Board of Audit and Inspection: "Public Procurement Service's Management of Bid Rigging Damage Lawsuits Inappropriate"

Board of Audit and Inspection Points Out Issues with Statute of Limitations Application in Public Institutions by Public Procurement Service... Also Highlights Problems with Outsourcing Administrative Tasks to Private Sector

[Asia Economy Reporter Ryu Jeong-min] The Board of Audit and Inspection has revealed issues in the management of damage compensation lawsuits related to bid rigging by the Public Procurement Service (PPS).

The Board of Audit and Inspection disclosed the results of a regular audit on the PPS on the 23rd. This audit was conducted over 12 days from September 10 to 25 last year.

According to the Board of Audit and Inspection, when bid rigging occurs in public contracts, the PPS receives a decision letter on bid rigging from the Fair Trade Commission and handles follow-up measures such as filing damage compensation lawsuits against the colluding companies.

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The National Finance Act states that the state's (including local governments') rights to 'monetary benefits' expire after five years of non-exercise due to the statute of limitations. The Civil Act stipulates that damage compensation claims expire after ten years from the date of the illegal act. The Board of Audit and Inspection judged that public institutions should apply the statute of limitations under the Civil Act.

The Board of Audit and Inspection pointed out, "The PPS did not apply different statutes of limitations according to the nature of the demand institutions, resulting in cases where the Fair Trade Commission's decision letter was not notified to the relevant institutions on the grounds that five years had passed since the illegal act, despite being public institutions."

Furthermore, the Board of Audit and Inspection criticized the PPS for establishing a work processing standard that initiates lawsuits directly when the PPS's standing as plaintiff is recognized, without preparing measures to jointly conduct lawsuits. This standard was described as unrealistic.

The Board of Audit and Inspection stated, "We notified the Administrator of the PPS to manage the statute of limitations separately according to the nature of the demand institutions and, in cases where multiple demand institutions are involved in bid rigging and need to jointly file lawsuits, to guide and coordinate each demand institution to improve the efficiency of litigation administration and contribute to eradicating bid rigging."

Meanwhile, the Board of Audit and Inspection said, "When the PPS entrusts some tasks to the private sector, it is desirable to specifically stipulate necessary matters for the proper handling of entrusted private tasks, such as the entrustment fee (cost) and the responsibilities of the entrusted institution, through public notices or contracts." However, it pointed out that the PPS arbitrarily designated the ○○ Association as the entrusted institution for related tasks such as designating excellent procurement products without legal grounds.

The Board of Audit and Inspection added, "We notified the Administrator of the PPS to prepare measures to specifically stipulate, through public notices or contracts under the Procurement Business Act, necessary matters for entrustment such as work processing standards and procedures, entrustment fees, and obligations of the entrusted institution related to the tasks entrusted to the ○○ Association."

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