Gyeonggi-do, What Are the Results of the 'Preemptive Crackdown on Fake Construction Companies in Public Bidding'?

Survey of 569 Companies, Disposition of 167 Companies... Average Bid Competition Rate Decreases by 24%

[Asia Economy Reporter La Young-cheol] Gyeonggi Province has implemented the ‘Public Construction Bidding Paper Company Pre-Inspection System’ since 2019 to preemptively block fake construction companies (paper companies), which are the root causes of license lending and illegal subcontracting in the construction industry. As a result, the average competition rate for construction bids has decreased by 24%.

According to the province on the 31st, as of the end of April this year, 569 construction companies that applied for 344 construction bids were pre-inspected, resulting in the detection of 167 companies, of which 148 were administratively sanctioned with business suspension or other penalties.

Additionally, since last year, pre-inspections have also been conducted in cities and counties within the province. By the end of last month, 29 cities and counties investigated 797 companies, detected 66 companies, and administratively sanctioned 42 of them.

Due to these pre-inspections, construction companies that do not meet registration standards have refrained from participating in bids, causing the average competition rate for public sector construction projects from January to April this year to drop to 387:1, a 24% decrease compared to the average competition rate of 512:1 during the same period in 2019 before the system was implemented.

In particular, since March, construction companies from other provinces and cities participating in specialized construction projects over 1 billion KRW or general construction projects over 10 billion KRW have also been included without exception in the pre-inspection targets. Consequently, the average competition rate for projects exceeding 1 billion KRW in April this year decreased by 14% to 168:1 compared to 198:1 during the same period last year.

Building on these achievements, the province plans to continuously propose to the government and the National Assembly the expansion of local governments’ authority to investigate construction companies and national support for related labor costs in 2022.

Alongside this, the province intends to take strong measures such as filing complaints against fake construction companies for bid interference.

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