT Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 4 -
in the central administrative agency, and is of high moral standing; or
4. A person who has abundant expertise and experience in the field of defense acquisition programs, and is also well educated and has good virtues.
(4) The term of office of ombudsmen shall be two years, and they may be re-commissioned for two further terms.
(5) The ombudsman commissioned pursuant to the provisions of para- graph (2) shall not be discharged from office against his/her will: Pro- vided, That where an ombudsman falls under any of subparagraphs 2 through 4, the Administrator of the Defense Acquisition Program Ad- ministration may discharge him/her from office, and where he/she falls under any of subparagraph 1, 5, or 6, the Administrator shall discharge him/her from office:
1. Where he/she has given or received money and other articles or entertainment in connection with his/her duties;
2. Where he/she has been negligent in performing his/her duties due to irresponsibility, or intentionally evaded the execution of duties;
3. Where he/she has performed an act in violation of security in the course of execution of his/her duties;
4. Where he/she has violated the provisions of the proviso to Article 8 (2);
5. Where it is recognized as being difficult for him/her to execute regular duties due to physical or mental incapacity; or
6. Where it is clarified that he/she falls under the proviso to paragraph (3) after he/she has been commissioned as an ombudsman, or he/she has concurrently held an additional position listed in the subpara- graphs of Article 9.
Article 6 (Representative Ombudsman)
(1) For the purposes of the efficient operation of the ombudsman system, there may be a representative ombudsman.
(2) The representative ombudsman shall be elected from among the ombudsmen.
(3) The representative ombudsman shall represent the ombudsmen, and administer the collective duties of the ombudsmen. (4) Where the representative ombudsman fails to perform his/her duties, Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 5 -
the ombudsman whom the representative ombudsman has appointed in advance shall perform his/her duties as proxy.
(5) The representative ombudsman shall submit details of the semi-annual accomplishments of the ombudsmen to the Administrator of the Defense Acquisition Program Administration within one month after the end of each half-year.
Article 7 (Functions, Authority, etc. of Ombudsman) (1) The ombudsmen may investigate the matters of civil petitions and request the Administrator of the Defense Acquisition Program Admin- istration for corrections or inspections pursuant to the provisions of Ar- ticle 6 (4) of the Act: Provided, That this shall not apply to the matters falling under each of the following subparagraphs:
1. Matters for which the proceedings of objections and for relief are under way pursuant to other Acts, such as administrative appeals, litiga- tion, adjudication of the Constitutional Court of Korea, etc.;
2. Matters that are concluded by judgment, decision, determination, reconciliation, mediation, arbitration, etc.;
3. Matters that have been inspected or are under inspection by a State agency, such as the Board of Audit and Inspection of Korea, etc.; or
4. Matters that are under investigation by an investigative agency. (2) Where the ombudsman intends to investigate pursuant to the provisions of paragraph (1), he/she may hear the comments of the relevant staff, peruse the relevant documents, conduct field inspection, etc.: Provided, That the relevant documents, etc. are not to be perused as they fall under Article 9 (1) 2 and 5 of the Official Information Disclosure Act, he/she may request the relevant staff to state opinions or explanations. (3) Where the ombudsman has taken custody of the originals of the rele- vant documents in the course of an investigation pursuant to the provi- sions of paragraph (2), he/she shall return them within seven days from taking custody.
(4) The request for a correction or inspection pursuant to the provisions of paragraph (1) shall be made in the name of the representative om- budsman by mutual consent of all ombudsmen.
(5) For the swift performance of the ombudsmen, the Administrator of the Defense Acquisition Program Administration may assist with al- lowances, travel expenses, other expenses, office space, etc. within its ENFORCEMENT DECREE OF THE DEFENSE ACQUISITION PROGRAM ACT Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 6 -
budget.
Article 8 (Public Announcement, etc. of Result of Investigation and Disposal)
(1) Where the Administrator of the Defense Acquisition Program Administration has been requested by the representative ombudsman to make a correction or inspection pursuant to the provisions of Article 7 (1), he/she shall notify the results of disposal to the representative ombuds- man within thirty days from the day he/she has been requested to make a correction or inspection.
(2) The representative ombudsman may publicly announce the details of request for a correction or inspection pursuant to the provisions of Article 7 (1) and the contents of result of disposal pursuant to the pro- visions of paragraph (1): Provided, That this shall not apply to infor- mation subject to the non-disclosure category pursuant to the provisions of Article 9 of the Official Information Disclosure Act. Article 9 (Prohibition on Holding Additional Post Concurrently) No ombudsman shall concurrently hold a post falling under any of the following subparagraphs:
1. National Assemblyman or local assemblyman;
2. Member of a political party or the member of an organization with the purpose of political activities; or
3. Officers or staff members of a defense contractor, etc. Article 10 (Transparency Evaluation Committee)
(1) For the purposes of causing civilian specialists, etc. to participate in, evaluate and request corrections in executing the system of securing transparency in defense acquisition programs, such as the real-name policy system, pledge of integrity system, etc. pursuant to the provisions of Ar- ticles 5 and 6 of the Act, a Transparency Evaluation Committee shall be established under the control of the Defense Acquisition Program Administration.
(2) The Transparency Evaluation Committee pursuant to the provisions of paragraph (1) shall consist of 7 members or less including one chair- man.
(3) The Deputy Administrator of the Defense Acquisition Program Ad- ministration shall be the chairman of the Transparency Evaluation Committee, and the members of such Committee shall be appointed or Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 7 -
entrusted by the chairman from among the public officials belonging to the Defense Acquisition Program Administration and persons recom- mended by nonprofit non-governmental organizations. However, at least two persons recommended by nonprofit non-governmental organizations shall be included in the Committee.
(4) Matters necessary for the formation and operation of the Transparency Evaluation Committee pursuant to the provisions of paragraph (1) and the term of office of its members, etc. shall be prescribed by the Admin- istrator of the Defense Acquisition Program Administration. Article 11 (Scope of Key Positions and Standards for Qualification) (1) The positions particularly deemed to require expertise pursuant to the provisions of Article 7 (1) of the Act (hereinafter referred to as a "key position") shall be positions such as director general or director of the Defense Acquisition Program Administration and the agencies under its control, and the head of the integrated project administration team. (2) Persons to be eligible for key positions pursuant to the provisions of Article 7 of the Act shall be qualified as follows: Provided, That a person for whom five years have not elapsed since he/she was subject to a heavy disciplinary measure or sentenced to imprisonment without labor or se- verer punishment pursuant to the provisions of Article 57 (1) of the Mil- itary Personnel Management Act or Article 1-2 of the Public Officials Disciplinary Decree shall not be appointed to any key position:
1. Persons who have worked for three years or more in a field relating to the positions to be appointed;
2. Persons who hold qualifications or a bachelor's degree or higher in the field relating to a defense acquisition program; or
3. Persons who have been educated in a field relating to a defense ac- quisition program.
(3) Matters necessary for the extent of the fields relating to the positions to be appointed, qualifications, degrees, kinds of education, etc. pursuant to the provisions of paragraph (2) shall be prescribed by the Adminis- trator of the Defense Acquisition Program Administration. Article 12 (Research of Legal Issues, etc. concerning Defense Acquisition Programs)
Matters that require advanced legal research for executing a contract, negotiation, etc. pursuant to the provisions of Article 8 of the Act shall ENFORCEMENT DECREE OF THE DEFENSE ACQUISITION PROGRAM ACT Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 8 -
be as listed in the following subparagraphs:
1. Matters relating to the basic strategy for the promotion of projects for improving defense capability for a total cost of ten billion won or more;
2. Matters relating to the preparation of requests for project proposals regarding defense acquisition programs and the evaluation thereof;
3. All kinds of contracts regarding defense acquisition programs;
4. Matters regarding major decision making on projects for improving defense capability prescribed by the Administrator of the Defense Acquisition Program Administration;
5. Matters regarding the transfer of national defense science and tech- nology pursuant to the provisions of Article 31 (3) of the Act;
6. Matters regarding the revocation of a designation of defense con- tractors, defense materials or guarantee organizations pursuant to the provisions of Article 48 of the Act;
7. Matters regarding the termination of commission of specialized re- search institutes pursuant to the provisions of Article 63; and
8. Other matters that the Administrator of the Defense Acquisition Program Administration recognizes as necessary for the swift exe- cution of defense acquisition programs.
Article 13 (Composition, etc. of Committee)
(1) The members of the Committee prescribed by Presidential Decree pursuant to the provisions of Article 9 (4) 1 of the Act shall be as listed in the following subparagraphs:
1. The managing director of the headquarters for resource management of the Ministry of National Defense;
2. The Deputy Administrator of the Defense Acquisition Program Ad- ministration and the managing director of each headquarters;
3. The chief director of the headquarters for strategic planning of the Joint Chiefs of Staff; and
4. The Vice Chief of Staff of the Army, Navy and Air Force (hereinafter referred to as "each service").
(2) Where the Committee deliberates upon and coordinates the matters relating to the Marine Corps, the Vice Commander of the Marine Corps shall act in an associate capacity.
(3) The term of office of the members commissioned pursuant to the Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 9 -
provisions of Article 9 (4) 1 through 3 of the Act shall be as long as they hold the positions, and the term of office of the members commissioned pursuant to the provisions of subparagraphs 4 and 5 of the same para- graph shall be two years, and they may be re-appointed for two further terms.
Article 14 (Operation of Committee)
(1) The Chairman of the Committee (hereinafter referred to as the "Chairman") shall represent the Committee, and administer all business. (2) Where the Chairman fails to perform his duties due to circumstances beyond his control, the Vice Chairman shall perform the duties as proxy. (3) The Committee shall convene when one third of the members on the register so requests, or when the Chairman or Vice Chairman recognizes this as necessary.
(4) The meetings of the Committee shall commence with a majority of the members on the register present, and pass resolutions upon the ap- proval of a majority of those members present, and the vote shall be made by an open vote.
(5) Where it is necessary for the deliberation upon and coordination of matters regarding the National Intelligence Service, the Committee may cause the public official belonging to the National Intelligence Service to attend the meeting and hear his/her opinions.
