Numerous Former Officials' Firms Involved in Urban Complex Projects... Allegations of Collusion Among Large Design Firms Including Haean

It has been revealed that most of the design competition contractors selected for the ‘Urban Public Housing Complex Project (Urban Complex Project)’?jointly promoted by the Ministry of Land, Infrastructure and Transport, Seoul City, and Korea Land and Housing Corporation (LH)?are LH-affiliated firms. In particular, suspicions have been raised that some design firms engaged in collusion to favor specific companies during the bidding process for these urban complex project design competitions.

However, since the Ministry of Land, Infrastructure and Transport decided on July 31 to investigate and terminate service contracts only for design competitions involving LH-affiliated firms concluded after that date, the urban complex project design competitions are reportedly continuing as planned. Consequently, some voices are calling for investigations into whether LH affiliation influenced project awards and whether bid rigging occurred.

The site of the Singil 2 District Urban Public Housing Complex Project./Photo by Hyunmin Kim kimhyun81@

According to the design industry on the 10th, among the six leading districts of the Seoul urban complex project (▲Jeungsan 4 ▲Singil 2 ▲Yeonsinnae Station ▲Banghak Station ▲East of Ssangmun Station ▲West of Ssangmun Station), LH-affiliated firms were selected for the basic design of five districts, excluding Banghak Station.

First, in Jeungsan 4, which has a large supply of 3,550 households, the design firms were selected by dividing the area into Block 1 and Block 2. Among these, Block 1 was assigned to D.A. Architecture and Beom Urban Architecture, where many former LH executives are employed.

Next, for Ssangmun Station West Side (1,428 households), Yuseon Engineering, which employs former LH executives, was selected, and for Singil 2 District (1,332 households), Haean Comprehensive Architecture, which has a former LH vice chairman and vice president, won the design competition.

For Yeonsinnae Station (392 households) and Ssangmun Station East Side (639 households), the designs of Withus Architecture and Ieodam Architecture, both led by CEOs with LH backgrounds, were selected.

Within the industry, suspicions have been raised that some design firms are engaging in collusive ‘divide-and-conquer’ practices to secure contracts in the urban complex project design competitions.

In fact, according to the urban complex project design competition website, among the six leading districts in Seoul, only two firms participated in the bidding for three districts (Singil 2, Yeonsinnae Station, Ssangmun Station East Side), competing against each other. Among these, Singil 2 and Ssangmun Station East Side saw unanimous votes from the judging panel. Singil 2 had Haean Comprehensive Architecture (7 votes) versus Cheong-eoram (0 votes), and Ssangmun Station East Side had Ieodam Architecture (7 votes) versus Beom Architecture (0 votes).

In particular, Haean Comprehensive Architecture is further suspected of collusion as it also received unanimous votes in the previous year’s urban complex project at Namyangju Yangjeong Station Area (Haean Comprehensive Architecture 13 votes, Sea Plan 0 votes).

Industry insiders unanimously agree that such unanimous voting results in these bids would be impossible without collusion.

An industry official stated, “According to the Enforcement Decree of the State Contract Act, bids with fewer than two participants are invalid for urban complex project design competitions. Especially when a powerful firm like Haean Comprehensive Architecture targets a project site, other firms tend to avoid bidding for that site, and the large firm requests smaller firms to act as figureheads to secure the contract.”

He added, “Since last year, due to the downturn in the construction market, there have been many reports that top-tier firms engage in collusion to avoid excessive competition in some project bids. It seems necessary to investigate collusion in the urban complex projects and to revise the bidding system.”

Regarding these collusion suspicions, Seoul City and LH emphasized, “Since the urban complex project design competitions are jointly conducted by the Ministry of Land, Infrastructure and Transport, Seoul City, and LH, all bidding processes have been entrusted to the Korea Institute of Registered Architects to ensure fair contractor selection. The evaluation committee is composed entirely of external members such as professors, and measures have been taken to ensure the bidding and evaluation are conducted as fairly as possible.”