Lee's Persistence Cuts "Swarm Bidding" in Public Procurement by 84%... Cheong Wa Dae: "A Step Toward Market Normalization"

Pilot bid bond requirement cuts average bidders per tender from 355 to 57
Average winning rank improves from 41st to 1.5th; quality gains expected
Results to be reported and discussed after measures take full effect in November

President Lee Jae-myung has repeatedly called for a decisive end to paper companies (companies that exist only on paper) and bid-rigging that have distorted the public procurement market. Measures to curb indiscriminate bidding practices have now shown tangible results. In particular, after restricting indiscriminate participation by companies lacking the capacity to fulfill contracts, the average number of bidders per tender fell to one-sixth of its previous level. Based on the results of the pilot program, the government plans to fully implement a system to screen out underqualified companies before they can bid.

President Lee Jae-myung listens to remarks from attendees at the second plenary meeting of the Regulatory Rationalization Committee, held at the Blue House on Oct. 23, 2026. Yonhap News Agency

According to Cheong Wa Dae and the government on the 27th, a pilot program launched in August to require bid bonds for certain items where indiscriminate participation by paper companies was a concern reduced the average number of bidders per tender by 83.9%, from 355 to 57. The average winning bid rank also improved from 41st to 1.5th. Previously, evaluations had to proceed through lower-ranked bidders before a winner could be selected. Since the system was introduced, however, winners have generally been selected from among the top one or two bidders.

The results are notable because they came as President Lee directly raised concerns about unfair practices in the public procurement market and called for institutional improvements. On December 11 last year, during the first ministerial briefing of the Lee Jae-myung administration, and again on July 15 this year, at a briefing for government ministries and agencies for the second half of the year held at the state guesthouse at Cheong Wa Dae, President Lee pressed Baek Seung-bo, head of the Public Procurement Service, on the issue of paper companies participating in public tenders.

President Lee also raised the issue at the first Anti-Corruption Policy협의회 held at Cheong Wa Dae on August 21. He called for the creation of “a system that allows the public to verify [the process] to ensure fairness and validity.” In response, Commissioner Baek reported plans to expand on-site inspections to prevent indiscriminate bidding and to require bid bonds from companies suspected of being paper companies.

Cheong Wa Dae is also paying close attention to the changes seen in the pilot program. “These results will be a meaningful step toward normalizing the public procurement market,” an official at Cheong Wa Dae said. In the public procurement market, companies without the capacity to actually supply goods have repeatedly submitted bids en masse or withdrawn from award evaluations. Concerns have also been raised that some companies bid on numerous items solely to win contracts, reducing the chances of companies that operate their businesses properly. Requiring bid bonds has served as a means of curbing this indiscriminate bidding.

The government plans to fully implement the requirement for bid bonds for companies suspected of being paper companies starting November 16. It will identify such companies using their registration and contract information and oversee them from the bidding stage. Starting in January next year, it will tighten the bid bond requirement by lowering the threshold for repeated withdrawals from award evaluations from five times to two or more. Companies that fail to submit evaluation documents or withdraw from an evaluation without a valid reason will be restricted from participating in tenders. Starting next year, companies registering more than 500 “other supply items” will also be required to submit a credit rating certificate. Rather than penalizing companies that lack the capacity to fulfill contracts only after bidding, the aim is to screen out underqualified companies at every stage, from market entry through bidding and contracting.

The Public Procurement Service is reportedly planning to report the results of the measures to Cheong Wa Dae and the Ministry of Finance and Economy after they take full effect, and to discuss further improvements to the system. Attention is also focused on whether the pilot program’s results—fewer bidders and more efficient award evaluations—can be extended across the public procurement market.

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