diff --git a/services/core/java/com/android/server/pm/ScanPackageUtils.java b/services/core/java/com/android/server/pm/ScanPackageUtils.java
index 0dc188b75d5e9..46f0dbcdfe10d 100644
--- a/services/core/java/com/android/server/pm/ScanPackageUtils.java
+++ b/services/core/java/com/android/server/pm/ScanPackageUtils.java
@@ -427,8 +427,7 @@ final class ScanPackageUtils {
         pkgSetting.setLastModifiedTime(scanFileTime);
         // TODO(b/135203078): Remove, move to constructor
         pkgSetting.setPkg(parsedPackage)
-                .setFlags(PackageInfoUtils.appInfoFlags(parsedPackage, pkgSetting))
-                .setPrivateFlags(
+                .setPkgFlags(PackageInfoUtils.appInfoFlags(parsedPackage, pkgSetting),
                         PackageInfoUtils.appInfoPrivateFlags(parsedPackage, pkgSetting));
         if (parsedPackage.getLongVersionCode() != pkgSetting.getVersionCode()) {
             pkgSetting.setLongVersionCode(parsedPackage.getLongVersionCode());
diff --git a/services/core/java/com/android/server/pm/SettingBase.java b/services/core/java/com/android/server/pm/SettingBase.java
index b952f80850bbc..61a251e19db79 100644
--- a/services/core/java/com/android/server/pm/SettingBase.java
+++ b/services/core/java/com/android/server/pm/SettingBase.java
@@ -146,6 +146,17 @@ public abstract class SettingBase implements Watchable, Snappable {
         return this;
     }
 
+    /**
+     * Unconditionally set both mPkgFlags and mPkgPrivateFlags.
+     * Should not be used outside pkgSetting initialization or update.
+     */
+    SettingBase setPkgFlags(int flags, int privateFlags) {
+        this.mPkgFlags = flags;
+        this.mPkgPrivateFlags = privateFlags;
+        onChanged();
+        return this;
+    }
+
     public int getFlags() {
         return mPkgFlags;
     }
diff --git a/services/core/java/com/android/server/pm/Settings.java b/services/core/java/com/android/server/pm/Settings.java
index 6400502f1a89d..7437b145189f4 100644
--- a/services/core/java/com/android/server/pm/Settings.java
+++ b/services/core/java/com/android/server/pm/Settings.java
@@ -987,8 +987,7 @@ public final class Settings implements Watchable, Snappable {
                     // Update new package state.
                     .setLastModifiedTime(codePath.lastModified())
                     .setDomainSetId(domainSetId);
-            pkgSetting.setFlags(pkgFlags)
-                    .setPrivateFlags(pkgPrivateFlags);
+            pkgSetting.setPkgFlags(pkgFlags, pkgPrivateFlags);
         } else {
             pkgSetting = new PackageSetting(pkgName, realPkgName, codePath,
                     legacyNativeLibraryPath, primaryCpuAbi, secondaryCpuAbi,
@@ -1175,15 +1174,15 @@ public final class Settings implements Watchable, Snappable {
                     .setUsesStaticLibrariesVersions(null);
         }
 
-        // These two flags are preserved from the existing PackageSetting. Copied from prior code,
-        // unclear if this is actually necessary.
-        boolean wasExternalStorage = (pkgSetting.getFlags()
-                & ApplicationInfo.FLAG_EXTERNAL_STORAGE) != 0;
-        if (wasExternalStorage) {
-            pkgFlags |= ApplicationInfo.FLAG_EXTERNAL_STORAGE;
-        } else {
-            pkgFlags &= ~ApplicationInfo.FLAG_EXTERNAL_STORAGE;
-        }
+        // If what we are scanning is a system (and possibly privileged) package,
+        // then make it so, regardless of whether it was previously installed only
+        // in the data partition. Reset first.
+        int newPkgFlags = pkgSetting.getFlags();
+        newPkgFlags &= ~ApplicationInfo.FLAG_SYSTEM;
+        newPkgFlags |= pkgFlags & ApplicationInfo.FLAG_SYSTEM;
+        // Only set pkgFlags.
+        pkgSetting.setPkgFlags(newPkgFlags, pkgSetting.getPrivateFlags());
+
         boolean wasRequiredForSystemUser = (pkgSetting.getPrivateFlags()
                 & ApplicationInfo.PRIVATE_FLAG_REQUIRED_FOR_SYSTEM_USER) != 0;
         if (wasRequiredForSystemUser) {
@@ -1191,9 +1190,7 @@ public final class Settings implements Watchable, Snappable {
         } else {
             pkgPrivateFlags &= ~ApplicationInfo.PRIVATE_FLAG_REQUIRED_FOR_SYSTEM_USER;
         }
-
-        pkgSetting.setFlags(pkgFlags)
-                .setPrivateFlags(pkgPrivateFlags);
+        pkgSetting.setPrivateFlags(pkgPrivateFlags);
     }
 
     /**