[Exclusive] Gyeonggi Education Office’s On-Campus Network Upgrade Project Stalled Amid ‘Preferential Treatment for Large Corporations, Budget Waste’ Controversy

Bidding Process Halted in September After Injunction Filed
Gyeonggi Provincial Office of Education Requests Procurement Office to Resume Evaluation After Media Investigation Begins
Exception to SME Competitive Bidding Requirement Through Arbitrary I

The Gyeonggi Provincial Office of Education (Superintendent Taehee Lim) has confirmed that its multi-hundred-billion-won project to upgrade wired and wireless networks in elementary, middle, and high schools has been stalled for two months due to an injunction request to halt the bidding process. As this newspaper began its investigation, the Gyeonggi Provincial Office of Education urgently requested the relevant procurement office to proceed with the evaluation schedule, which had been postponed due to the lawsuit.

This project, which has faced controversy over preferential treatment for large corporations since the ordering stage, has also drawn criticism for wasting budget due to the adoption of a specific technology, as well as allegations of "favoritism" toward a company run by a former official from the Gyeonggi Provincial Office of Education.

Gyeonggi Provincial Office of Education building. Gyeonggi Provincial Office of Education

According to the legal community on November 20, several wired and wireless communication equipment manufacturers and information communication construction companies that were unable to participate in the bidding for the "2025 First School Wired and Wireless Network Improvement Project (Equipment)," announced by the Gyeonggi Provincial Office of Education through the Incheon Regional Public Procurement Service on September 12, filed an injunction with the Seoul Central District Court on September 24 to "prohibit the continuation of the bidding process" against the Republic of Korea.

After the injunction request was filed, the Incheon Regional Public Procurement Service issued a correction notice and informed the large corporate bidders that "the evaluation schedule will be postponed indefinitely due to ongoing litigation."

On November 18, an official from the Incheon Regional Public Procurement Service stated, "The evaluation schedule was postponed because of the ongoing lawsuit, not because the bidding process itself was halted," and added, "Once the court's decision is made, we will proceed with the subsequent procedures in accordance with regulations."

Although a hearing was held on October 1, no decision has been made for over a month since then, leaving the bidding process suspended for nearly two months. However, as this newspaper began investigating the issues surrounding the project, it was confirmed that the Gyeonggi Provincial Office of Education requested the Incheon Regional Public Procurement Service to expedite the process, even though the court's decision on the injunction had not yet been issued.

On that day, an official from the Incheon Regional Public Procurement Service said, "Recently, the Gyeonggi Provincial Office of Education, which requested the procurement, asked us to expedite the process, citing reasons such as the need to execute the project budget and the fact that construction must take place during school vacations to avoid disrupting classes," and added, "If we proceed with the bidding and the court grants the injunction, it could create a complicated situation. Although it would be ideal to wait for the court's decision and proceed accordingly, since the Gyeonggi Provincial Office of Education made the request and our internal legal review concluded that there would be no issue in proceeding while the injunction is still pending, we plan to move forward with the process soon."

Legal and industry experts argue that it is unreasonable to push ahead with the bidding process before the court has ruled on whether it can continue. In particular, at the October 1 hearing, the presiding judge reportedly asked the Incheon Regional Public Procurement Service whether they could halt the process until the injunction decision was issued, and the agency responded that they would do so, according to an industry official present at the time.

Exception to Competitive Bidding Among Small Businesses... Controversy Over Preferential Treatment for Large Corporations

The Gyeonggi Provincial Office of Education is pursuing this project to improve outdated wired network infrastructure in schools, taking into account the expansion of the Artificial Intelligence Digital Textbook (AIDT) service, which was recently downgraded to educational material.

Last year, a 17.5 billion won equipment installation project was carried out at 114 schools, and this year, a 53.6 billion won project is underway at 296 schools to remove old cables and build a 10G-speed network infrastructure. The project targets 2,300 schools in Gyeonggi Province, and when including the costs for design, construction, and supervision in addition to equipment purchases, the total budget is expected to reach several hundred billion won.

KT Bangbae Building. Photo by Yonhap News

The core of this project is the installation of a new "optical multiplexer" in each classroom to transmit video and data signals to the central hub. The issue is that, although the optical multiplexer is classified as a "competitive product among small businesses" under the "Act on the Promotion of Purchases of Small and Medium Enterprise-Manufactured Products and Support for Market Expansion" (Market Support Act), which requires competitive bidding among small businesses, the Gyeonggi Provincial Office of Education cited an exception and issued the order through a "negotiated contract" that allows large corporations to participate. In fact, a consortium including KT won the project last year.

