Hello, this is Attorney Park Jong-han from Cheongchul Law Firm.

In the case of public enterprises or public institutions, there may be cases where a deduction is imposed on the contracting party based on their own criteria during the evaluation of the qualifications for contract awards. Whether or not a deduction is imposed can determine whether the contracting party will be awarded the contract, so there are many cases where parties wish to contest the deductions made by these public enterprises or public institutions.

In such cases, it is necessary to examine the legal nature of the deductions made by public enterprises or public institutions.

[Question]

Whether the deduction imposed by the public enterprise based on its own criteria constitutes an administrative disposition

[Answer]

An administrative disposition that is subject to administrative litigation refers to the actions taken by an administrative agency or a public institution that has received delegated authority or entrustment based on statutes to exercise public power concerning matters related to the rights and obligations of citizens. Even if it is an act that restricts the rights of the other party, it cannot be classified as an administrative disposition unless it is an action of the administrative agency or its affiliated institution or a public institution that has received delegated authority (refer to Supreme Court Decision 98du14822 of February 9, 1999, and Supreme Court Decision 2010mu137 of November 26, 2010).

Although the regulation cited as the basis for the deduction measure applied to bidders is based on the detailed criteria for the construction award qualification evaluation of the public enterprise, and these detailed criteria are based on the Act on the Operation of Public Institutions and the Regulations on Contract Affairs of Public Enterprises and quasi-government agencies, if these regulations are merely internal regulations that public institutions should follow to manage contractual relationships fairly, rationally, and efficiently without having external binding power, the deduction measure imposed by the public enterprise on bidders cannot be regarded as an administrative action of an administrative agency or its affiliated institution, or a public organization that has received such delegation, but is merely a notification action that has legal effect in the sense that it intends to deduct 10/100 of the total acquisition score according to the detailed criteria, which are internal regulations of the public enterprise when the target participates in a bid conducted by the public enterprise. Also, even if such a notification action exists from the public enterprise, it cannot be concluded that it imposes restrictions on the qualification to participate in all bids conducted by the state, local governments, or other public institutions under Article 39, Paragraph 2 and Paragraph 3 of the Act on the Operation of Public Institutions, and Article 15 of the former Regulations on Contract Affairs of Public Enterprises and quasi-government institutions. Thus, such deductions by the public enterprise cannot be regarded as administrative dispositions subject to administrative litigation (refer to the Supreme Court Decision 2010du6700 of December 24, 2014).

In this way, we briefly examined whether the cancellation of supplier registration and the restriction measures taken by the public enterprise based on its own guidelines constitute administrative dispositions, and the criteria for their legality. In disputes related to national contracts and public procurement, the related laws can be very complex and often subject to frequent amendments, so knowledge and experience in this area are required, and one should also be well aware of the administrative agency's interpretations and disposition cases, not just court rulings. Therefore, it is highly recommended to seek assistance from an attorney with expertise in national contract legislation and experience in various disputes relating to national contracts and procurement.

Cheongchul Law Firm consists only of attorneys from the four major law firms in Korea: Kim & Chang, Gwangjang, Taepyeongyang, and Sejong, and not just one attorney but a team of specialized attorneys related to the case responds. Cheongchul provides comprehensive solutions beyond just solving specific issues, focusing on ultimately achieving what the client desires. If you need help achieving your goals, please do not hesitate to contact Cheongchul.