Improving Government-Commissioned Projects and Re-commissioned Operations by Public Institutions

 

Published on May 19, 2026
Published by Public Institution Evaluation Division



 

   Government-commissioned projects refer to activities that fundamentally constitute inherent governmental functions and would ordinarily be undertaken directly by the state but are instead executed by external entities, including public institutions, to leverage specialized expertise, address budgetary and personnel constraints, and enhance service delivery. This may be viewed as an inevitable evolution of the modern administrative state, which has flexibly expanded its service delivery functions in response to increasingly complex societal demands. In this context, government-commissioned projects represent an overlapping policy domain that must simultaneously achieve two core objectives: the government’s ultimate accountability for project outcomes and the operational efficiency of public institutions.
   Against this backdrop, this report provides an overall review of government-commissioned projects implemented by public institutions, with a particular emphasis on commission fees, which serve as a key institutional component of the delegation framework. The analysis focuses on three areas: the contractual arrangements governing project commissions and fees, the scale and rates of the fees received by individual institutions, and the fee structures in projects re-delegated to third-party institutions.
   First, with respect to contractual arrangements, the analysis identified cases in which some institutions either failed to conclude formal contracts during project implementation or, where contracts existed, did not clearly specify project expenditures and commission fee amounts. Among the 141 public institutions examined, 53 institutions (37.6%) either operated without formal agreements or omitted project expenditures from their contracts, while 16 institutions (11.3%) did not explicitly stipulate a contractual basis for receiving fees.
   These findings suggest that, despite the public nature of government-commissioned projects, contractual arrangements have not sufficiently clarified the rights and obligations of the contracting parties, nor adequately specified the cost-allocation structures. Accordingly, it is necessary to strengthen contractual governance by reviewing both the execution and substantive adequacy of these agreements, ensuring that key elements, including project expenditures and commission fees, are explicitly reflected in the documents.
   Second, regarding commission fee determination, the analysis revealed substantial variation across institutions in the fee rates received as compensation for project implementation. This discrepancy appears to reflect the absence of detailed and consistent determination standards, notwithstanding that these fees are intended to offset administrative costs and accountability burdens.
   In particular, 47 public institutions were found to rely solely on the upper-limit provisions prescribed under the Enforcement Rule of the Act on Contracts to Which the State Is a Party, without establishing separate criteria for determining these fees. The Enforcement Rule sets ceilings for general administrative expenses ranging from 5% to 11%, depending on the project type. However, these provisions merely establish caps and cannot be regarded as granular calculation standards that reflect project-specific characteristics or institutional workloads. Moreover, even where fee determination criteria existed, only a limited number of cases comprehensively weighed factors such as project scale, institutional roles, actual work scope, re-commission status, and the extent of management and oversight responsibilities. Accordingly, the government should clarify the criteria and procedures governing fee determination and establish a more sophisticated calculation framework capable of reflecting both project characteristics and institutional workload.
   Finally, for re-delegation arrangements, the analysis identified cases in which institutions continued to receive relatively high fee rates despite delegating actual project execution to another entity and assuming primarily management and oversight functions.
   Under this re-delegation structure, both the primary trustee (the public institution directly commissioned by the government) and the secondary trustee (the third-party organization responsible for actual project implementation) receive commission fees. Where the primary trustee receives relatively high fees despite limited direct involvement in project execution, the share of the direct project budget allocated to end-beneficiaries may decline. Such outcomes are undesirable from the standpoint of both efficient project implementation and the optimal allocation of public expenditures.
   Currently, no differentiated standards exist to regulate the fees received by primary trustees in cases involving re-delegation. Therefore, institutional reforms are needed to rationalize fee allocation between primary and secondary institutions to address these multi-layered arrangements and ensure that fees correspond to the actual workload and accountability borne by public institutions.
   In the longer term, these efforts would contribute to improving the transparency and rationality of contractual and cost-calculation frameworks for government-commissioned projects, while also ensuring a balance between the operational efficiency of public institutions and governmental accountability.