Association Considers Re-announcing Bidding
POSCO E&C Unable to Secure Orders if License is Revoked
Deliberation Over Possible Private Contract with Lotte Engineering & Construction
The Gaepo Woosung 4th Reconstruction Association is reportedly considering re-announcing the bidding for a construction contractor, as the risk of POSCO E&C’s license cancellation has increased the likelihood that the competitive bidding process will fail. This is because, if POSCO E&C withdraws from the process, which was initially expected to be a two-way competition, it would likely result in Lotte Engineering & Construction being the sole bidder.
According to the maintenance industry on August 7, the Gaepo Woosung 4th Reconstruction Association is reviewing the option of reissuing the construction contractor bidding announcement. There have also been discussions with the relevant district office, Gangnam District Office, about postponing the bidding schedule. An official from Gangnam District Office stated, "I understand that a postponement (of the contractor bidding) is under consideration," and added, "However, nothing has been finalized yet."
If the bidding is canceled and a new announcement is made, the general meeting to select the contractor could be postponed to next year. Originally, the association planned to close the bidding on September 9 and hold a general meeting to select the contractor on November 1.
Among the association members, concerns have reportedly been raised about POSCO E&C’s capacity to take on new projects. This is because, in the wake of strong criticism from the political sphere and President Lee Jaemyung, the company is focused on managing the aftermath of recent accidents, making it burdensome to expand to new sites. Member A stated, "Among the members, there were concerns about whether POSCO E&C has the capacity to participate in the bidding, given that the company is preoccupied with managing major industrial accident recovery."
POSCO Faces Uncertainty in Securing Orders Due to Serious Accidents... Concerns Over Possible Sole Bidding by Lotte
This bidding contest was initially expected to be a two-way competition between Lotte Engineering & Construction and POSCO E&C. The competitive landscape narrowed as Samsung C&T, a strong candidate, did not attend the site briefing and focused its resources on Gaepo Woosung 7th. HDC Hyundai Development Company is also concentrating on Songpa Hanyang 2nd, which had a bidding announcement around the same time, leading to speculation that it would not participate in Gaepo Woosung 4th.
However, as POSCO E&C faces the risk of license cancellation due to consecutive major industrial accidents, the possibility of competitive bidding itself being scrapped has increased. Four people have died at POSCO E&C construction sites this year, and additional fatal accidents occurred even after President Lee Jaemyung’s reprimand, bringing the company’s lax safety management into the spotlight. President Lee strongly criticized POSCO E&C, instructing, "Find and report all legally possible measures, including construction license cancellation and prohibition from public bidding."
Heemin Jung, former president of POSCO E&C, is offering an apology to related parties ahead of a statement regarding consecutive on-site fatal accidents at the company’s headquarters in Songdo, Incheon, on the 29th of last month. Photo by Yonhap News
If POSCO E&C faces the unprecedented situation of license cancellation, it will be impossible for the company to participate in the bidding. According to the Framework Act on the Construction Industry, even if business suspension or registration cancellation is finalized, the company can continue with contracts already signed, but new orders are completely blocked.
A private contract resulting from a sole bid is also a burden for the association. This is because competitive bidding between contractors is necessary to secure favorable business terms for the association.
As the likelihood of POSCO E&C’s withdrawal increases, some members have reportedly suggested that if Lotte Engineering & Construction becomes the sole bidder, the association should allow the bid to fail and then enter into a private contract with Samsung C&T. An industry official stated, "Some residents were disappointed as Samsung C&T was expected not to participate in the bidding," and added, "There are also association members who say they will wait until the bid fails if Lotte Engineering & Construction is the sole bidder."
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