(6) Other matters necessary for the operation of the Committee shall be prescribed by the Chairman after the resolution of the Committee. Article 15 (Subcommittee)
(1) The subcommittees by field and the matters for deliberation and coordination by each subcommittee pursuant to the provisions of Article 10 of the Act shall be as set out in the following subparagraphs:
1. Policy and planning subcommittee: Matters regarding Article 9 (2) 1 through 4, 10, 11 and 14 of the Act;
2. Project administration subcommittee: Matters regarding Article 9 (2) 5 through 7 and 14 of the Act; and
3. Munitions procurement subcommittee: Matters regarding Article 9 (2) 8, 9 and 12 through 14 of the Act.
(2) Each subcommittee shall consist of between five and twenty members including one chairman.
(3) The chairman of each subcommittee shall be appointed from among ENFORCEMENT DECREE OF THE DEFENSE ACQUISITION PROGRAM ACT Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 10 -
the members by the Chairman on the recommendation of the Vice Chair- man, and the members of each subcommittee shall be appointed or commissioned by the Chairman on the recommendation of the Vice Chair- man from among the persons listed in the following subparagraphs:
1. Persons recommended from among public officials of director general level, or generals in the Ministry of National Defense, the Joint Chiefs of Staff and each service by the members of the Committee belonging to the same agency;
2. Public officials of director general level or generals belonging to the Defense Acquisition Program Administration;
3. Persons recommended by the members of the Committee listed in Ar- ticle 9 (4) 2 and 3 of the Act from among public officials of director general level or officers and staff members belonging to the same agency; and
4. Persons commissioned pursuant to the provisions of Article 9 (4) 4 and 5 of the Act.
(4) The term of office of a member of a subcommittee who has been commissioned pursuant to the provisions of paragraph (3) 1 through 3 shall continue as long as he/she retains his/her position, and the term of office of a member of a subcommittee who has been commissioned pur- suant to the provisions of subparagraph 4 of the same paragraph shall continue during the term of office of the members of the Committee. (5) The provisions of Article 14 (1) through (4) and (6) shall apply mu- tatis mutandis to the operation of subcommittees. In this case, "Committee" shall be read as "subcommittee", "Chairman" as "chairman of a sub- committee", "Vice Chairman" as "member appointed in advance by the chairman of subcommittee."
Article 16 (Specialized Members)
(1) The number of specialized members pursuant to the provisions of Article 10 (3) of the Act shall be between two and five, and shall be commissioned by the Chairman on the recommendation of the Vice Chairman.
(2) The term of office of specialized members pursuant to the provisions of paragraph (1) shall be one year, however, this may be extended for a further term: Provided, That where a specialized member has been entrusted within consultation on a specific matter, he/she shall be deemed Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 11 -
as having been discharged from such commission on the completion of such consultation.
Article 17 (Request, etc. for Submission of Data) (1) Where necessary for deliberation and coordination, the Committee or a subcommittee may request the Ministry of National Defense, the Joint Chiefs of Staff, each service, the Agency for Defense Development, the Agency for Defense Technology and Quality Assurance, defense con- tractors, etc. for the submission of data or opinions. (2) The agency or organization that has been requested to submit data or opinions pursuant to the provisions of paragraph (1) shall cooperate with it insofar as there are no justifiable grounds otherwise. Article 18 (Allowance and Travel Expenses)
The members present at the Committee and subcommittees, specialized members and persons who have attended and submitted opinions to the Committee pursuant to the provisions of Article 17 may be paid allow- ances and travel expenses within the scope of the budget: Provided, That where the relevant public official has attended the Committee in connec- tion with his/her duties, this shall not apply.
CHAPTER PROJECTS FOR IMPROVE-
MENT OF DEFENSE
CAPABILITY
SECTION 1 Principles for Execution of Projects for Improvement of Defense Capability
Article 19 (Request for Assistance of Manpower, etc.) Where the manpower from the relevant organizations, such as each ser- vice, agencies under the direct control of the Ministry of National Defense (including the units under the direct control of the Ministry of National Defense; hereinafter the same shall apply), the Agency for Defense Development and the Agency for Defense Technology and Quality Assur- ance is needed for the purposes of efficient operation of the comprehen- sive project administration system pursuant to the provisions of Article 12 of the Act in executing projects for the improvement of defense capa- bility, the Administrator of the Defense Acquisition Program Administra- tion may request manpower assistance from the relevant agencies and ENFORCEMENT DECREE OF THE DEFENSE ACQUISITION PROGRAM ACT Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 12 -
organizations following deliberation by the Committee. In this case, he/ she shall request the Minister of National Defense to provide manpower assistance regarding the manpower belonging to each service and the agencies under the direct control of the Ministry of National Defense. SECTION 2 Medium-Term National Defense Plan
and Budget
Article 20 (Formulation of Medium-Term National Defense Plan, etc.) (1) For the purposes of formulating a medium-term national defense plan pursuant to the provisions of Article 13 (1) of the Act, the Minister of National Defense shall prepare guidelines for the formulation of a medium- term national defense plan (hereinafter referred to as the "guidelines for the medium-term national defense plan").
(2) Where the Minister of National Defense intends to prepare the guide- lines for the medium-term national defense plan pursuant to the pro- visions of paragraph (1), he/she may receive in advance, and reflect the opinion of the Administrator of the Defense Acquisition Program Ad- ministration regarding the projects for the improvement of defense capability.
(3) Where the Minister of National Defense formulates the guidelines for the medium-term national defense plan or the Administrator of the De- fense Acquisition Program Administration prepares the opinion pursuant to the provisions of paragraph (2), he/she shall consider the matters in the following subparagraphs:
1. Matters regarding Article 22 (3) 1 through 5;
2. The order of priorities of requirements for weapons systems for the purposes of achieving goals regarding combined military strategy; and
3. The medium- and long-term policies regarding the advancement of national defense science and technology pursuant to the provisions of Article 30 of the Act.
(4) Where the Administrator of the Defense Acquisition Program Ad- ministration intends to formulate a medium-term plan in the fields of projects for the improvement of defense capability pursuant to the provi- sions of Article 13 (2) of the Act, he/she shall cause each service and the agencies under the direct control of the Ministry of National Defense to submit the requirements for elements for facilitating military capability Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 13 -
pursuant to the provisions of Article 28 (1).
Article 21 (Formulation of Budget)
(1) Where the Minister of National Defense intends to draw up guide- lines for the formulation of a budget pursuant to the provisions of Article 14 (1) of the Act, he/she shall receive in advance, and reflect the opin- ions regarding the projects for improvement of defense capability from the Administrator of the Defense Acquisition Program Administration. (2) Where the Administrator of the Defense Acquisition Program Ad- ministration intends to formulate a budget for projects for the improve- ment of national defense capability, he/she shall have the data on the formulation of a budget regarding the elements for facilitating military capability pursuant to the provisions of Article 28 (1) from each service and the agencies under the direct control of the Ministry of the National Defense.
SECTION 3 Decisions on Requirements and
Corrections Thereof
Article 22 (Procedures, etc. for Decisions on Requirements) (1) Where the Chairman of the Joint Chiefs of Staff intends to raise the requirements for weapons systems, etc. pursuant to the provisions of Ar- ticle 15 (1) of the Act, he/she shall obtain, and reflect the requirements from the Ministry of National Defense, the Defense Acquisition Program Administration, the Joint Chiefs of Staff, each service and the agencies under the direct control of the Ministry of National Defense (hereinafter referred to as the "requirement-raising agencies"). (2) Where a requirement-raising agency intends to propose requirements to the Chairman of the Joint Chiefs of Staff pursuant to the provisions of paragraph (1), it shall prepare an application for requirement contain- ing the matters in the following subparagraphs. In this case, the applica- tion for requirement may indicate a scheme to innovate the operational performance pursuant to the provisions of subparagraph 2:
1. The necessity, range of management, timing for militarization and required quantity of weapons systems;
2. The performance of weapons systems necessary for operations (here- inafter referred to as the "operational performance"); and
3. The elements for facilitating military capability pursuant to the pro- ENFORCEMENT DECREE OF THE DEFENSE ACQUISITION PROGRAM ACT Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 14 -
visions of Article 28 (1).
(3) When a requirement-raising agency intends to prepare an applica- tion for requirement pursuant to the provisions of paragraph (2), it shall consider the matters in the following subparagraphs:
1. The basic direction of national defense policy;
2. Analysis on the domestic and overseas national defense situation;
3. The direction of realizing the building of military capability that has been formulated by the Joint Chiefs of Staff in consideration of the security situation, military strategy, etc.;
4. The level of advancement and procurement of national defense science and technology;
5. The appropriate rate of operation and manufacturing capacity of de- fense contractors, etc.; and
6. Matters regarding the maintenance and repair of weapons systems. (4) The Agency for Defense Development, the Agency for Defense Technology and Quality Assurance, defense contractors or research institutes pur- suant to the provisions of Article 6 (1) 4 of the Act may submit opinions on the requirement to the requirement-raising agency. (5) Other matters necessary for the procedures for decisions on require- ments shall be prescribed by Ordinance of the Ministry of National Defense. Article 23 (Modification of Requirements in Minor Matters) (1) The term "such insignificant matters as prescribed by Presidential Decree" in the proviso to Article 16 (2) of the Act means the matters in the following subparagraphs:
1. The modification of annual quantity or timing for militarization re- garding weapons systems, etc. on the grounds for changes in finan- cial resources in the formulation of a medium-term national defense plan or formulation and execution of a budget pursuant to the provi- sions of Articles 13 (1) and 14 of the Act;
2. The modification of technical and incidental performance regarding weapons systems, etc.; and
3. The modification of procurement plans for the elements for facili- tating defense capability pursuant to the provisions of Article 28 (1). (2) Where there are modifications to the matters falling under each sub- paragraph of paragraph (1) in the course of deliberation upon and coordination of the medium-term plan for projects for the improvement Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 15 -
of defense capability by the Committee or subcommittee, it shall be deemed that there has been a modification to the requirements thereof. SECTION 4 Execution of Projects for Improvement
of Defense Capability
Article 24 (Methods of Advancement of Projects for Improvement of De- fense Capability)
(1) Where prior research pursuant to the provisions of Article 17 (1) of the Act has been completed, the Administrator of the Defense Acquisition Program Administration shall formulate the basic strategy for the ad- vancement of projects for the improvement of defense capability and ar- range it to be deliberated by the Committee.
