Overheating in Winning Bids for Hannam 3 District Shows Signs of 'Rehash'

Resumption of 7 Trillion Won Hannam 3 District Project Bidding... Still Walking the Line Between Legal and Illegal
"Some Construction Companies Allegedly Contacted Union Members Prohibited by Law"
Ministry of Land and Seoul City, Previously Reported to Prosecutors, Remain Passive
Calls for Guidelines and Fairness Pledge Measures

[Asia Economy Reporter Lim On-yu] The selection of the construction company for the redevelopment of Hannam 3 District in Yongsan-gu, Seoul, which has gone through many twists and turns, is now gaining momentum again. However, there are claims that some construction companies are engaging in individual contact with union members, which is prohibited by law, signaling signs that the bidding war may once again become overheated. In particular, the Ministry of Land, Infrastructure and Transport (MOLIT) and the Seoul Metropolitan Government, which had even reported the bidding participants to the prosecution, are reportedly not planning any administrative guidance or on-site inspections to prevent overheating, drawing criticism.

According to the urban maintenance industry on the 11th, the Hannam 3 District redevelopment union held an on-site briefing session for construction company bidding yesterday at Dokseodang-ro 5-gil, Yongsan-gu, Seoul. The briefing session is a stage where bidding guidelines are explained to construction companies wishing to participate and letters of intent are collected. The union had proceeded with the bidding last year with the participation of GS Construction, Hyundai Construction, and Daelim Industrial, but the process was halted after MOLIT and the Seoul Metropolitan Government raised issues about illegal activities by the three companies and requested an investigation by the prosecution. After the prosecution decided not to indict the three companies, the union has started preparing for a re-bid. As expected, the three companies that competed in last year’s bidding participated again in the briefing session.

Due to the previous prosecution report incident, the atmosphere on site was calm. The union also emphasized fair competition to the construction companies. A union official said, "Since this is a re-bid, we have revised some of the bidding guidelines considering the points raised by MOLIT and the Seoul Metropolitan Government," adding, "We will not accept innovative designs." Although the official refrained from specifying the changes, it is highly likely that they relate to last year’s issues involving violations of the Urban Residential Environment Maintenance Act (interest-free support for project costs), bid interference (guaranteeing sale prices), and violations of the Fair Labeling and Advertising Act (leasing before sale). A representative from one of the construction companies attending the briefing also said, "The union requested us to keep in mind the points raised by MOLIT and the Seoul Metropolitan Government and to compete fairly," adding, "The guidelines have not changed significantly compared to the first round." He further stated, "If we violate the union’s guidelines, we may be excluded from the bidding and it could affect future permits from the Seoul Metropolitan Government, so we will compete fairly."

However, industry insiders observe that signs of overheated competition are already emerging behind the scenes. Hannam 3 District is a large-scale redevelopment project on a 380,000㎡ site, where 5,816 new apartment units will be built, with the total project cost estimated to reach 7 trillion won. Especially since the outcome of this bidding could influence the bidding battles for Hannam 2, 4, and 5 Districts in the future, construction companies are walking a fine line between legal and illegal by attempting individual contact with union members, which is prohibited by law. According to Article 38 of the Maintenance Project Contract Handling Standards, construction companies are prohibited from individual promotion or offering money to union members regarding the selection of construction companies. A representative from a construction company claimed, "We want to compete according to the law, but realistically it is impossible to do so alone," adding, "It has been confirmed that other companies have already started individual contact with union members."

The bigger problem is that MOLIT and the Seoul Metropolitan Government, which should be encouraging fair competition, are just standing by. A MOLIT official said, "There are no plans yet for on-site investigations or guideline presentations regarding Hannam 3 District."

Because of this, the industry points out that MOLIT and the city government need to establish institutional measures such as clearly presenting guidelines to prevent overheated competition, requiring fair competition pledges, and operating reporting centers. An official from the maintenance industry said, "There are limits to self-regulation, and if competitors monitor each other, there is a risk of illegal activities," adding, "Public institutions should not just rely on post-incident prosecution but take preemptive measures to prevent illegal competition."

This content was produced with the assistance of AI translation services.