Sunday, November 28

It’s a competitive bidding… Booyoung housing ‘penalty’ for slashing bids

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It was found that Booyoung Housing arbitrarily cut the subcontract price set as the lowest bid, and was sanctioned by the authorities. The Fair Trade Commission announced on the 14th that it had imposed a correction order and a fine of 131 million won on Booyoung Housing on charges of paying a subcontract price less than the minimum bid price without justifiable reasons (violation of the Subcontract Act). According to the survey, Booyoung Housing selected 11 subcontractors for construction from 2016 to 2018 through the lowest competitive bidding method, but decided to pay less for the subcontract than the bid amount. The subcontract price was reduced mainly by negotiating additional contracts after the subcontractor was decided. For example, the minimum bid for the construction contracted in 2018 was 2,776.2 million won, but the final determined amount was only 2.74 billion won. The difference between Booyoung Housing and its two-year savings amounted to a total of 158.43 million won. The Subcontracting Act stipulates that when a subcontract is concluded through competitive bidding, the subcontract price must not be determined at an amount lower than the lowest bid amount. This is possible only if there is a justifiable reason such as a reason attributable to the subcontractor. In the case of Booyoung housing, it was found that the price was reduced in this way even though there was no justifiable reason and the minimum bid did not exceed the self-execution budget set in advance. Booyoung Housing has paid both the bid difference and delayed interest since the Fair Trade Commission investigation began. Accordingly, the Fair Trade Commission imposed a reoccurrence prevention order instead of a payment order. Reporter Lee Jae-yeon [email protected]

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