Gyeonggi-do, Unfair Subcontracting Practices in Public Construction Projects 'Still Ongoing'

[Asia Economy (Suwon) = Reporter Lee Young-gyu] #1 Company ㄱ, a major construction firm that won a 33 billion KRW contract for the construction of the A sewage treatment facility commissioned by Pyeongtaek City, Gyeonggi Province, set a special clause in the subcontract agreement stipulating that all costs arising from complaints must be borne by the 'subcontractor.'

#2 Another major construction company, ㄴ, included a special clause in the subcontract agreement for the 11.6 billion KRW B facility construction project commissioned by Gwangju City, preventing the 'subcontractor' from demanding additional costs due to inflation or expedited construction (work that concentrates equipment and personnel to finish early).

Unfair subcontracting practices continue to be rampant in public construction projects commissioned within Gyeonggi Province.

Gyeonggi Province announced on the 22nd that a special audit conducted last month on 196 public construction projects commissioned by the province, cities, counties, and public institutions since July 2018 uncovered a total of 297 cases of unfair subcontracting practices.

The audit results confirmed that despite efforts to improve unfair practices in the construction sector, abusive behaviors based on distorted forms of unfair special clauses, such as in site explanation documents, persist.

Representative cases include ▲ imposing unfair special clauses that shift costs related to complaint handling and industrial accidents, which should be borne by the contractor, onto the subcontractor (26 cases) ▲ agreeing on delay penalty rates higher than the legal standard (137 cases) ▲ agreeing on warranty periods and defect repair guarantee rates exceeding legal standards (134 cases).

The province attributes these issues to public contracting officials’ failure to thoroughly review subcontract agreements submitted by major construction companies and plans to hold construction supervisors and others responsible for neglecting subcontract agreement review duties.

Additionally, improvement measures will be taken against unfair subcontracting practices identified through the audit.

Kim Jin-hyo, the province’s Chief Auditor, stated, "We hope this special audit provides some support to small subcontractors struggling due to COVID-19," adding, "We will continue to conduct regular audits on unfair subcontracting practices to protect socially vulnerable parties."

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