Page 138 - 2020 Defence White Paper

only to technology development, to the R&D of select weapons systems. The MND
plans to enact subordinate statutes containing detailed operational plans for the
system that are included in the two laws enacted in 2020 and enforce them in 2021
while continuing to make system improvements for the smooth promotion of future
defense projects.
In 2019, among the four subcommittees of the Defense Acquisition Program
Promotion Committee, the MND integrated three subcommittees that were operated
based on defense acquisition project promotion stages (project planning, project
management, and follow-up management such as logistics procurement) into one
committee under the jurisdiction of the Defense Acquisition Program Administration
(DAPA) to streamline the decision making process. Major issues–from the project
planning stage to execution and contract management–were reviewed in one
subcommittee so that decisions could be made from a comprehensive perspective
on the overall project. As a result, the subcommittees of the Defense Acquisition
Program Promotion Committee have been reorganized into two subcommittees: the
Subcommittee on Military Force Policy under the jurisdiction of the MND and the
Subcommittee on Defense Project Planning and Management under the jurisdiction
14)
It refers to the cost of the DAPA.
calculated by the quantity
and price standard by System improvements have also been made to induce defense companies to reduce
scientific research for a costs. Since the existing defense cost was a way to compensate companies for the
certain operation; even if
a company performs the actual costs incurred, no incentives were given to companies for cost reduction.
operation at a lower cost
than the standard cost, Accordingly, the MND laid the foundation for enhancing the transparency and
the cost is calculated as
standard cost, so the efficiency of defense acquisition projects by introducing the concept of standard
savings can be regarded as
the profit of the company. cost in the defense industry field for the first time in 45 years since the introduction
14)
15) of the defense cost standard in 1974 which improved the cost structure in its entirety
To ensure that the
liquidated damages for so that the cost reduction efforts of the company could be compensated with profits.
delay system-which
imposes a certain In addition, various policies were promoted at the same time, such as compensating
percentage of liquidated
damages for delay on appropriate costs for related activities, to simplify the complex defense cost profit
the contract amount as
a means of securing the structure and to encourage the export and R&D of defense companies.
contractual performance
of the contract partner- In 2018, the MND expanded the application of the cap on the maximum amount
does not act as an of liquidated damages for delay from existing prototype production contracts to
15)
excessive burden on
the contract partner, the first mass production contracts. Considering the fact that a number of unexpected
MND has set the total
amount of liquidated risk factors may arise even in the initial mass production stage due to the nature of
damages for delay at 10%
of the contract amount defense projects, which require high precision, the MND reduced the burden on
(Paragraph 4, Article 61 of
the Enforcement Decree companies participating in the defense industry by applying this cap mass production
of the Defense Acquisition
Program Act). contracts.

136 2020 Defense White Paper