President Lee Criticizes Dawonsys for Train Delivery Delays at Ministry Briefing
Highlights Oversight Issues in Dawonsys’ Three Consecutive Contracts
"Says Dawonsys Won Orders in Three Rounds... Oversight Capacity in Question"
"Advance Payment Cap Should Be Lowered from 70% to 20%"
Regarding the situation where Dawonsys, which received an order from Korea Railroad Corporation (KORAIL) to manufacture railway vehicles, has delayed delivery, President Lee Jaemyung criticized, "A government agency has been defrauded." He also pointed out that the government brought risk upon itself by providing up to 70% of the contract amount as advance payment during the public procurement process, and ordered a comprehensive overhaul of the system.
On December 12, during a Ministry of Land, Infrastructure and Transport work briefing at the Sejong Convention Center, President Lee stated, "Isn't Dawonsys taking on orders and then doing other things? If you give 70% as an advance payment, it's only natural that this happens. In the private sector, it's only 10%, so why does the government give as much as 70%?" Referring to a case investigated by Assemblyman Han Junho of the Democratic Party, he added, "I heard they are not even manufacturing. They won many orders by bidding low, but there are doubts about their capacity to produce trains."
In response, Minister Kim Yoonduk of the Ministry of Land, Infrastructure and Transport replied that an investigation is underway. During this year’s National Assembly audit, KORAIL was criticized for placing an additional order of 116 train cars with Dawonsys, which had already failed to deliver 236 cars on a cumulative basis. Of the 150 ITX-Maum cars that were supposed to be delivered by December 11, 2022, 30 cars still have not been delivered, and of the 208 ITX-Maum cars that were due by November 10, 2023, 188 cars remain undelivered. It is reported that the total value of contracts Dawonsys won in the first to third rounds amounts to 914.9 billion won.
When a working-level official from the Ministry of Land, Infrastructure and Transport explained that, under the National Contract Act, up to 70% of the contract amount can be paid in advance, President Lee countered, "It means you can give it, not that you must give it," and criticized, "If you give as much as 70%, there are cases where companies neglect their work and go bankrupt." President Lee then stated, "Granting another low-bid contract opportunity to a company that delayed delivery shows the government’s oversight function is not working at all. I believe a government agency has been defrauded." He instructed Policy Chief Kim Yongbum to revise the regulations so that, except for special cases approved in advance, advance payments cannot exceed 20%.
Additionally, Minister Kim stated, "We must also prevent KORAIL employees from being reemployed, and in reality, there are very few domestic manufacturers. Improvements to prevent low-price bidding are also necessary." The Ministry of Land, Infrastructure and Transport is currently investigating Dawonsys and plans to request a formal investigation next week.
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