(2) The basic strategy for project advancement pursuant to the provi- sions of paragraph (1) shall include the matters in the following sub- paragraphs:
1. The details of investigation into research and development, or deci- sions on purchasing;
2. Matters regarding the form of research and development, methods of purchasing, etc.;
3. Detailed directions for advancement following research and devel- opment, or purchasing;
4. Schemes for testing and evaluation;
5. Schedules for project advancement;
6. Administration schemes covering the whole period of durability of weapons systems;
7. Step-by-step goals and strategies for development where the per- formance of operation of weapons systems is innovated; and
8. Inter-operativity quality between the weapons systems of each service under combined battlefield conditions.
(3) The form of research and development pursuant to the provisions of paragraph (2) 2 shall be formulated by classification according to the following subparagraphs:
1. Domestic research and development (including cases of receiving in- ternational technological cooperation) or joint international research and development;
ENFORCEMENT DECREE OF THE DEFENSE ACQUISITION PROGRAM ACT Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 16 -
2. Research and development funded by the Government, defense con- tractors, etc. or joint research and development by the Government and defense contractors, etc.; and
3. Research and development supervised by the Agency for Defense Development or by defense contractors, etc. through competitive bidding.
Article 25 (Qualifications, etc. for Participants in Negotiation) (1) Civilian specialists who are permitted to participate in purchase procedures for munitions pursuant to the provisions of Article 19 (2) of the Act shall be those who fall under any of the following subparagraphs:
1. A public official who has five or more years of work experience in an international contract or international negotiation division;
2. A lawyer, patent attorney, or certified public accountant who has three or more years of work experience in the field of international contracts or international negotiation;
3. A person who has a master's degree or higher in a field relating to international contracts or international negotiation, such as inter- national trade, international commerce, etc., and has five or more years of work experience in the business of international contracts or international negotiation; or
4. A person who has ten or more years of work experience in the field of science and technology.
(2) The Administrator of the Defense Acquisition Program Administration shall select up to fifteen civilian specialists pursuant to the provisions of paragraph (1) on the recommendation of the Committee, and may have necessary persons participate where he/she purchases munitions. Article 26 (Standards for Offset Trade)
(1) The amount by unit project of munitions for which offset trade is pro- moted pursuant to the provisions of Article 20 (1) of the Act shall be not less than ten million US dollars: Provided, That where it falls under any of the following subparagraphs, such offset trade may not be pro- moted:
1. Where parts for repair are purchased;
2. Where basic raw materials, such as oil, etc. are purchased; or
3. Where it has undergone deliberation by the Committee in consideration of national security, economic efficiency, etc.
Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 17 -
(2) Matters necessary for the promotion of offset trade, such as promotion procedures for offset trade, etc. shall be prescribed by the Administrator of the Defense Acquisition Program Administration. Article 27 (Formulation, etc. of Plan for Testing and Evaluation) (1) Where the Administrator of the Defense Acquisition Program Admin- istration intends to formulate a testing and evaluation plan for weapons systems and core technology pursuant to the provisions of Article 21 (1) of the Act, he/she shall formulate it by integrating and reflecting the step-by-step plans referred to in the following subparagraphs: Provided, That where it is recognized as unnecessary to undergo all the testings and evaluations according to the step-by-step plans, the plan for testing and evaluation may be formulated by reflecting an individual plan for testing and evaluation:
1. Testing and evaluation plans for development: Plans to confirm whether the subject matter of testing and evaluation satisfies the technical goal of development, as formulated by the organization that took charge of such research and development; and
2. Testing and evaluation plans for operation: Plans to confirm whether the subject matter of testing and evaluation satisfies the operational performance and are suitable for the operation of each service, as formulated by the service and the agency under the direct control of the Ministry of National Defense that raised the requirements (here- inafter referred to as the "requirement-raising service"). (2) Where the Administrator of the Defense Acquisition Program Ad- ministration intends to formulate a testing and evaluation plan for the purchase of weapons systems pursuant to the provisions of Article 21 (1) of the Act, he/she shall follow on a plan falling under any of the following subparagraphs:
1. A testing and evaluation plan based on the subject matter;
2. A testing and evaluation plan based on data; or
3. A testing and evaluation plan based on the subject matter and data. (3) The testing and evaluation plan pursuant to the provisions of para- graphs (1) and (2) shall contain the matters in the following subpara- graphs:
1. The items of equipment and number thereof to be tested and evaluated;
2. The time, place and method of testing and evaluation; ENFORCEMENT DECREE OF THE DEFENSE ACQUISITION PROGRAM ACT Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 18 -
3. The items of testing and evaluation, and the standards for evaluation;
4. The person who shall execute the testing and evaluation; and
5. The budget needed for testing and evaluation. (4) Where the Administrator of the Defense Acquisition Program Admin- istration formulates a testing and evaluation plan pursuant to the provi- sions of paragraph (1), he/she shall consider the matters in the following subparagraphs, and where he/she formulates a testing and evaluation plan pursuant to the provisions of paragraph (2), he/she shall consider the proposals for purchase projects by an enterprise:
1. A plan for research and development;
2. A proposal for a project for research and development by an enterprise;
3. An execution plan for testing and evaluation for development pre- pared by a research and development institute; and
4. An execution plan for the testing and evaluation for operations pre- pared by a requirement-raising agency.
(5) For the purposes of the efficient formulation of plans for testing and evaluation, confirmation of the progress of testing and evaluation, judg- ment of results, etc., the Administrator of the Defense Acquisition Program Administration may operate a combined testing and evaluation team con- sisting of the staff members belonging to the Defense Acquisition Program Administration, each service and the agencies referred to in the provi- sions of Article 21 (2) of the Act. Matters regarding the composition and operation thereof shall be prescribed by the Administrator of the Defense Acquisition Program Administration.
(6) Where each service or agency conducts the testing and evaluation of weapons systems and core technology pursuant to the provisions of Article 21 (2) of the Act, the Administrator of the Defense Acquisition Program Administration shall provide the budget necessary for the smooth execu- tion of testing and evaluation.
(7) Matters necessary for the execution of testing and evaluation, such as procedures for testing and evaluation, etc. shall be prescribed by Or- dinance of the Ministry of National Defense.
Article 28 (Securing, etc. of Elements for Facilitating Military Capability) (1) The Administrator of the Defense Acquisition Program Administra- tion and a requirement-raising service shall secure the elements (herein- after referred to as the "elements for facilitating military capability") in Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 19 -
the following subparagraphs to provide weapons systems with the military capability so that weapons systems are operational upon deployment. In this case, the Administrator of the Defense Acquisition Program Ad- ministration shall secure the elements for facilitating military capability set forth in subparagraph 1 (a) and 2, and the requirement-raising service shall secure the elements for facilitating military capability set forth in subparagraph 1 (b):
1. The elements to facilitate combat development in the following items for the purpose of demonstrating instantaneous defense capability on the battlefield by the weapons systems acquired: (a) The hardware and software, etc. necessary for the inter-operativity of the facilities of military units and weapons systems; and (b) Organizations, equipment education and training and radio fre- quencies for the formation of military doctrine, and military units; and
2. Combined elements for assistance with munitions, such as parts for repair, operating manuals, etc. necessary for the efficient and eco- nomical operation of the acquired weapons systems. (2) Where necessary for securing the elements for facilitating military capability pursuant to the provisions of paragraph (1), the Administrator of the Defense Acquisition Program Administration may request the requirement-raising service for assistance. In this case, the requirement- raising service shall cooperate insofar as there is no special grounds otherwise.
(3) Where the requirement-raising service intends to secure the elements for facilitating military capability, such as formulation of military units or education and training, etc. following the deployment of weapons sys- tems, the Administrator of the Defense Acquisition Program Administra- tion may assist with the necessary budget, and where the requirement- raising service agrees, the Administrator may have a defense contractor, etc. execute all or part of the follow-up assistance with materials for a certain period under contract.
CHAPTER PROCUREMENT AND QUALITY
ASSURANCE
Article 29 (Methods, etc. of Procurement)
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(1) The munitions that each service may directly procure pursuant to the provisions of Article 25 (2) of the Act (hereinafter referred to as "pro- curement by military unit") shall be as listed in the following subpara- graphs:
1. Test materials developed directly by the military unit that manages munitions;
2. The consumable materials necessary for the maintenance of munitions performed by a military repair unit (including the military repair shop; hereinafter the same shall apply), and the manufacture of necessary parts thereof;
3. A unitary item with an annual procurement plan of less than thirty million won, and a unitary item with a track record of procurement by the military unit of between thirty million won and fifty million won;
4. An article for which there are no national defense standards pursuant to the provisions of Article 31 (1) and no sample can be presented;
5. An article for which emergency purchasing is necessary in time of war, disaster, etc.;
6. An article, such as coding equipment, etc. that each service uses, and for which the maintenance of confidentiality is necessary, and an ar- ticle which is specially manufacture upon the various terms desired by users; and
7. An article which is needed where the equipment and parts that have been procured by a military unit are requested to be repaired by an enterprise.
(2) Where the Administrator of the Defense Acquisition Program Admin- istration purchases munitions by requesting the Administrator of the Public Procurement Service pursuant to the provisions of Article 25 (2) of the Act, he/she shall decide the matters of the extent of munitions being the object of procurement, methods for, and procedures for pro- curement after consultation with the Administrator of the Public Pro- curement Service. In this case, the Administrator of the Defense Acquisi- tion Program Administration shall hear the opinion of the requirement- raising service.
Article 30 (Designation and Cancellation of Standard Articles) (1) Where the Administrator of the Defense Acquisition Program Ad- Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 21 -
ministration formulates a plan for the standardization of munitions re- garding nonweapon systems pursuant to the provisions of Article 26 (1) of the Act, he/she shall hear and reflect the opinion of the Ministry of National Defense thereon.
