Increase in Restriction Period for Public Bidding Participation if Serious Accidents Occur... Construction Companies Anxious

[Financial News] The government plans to strictly restrict public bidding participation for companies where serious accidents occur. The plan is to extend the maximum two-year restriction period for bidding participation eligibility for companies in case of serious accidents under the National Contract Act. Construction companies, which are highly dependent on public works such as social overhead capital (SOC), are anxious.
 Im Gi-geun, the second vice minister of the Ministry of Strategy and Finance, held the third Procurement Policy Review Committee at the Kensington Hotel in Yeouido, Seoul, on the 20th. They reviewed and decided on measures to improve the national contract system and the public procurement innovation ecosystem. This is to ensure that the public sector plays a leading role in eradicating disasters in a situation where serious accidents are occurring in succession, while also allowing technology-based innovative companies such as artificial intelligence (AI) to quickly enter the procurement market.
 The Ministry of Strategy and Finance plans to prepare measures to strictly restrict public bidding participation for companies where serious accidents occur. Currently, the restriction on public bidding participation eligibility is imposed when two or more workers die simultaneously under the Industrial Safety and Health Act. If the number of workers who died simultaneously is between 2 and 6, a one-year contract sanction is imposed; if it is between 6 and 10, a one-year and six-month sanction is imposed; and if it is 10 or more, a two-year sanction is imposed. All are based solely on the number of deaths that occurred simultaneously in a single accident.
 The Ministry of Strategy and Finance plans to strengthen the criteria by expanding it to cases where a large number of 'annual deaths' occur. Additionally, they plan to promote the expansion of the restriction period and the strengthening of aggravated punishment in case of repeated accidents. However, changes in the specific level of sanctions require consultation with related ministries. They also plan to establish a legal basis to ensure that the effect of sanctions is succeeded to prevent evasion of sanctions through corporate division or name change regarding the restriction on bidding participation eligibility.
 A representative from the Ministry of Strategy and Finance said, "Although the Ministry of Strategy and Finance can independently change the National Contract Act, it is linked with the Industrial Safety and Health Act, which includes criteria for serious accidents, so discussions with the Ministry of Land, Infrastructure and Transport and the Ministry of Employment and Labor are necessary," adding, "We are aiming to make it strong enough to expel from the market to eradicate serious accidents." They continued, "The authority to restrict bidding participation eligibility lies with the head of the central agency, but it is not decided independently; it is decided and disposed of by the Contract Review Committee. In this process, they are expected to hear from companies about the reasons for consideration."
 The strengthening of bidding restrictions in public contracts by the Ministry of Strategy and Finance is interpreted as part of President Lee Jae-myung's remarks. Earlier, the president instructed at the cabinet meeting on the 12th, "Large construction companies have repeatedly caused serious accidents but have not been properly punished," and "Review strong sanctions such as permanent disqualification from bidding and imposition of fines." This was in response to the fact that four people have died from industrial accidents at the POSCO E&C construction site alone this year.
 Meanwhile, the government plans to immediately start improving the system after holding this Procurement Policy Review Committee and complete the revision of contract laws and regulations by November this year. The legal amendment is aimed at passing within this regular session of the National Assembly. Vice Minister Im said, "Through this improvement plan, we will simultaneously promote the strengthening of the safety management system in the contract process, support for corporate safety investment, and strong and effective sanctions against companies with serious accidents. Through this, we will establish safety as a core element of corporate competitiveness and ensure that companies insensitive to safety are expelled from the public bidding market."


junjun@fnnews.com Choi Yong-jun Reporter