[Exclusive] Competitive Bidding Without Competition: A 5.3 Trillion-Won Sole-Source Contract Market

[Financial News] "Competitive bidding without competition" is recurring in public procurement. Although tenders are opened to compare prices and technology among multiple companies, contracts worth more than 5 trillion won have ultimately been converted to sole-source deals after only one company submitted a bid or after reannouncements and other procedures. The cases span a wide range of fields, from lunar landers and college admissions computer networks to location-tracking electronic devices.
An analysis by Financial News of all data submitted by the Public Procurement Service (PPS) to the office of Jung Tae-ho of the Democratic Party of Korea on the 23rd found that 1,559 contracts worth 5.3099 trillion won had either received bids from only one company or been converted to sole-source contracts after reannouncements and other procedures. The contracts were among the top 100 agency-company combinations by cumulative contract value, involving sole-source contracts signed at least five times a year between the same requesting agency and company from 2022 through August this year.
There were 943 cases worth 1.8724 trillion won in which competitive bidding was held but the contract was converted to a sole-source deal because only one company submitted a bid. Another 616 cases, worth 3.4375 trillion won, were converted to sole-source contracts after reannounced tenders and other procedures.
Large-scale projects were no exception. Last year, the Korea Aerospace Research Institute (KARI) signed a 103.3 billion-won contract with Hanwha Aerospace for the "Development, Assembly and Testing of Components for the Lunar Lander Propulsion System." Although the project was put out for competitive bidding, it was converted to a sole-source contract after only one company participated. The problem is that such "lone-bid competition" has not been limited to one-off cases.
Over the past five years, the Korean Council for University Education (KCUE) has signed 18 sole-source contracts worth 34 billion won with Foxsoft. Competitive bidding was held for projects to build and maintain the Comprehensive Support System for University Admissions and the Integrated University Information Disclosure System, but the process repeatedly ended in sole-source contracts after only one company participated.
The Ministry of Justice's Central Location-Tracking Control Center also signed 19 sole-source contracts worth 36.7 billion won with Melper. A 2026 maintenance project for location-tracking electronic devices, valued at 4.19 billion won, drew only one bidder in the competitive tender. Projects to manufacture smartwatch monitoring devices and location-tracking electronic devices were converted to sole-source contracts after reannounced tenders and other procedures.
The National Election Commission (NEC) signed 19 sole-source contracts worth 33.9 billion won with Miru Systems. In particular, its 2023 project to manufacture Early Voting Operation Equipment, valued at 32.1 billion won, resulted in a sole-source contract after reannounced tenders and other procedures. Technical support and inspections for the related equipment, as well as contracts for consumables, subsequently continued with the same company.
Jung Tae-ho said, "Although the value of public procurement lies in transparency and efficiency, the current competitive bidding structure is not fully serving its original purpose. We need to examine whether bidding conditions are skewed in favor of a particular company or whether specific specifications are preventing new competitors from entering the market."
[email protected] Kim Kyung-min Reporter