LIG D&A Barred From Bidding for 2 Years... Could Face Further Sanctions?

LIG Defense & Aerospace Could Bid on New Projects if It Applies to Suspend the Ban

LIG Defense & Aerospace's small reconnaissance-strike hybrid drone and hybrid transport drone are on display at the Unmanned Vehicle X Civil-Military Cooperation Expo, held at COEX in Gangnam-gu, Seoul, on the 25th. 2026.8.25 Photo by Kang Jinhyeong

LIG Defense & Aerospace has been barred from participating in bidding for two years. Facing an urgent challenge to securing new orders, the company says it will contest the sanction through legal action, including an application to suspend its enforcement.

According to the Defense Acquisition Program Administration (DAPA), the Defense Industry Contract Review Committee met on October 20 and decided to impose a 24-month ban on LIG Defense & Aerospace's eligibility to participate in bidding, the maximum penalty under the National Contract Act. The measure follows up on the bribery and cost-related irregularities involving LIG, which prosecutors announced in August.

LIG Defense & Aerospace is suspected of providing more than 300 million won in bribes to DAPA employees. DAPA said it took into account the largest amount of bribes since the agency was established in 2006, as well as planned misconduct carried out over an extended period. LIG Defense & Aerospace is expected to pursue legal action, including a lawsuit to overturn the sanction and an application to suspend its enforcement. The company said, "We regret that a sanction was imposed based solely on the fact that we have been indicted while legal proceedings are ongoing. We will apply to suspend enforcement and take all necessary measures to ensure that our business and other operations are not disrupted." LIG Defense & Aerospace previously challenged a three-month ban on bidding imposed in 2017 over the falsification of test reports.

The sanction is expected to significantly constrain LIG Defense & Aerospace's ability to secure new defense contracts during the ban. Some observers say it could affect the development project for the KF-21 long-range air-to-air missile, for which a contract is scheduled to be awarded at the end of 2026. LIG Defense & Aerospace ranked first in the proposal evaluation for systems integration, a key part of the project. Concerns have also been raised that the sanction could disrupt the military's deployment of equipment in areas where the company has strengths, such as precision-guided weapons.

However, some believe the sanction will have a limited impact on the broader K-defense industry. Existing contracts will not be automatically terminated, and the measure does not directly apply to overseas export contracts. If a court grants the application to suspend enforcement, the bidding ban will be put on hold, potentially allowing the company to participate in new projects.

Some in the defense industry say DAPA had little choice but to respond in accordance with its principles to the serious allegations of bribery. If the sanction is prolonged, declining new orders are expected to put greater pressure on LIG Defense & Aerospace's medium- and long-term performance. Although the company is expanding exports, its domestic revenue remains four times its overseas revenue.

The possibility of further sanctions remains. The defense projects related to the alleged bribery investigated by prosecutors include six projects, among them a countermeasure system against small unmanned aircraft. The current sanction concerns the small unmanned aircraft countermeasure system project under the National Contract Act, and further penalties could be imposed in connection with the other projects.

This content was produced with the assistance of AI translation services.