KOTRA has opened the public software procurement market, traditionally dominated by small and medium-sized enterprises (SMEs), to large corporations. This shift is highlighted by a 21 billion won project to establish an "AI Trade Investment Platform." With major system integrators like Samsung SDS expected to bid, concerns are rising that the government software market is transitioning from SMEs to large firms due to the influence of artificial intelligence (AI).
According to the IT industry, KOTRA published a request for proposals (RFP) for the "KOTRA Intelligent Trade Investment Platform" on May 15. The total project cost is 21 billion won, with a duration of 30 months, aimed at integrating seven systems currently operated separately, including Trade Investment 24, Buy Korea, and Invest Korea, and implementing customer data platforms (generative AI, LLM, RAG, CDP). The deadline for proposals is July 7.
The core of the controversy lies in the allowance for large corporations to participate. Under Article 48 of the Software Promotion Act and a Ministry of Science and ICT announcement, large companies with sales exceeding 800 billion won can only participate in projects worth over 8 billion won, while those with sales below that threshold can only bid on projects worth over 4 billion won. Companies belonging to conglomerates like Samsung SDS are generally prohibited from bidding regardless of project size. However, exceptions can be made for projects deemed unsuitable for private sector service due to national security concerns, such as defense, diplomacy, public safety, and military.
Under this framework, KOTRA's individual system construction and operation projects, such as Trade Investment 24 and Buy Korea, have historically been too small for large corporations to participate. However, by increasing the project budget to 21 billion won and classifying it as a "private sector unsuitable project," KOTRA has created an opportunity for both general and conglomerate-affiliated large companies to bid.
A KOTRA official stated, "This is a large and complex project that integrates the existing seven systems and introduces AI, making it an unavoidable choice to pursue designation as unsuitable for the private sector. It is not intended to benefit any specific group; rather, it simply opens the door for large companies as the project scale increases."
The budget structure is also a point of contention. Of the total project cost of 21 billion won, 3.9 billion won is scheduled for expenditure this year, while the remaining 17.2 billion won (about 82%) is allocated for the 2027-2028 budget, which has not yet received approval from the Ministry of Economy and Finance. KOTRA maintains that it has submitted the budget for approval and believes there are no issues with the project scale assessment.
The symbolic significance of this project is considerable. By bundling individual projects under the guise of integration and AI implementation, a precedent may be set that effectively circumvents restrictions on large company participation. If this approach spreads to other public institutions, it could undermine the foundation of the public procurement market that SMEs have maintained.
An official from a mid-sized IT company expressed concern, stating, "The expertise and investments that dozens of SMEs have built up over the years to secure government contracts are at risk of being transferred to large corporations. If the market is handed over to large companies under the pretext of AI implementation and system integration, there will be no IT companies left in the country."
* This article has been translated by AI.
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