‘Strict action’ against unfair procurement practices: Public Procurement Service to recover 8.7 billion won from 34 firms over collusion and specification violations

[Financial News] A large number of companies that undermined order in the public procurement market through unfair practices, including colluding in advance on bid prices and violating contract specifications, have been caught.
The Public Procurement Service said it had decided to request that Merger Review file a complaint against one company and recover a total of 8.7 billion won in unjust gains from 34 companies caught engaging in unfair procurement practices, including bid-rigging and violations of direct-production standards and specifications.
The one company targeted by the request to Merger Review to file a complaint was found to have improperly restricted competition by agreeing in advance on bid prices and price ranges during a tender for an underwater survey service commissioned by the Korea Authority of Land & Infrastructure Safety. Taking into account the severity, duration and nature of the collusion, the Public Procurement Service determined that severe punishment was warranted.
The 34 companies subject to recovery of unjust gains were found to have violated direct-production standards, contract specifications or their obligation to maintain preferential prices across 22 product categories, including permeable concrete and air circulators. The Public Procurement Service has already restricted these companies’ eligibility to participate in bidding and decided, as a follow-up measure, to recover in full the 8.7 billion won in unjust gains they illegally obtained.
Kim Ji-uk, Director General of the Digital Fair Procurement Bureau at the Public Procurement Service, said, “We will respond firmly to unfair practices such as collusion and specification violations,” adding, “We will mobilize all legal and administrative measures, including the recovery of unjust gains and filing complaints, to create a fair and transparent procurement environment that the public can trust.”
Meanwhile, the measure follows concerns that, as the public procurement market grows each year, unfair practices by some underperforming companies and companies using improper methods are directly linked to waste of public funds. In particular, violations of direct-production standards and deliveries of products that fail to meet contract specifications have not only directly threatened the safety and quality of public facilities, but have also created a vicious cycle by depriving conscientious small and medium-sized businesses—which follow the law and established principles and produce their goods honestly—of opportunities to win contracts.
[email protected] Kim Won-jun Reporter