There are criticisms that the sanctions against dishonest contractors by the Public Procurement Service (PPS) lack effectiveness. Even if designated as dishonest contractors and restricted from participating in bids, many cases evade sanctions through injunction applications for suspension of execution and lawsuits.
According to data submitted by the PPS to Ahn Do-gul, a member of the National Assembly's Planning and Finance Committee (Democratic Party, Gwangju Dong-gu and Nam-gu Eul), from 2019 to the end of August this year, there have been a total of 1,703 cases where the PPS designated and sanctioned contractors as dishonest.
However, among these, 527 cases involved dishonest contractors filing injunction applications for suspension of execution with the courts, and 454 of these were granted. The average approval rate reached 90.6%, meaning that when granted, contractors can avoid sanctions such as restrictions on bid participation due to their dishonest designation.
If an injunction application for suspension of execution is granted, the contractor can continue to participate in public bids until a final ruling by the Supreme Court. The litigation period until the Supreme Court ruling is estimated to be between a minimum of 1 year and 6 months and a maximum of 4 years and 2 months. In practice, this means dishonest contractors can participate in public bids without sanctions for an average of over 2 years.
In fact, companies sanctioned as dishonest contractors from 2019 to the end of August this year participated in national project bids and signed contracts during the suspension period amounting to approximately ?287.6 billion in 2019, ?815.8 billion in 2020, ?955.4 billion in 2021, ?504.5 billion in 2022, ?700.4 billion in 2023, and ?224.8 billion as of August this year. The total scale of national project bids by dishonest contractors over the past five years reached ?3.4885 trillion.
Notably, during this period, 10 specific companies won 246 contracts during the suspension period, with contract amounts totaling ?2.2131 trillion. This accounts for 63.4% of the total contract amount won by all dishonest contractors.
Among them, a large conglomerate-affiliated company A participated in 53 bids during the suspension period and signed contracts worth approximately ?546.2 billion, while large conglomerate D participated in 102 bids and secured contracts worth ?230.1 billion.
According to the Act on Contracts to Which the State is a Party (Article 27: Restriction on Bid Participation of Dishonest Contractors), if a bidder or contracting party commits illegal acts during bidding, contract conclusion, or contract execution with the state or public institutions, they are defined as "dishonest contractors" and are prohibited from participating in bids for a certain period.
Reviewing the sanctions imposed by the PPS on dishonest contractors over the past five years shows 732 cases with sanctions of 1 to 3 months, 654 cases of 4 to 6 months, 44 cases of less than 7 to 12 months, and 71 cases of 1 to 2 years.
Assemblyman Ahn stated, "Court injunction applications for suspension of execution are effectively being abused by dishonest contractors as a means to evade sanctions," adding, "This undermines the effectiveness of sanctions, and there is a need to amend related laws or improve systems to enhance the effectiveness of sanctions."
He also argued, "If the suspension of execution is confirmed in litigation, it is necessary to consider imposing partial fines based on the contract amount, sales, or profits during the litigation period along with the dishonest contractor sanctions."
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