Policy move comes amid string of defense procurement corruption cases

Even a single violation now triggers deductions; maximum reaches -3 points

The Defense Acquisition Program Administration revised seven internal regulations Monday to tighten its evaluation criteria for unfair-conduct records. [The Herald Business DB]
The Defense Acquisition Program Administration revised seven internal regulations Monday to tighten its evaluation criteria for unfair-conduct records. [The Herald Business DB]

The Defense Acquisition Program Administration has sharply raised the penalty scores imposed on companies that engage in bribery, bid-rigging or the submission of false documents in defense procurement bids. For the first time, illicit brokering and lobbying — previously excluded from credibility assessments — will also carry deductions.

DAPA said Monday it revised seven internal regulations, including its "Standards for Qualification Review of Goods," to strengthen the criteria for evaluating companies' records of unfair conduct.

The move comes amid a recurring pattern of defense industry corruption. The Suwon District Prosecutors' Office's defense procurement and industrial technology crimes unit last month indicted and detained a DAPA Grade-5 civil servant and a defense company executive on charges of accepting about 300 million won ($217,000) in bribes in exchange for favorable evaluations during a weapons-system development bid.

The case involved projects worth 91.5 billion won, including the development of a Link-22 system for Jangbogo-II submarines, and investigators found the company had provided about 460 million won in illicit payments. DAPA has issued 876 debarment sanctions since 2012, but critics have long argued that many of the penalties amounted to little more than a slap on the wrist.

The unfair-conduct history evaluation in qualification reviews works by accumulating scores for each type of violation committed by a debarred company and applying the total as a deduction in the credibility assessment.

Under the previous standards, per-violation scores were generally low, meaning some infractions — such as bribery involving 10 million won or less — did not trigger any deduction after a single offense. Even companies that received the most severe sanctions could not reach the maximum deduction, a structure critics said failed to match the gravity of violations with the severity of penalties.

The revised rules lower the threshold so that even a single violation triggers a deduction, and allow the maximum deduction to be applied depending on the severity of the offense. The ceiling on deduction scores has been raised 1.5 times from the previous standard.

In detail, the score range for bribery rises from 2–10 points to 5–20 points; bid-rigging and false document submission go from 5–10 points to 10–20 points; losses to public funds from fraud and misconduct move from 5–10 points to 5–20 points; and unfair subcontracting practices increase from 3–5 points to 7–10 points. The deduction range expands from -0.5 to -2.0 points under the old rules to -1.0 to -3.0 points.

The revision also introduces, for the first time, deduction criteria for illicit brokering and lobbying — conduct that constitutes grounds for debarment under the Defense Acquisition Program Act but had not previously been reflected in credibility assessments.

"This revision to the qualification review standards will impose strict accountability for conduct that undermines fairness — such as bribery and bid-rigging — and by incorporating illicit brokering and lobbying into the assessment, it will serve as an opportunity to further enhance the fairness and transparency of defense procurement contracts," DAPA Commissioner Lee Yong-cheol said. "We will continue to improve our contracting systems to establish a fair competitive order and build a DAPA that the public can trust."


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