[Yang Nak-gyu's Defence Club] Will the Military Supply Malpractice of Veterans Organizations Be Broken?

[Asia Economy Yang Nak-gyu, Military Specialist Reporter] The military authorities recently announced a comprehensive plan to improve military meals and decided to significantly reduce contracts with veterans' organizations. The industry points out that veterans' organizations have been abusing sole-source contracts to continuously supply low-quality military provisions.

According to the comprehensive plan for improving military meals announced by the government recently, sole-source contracts for meal supplies, including kimchi supplied by the Sangigun-gyeonghoe (War Veterans Association), will be abolished starting next year.

Complaints from soldiers about clothing supplied by veterans' organizations have also been ongoing. From 2016 to last year, there was one defect case in meals supplied by veterans' organizations (Boeun Veterans Village), and seven defect cases in clothing supplies (one case from Peace Veterans Village, three from Jeonwoo, and three from GNT Busan Volunteer Village). Additionally, this year there were defects in winter training uniforms (Jeonwoo) and spring/autumn training uniforms (Mugunghwa Veterans Village).

Veterans' organizations have consistently engaged in illegal activities such as lending their names or operating businesses without approval. In particular, even after being designated as debarred contractors preventing them from participating in government bids for a certain period, they have repeatedly participated in bids.

In July 2014, the Defense Acquisition Program Administration investigated veterans and welfare organizations supplying training uniforms and underwear to soldiers and uncovered seven companies that fabricated false documents to gain unfair profits. The suspension periods for bidding qualifications of the identified veterans' organizations were six months for Hwarang Veterans Village, and twelve months for Busan Volunteer Village GNT, Pyeonghwa Veterans Village, Jeonwoo, Widowed Mothers Welfare Association, Vietnam War Veterans Association, and Wihun Veterans Village.

Nevertheless, among the seven sanctioned veterans welfare organizations, four increased their military supply sales that year. Hwarang Veterans Village's military supply contract amount was only 17.1 billion KRW in 2012 but increased from 17.2 billion KRW last year to 19.7 billion KRW. Busan Volunteer Village also increased from 35.6 billion KRW in 2012 to 36 billion KRW last year and 45.8 billion KRW this year. Pyeonghwa Veterans Village increased military supply sales from 13.7 billion KRW in 2012 to 15.3 billion KRW this year.

At that time, the Defense Acquisition Program Administration signed a ‘performance delay special agreement’ with veterans' organizations to maintain military supply contracts while recovering the payment for goods to the national treasury. However, from the veterans' organizations' perspective, this effectively guaranteed military supply contracts for a certain period, leading to criticism that it amounted to providing benefits.

As these practices by veterans' organizations continued, the government took action in June to establish legal grounds to punish violations detected in various profit-making projects conducted by veterans' organizations. The revised laws, including the ‘Act on the Establishment of Organizations for Persons of National Merit, etc.,’ the ‘Act on the Treatment and Establishment of Organizations for Special Mission Merit Persons,’ the ‘Act on the Treatment and Establishment of Organizations for War Veterans,’ and the ‘Act on Support for Patients with Agent Orange Sequelae and Establishment of Organizations,’ were deliberated and approved at the Cabinet meeting.

Furthermore, clothing items allocated to soldiers through sole-source contracts with veterans' welfare organizations will be gradually reduced starting next year and fully transitioned to competitive procurement after 2025.

A Ministry of National Defense official stated, "Soldiers' satisfaction with some items supplied by veterans' organizations is low," adding, "We plan to break the past practices and supply high-quality items to soldiers through competition."