Will Defense Industry Corruption Veterans Organizations Regain Soldier Uniform Guarantees?

[Asia Economy Reporter Yang Nak-gyu] There are concerns that a veterans' organization, previously embroiled in controversies over forged documents and unfair profits, could be implicated in defense industry corruption again. Since 2015, the Defense Acquisition Program Administration (DAPA) has shifted the procurement contracts of problematic veterans' organizations from sole-source contracts to competitive bidding. However, as DAPA transfers this responsibility to the Public Procurement Service (PPS), there are worries that the contracts might revert to sole-source agreements.

According to DAPA on the 29th, the procurement of general military supplies such as meals, clothing, and aviation fuel will be transferred from DAPA to PPS starting in July. The transfer includes approximately 3,000 items, including military meal supplies, clothing, equipment, and aviation fuel, with contracts valued at about 1.4 trillion KRW based on 2019 figures.

Since 2015, DAPA has converted the procurement method for clothing items to competitive contracts due to concerns over defense industry corruption arising from sole-source contracts with veterans' organizations that supplied clothing.

However, even after switching to competitive contracts, some veterans' organizations maintained sole-source contracts. These organizations were imposed with over 17 billion KRW in government fund recoveries but refused repayment, citing lack of funds. To recover the funds, DAPA signed 'performance delay special agreements' with these veterans' organizations, agreeing to recover the payment through government funds while allowing them to maintain military supply contracts until 2017. Ultimately, these veterans' organizations were guaranteed military supply contracts until 2017.

Contracts with veterans' organizations designated as fraudulent companies also continued. Once designated as a fraudulent company, an entity is barred from participating in government bids for a certain period. However, some veterans' organizations, despite being restricted from bidding, managed to secure contracts again. For example, in 2014, the bidding suspension period was six months for Hwarang Veterans Village, and twelve months for Busan Volunteer Village, Peace Veterans Village, Comrades, Widows and Orphans Welfare Association, Vietnam War Veterans Association, and Distinguished Veterans Village.

Subsequently, defense industry corruption issues surfaced. In 2017, the Seoul Central District Prosecutors' Office Defense Acquisition Investigation Division conducted a search and seizure at the office of a DAPA official located in the Government Complex Gwacheon and other contract-related departments. The prosecutors seized mobile phones, PCs, documents, and other work-related materials from the procurement team offices, which were responsible for clothing-related tasks such as sportswear.

Earlier, prosecutors uncovered evidence that a local military uniform manufacturer used the name of a disabled persons' organization to supply military uniforms through sole-source contracts instead of competitive bidding and bribed DAPA officials. The related companies were raided, and those involved were arrested.

DAPA stated that for two years after the transfer, procurement contracts will be conducted under DAPA’s procurement regulations or those applied by analogy. However, concerns remain that after two years, contracts may revert to sole-source agreements, and some voices suggest that DAPA is trying to shift the responsibility to PPS. In response, DAPA explained that the transfer of general supplies procurement is a core project of 'Defense Reform 2.0' and that the final agreement on the transfer was reached after continuous consultations with the Ministry of National Defense and other related agencies.

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