(2) Where the Administrator of the Defense Acquisition Program Ad- ministration intends to designate a standard article on munitions, he/ she shall consider the matters in the following subparagraphs. In this case, the standard articles shall be designated by receiving the opinion of each service for nonweapon systems procured by means of purchasing. However, standard articles shall be designated in accordance with the requests of the Ministry of National Defense or each service for the ar- ticles of nonweapon systems procured by means of research and devel- opment:
1. The appropriateness of the terms desired by each service and the necessity of designation of standard articles;
2. The economy of the relevant munitions;
3. The sufficiency of elements for facilitating military capability;
4. The degree of utilization in civilian and military fields; and
5. The degree of connectivity with the munitions in use. (3) Where it falls under any instance of the following subparagraphs, the Administrator of the Defense Acquisition Program Administration shall cancel the designation of standard articles on the munitions:
1. Where munitions are replaced by a new standard article;
2. Where it is unnecessary to maintain a standard article as it fails to satisfy the military utility and is economically inappropriate; and
3. Where it is necessary to convert the munitions to articles, etc. manufactured and distributed among civilians.
(4) The procedures necessary for the designation and cancellation of standard articles pursuant to the provisions of paragraphs (2) and (3) shall be prescribed by the Administrator of the Defense Acquisition Pro- gram Administration.
Article 31 (Enactment and Amendment of National Defense Standards) (1) Where the Administrator of the Defense Acquisition Program Ad- ministration intends to designate standard of munitions pursuant to the provisions of Article 26 (3) of the Act (hereinafter referred to as the "na- tional defense standard"), he/she shall target the designated standard ENFORCEMENT DECREE OF THE DEFENSE ACQUISITION PROGRAM ACT Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 22 -
articles, while following shall depend requests for designation from the organizations in the following subparagraphs:
1. The Agency for Defense Development in the case of articles of research and development under the supervision of the Agency for Defense Development;
2. The relevant enterprise in the case of articles of research and development under the supervision of the enterprise, or articles, etc. procured en bloc by the Defense Acquisition Program Administration pursuant to the provisions of Article 25 of the Act; and
3. The Ministry of National Defense or each service in the case of articles of nonweapon systems procured by the Ministry of National Defense or each service.
(2) For articles whose national defense standard is not designated but procured by the military unit, the Administrator of the Defense Acqui- sition Program Administration may have each service designate the standards.
(3) Where the effectiveness of the national defense standard has decreased due to changes in and development of the domestic industrial technology that manufactures the munitions, or changes in the national defense standard that each service requests, the Administrator of the Defense Acquisition Program Administration may modify or abrogate the national defense standard.
(4) The procedures necessary for the enactment, modification and ab- rogation of national defense standards pursuant to the provisions of paragraphs (1) and (3) shall be prescribed by the Administrator of the Defense Acquisition Program Administration.
Article 32 (Administration of Form and Shape)
(1) The Administrator of the Defense Acquisition Program Administration shall, pursuant to the following subparagraphs, administer munitions in accordance with their physical or functional characteristics (herein- after referred to as the "shape") so that the munitions shall fulfill the purpose of their utilities:
1. The discernment of shape so that the munition may satisfy the required level of performance of each service and show the utmost efficiency, etc. in operation;
2. The documentation of shape, such as the work, etc. of design drafting Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 23 -
for the purposes of concrete embodiment of discerned shape;
3. The confirmation, coordination and control of discerned details to be modified on the basis of the documented shape; and
4. Confirmation as to whether the munition coincides with the discerned shape and the administration of data.
(2) The administration of shape of munitions shall be executed from the time when the method of project promotion regarding the method of acquisition of weapons systems, etc. pursuant to the provisions of Ar- ticle 17 of the Act is decided until the munitions become obsolete pursuant to the provisions of Article 13 (3) of the Act on the Management of Mil- itary Supplies.
(3) The detailed procedures necessary for the administration of shape shall be prescribed by the Administrator of the Defense Acquisition Pro- gram Administration.
Article 33 (Munitions Inventory Information)
(1) Where the Administrator of the Defense Acquisition Program Ad- ministration intends to allocate a stock number to munitions pursuant to the provisions of Article 27 (1) of the Act, he/she shall do so by classi- fying them in accordance with the drawing, price, packing unit, period of storage and information, etc. on the manufacturer. (2) Where the Administrator of the Defense Acquisition Program Ad- ministration formulates a plan for the administration and utilization of munitions inventory information pursuant to the provisions of Article 27 (2) of the Act, he/she shall hear and reflect the opinion of the Minister of the National Defense.
(3) Where the relevant organization, such as each service, the agencies under the direct control of the Ministry of National Defense, the Agency for Defense Development, the Agency for Defense Technology and Quality Assurance, etc. has to correct or supplement munitions inventory in- formation, it shall submit the relevant details to the Administrator of the Defense Acquisition Program Administration. The Administrator of the Defense Acquisition Program Administration shall decide whether to correct or supplement the information and notify the result to the rele- vant organization.
(4) Where defense materials are exported, the Administrator of the Defense Acquisition Program Administration may conclude an agreement on the ENFORCEMENT DECREE OF THE DEFENSE ACQUISITION PROGRAM ACT Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 24 -
exchange of the munitions inventory information that can be supplied to the export partner country.
CHAPTER ADVANCEMENT OF NATIONAL
DEFENSE SCIENCE AND
TECHNOLOGY
Article 34 (Formulation of Policy and Plan for Advancement of National Defense Science and Technology)
(1) The medium- and long-term policies on the advancement of national defense science and technology pursuant to the provisions of Article 30 (1) of the Act (hereinafter referred to as the "policy on the advancement of national defense science and technology") shall be formulated every five years, and the matters to be included therein shall be as the following subparagraphs:
1. The medium- and long-term development goal and the basic direction of the policy on the advancement of national defense science and technology;
2. The policy on the national defense science and technology necessary for the reformation of military capability;
3. Matters regarding the distribution of financial resources and expan- sion of investment for the advancement of national defense science and technology; and
4. Other important policies necessary for the advancement of national defense science and technology.
(2) For the purpose of formulation of a policy on the advancement of na- tional defense science and technology, the Minister of National Defense may request the presentation of necessary data to the Defense Acquisition Program Administration, the Joint Chiefs of Staff, each service, the Agency for Defense Development, the Agency for Defense Technology and Quality Assurance, etc.
(3) The action plan for the advancement of national defense science and technology pursuant to the provisions of Article 30 (1) of the Act shall be formulated every year on the basis of the policy on the advancement of national defense science and technology, and the matters to be included therein shall be as listed in the following subparagraphs: Reproduced from Statutes of the Republic of Korea Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea - 25 -
1. Matters regarding plans for securing and schemes for advancing na- tional defense science and technology;
2. Plans for the promotion of policies on national defense science and technology pursuant to the provisions of paragraph (1) 2;
3. Matters regarding the promotion plan for the advancement and internationalization of national defense science and technology;
4. Matters regarding plans for the organic supplementation and promo- tion of development between national science and technology and national defense science and technology;
5. Matters regarding investment in the research and development of national defense science and technology;
6. Matters regarding broadening of the foundations of national defense science and technology, such as the facilities, equipment, etc. for the advancement of national defense science and technology; and
7. Matters regarding the fostering and improvement of treatment for-
ward manpower for national defense science and technology.
(4) Policy, etc. regarding the advancement of national defense science
and technology that must undergo the deliberation of the
National Science
and Technology Committee pursuant to the provisions of Article 30 (1)
of the Act shall be as listed in the following
subparagraphs:
1. Matters falling under the subparagraphs of paragraph (1);
2. Matters falling under paragraph (3) 1, 4, 6, and 7; and
3. Other matters that the Minister of National Defense determines on
after consultation with the Minister of Education, Science and
Tech-
nology.
Article 35 (Duties, etc. for Administration of Information on National
Defense Science and Technology)
(1) For the purposes of integrated administration of the information on
the national defense science and technology pursuant to
the provisions
of Article 31 of the Act in a systematic way, the Administrator of the
Defense Acquisition Program Administration
shall perform the duties in
the following subparagraphs:
1. The collection and administration of information pursuant to the
provisions of the subparagraphs of Article 31 (1) of the Act,
and the
cataloging thereof;
2. Investigations into the level of technology, domestically and offshore,
and the analysis of trends in technological development;
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3. The establishment of distribution channels for national defense scien-
tific and technological information; and
4. The publication and distribution of data regarding national defense
scientific and technological information.
(2) Ownership of intellectual property rights arising from the research
into and development of national defense science and technology
shall be
governed by the provisions of Article 18 of the Agency for Defense
Development Act and Article 15 of the Regulation on
the Administration,
etc. of National Research and Development Project.
Article 36 (Transfer of National Defense Science and Technology)
(1) Anyone who intends to receive the transfer of national defense science
and technology pursuant to the provisions of Article
31 (3) of the Act
(hereinafter referred to as the "transfer of technology") shall apply to
each service or government-invested
research institute that holds such
technology (hereinafter referred to as the "technology-holding organiza-
tion") for the transfer
of technology, along with the documents in the
following subparagraphs:
1. The aim of transfer of technology;
2. Details of the technology intended for transfer; and
3. Plans for utilization of the technology intended for transfer.
(2) The technology-holding organization shall request the Administrator
of the Defense Acquisition Program Administration to approve the trans-
fer of technology within one month from the day he/she
received appli-
cation for the transfer of technology after examining the matters in the
following subparagraphs. The Administrator
of the Defense Acquisition
Program Administration shall decide whether to grant approval within
two months from the day he/she
received the request after the delib-
eration of the Committee and shall notify the technology-holding orga-
nization of the outcomes:
1. The extent and details of the transfer of technology;
2. Whether the applicant for the transfer of technology qualifies;
3. The necessity of the transfer of technology;
4. The royalties for technology;
5. The procedures for the transfer of technology and points at issue;
6. Matters that the organizations, etc. that receive the transfer of
technology shall abide by at the time of the transfer of technology;
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and
7. Other matters that the Administrator of the Defense Acquisition
Program Administration requests.
(3) The technology-holding organization shall transfer technology in
accordance with the contract for the transfer of technology
with the person
who intends to receive the transfer of technology. In this case, matters
to be included in the contract for the
transfer of technology shall be
determined by the Administrator of the Defense Acquisition Program
Administration.
Article 37 (Operation, Supervision, etc. of Agency for Defense Technology
and Quality Assurance)
(1) Projects that the Agency for Defense Technology and Quality As-
sur ance executes in connection with the administration, etc.
of national
defense science and technology shall be the responsibility of technological
assistance relating to the prior research,
offset trade, improvement of
performance, etc. that the Administrator of the Defense Acquisition Pro-
gram Administration commissions.
