Hello, I am Attorney Bae Gi-hyung from the Law Firm Cheongchul.

If it is confirmed that a bidder submitted false documents during the bidding process, the respective bidder cannot become a contract partner.

Specifically, looking at Article 10 of the Contract Regulations on Eligibility Screening (Processing of Those Who Submit Examination Documents by Deceptive Means), it is stipulated that if it is before the contract is concluded, the bidder may be excluded from the list of eligible bidders or the decision notice may be canceled; if it is after the conclusion of the contract, the respective contract can be rescinded or canceled.

Furthermore, according to Article 76, Paragraph 2, Item 1 of the Enforcement Decree of the Act on Contracts to which the State is a Party (hereinafter referred to as 'State Contract Act'), a disposition restricting bidding qualifications will be made within the period of two years. In this case, they will not be able to participate in other public contract bids either.

So, would the bid deposit submitted under false documents also be forfeited to the national treasury?

[Question]

Can the bid deposit of a disqualified contractor who submitted false documents be forfeited to the national treasury?

[Answer]

A disqualified contractor who submitted false documents loses the status of the successful bidder, so the bid deposit cannot be forfeited to the national treasury.

If the fact of submitting false documents is discovered, in accordance with Article 10 of the Contract Regulations on Eligibility Screening, the bidder may be excluded from the list of eligible bidders or the decision notice for the successful bidder may be canceled. In this case, the said company will lose the status of the successful bidder.

However, Article 9, Paragraph 3 of the State Contract Act stipulates, “If the successful bidder does not conclude the contract, the head of each central agency or the public official in charge of the contract must forfeit the respective bid deposit to the national treasury.” Thus, it is relatively clear that the above provision applies when it is presumed that the individual is in the ‘status of the successful bidder’ but does not conclude the contract.

Regarding the same matter, The Public Procurement Service also replied, “In the case where a successful bid was processed for someone who submitted false documents and is prior to the conclusion of the contract, they should be excluded from the list of eligible bidders or the decision notice should be canceled according to Execution Standard Article 10, Paragraph 1, Item 1, and based on Enforcement Decree Article 76, Paragraph 1, Item 2, the bidding qualification of the disqualified contractor should be restricted. In this case, since the status of the successful bidder is lost, it is not subject to forfeiture of the bid deposit to the national treasury, and the same treatment should be applied when it is before the selection of the successful bidder.”

Attorney Bae Gi-hyung has rich experience and skills, having worked in the Construction/Real Estate team of the Defense Acquisition Program Administration and major law firms, specializing in matters related to public properties, including bidding, use permits, lease contracts, and imposition of restitution. If you need assistance regarding national property, local property, or public property, please feel free to contact us.

The Law Firm Cheongchul is composed exclusively of attorneys from Korea's top four law firms: Kim & Chang, Lee & Ko, Bae, Kim & Lee LLC, and Shin & Kim. Rather than relying on a single attorney, we form teams composed of specialized attorneys relevant to the case. Cheongchul provides comprehensive solutions for the entire business, focusing on ultimately achieving what the client desires. If you need help in achieving your goals, do not hesitate to contact Cheongchul.