[Software] Legal advisory services regarding government software procurement projects and subcontracting restrictions for large corporations.

Law firm Veat conducted a legal review regarding the scope of participation and restrictions on subcontractors for software bids by government agencies, taking on a request from a major IT company affiliated with a large corporation.

Law firm Veat reviewed the “Software Promotion Act” and, in principle, large software companies are restricted from participating in software bids by government agencies to protect small and medium-sized software companies, but in some cases, participation is possible. Therefore, we carefully reviewed the case to determine if the client company, a major IT company affiliated with a large corporation, could participate.

We analyzed the case to determine whether it falls under subcontracting/sub-subcontracting/sub-sub-subcontracting, and advised on whether participation is possible in that structure.

Article 51 of the “Software Promotion Act” stipulates that when a software company enters into a contract with a government agency, it cannot subcontract more than 50% of the software business amount, excluding the purchase price of goods (including commercial software), but an exception exists for businesses that require new technologies or specialized technologies as defined in a presidential decree and where the amount needed for the business exceeds 50% of the software business amount, excluding the purchase price of goods, it can subcontract the entire software business to that extent.

Although the software company receiving subcontracting cannot generally sub-subcontract the business, it can do so again if it requires new technologies or specialized technologies as defined in a presidential decree and for other reasons necessary to perform the subcontracted business.

However, the software company receiving sub-subcontracting cannot sub-subcontract the business again. (Article 51(4) of the “Software Promotion Act”).

Since the “Software Promotion Act” clearly defines standards, it is necessary to carefully examine whether the business we support meets the structural standards defined in the “Software Promotion Act”.

If a clear legal review is needed to determine whether the business we support falls under subcontracting/sub-subcontracting/sub-sub-subcontracting and is possible to participate in that structure, we recommend receiving detailed review from a law firm with extensive experience in corporate legal advisory services.

Law firm Veat provides legal advisory services by incorporating Veat’s accumulated experience in advising numerous companies, and we are grateful that many companies regularly request legal advisory services.

If you desire Veat’s specialized corporate legal advisory services, please contact Law firm Veat as follows.

Thank you.

Law firm Veat