(2) Contributions by the Government to the Agency for Defense Technology
and Quality Assurance pursuant to the provisions of Article
32 (7) of
the Act shall be made annually by the Administrator of the Defense Ac-
quisition Program Administration paying funds
to the budget.
(3) The President of the Agency for Defense Technology and Quality
Assurance shall formulate an annual business
plan and budget plan and
submit them to the Administrator of the Defense Acquisition Program
Administration by not later than ten
months prior to the commencement
of the relevant business year, and obtain approval from him/her. The
same shall apply where an
approved business plan and budget is modified.
(4) The President of the Agency for Defense Technology and Quality
Assurance shall
report the quarterly results of the execution of busi-
ness plans to the Administrator of the Defense Acquisition Program
Administration
within one month from the completion of the quarter.
(5) The President of the Agency for Defense Technology and Quality
Assurance
shall have the settlements of each business year audited by
a certified public accountant designated by the Administrator of the
De-
fense Acquisition Program Administration, and submit the results to the
Administrator of the Defense Acquisition Program Administration
by the
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end of March of the following year.
(6) Details of settlement relating to national secrets and matters directly
related thereto in the case of paragraph (5) shall be
excluded from the
subject matter of audits by the certified public accountant.
CHAPTER FOSTERING OF DEFENSE
INDUSTRY
Article 38 (Formulation, etc. of Basic Plan for Fostering of Defense In-
dustry)
(1) A basic plan for fostering of the defense industry pursuant to the
provisions of Article 33 of the Act shall be formulated every
five years,
and may be corrected and supplemented on an annual basis where nec-
essary.
(2) Where the Administrator of the Defense Acquisition Program Ad-
ministration intends to formulate a basic plan for fostering
of the defense
industry pursuant to the provisions of paragraph (1), he/she shall consult
with the Minister of Knowledge Economy
for matters falling under Article
33 (2) 2, 4, 5 and 7 of the Act.
Article 39 (Designation of Defense Materials)
(1) Materials that can be designated as defense materials from among
those that are not classified as weapons systems pursuant to
the provi-
sions of the proviso to Article 34 (1) of the Act shall be as listed in the
following subparagraphs:
1. The materials involved in the process of research and development for
military purposes, which are expected to be selected as
weapons systems
after the completion of research and development; and
2. Other materials that satisfy the standards prescribed by Ordinance
of the Ministry of National Defense.
(2) Materials falling under the subparagraphs of Article 35 (2) of the
Act shall be the major defense materials pursuant to the
provisions of
Article 34 (2) of the Act, and other defense materials shall be general
defense materials.
(3) Anyone who manufactures, or intends to manufacture munitions may
request the Administrator of the Defense Acquisition Program
Ad-
ministration to designate such munitions as defense materials. In this
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case, the Administrator of the Defense Acquisition Program Administra-
tion shall decide within three months whether the designation
of those
munitions as defense material is appropriate and notify the applicant
with regard thereto.
(4) Where the Administrator of the Defense Acquisition Program Ad-
ministration has designated defense materials pursuant to the
provisions
of paragraph (3) of this Article or Article 34 (1) of the Act, he/she shall
notify the Minister of Knowledge Economy.
Article 40 (Restrictions, etc. on Designation of Defense Materials)
(1) The Administrator of the Defense Acquisition Program Administra-
tion shall designate defense materials by reference to the unit of the
finished product or the main unit comprising the item: Provided,
That
where necessary for the swift procurement of munitions, the combination
or parts may be designated as defense materials.
(2) Repair parts used for defense materials shall be deemed as having
been designated by being included with defense materials:
Provided, That
where the relevant repair parts are not manufactured by the relevant defense
contractor, or are used for materials
that are not defense materials, the
same shall not apply.
(3) The Administrator of the Defense Acquisition Program Administra-
tion may not designate as defense materials for which it is
deemed that
two or more enterprises are able to manufacture them, in consideration
of domestic technological standards.
Article 41 (Designation of Defense Contractors)
(1) Anyone who intends to be designated as a defense contractor pur-
suant to the provisions of Article 35 (1) of the Act shall
apply to the
Minister of Knowledge Economy along with the following documents:
Provided, That where a defense contractor who has
already been designated
intends to be designated to also manufacture other defense materials, he
need only apply with the documents
falling under subparagraphs 1 and
4 through 7:
1. An application form;
2. The articles of incorporation (limited to corporations);
3. A balance sheet and income statement;
4. Details and a description of the capacity of manufacturing facilities
and the main annexed facilities;
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5. The results of use of raw materials and plans for procurement;
6. The kinds and specifications of products, and the results and plans
for the manufacture and sale thereof;
7. A business plan;
8. Plans for upskilling engineers and technicians and a description of
technical capability; and
9. Plans for safety measures and explanation thereof.
(2) Where the Minister of Knowledge Economy has received an application
pursuant
to the provisions of paragraph (1), he/she shall inspect the
manufacturing facilities, etc. in accordance with the standards for
facilities
pursuant to the provisions of Article 42, and request the Administrator
of the Defense Acquisition Program Administration
to inspect security
requirements pursuant to the provisions of Article 44.
(3) Where the Minister of Knowledge Economy has received an application
for designation of defense contractors pursuant to the provisions
of
paragraph (2), he/she shall decide whether to designate the applicant
as defense contractor within six months and notify the
applicant and the
Administrator of the Defense Acquisition Program Administration of the
results and deliver the certificate of
designation to the applicant if he/she
designates.
(1) The standards for facilities of defense contractors pursuant to the
provisions of Article 35 (1) of the Act shall be based on
standards that
are prescribed by the Minister of Knowledge Economy regarding the following
personnel and material facilities:
1. The general facilities and special facilities necessary for the manufac-
ture of defense materials;
2. The facilities to inspect the quality of defense materials;
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3. The technical manpower necessary for the manufacture of defense
materials; and
4. Other facilities recognized as necessary by the Minister of Commerce,
Industry and Energy.
(2) Where the Minister of Knowledge Economy prescribes the standards
for facilities pursuant to the provisions of paragraph (1),
he/she shall
consult with the Administrator of the Defense Acquisition Program
Administration.
(2) Where the Minister of Knowledge Economy intends to modify standards
for facilities pursuant to the request in paragraph (1),
he/she shall consult
with the Administrator of the Defense Acquisition Program Administration.
1. Measures for security regarding areas and facilities where defense
facilities are fully protected;
2. Measures for security regarding personnel employed by defense
contractors;
3. Measures for security regarding the treatment, keeping and manage-
ment of secret documents;
4. Measures for protection of defense materials and raw materials;
5. Measures for protection of equipment and facilities;
6. Measures for security regarding communications facilities and method
of communications;
7. Measures for procedures for processing all kinds of data and data arising
from data processing;
8. Means of organic communications with relevant intellectual agencies
in preparation for security accidents; and
9. Other measures for security recognized by the Administrator of the
Defense Acquisition Program Administration as necessary for
the main-
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tenance of security.
(2) The Administrator of the Defense Acquisition Program Administration
shall request to the Minister of National Defense to investigate
and ver-
ify the requirements for security listed in the following subparagraphs
relating to the designation, etc. of defense contractors,
and the Minister
of National Defense shall notify the Administrator of the Defense Ac-
quisition Program Administration of the
result of investigation and
verification:
1. Inspection of requirements for security following the designation of
defense contractors pursuant to the provisions of Article
41 (2) and
the commissioning of specialized research institutes pursuant to the
provisions of Article 46 (1); and
2. Verification of conditions necessary for the revocation of a designa-
tion as defense contractors pursuant to the provisions of
Article 48
(1) 2 of the Act and the termination of commission of specialized
research institutes pursuant to the provisions of
Article 63 (1) 1.
Article 45 (Sale, Acquisition, etc. of Defense Contractors)
(1) The standards for changes in substance in the
governance of man-
agement of defense contractor pursuant to the provisions of Article 35 (3)
of the Act shall be based on the
instances falling under any of the fol-
lowing subparagraphs:
1. When the stocks, etc. (including equities or all other property rights;
hereinafter the same shall apply) of a defense contractor
are intended
to be disposed of or taken over en bloc by means of sale and acquisi-
tion, exchange or merger between enterprises,
execution of security
rights, receipt of payment in kind or by other means;
2. When a new corporation is established by spinning off the manufactur-
ing sector of a defense contractor, or such manufacturing
sector is
intended to be disposed of or acquired en bloc by means of sale and
acquisition , exchange or merger between enterprises,
execution of
security rights, receipt of payment in kind or by other means;
3. When the same person intends to possess 50/100 or more of the stocks,
etc. of a defense contractor independently or jointly with
a person
(hereinafter referred to as a "person related to the same person") falling
under any of the following items (including
when the same person
possesses not more than 50/100 but becomes a major stockholder, and
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is able to exercise controlling influence over the selection of officers
or management of the defense contractor directly or through
a person
related to the same person):
(a) Spouse, blood relatives as far as third cousins and relatives as far
as cousins of in-laws;
(b) A company where the same person exercises controlling influence
over major decision making or conduct of the business, such
as the
organizational change of the company concerned, investment in the
new business, etc. directly or through a person related
to the same
person; or
(c) A company where the same person appoints or dismisses the
representative director, or appoints or dismisses 50/100 or more
of the directors by contract or agreement with other major stock-
holders; or
4. When a defense contractor is intended to be managed by means of
acquisition by transfer, hire or entrustment of management of
all or
part of the business.
(2) Anyone who intends to obtain approval from the Minister of Knowledge
Economy in acquiring the controlling rights in a defense
contractor pursuant
to the provisions of Article 35 (3) of the Act shall submit an application
for approval prescribed by the Ministry
of National Defense along with
the documents falling under Article 41 (1) 2 and 3 and the documentary
evidence regarding acquisition
of stocks, etc. of a defense contractor to
the Minister of Knowledge Economy: Provided, That where a person intends
to manage a
defense contractor with modifying the manufacturing facilities
or requirements for security after the acquisition of the defense
contractor,
he shall also submit the documents falling under Article 41 (1) 4 through
9.
