Page 140 - 2018 Defense White Paper

application of the cap on the maximum amount of penalties for delay 15) to a wider range of

projects. The cap on the maximum amount of penalties for delay at 10% of the contract value,
which has been applied to system development projects, will be applied to pilot production
projects. In addition, the MND will provide incentives for defense R&D projects, including the

co-ownership of R&D outcomes; access to defense R&D infrastructure for civilian entities; and
support for technologies of which there is a lack of through government–private joint R&D.
Furthermore, the MND plans to set up a cooperation system where national R&D capabilities

can be utilized. First, national R&D capabilities will be actively applied in fundamental
researches, and a system for collaboration and the division of duties between national R&D
programs and defense R&D programs will be established. In an effort to achieve this objective,

the MND, the DAPA, and the Ministry of Science and ICT (MSIT) formulated and announced
the “Strategy for Future Defense Development Based on Science and Technology” in April 2018,
and plan to carry out a pilot project to develop innovative technologies for future defense under
the leadership of MSIT in 2019. Furthermore, the MND will provide a regulatory foundation

to allow for such efforts for innovation to continue by pursuing the enactment of the “Act on
Promotion of Innovation in Defense Science and Technology” (provisional title).

5. Building a Competitive Defense Industry and Vitalizing
Defense Export

| Bolstering the Competitiveness of the Defense Industry with a Focus on Technology
and Quality | The defense industry is the cornerstone of national security. By acquiring and

supplying weapons systems, with performance and quality that meet the standard of the ROK
Armed Forces, on time, the defense industry has played a key role of providing the foundation
for the buildup of military strength and the realization of responsible defense. It has been, so

far, challenging for outstanding private-sector f irms with technological capabilities to enter into

15) When the counterpart to a contract delays the performance of contractual obligations, the counterpart is
required to pay the amount calculated by multiplying the contract price by the rate prescribed by the ordinance
of the Ministry of Strategy and Finance and the number of delayed days in cash as penalty for delay. The MND
program limits the maximum amount of cash penalties to a certain proportion of the contract price.

138 Chapter 4 Building Elite Armed Forces Using Advanced Technology