At the time, the Gyeonggi Provincial Office of Education cited Article 7, Paragraph 1, Item 4 of the Enforcement Decree of the Market Support Act, which allows exceptions when "specific technology or services are required," as the reason for not holding a competitive bid among small businesses. Specifically, they explained that: ▲ This project is not a simple initial supply and installation for new schools, but involves integrating new equipment such as SchoolNet devices and optical receivers, ensuring uninterrupted wired and wireless internet service during the academic year; and ▲ It requires the safe removal of outdated ICT equipment and ongoing collaboration with existing wireless network, SchoolNet, and 10G internet service providers for seven years after installation to continuously improve internet quality in schools.

However, many industry insiders find this explanation unconvincing. They point out that optical multiplexers have always been produced by small businesses and do not require any special technology, and that small businesses are fully capable of maintenance and support. There are suspicions that the exception was arbitrarily applied to favor large corporations.

The companies that filed the injunction stated in their application, "If you compare the bidding qualifications for this project and for the direct purchase of optical multiplexer equipment for school remodeling, you will see that the same technology and services are required for both new school network construction and the improvement of outdated networks."

They further argued, "The Gyeonggi Provincial Office of Education claimed that special technology or services were required for after-sales support, but in the first phase of this project in 2024, KT's project implementation plan showed that the personnel responsible for construction and defect repair belonged to small businesses, not large corporations. Therefore, the claim that small businesses lack after-sales support capabilities and that large corporations are necessary is false."

They added, "By using a 'negotiated contract,' where technical evaluation scores are decisive, instead of an open bid that prioritizes price competitiveness once eligibility is met, the project excludes free competition among small businesses and is designed to benefit large corporations."

Additionally, the applicants claimed, "Even if special technology or services are required for defect repair or management, the replacement of outdated equipment, which does not require such expertise, should have been ordered separately. Furthermore, the required consultation with the head of the local Small and Medium Business Administration to exclude products from direct purchase was not conducted, which is a procedural flaw."

Taehee Lim, Superintendent of Gyeonggi Provincial Office of Education. Gyeonggi Provincial Office of Education

Insistence on FTTH Optical Communication Method... Billions in Additional Spending Per School

Beyond the controversy over preferential treatment for large corporations, the project has also been criticized for insisting on a specific technology, leading to wasteful spending.

It is reported that the Gyeonggi Provincial Office of Education allocated an average budget of 350 million won per school for this project. The problem is that, unlike other provincial education offices, the Gyeonggi Provincial Office of Education adopted the Fiber To The Home (FTTH) method.

According to industry sources, other provincial education offices in Gangwon, Gwangju, Jeju, and Gyeongnam have successfully implemented similar projects using the Software Defined Networking (SDN) method, verified by the National Information Society Agency (NIA), at an average cost of about 150 million won per school.

The FTTH method adopted by the Gyeonggi Provincial Office of Education requires large-scale additional construction, including the installation of optical cables and receivers in each classroom, as well as electrical work and the removal of existing networks. As a result, the budget per school is about 200 million won higher than in other provinces, with an estimated additional total cost of about 460 billion won.

Industry experts have called for a fundamental change in the project approach, arguing that this insistence on a particular method leads to massive equipment and material purchases and ultimately to competition among participating companies for vested interests.

One expert advised, "If the intelligent school network (SDN) technology, already successfully implemented by other provincial education offices, is adopted, approximately 460 billion won can be saved. The project should be centered on capable small and medium-sized enterprises to avoid unnecessary subcontracting to large corporations, thereby revitalizing the local economy and saving the budget at the same time."

Allegations of Favoritism Toward Company Run by Former Gyeonggi Education Office Employee

Meanwhile, controversy has arisen because company T, operated by a former Gyeonggi Provincial Office of Education official, was included in the KT consortium that won last year's project.

If the court rejects the injunction and company T's products are again introduced in partnership with KT this year, there are concerns that the company could win additional projects promoted by the Gyeonggi Provincial Office of Education in the future, raising suspicions of favoritism toward insiders.

An industry official stated, "It is widely known in the industry that company T is run by a former Gyeonggi Provincial Office of Education employee. Some say that company T is aggressively proposing its products through KT on a school-by-school basis in order to monopolize future expansion, maintenance, and management contracts."

Meanwhile, the Gyeonggi Provincial Office of Education stated the previous day, in response to questions about the various allegations related to this project, "It is difficult to respond as the matter is currently under litigation."

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