Article 46 (Commissioning of Specialized Research Institute)
(1) The Administrator of the Defense Acquisition Program Administration
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shall commission a specialized research institute from among the orga-
nizations with the requirements for security pursuant to
the provisions
of Article 44 (1) in consideration of the research facilities and level of
technology: Provided, That in the cases
of commissioning of specialized
research institutes to implement projects for research and development
other than those involving
military secrets, the requirements for security
pursuant to the provisions of Article 44 (1) may not apply.
(2) Where the Administrator
of the Defense Acquisition Program Ad-
ministration intends to commission a specialized research institute
pursuant to the provisions
of paragraph (1), he/she may cause the relevant
organization to submit the documents in the following subparagraphs. In
this case,
the provisions of Article 41 (4) shall apply mutatis mutandis
to the commission procedure of specialized research institutes:
1. The articles of incorporation (limited to corporations);
2. The details of research facilities and main annexed facilities, and a
description of capacity;
3. A business plan and business outcomes; and
4. A description of technical capacity.
(3) Where the Administrator of the Defense Acquisition Program Ad-
ministration intends
to commission a research institute operated by the
Government or a local government, or a government-funded research
institute
as a specialized research institute, he/she shall consult with
the supervising organization in advance.
(4) Where the Administrator of the Defense Acquisition Program Ad-
ministration has commissioned a specialized research institute,
he/she
shall deliver a certificate of commission of specialized research institute
to the specialized research institute. In this
case, he/she shall notify the
supervising organization in charge of the fact where he/she has com-
missioned pursuant to the provisions
of paragraph (3).
Article 47 (Measures by Fair Trade Commission)
Where the Fair Trade Commission has been requested to take measures
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against unfair trading activities pursuant to the provisions of Article 36 (3)
of the Act, and the relevant large enterprise is
recognized as having
engaged in unfair trading activity pursuant to the provisions of Article
23 (1) of the Monopoly Regulation
and Fair Trade Act, the Commission
shall take necessary measures without delay.
Article 48 (Methods, etc. of Inquiry into Facts)
(1) In inquiring into facts for the purpose of coordination, etc. of business
pursuant to the provisions of Article 36 (4) of the
Act, the Administrator
of the Defense Acquisition Program Administration shall notify the rele-
vant large enterprises, small or
medium enterprises or defense contractors
of the time and date, place, purpose, etc., and the fact-finding public
official at the
Defense Acquisition Program Administration shall display
any certificate indicating his authority.
(2) Where the inquiry involves entering an office or place of business of
large enterprises, small or medium enterprises or defense
contractors, the
interested persons of the relevant office or place of business shall be pre-
sent and when the statements by the
interested persons are heard in the
course of inquiry into fact, the details thereof shall be recorded in writing.
Article 49 (Details
and Methods, etc. of Publicly Announcing Recom-
mendations)
(1) The details of recommendations for execution pursuant to the provi-
sions of Article 36 (5) of the Act shall be as listed in
the following sub-
paragraphs:
1. The name of the enterprise which is the object of recommendations
for execution;
2. The details of recommendations for execution;
3. Follow-up measures accompanying the nonperformance of recom-
mendations for execution; and
4. Other matters necessary for the performance, etc. of recommendations.
(2) Where the Administrator of the Defense Acquisition Program
Admin-
istration announces in public pursuant to the provisions of paragraph (1),
he/she shall cause it to be published in a nationwide
daily newspaper
at least twice, and notify the relevant large enterprises, defense con-
tractors, etc. of the details thereof in
writing.
(3) Where the Administrator of the Defense Acquisition Program Ad-
ministration orders the execution of recommended matters
to the large
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enterprises or defense contractors pursuant to the provisions of Article
36 (5) of the Act, he/she shall notify the large enterprises
or defense
contractors of the details in writing and confirm the status of execution.
Article 50 (Protection and Fostering of Defense
Contractors)
(1) The Government shall purchase the defense materials manufactured
by defense contractors in the first instance.
(2) The Administrator of the Defense Acquisition Program Administration
shall notify the relevant defense contractors annually of
the quantity of
defense materials planned for manufacturing.
(3) Where the defense contractor intends to manufacture the annual
quantity before the procurement contract of the year from among
the planned
manufacturing quantity notified pursuant to the provisions of paragraph
(2), he shall obtain approval therefor from
the Administrator of the Defense
Acquisition Program Administration.
(4) The defense contractor may request the Administrator of the De-
fense Acquisition Program Administration for a quality certification
of
the materials manufactured with the approval pursuant to the provisions
of paragraph (3), and the Administrator of the Defense
Acquisition Pro-
gram Administration shall comply with it insofar as there are no special
grounds otherwise.
(5) Where there are materials manufactured pursuant to the provisions
of paragraph (3) which are difficult to keep or they are prone
to safety
accidents, etc., the defense contractor may deliver or keep the materials
in the place indicated by the relevant Chief
of Staff after consultation
with the service where such materials are to be delivered.
Article 51 (Loaning of Funds)
(1) Where an enterprise intends to have funds loaned pursuant to the
provisions of Article 38 of the Act, it shall apply for a loan
to a financial
institute handling the relevant fund after obtaining a recommendation
of loaning from the Minister of Knowledge
Economy.
(2) Where it is recognized as necessary for the balanced fostering of de-
fense contractors, the Administrator of the Defense Acquisition
Program
Administration may recommend the loaning of funds to the Minister of
Knowledge Economy.
(1) The expenses that can be subsidized for the fostering of the defense
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industry pursuant to the provisions of Article 39 (1) 4 of the Act shall
be as listed in the following subparagraphs:
1. Expenses of transferring defense facilities in accordance with orders
under Article 49 (1) of the Act;
2. Interest on funds required for reserving raw materials pursuant to
the provisions of Article 55 of the Act;
3. Maintenance expenses for exclusive-use equipment kept idle due to
the suspension of procurement of defense materials by the Government
or marked decreases in the placement of order, and labor costs for
employees;
4. Expenses for the restoration of destroyed or lost defense facilities or
defense materials or purchase of new ones due to natural
disaster or
other accidents; and
5. Expenses for removal or scrapping of the facilities, machinery and
tools used exclusively for the manufacture of defense materials,
which
have become idle due to a restructuring plan of the Government for
the defense industry.
(2) The Administrator of the Defense Acquisition Program Administration
shall determine the standards, etc. for grants of subsidies
pursuant to
the provisions of Article 39 (1) of the Act and other necessary matters
after consultation with the Minister of Commerce,
Industry and Energy.
(3) Those who intend to receive subsidies shall apply to the Administrator
of the Defense Acquisition Program
Administration along with the docu-
ments listed in the following subparagraphs:
1. An application form;
2. A business plan; and
3. Details of the funds required.
(4) Where substantial profits are made by the defense contractor or
specialized research institute
out of their subsidies, the Administrator
of the Defense Acquisition Program Administration, in granting subsidies,
shall attach
conditions that an amount equivalent to all or part of the
subsidy should be refunded to the State.
Article 53 (Transfer, etc. of Assets by Subsidies)
(1) Anyone who intends to receive approval for disposal of assets acquired
with
subsidies or whose utility has been increased pursuant to the pro-
visions of Article 39 (2) of the Act shall apply to the Administrator
of
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the Defense Acquisition Program Administration, along with documents
as listed in the following subparagraphs:
1. An application form; and
2. A statement of grounds.
(2) Where the Administrator of the Defense Acquisition Program Ad-
ministration has received an application
for approval of disposal pursuant
to the provisions of paragraph (1), he/she shall decide whether to approve
the same within two
months after consultation with the Minister of
Knowledge Economy, and notify the applicant and the Minister of Knowledge
Economy
of the outcome.
Article 55 (Assistance to Defense Industry)
Where a defense contractor or specialized research institute intends to
obtain technical assistance or manufacturing assistance
pursuant to the
provisions of Article 41 of the Act, it shall submit an application for such
assistance including the matters in
the following subparagraphs to the
Administrator of the Defense Acquisition Program Administration, the
Chief of Staff of each
service, the President of the Agency for Defense
Development, the President of the Defense Agency for Science and Quality
Assurance,
or the head of the military repair units:
1. The terms and period of assistance; and
2. The terms and conditions for the share of expenses.
Article 56 (Establishment, etc. of Association, etc.)
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(1) The association or organization pursuant to the provisions of Article
42 (1) of the Act shall have 20 or more members and have
the object
of fulfilling the duties in the following subparagraphs:
1. The duties of survey and research regarding the defense industry;
2. The duties to improve the competitiveness of the defense industry;
3. The duties to promote exports by the defense industry; and
4. Other duties recognized as necessary by the Administrator of the De-
fense Acquisition Program Administration.
(2) The association or organization established pursuant to the provi-
sions of paragraph (1) shall obtain approval from the Administrator
of
the Defense Acquisition Program Administration by drafting its articles
of incorporation including the matters in the following
subparagraphs.
The same shall apply when amending the articles of incorporation:
1. Purpose and title;
2. The address of its main office;
3. Matters regarding duties and the execution thereof;
4. Matters regarding officers;
5. Matters regarding the qualifications for membership;
6. Matters regarding the amendment of the articles of incorporation; and
7. Other matters necessary for the operation of the association or orga-
nization.
(3) Where necessary for the guidance and supervision of the association
or organization established pursuant to the provisions of
paragraph (1),
the Administrator of the Defense Acquisition Program Administration
shall cause the matters regarding its duties
to be reported or request the
submission, etc. of information.
Article 57 (Designation, etc. of Guarantee Organization)
(1) Anyone who intends to be designated as a guarantee organization
pursuant
to the provisions of Article 43 (1) of the Act shall satisfy the
requirements in the following subparagraphs:
1. The paid-in capital (an endowment in the case of a nonprofit corpora-
tion) shall be five hundred million won or more;
2. To have sufficient manpower and material facilities for conducting
guarantee businesses in the each of subparagraphs of Article
43 (2)
of the Act; and
3. To secure funds (hereinafter referred to as "guarantee funds") neces-
sary for conducting guarantee business for defense contractors,
etc.
