Shell companies will soon be blocked from indiscriminately entering the public procurement market.
The Public Procurement Service (PPS) said on the 13th that it will phase in stricter standards for imposing bid bonds by revising its "PPS Domestic Goods Purchase Regulations."
The move will fundamentally block "reckless, indiscriminate bidding" by companies that lack proper capacity to fulfill contracts in goods procurement bids.
The PPS is pushing the revision as a follow-up measure after preparing a "plan to eradicate indiscriminate bidding" aimed at rooting out distortions in public procurement such as broker involvement, swarm bidding and shell companies.
First, among the goods the PPS purchases, it plans to separately announce items where broker involvement is suspected or where indiscriminate bidding competition occurs, based on a comprehensive analysis of the average number of bidders, award rankings and the ratio of suspected shell companies. Bid bonds will be imposed on all companies participating in bids for those items.
In addition, the PPS will define paper companies in goods supply bids and select suspected shell companies based on data to impose bid bonds. To prevent irresponsible behavior of habitually abandoning contracts after reckless bidding, bid bonds will also be imposed on those who have "abandoned bids two or more times" over the past year.
"Public procurement must go beyond simply purchasing goods to become an economic catalyst that promotes corporate employment and investment," PPS Administrator Baek Seung-bo said. "We will build a fair and just procurement ecosystem."
