Songpa Hanyang 2nd Reopens Contractor Selection... GS Engineering & Construction's Chances Rise [Real Estate AtoZ]

Vote Held on Whether Individual Contact With Members Invalidated Bid
Board of Delegates Votes 82% to Declare Bid Void
Second Site Briefing on the 24th, Bids Due December 9
If Sole Bidder Again in Second Round, GS Becomes Preferred Negotiator

The Songpa Hanyang 2nd Reconstruction Association has decided to declare the first round of bidding void, following controversy over individual contact with association members, and will proceed with the selection of a new contractor. With GS Engineering & Construction still qualified to bid, the likelihood of the company winning the contract has increased.

On October 18, the Songpa Hanyang 2nd Reconstruction Association announced a second round of bidding for contractor selection and will hold a site briefing session on October 24. Bid proposals must be submitted by December 9. To participate in the bidding, companies must pay a bid deposit of 60 billion won and attend the site briefing session.

In the first round of bidding held in September, GS Engineering & Construction was the sole participant, resulting in the bid being declared void. During this process, HDC Hyundai Development Company raised concerns about GS Engineering & Construction allegedly making individual contact with association members, which led to the suspension of the contractor selection process. According to the Ministry of Land, Infrastructure and Transport's "Standards for Handling Contracts in Maintenance Projects," if individual contact with association members occurs three or more times, the bid is invalid. Under the Seoul Metropolitan Government's "Publicly Supported Maintenance Project Contractor Selection Criteria," a single violation also renders the bid invalid.

In response, the association held a board of delegates meeting on October 14 to vote on whether to declare the first round of bidding void or invalid. Of the 87 delegates present, 72 (82.76%) voted to declare the bid void. After seeking legal advice from three law firms, all advised that it would be difficult to disqualify GS Engineering & Construction from participating in the bid. They noted that the alleged conduct by GS Engineering & Construction occurred before the submission of the bid proposal, and that declaring the bid invalid could result in significant legal risks and delay the contractor selection process.

As a result of the board's decision, GS Engineering & Construction retained its eligibility to participate in the rebidding, overcoming a major hurdle. If the second round of bidding also fails due to a lack of competition-should GS Engineering & Construction remain the sole bidder-a private contract negotiation may be possible, designating GS Engineering & Construction as the preferred negotiating party. GS Engineering & Construction has been pursuing an aggressive strategy this year to expand its contracts in the Gangnam area. The company stated, "We will participate in the second round of bidding for contractor selection as well."

HDC Hyundai Development Company, which had called for GS Engineering & Construction's bid to be invalidated, has not yet decided whether to participate in the second round of bidding. A representative from HDC Hyundai Development Company said, "We will participate if the environment allows our proposal to be properly communicated to the association members, and we are carefully considering our participation."

The association plans to hold a general meeting to select the contractor as early as the end of January next year. An association representative explained, "With over 80% of the board of delegates deciding to proceed with the second announcement, the legal risks have been resolved. After selecting the contractor, we aim to obtain architectural review approval next year and apply for project implementation approval by the end of next year."

Songpa Hanyang 2nd is a complex with 744 units completed in 1984. After reconstruction, it will consist of 1,346 units in buildings ranging from four basement levels to 29 above-ground floors. The construction cost proposed by the association is 7.9 million won per 3.3 square meters, with a total project cost of 685.6 billion won.