(2) Anyone who seeks to be designated pursuant to the provisions of
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paragraph (1) shall apply to the Administrator of the Defense Acquisi-
tion Program Administration after preparing the documents
listed in the
subparagraphs. In this case, a relevant public official shall verify a certi-
fied copy of register of incorporation
through administrative information
sharing under the provisions of Article 21 (1) of the Electronic Govern-
ment Act, and if the
applicant does not agree to such verification, he shall
submit a certified copy of register of incorporation:
1. An application for designation;
2. Deleted; 3. Documents that can verify the qualifications in the subparagraphs
of paragraph (1); and
4. Documents regarding guarantee regulations, such as the limits on
guarantees, the terms of guarantee contracts, the limits on guarantees,
guarantee fees, etc.
(3) Where the Administrator of the Defense Acquisition Program Ad-
ministration has designated a guarantee organization pursuant
to the
provisions of paragraph (1), he/she shall announce it in public.
Article 58 (Measures, etc. for Assistance with Exports)
(1) The Administrator of the Defense Acquisition Program Administration
may take measures in the following subparagraphs, or request
the head
of relevant agencies, etc. to take necessary measures for the promotion
of the export of defense materials and national
defense science and
technology pursuant to the provisions of Article 44 (1) of the Act:
1. Tax deductions and/or exemptions for defense materials that are
exported;
2. Measures for counter-purchase following the export of defense ma-
terials;
3. Investigations into the bottlenecks that defense contractors encounter
abroad, and assistance in the resolution thereof;
4. Cooperation in civilian trade and industries; and
5. Education and training, and assistance in public relations.
(2) The Administrator of the Defense Acquisition Program Administra-
tion may provide assistance in matters under the following subparagraphs
for the purposes of export promotion of defense materials
pursuant to
the provisions of Article 44 (2) of the Act:
1. Assistance with expenses for opening, participating in, etc. local and
overseas exhibitions or the science council for the purposes
of export
promotion;
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2. Assistance with education expenses for upskilling export specialized
manpower;
3. Assistance with visits to purchasing countries for export negotiation,
and invitation calls of important persons from purchasing
countries;
and
4. Other assistance recognized by the Administrator of the Defense Ac-
quisition Program Administration as necessary for export promotion.
Article 59 (Transfer or Lease, etc. of State Assets)
(1) Miscellaneous assets that can be leased without consideration pur-
suant
to the provisions of Article 45 (1) of the Act shall be as listed in
the following subparagraphs:
1. Information on national defense science and technology pursuant to
the provisions of Article 31 (1) of the Act; and
2. Land, buildings and structures provided directly for the transfer of
defense facilities executed in accordance with an order pursuant
to
the provisions of Article 49 (1) of the Act.
(2) The administrative assets that can be permitted for use without
consideration pursuant to the provisions of Article 45 (1) of
the Act shall
be as listed in the following subparagraphs:
1. All kinds of test centers and laboratory facilities;
2. Explosives disposal sites;
3. Shooting ranges; and
4. Other assets that are prescribed by Ordinance of the Ministry of
National Defense as necessary for the manufacture and testing
of
defense materials.
(3) The specialized equipment or goods that can be leased with or without
consideration pursuant to the provisions of Article 45
(2) of the Act shall
be the raw materials, equipment, jigs and fixtures, measuring instru-
ments, inspection machinery and tools,
or articles and parts thereof for
performance testing and inspection, which are used for the manufacture
and research of defense
materials or manufacture of prototypes.
(4) Cases where the specialized equipment or goods referred to in para-
graph (3) that
can be leased with or without consideration shall be as
listed in the following subparagraphs:
1. Where the repair of disorder takes a long time or is impossible, or
where it is apprehended to incur setbacks to the manufacture
of de-
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fense materials due to difficulties to purchase domestically or to im-
port from overseas;
2. Where it is needed for the performance testing or inspection of defense
materials;
3. Where it is impossible to manufacture defense materials as the manu-
facturing facilities have been destroyed due to natural disaster
or other
accidents; and
4. Where the lease thereof is stipulated in the procurement contract,
commissioning of research and development, etc. of defense
materials.
(5) The specialized equipment or goods that can be transferred without
consideration pursuant to the provisions of Article
45 (2) of the Act shall
be as listed in the following subparagraphs:
1. Specialized equipment or goods that have been leased pursuant to the
provisions of Article 45 (2) of the Act, but that cannot
be returned
or are inappropriate after use as they fall under paragraph (4) 2 or
3; and
2. The munitions that are equipment determined by the military as use-
less or surplus articles, but that can be used or recycled
by defense
contractors or specialized research institutes after repair.
(6) Where a defense contractor or specialized research
institute intends
to use, lease or take over State assets pursuant to the provisions of
paragraphs (1) through (5), it shall apply
to the relevant management
agency along with the following documents after receiving recommen-
dation by the Administrator of the
Defense Acquisition Program Ad-
ministration:
1. Any application form ; and
2. A plan for utilization.
(7) The management agency that has received an application pursuant
to the provisions of paragraph (6)
shall permit the use thereof, lease or
transfer insofar as there are no special grounds otherwise.
Article 60 (Special Precedents
for Contracts)
(1) The Administrator of the Defense Acquisition Program Administration
may conclude a contract covering two or more fiscal years
(hereinafter
referred to as a "long-term contract") in the following cases:
1. When it takes several years to execute the contract that research or
pilot manufacture is commissioned pursuant to the provisions
of Ar-
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ticle 18 (4) of the Act, or defense materials are procured pursuant
to the provisions of Article 34 of the Act; and
2. When it is determined to be inefficient to conclude a contract that
terminates within the fiscal year concerned in light of the
relevant
long-term procurement plan, economic circumstances, etc.
(2) The provisions of Articles 8 (2), 37 (1), 50 (3) and 69 of
the Act
on Contracts to Which the State is a Party shall apply mutatis mutandis
where a long-term contract for defense materials
is concluded.
Article 61 (Kinds, Terms, Extent, etc. of Contracts)
(1) Contracts pursuant to the provisions of Article 46 (1) of
the Act shall
be concluded as classified in the following subparagraphs:
1. General conclusive contracts: Where the contract amount is agreed
at the time of conclusion of the contract, and the agreed contract
amount is to be paid if the agreed contract terms are fulfilled;
2. Commodity price coordinated unit price contract: Where a contract
is intended within the extent of a contract amount fixed by
the
Administrator of the Defense Acquisition Program Administration by
adjusting the recent unit price of contract according to
the index
fluctuation rate without recalculating the unit price for an article that
has previously been subject to contract after
fixing the estimated price
by means of unit price calculation method in the last two years;
3. Cost reduction compensation contract: Where the amount of cost re-
duction is deducted from the contract amount and the compensation
within the extent of the cost reduction is intended when there is new
technology or development of engineering methods, business
ra-
tionalization, etc. during the contract execution period after the
conclusion of contract;
4. Conclusive contract with inducement: Where a contract is concluded
by fixing the highest payable contract amount, target cost
and target
profit, and the contract amount shall be paid by adding the cost that
actually arises, target profit and inducement
profit after the execu-
tion of the contract when it was possible to fix the estimated amount,
but a cost reduction is anticipated
by means of inducement profit in
view of the characteristics of the contract;
5. Ceiling amount contract: Where a ceiling amount is established in
order to efficiently secure repair parts for main equipment
and main-
tenance for the operation of weapons systems when a contract is
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concluded, and the repair parts and maintenance shall be requested
from the contracting enterprise for a certain period;
6. Midway conclusive contract: Where the contract amount is to be
determined in the course of execution of contract as it is difficult
to
conclude at the time of conclusion of contract in view of the nature
of contract;
7. Cost settlement contract with inducement: Where the contract amount
is impossible to determine at the time of conclusion of contract,
the
actual cost occurred shall be paid and the profit is to be paid after
adding the target profit and the inducement profit as
substitution of
local products for imported products are requested from the contract-
ing party;
8. Indeterminate item contract: Where it is difficult to determine the cost
of certain items that constitute the contract amount
when concluding
a contract, it is intended to determine only the items which are possible
to determine the cost, and part of the
items that are difficult to determine
are to be determined after the execution of contract; and
9. General approximation contract: Where the contract amount is to be
determined after the execution of contract as there is no cost
data
to determine contract amount at the time of conclusion of contract.
(2) Upon completing execution of a contract after the
conclusion of an
approximation contract pursuant to the provisions of paragraph (1) 7
through 9, the approval of the Administrator
of the Defense Acquisition
Program Administration shall be obtained pursuant to the provisions of
Article 70 (3) of the Act on
Contracts to Which the State is a Party:
Provided, That upon completing execution of a contract after the conclu-
sion of an approximation
contract for procurement by a military unit, the
approval of the Chief of Staff of each service or the head of agency under
the
direct control of the Ministry of National Defense shall be obtained,
notwithstanding the provisions of Article 70 (3) of the Act
on Contracts
to Which the State is a Party.
Article 62 (Procedures for Revocation of Designation of Defense Con-
tractors)
Where the Minister of Knowledge Economy revokes the designation of
a defense contractor pursuant to the provisions of Article 48
(1) of the
Act, he/she shall notify the Administrator of the Defense Acquisition
Program Administration and the relevant defense
contractor, and retrieve
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the certificate of designation of the defense contractor.
Article 63 (Termination of Commission of Specialized Research Institute)
(1) The Administrator of the Defense Acquisition Program
Administra-
tion may terminate the commission where a specialized research institute
falls under any of the following subparagraphs:
1. Where it fails to meet the requirements for security pursuant to the
provisions of Article 44;
2. Where it refuses or fails to execute the commission for research and
development of defense materials or manufacture of prototypes,
etc.;
or
3. Where the Administrator of the Defense Acquisition Program Ad-
ministration considers that there is no need to retain it as a
specialized
research institute due to the insufficiency of research facilities or the
level of technology, etc.
(2) Where the Administrator of the Defense Acquisition Program Ad-
ministration intends to terminate the commission of a specialized
research
institute, he/she shall clearly notify the specialized research institute
and the supervisory organization in charge thereof
with the reasons and
retrieve the certificate of designation of the specialized research institute.
(3) Where the Administrator
of the Defense Acquisition Program Ad-
ministration intends to terminate the commission of specialized research
institute pursuant
to the provisions of paragraph (1), he/she shall conduct
a hearing.
