DAPA bans LIG D&A from bidding for 24 months in 'harshest-ever' sanction

The Defense Acquisition Program Administration (DAPA) has decided to ban LIG D&A from participating in public tenders for 24 months over its involvement in a bribery and cost-fraud case — the harshest sanction available under Article 27 of the State Contracts Act. The restriction is expected to weigh on the company's ability to secure new contracts, given how much of its sales come from the domestic defense market.

DAPA said Tuesday it convened a defense procurement contract review committee at the Government Gwacheon Complex that afternoon and deliberated on and approved sanctions against LIG D&A as an unqualified contractor. The decision follows prosecutors' announcement of the bribery and cost-fraud case on Aug. 20.

The committee focused its review on bribery and improper cost calculations that occurred during the relevant contracting process. It cited three reasons for imposing the maximum sanction: the bribe involved was the largest in DAPA's history, the misconduct was deliberate and carried out over an extended period, and the case has damaged public trust in national security and the defense procurement system as a whole.

A number of civilian members took part in the deliberations. The committee heard explanations and statements from the company, then reviewed the illegality of the misconduct and the potential impact of sanctions on future defense procurement. After discussing the form and severity of punishment — including a bidding ban and a monetary fine — it settled on the 24-month restriction.

The fact that the committee imposed a bidding ban even after examining its impact on ongoing defense programs sends a policy signal that serious misconduct cannot escape punishment simply on grounds of project continuity.

If any scheduled tenders fall within the restriction period, LIG D&A will lose the opportunity to compete, which could affect its future order backlog and sales base. The full extent of the impact will depend not only on the length of the ban but also on which contracts are scheduled for bidding and award during that period.

Kim Il-dong, DAPA's deputy director general and chair of the committee, said no illegal conduct that undermines transparency and fairness in defense procurement — including bribery and cost fraud — will ever be tolerated.

"Through this maximum-level sanction, we will put the entire defense industry on notice, and we will continue to apply a zero-tolerance principle to corruption in defense procurement," Kim said.