Gyeonggi Provincial Office of Education Proceeds With Bidding Before Injunction Ruling; KT Selected as Preferred Negotiation Partner

Gyeonggi Provincial Office of Education (Superintendent Lim Taehee) has selected KT Corporation (hereinafter referred to as KT) as the preferred negotiation partner for the 53.6 billion won "2025 1st School Wired and Wireless Network Improvement Project (Equipment)" conducted through the Public Procurement Service.

The Gyeonggi Provincial Office of Education, as reported by The Asia Business Daily on the 20th ([Exclusive] Gyeonggi Provincial Office of Education's School Network Advancement Project Stalled Amid 'Major Corporate Favoritism and Budget Waste' Controversy), pushed the Incheon Regional Public Procurement Service to proceed with the bid opening, even though the court had not yet ruled on the injunction request to "suspend the bidding process."

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

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According to the announcement on the National Electronic Procurement System (Nara Marketplace) by the Public Procurement Service on the 26th, the Incheon Regional Public Procurement Service conducted the bid opening at 5:37 p.m. the previous day and selected KT as the preferred negotiation partner. KT, which last year won a 17.5 billion won equipment supply project for 114 schools, received a near-perfect overall score (99.999 points), with a bid price score of 9.999 and a final technical evaluation score of 90, making it highly likely to win this project as well.

The core of the multi-trillion-won "Elementary, Middle, and High School Network Advancement Project" promoted by the Gyeonggi Provincial Office of Education since last year is the introduction of an "optical multiplexer" in each classroom to transmit video and data signals to a central hub.

The issue is that the "optical multiplexer" is classified as a "competitive product among small and medium-sized enterprises" under the "Act on the Promotion of Purchase of SME Products and Support for Market Expansion," which requires competitive bidding among SMEs. However, the Gyeonggi Provincial Office of Education issued the order through a "negotiated contract" method, citing exceptions, thereby allowing large corporations to participate.

As a result, several wired and wireless communication equipment manufacturers and information and communications construction companies that could not participate in this bid filed an injunction with the Seoul Central District Court on September 24 to "suspend the bidding process," and the bidding procedure was halted upon the filing of the injunction.

The 50th Civil Division of the Seoul Central District Court notified both the applicants and respondents of the hearing date immediately after the injunction was filed on September 25, and held the hearing on October 1. At that time, the court asked the Incheon Regional Public Procurement Service whether it could suspend the procedure until the injunction decision was made, and a representative from the service responded affirmatively, according to an industry official present at the scene.

However, after The Asia Business Daily began its investigation last week, the Gyeonggi Provincial Office of Education requested the Incheon Regional Public Procurement Service to expedite the bidding process, citing reasons such as ▲the need to execute the project budget and ▲the necessity of conducting construction during the school vacation period. The Incheon Regional Public Procurement Service, after an internal legal review, notified the bidding companies (KT, Samsung SDS, Lotte Innovate) on the 20th that "the evaluation is scheduled for the 25th." The bid opening was then conducted the day before, and KT was selected as the preferred negotiation partner.

Of course, the mere filing of an injunction to suspend the bidding process or the ongoing court hearing does not automatically require the suspension of the bidding process. However, proceeding with the process before the court's decision, only to have the injunction granted later, could create a highly complicated situation. Therefore, it is common practice to suspend the process until the court's ruling is issued.

When asked about the reason for proceeding with the bidding process so quickly, a representative from the Gyeonggi Provincial Office of Education stated, "We did not rush the bid opening, but proceeded as originally scheduled."

The official explained, "Schools start their winter break as early as mid-December to the end of December, and the construction needs to be carried out during that time," adding, "The (equipment) replacement work must be done when students are not present, so the bid opening and other preliminary steps need to take place now."

However, an industry representative commented on this explanation, saying, "Similar projects are underway in other cities and provinces, and construction can be carried out at any time, not just during the vacation period." The legal community has also described the move as "potentially appearing to disregard the court" or "highly unusual."

With the Gyeonggi Provincial Office of Education selecting KT as the preferred negotiation partner through the bid opening before the conclusion of the injunction case, in which the office argued the illegality of the bidding process and requested its suspension, attention is now focused on how the trial will proceed.

A court official stated, "Even if there has been a change in circumstances, such as the partial progress of the bidding process, that alone does not necessarily mean the applicant's interest has disappeared. How the parties respond to the change in circumstances will be a matter for the court to decide."

Although the bid opening has already been completed and the court may see little practical benefit in continuing the hearing, if the creditor (the applicant for the injunction) responds by requesting a change in the purpose of the application due to the changed circumstances, the court may issue a ruling on that matter.

Attorney A, a former presiding judge, stated, "Applicants for the injunction may be able to contest the validity of the procedures carried out during the hearing, such as the bid opening or selection of the preferred negotiation partner, by filing an injunction seeking to suspend the 'effectiveness' of these actions."

The Gyeonggi Provincial Office of Education is expected to expedite the follow-up negotiation process to finalize KT as the successful bidder and proceed with the project. However, there remains the possibility that the project could be halted again if the companies that filed for the injunction change the purpose of their applications or file additional injunctions.

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