Article 64 (Revocation of Designation of Defense Materials)
(1) The Administrator of the Defense Acquisition Program Administration
shall examine all defense materials every three years to determine whether
to continue or revoke the designation, and take measures
accordingly.
(2) Where the Administrator of the Defense Acquisition Program Ad-
ministration intends to revoke the designation
of defense materials, he/
she shall clearly notify the Minister of Commerce, Industry and Energy
and the relevant defense contractor
thereof with the reasons.
CHAPTER SUPPLEMENTARY PROVISIONS
Article 65 (Consultation, etc. on Manufacture and Sales Contracts for
Defense Materials)
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(1) Where a person other than a government agency, intends to obtain
approval for conclusion of a contract for manufacturing and
selling de-
fense materials with a defense contractor, he/she shall submit an appli-
cation for approval to the Administrator of
the Defense Acquisition Program
Administration.
(2) Where the Administrator of the Defense Acquisition Program Ad-
ministration has received an application for such approval pursuant
to
the provisions of paragraph (1), he/she shall determine within three months
whether to grant approval in consideration of the
requirements of the
military, and notify the applicant and defense contractor thereof.
Article 66 (Special Examples regarding Manufacture
of Military Firearms,
Swords, Explosives, etc.)
(1) Where it is considered as necessary for the execution of supply con-
tracts, security and safety in manufacturing, administering,
etc. the
military firearms, swords, explosives, etc. by defense contractors or
specialized research institutes, the Administrator
of the Defense Acquisi-
tion Program Administration may have a superintendent dispatched to
defense contractors or specialized
research institutes, or have other rele-
vant public officials execute an inspection of military firearms, swords,
explosives and
related facilities, transportation, etc. appurtenant thereto,
and other measures, or entrust the head of a military unit or the
head
of an agency appointed by the Minister of National Defense with such
duties.
(2) The matters regarding the permission of manufacture of military
firearms, swords, explosives, etc. and the standards, etc. for
safety
management shall be prescribed by Ordinance of the Ministry of National
Defense.
Article 67 (Reserving of Raw Materials)
(1) The kind and quantity of raw materials that the defense contractor
must reserve pursuant to the provisions of Article 55 of
the Act and other
necessary matters shall be prescribed by the Administrator of the De-
fense Acquisition Program Administration.
(2) The Administrator of the Defense Acquisition Program Administration
may notify the relevant defense contractors of the details
of raw materials
that they must reserve pursuant to the provisions of paragraph (1), and
order them to reserve raw materials accordingly.
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(3) The defense contractors who have been ordered pursuant to the
provisions of paragraph (2) shall reserve the raw materials within
one
year from the day they have been ordered to do so. Where they fail to
reserve the raw materials within the prescribed period,
they shall notify
the Administrator of the Defense Acquisition Program Administration of
the reason and the expected day of reserving.
Article 68 (Control of Exports, etc)
(1) Anyone who intends to engage in the business of overseas exports
or brokerage business pursuant to the provisions of Article
57 (1) of the
Act shall submit a report of export business or brokerage business
accompanied by the documents prescribed by Ordinance
of the Ministry
of National Defense to the Administrator of the Defense Acquisition Pro-
gram Administration.
(2) The Administrator of the Defense Acquisition Program Administration
who has been reported pursuant to the provisions of paragraph
(1) shall
deliver a report certificate of export business or brokerage business to
the persons who have reported.
(3) The permission for export of defense materials, etc. pursuant to the
provisions of Article 57 (2) of the Act shall be granted
by the Adminis-
trator of the Defense Acquisition Program Administration for the major
defense materials and national defense science
and technology pursuant
to the provisions of Article 39 (2), and by the Minister of Commerce, In-
dustry and Energy for general
defense materials.
(4) The extent of defense materials and national defense science and
technology permitted to be exported pursuant to the provisions
of Article
57 of the Act shall be prescribed by the Administrator of the Defense
Acquisition Program Administration.
(5) Where the guarantee of the execution of contracts and of quality is
requested from the government of the purchasing country
when exporting
defense materials and national defense science and technology pursuant
to the provisions of paragraph (4), the Minister
of Knowledge Economy
or the Administrator of the Defense Acquisition Program Administration
may comply with it.
shall be as set out in the following subparagraphs:
1. Where it is necessary for international peace, maintenance of safety
and national security;
2. Where diplomatic friction is expected from the export of major defense
materials;
3. Where it is necessary for the observance of agreements concluded
between governments regarding an agreement for importation of
tech-
nology with a foreign country or export control of strategic materials;
4. Where damage to national interests is apprehended due to excessive
competition between domestic enterprises that export major
defense
materials; and
5. Where articles, the quality of which has not been guaranteed, or where
disqualified articles are exported.
Article 69 (Recovery of Fraudulent Gains)
(1) Where the Administrator of the Defense Acquisition Program Ad-
ministration intends to recover fraudulent gains and additional
levies
(hereinafter referred to as "fraudulent gains, etc.") pursuant to the pro-
visions of Article 58 of the Act, he/she shall
serve a written notification
for payment clearly stating the fact of fraudulent gains, amount of fraud-
ulent gains, etc., deadline
for payment, and the method of and period
for, etc. raising objections.
(2) Anyone who has been notified pursuant to the provisions of para-
graph (1) shall pay the fraudulent gains, etc. to the organization
appointed
by the Administrator of the Defense Acquisition Program Administration
within thirty days from the date of notification.
Article 70 (Restriction, etc. of Qualification for Participation in Bidding)
(1) Where the representative or officer of an enterprise
or research in-
stitute falls under any of the following subparagraphs by violating the
pledge of integrity pursuant to the provisions
of Article 59 of the Act,
the Administrator of the Defense Acquisition Program Administration
may restrict the qualification for
participation in bidding for between one
month to one year as prescribed by Ordinance of the Ministry of National
Defense, and
revoke or terminate contract giving rise to violation:
1. Where agreement was made to give or he/she has given money or ar-
ticles, entertainment, etc. to the relevant public officials
(including
the members of the Committee and subcommittees, and the specialized
ENFORCEMENT DECREE OF THE DEFENSE ACQUISITION PROGRAM
ACT
Reproduced from Statutes of the Republic of Korea
Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea
- 49 -
members pursuant to the provisions of Article 16) in connection with
decision making, bidding, successful bidding, or conclusion
or execu-
tion of a contract relating to defense acquisition programs;
2. Where he/she has requested an offer of specific information regarding
defense acquisition programs or such information has been
requested;
or
3. Where he/she has violated the terms of pledge of integrity, apart from
subparagraphs 1 and 2, despite being compelled to observe
the pledge
of integrity by the Administrator of the Defense Acquisition Program
Administration.
(2) Matters that are not prescribed by this Decree concerning the re-
striction of qualification for participation in bidding on
the grounds of
violation of pledge of integrity shall be as provided for in the Enforcement
Decree of the Act on Contracts to Which
the State is a Party.
Article 71 (Entrustment of Authority)
(1) The Administrator of the Defense Acquisition Program Administra-
tion shall entrust the following duties to the President of
the Agency for
Defense Development pursuant to the provisions of Article 61 of the Act:
1. Public announcements necessary for the selection of organizations in
charge of research and development of core technology and
receipt of
proposals for the projects for research and development pursuant to
the provisions of Article 18 (3) of the Act; and
2. Contracts and management of research and development of core
technology pursuant to the provisions of Article 18 of the Act.
(2) The Administrator of the Defense Acquisition Program Administration
shall entrust the following duties to the President of the
Agency for De-
fense Technology and Quality Assurance pursuant to the provisions of
Article 61 of the Act:
1. The issuance of examination papers regarding weapons systems and
nonweapon systems designated by the Administrator of the Defense
Acquisition Program Administration from among the duties regarding
quality assurance pursuant to the provisions of Article 28 of
the Act;
2. The control of the details of shape regarding obvious errors and
corrections, etc. of the plan which do not influence the performance
of the munitions in the mass production phase from among the duties
regarding the control of the details of shape pursuant to the
provisions
of subparagraph 3 of Article 32; and
3. The confirmation of kinds and quantity of raw materials to be reserved
by defense contractors pursuant to the provisions of Article
67.
ENFORCEMENT DECREE OF THE DEFENSE ACQUISITION PROGRAM ACT
Reproduced from Statutes of the Republic of Korea
Copyright 1997
by the Korea Legislation Research Institute, Seoul, Korea
- 50 -
ADDENDA
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Repeal of Other Acts and Subordinate Statutes)
(1)
The Enforcement Decree of the Act on Special Measures for Defense
Industry shall be repealed.
(2) The Regulations of National Defense Investment Project Promotion
Committee shall be repealed.
Article 3 (Transitional Measures concerning Specialized Enterprises and
Systematized Enterprises, etc.)
The provisions of the former Enforcement Decree of the Act on Special
Measures for Defense Industry shall apply to enterprises and
materials
that have been specialized and systematized pursuant to the provisions
of the former Enforcement Decree of the Act on
Special Measures for De-
fense Industry at the time this Decree enters into force from the date
this Decree enters into force until
December 31, 2008. In this case, the
Minister of National Defense shall be deemed the Administrator of the
Defense Acquisition
Program Administration.
Article 4 (Amendment of Other Acts) Omitted.
Article 5 (Relationship to Other Acts and Subordinate Statutes)
Where the provisions of the former Enforcement Decree of the Act
on
Special Measures for Defense Industry are cited in other Acts or subordi-
nate statutes at the time this Decree enters into
force and there are pro-
visions corresponding thereto in this Decree, this Decree or the relevant
provisions of this Decree shall
be deemed to have been cited in place of
the former provisions.
ADDENDUM
This Act shall enter into force on the date of its promulgation.
Articles 2 through 4 Omitted.
Reproduced from Statutes of the Republic of Korea
Copyright 1997 by the Korea Legislation Research Institute, Seoul, Korea
- 51
-
The Acts and subordinate statutes translated into English herein shall
not be construed as having official authority, Ministry of
National
Defense and the Korea Legislation Research Institute shall bear no
legal responsibility for the accuracy of such translation,
and in case
of any divergence of interpretation of the Korean and English version
thereof, the Korean version shall apply
(
)
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