'Blocking Fake Construction Company Bids'... Gyeonggi-do Expands 'Pre-Inspection' of Public Bids

Expansion of Crackdown Targets and Investigation Period for 'Paper Company'

[Image source=Yonhap News]

[Asia Economy Reporter La Young-cheol] Gyeonggi Province will expand the scope and timing of the 'Preemptive Crackdown on Paper Companies in Public Construction Bidding,' which blocks fake construction companies (paper companies) from the bidding stage, starting this year.

According to the province on the 15th, the 'preemptive crackdown' is a system that investigates the top 1 to 3 companies in the qualification review among bidders for construction projects ordered by the province to verify whether they meet the registration criteria under the 'Framework Act on the Construction Industry.'

Previously, this applied only to region-restricted competitive bids between 100 million KRW and less than 1 billion KRW, but from bidding announcements made after this date, it will apply to all competitive bids over 100 million KRW.

As a result, construction companies from other cities and provinces participating in specialized construction projects over 1 billion KRW or general construction projects over 10 billion KRW will also be subject to the preemptive crackdown without exception.

The investigation period has also been extended from only before the contract award to after the contract. The policy aims to prevent companies that have contracted through the preemptive crackdown from gaining unfair profits through illegal subcontracting or lending of construction licenses, which are unfair trade practices.

If a company is found to be below the construction business registration standards or involved in unfair trade practices after the contract, additional measures such as administrative sanctions, contract termination, and prosecution will be taken according to relevant laws.

Fake construction companies caught will be required to pay a bid deposit amounting to 10% of the bid amount, in addition to administrative sanctions, judicial actions, and exclusion from bidding. By the end of last year, the province issued notices for bid deposit payments totaling 368 million KRW across 31 cases.

The province posted the 'Preemptive Crackdown Consent Form' on its website and attached it to bidding announcements so that participants are informed of the content before submitting bids.

The province also plans to provide rewards of up to 200 million KRW to whistleblowers reporting fake construction companies.

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