Public Procurement Service extends deposit forfeiture to local government contracts, aiming to build a fair and safe construction industry
A sanctions measure that strips unqualified construction companies of their bid deposits on public projects is being extended to facilities contracts governed by local government procurement law.
The Public Procurement Service announced Monday that it will expand the forfeiture of bid deposits to the national treasury — applied to construction firms found through eligibility investigations to fall short of registration requirements — to cover facility construction projects subject to the Local Contract Act.
The measure, effective Monday, is in line with the government's fair-economy policy and is designed to block shell companies lacking genuine construction capacity from entering bids, while protecting legitimate contracting opportunities for capable builders.
Earlier, starting Aug. 31, the agency had already toughened sanctions on facility projects under the State Contract Act — going beyond simply disqualifying substandard firms from contract awards to also forfeiting their bid deposits, set at 5 percent of the bid amount, to the national treasury.
The latest expansion extends that measure to facility projects under the Local Contract Act, narrowing regulatory blind spots for unqualified companies and creating a level playing field for construction firms with genuine capabilities.
"Shell companies recklessly entering bids not only deprive capable construction firms of legitimate contracting opportunities, but can also lead to deteriorating quality in public facilities and safety accidents," said Im Byeong-cheol, director of the Facility Projects Bureau. "We will strictly block unqualified companies without construction capacity from participating in bids, and build a fair and safe construction industry ecosystem where skilled companies compete and win contracts on merit."
kwonhl@heraldcorp.com
