Seoul City Expands Investigation of Substandard Construction Companies to Subcontractors with Over 100 Million Won

Investigation of Substandard Contractors Targeting Construction Companies Bidding for City-Ordered Projects
Investigation of District-Ordered Projects Expanded to 25 Districts This Year
175 Substandard Contractors Detected and Administratively Sanctioned Over 4 Years

# A construction company A, holding three specialized construction licenses, is required to have six engineers on staff at all times. However, a crackdown by the Seoul Metropolitan Government revealed that the required number of personnel were not consistently working. One of the engineers was operating a personal business with an income of 60 million KRW. The company was suspended from business due to failing to meet the registration standards (engineers).

Construction site scene. Unrelated to the article content.

Seoul is expanding the scope of crackdowns to eliminate poorly performing construction companies lacking construction capability. This is to increase the bidding opportunities for sound companies and improve construction quality.

On the 8th, Seoul announced that starting this year, the investigation of poor construction companies bidding on city-commissioned projects will be expanded to include subcontractors with contracts worth 100 million KRW or more. The investigation, which was originally conducted in six autonomous districts, will be extended to 25 districts this year.

The investigation of poor construction companies is conducted by verifying through document and on-site inspections whether construction companies bidding on city-commissioned projects operate in accordance with construction business registration standards (technical personnel, capital, office).

Last year, a pilot crackdown on subcontractors for city-commissioned projects revealed that 2 out of 10 companies failed to meet the construction business registration standards.

Over the past four years, investigations into poor construction companies identified and sanctioned 175 non-compliant companies out of 954. The sanctions included ▲151 business suspensions ▲4 fines and penalties ▲3 corrective orders ▲1 registration cancellation. The remaining 16 companies are undergoing hearing procedures for administrative sanctions.

From this year, inspections of city-commissioned projects in all 25 districts of Seoul will be actively conducted by selecting about 1 to 2 projects per district and promoting joint investigations by the city and districts. A ‘Construction Business Registration Standards Investigation Manual’ will also be distributed for practical use in investigations.

Before the crackdown, the city will distribute a ‘self-diagnosis checklist’ containing the main revised violation items so that construction companies can check their compliance with registration standards on their own.

Kim Seong-bo, Director of the Seoul Disaster and Safety Management Office, said, "Poor construction companies obstruct fair competition in the construction industry and cause harm to both citizens and the industry through quality degradation and safety accidents. Above all, we will thoroughly crack down on poor construction companies that threaten ‘citizen safety’ so that they cannot gain a foothold in the industry, and create an environment where sound construction companies can demonstrate their capabilities at more sites."