South Korea’s Defense Acquisition Program Administration is pursuing a review that could strip LIG D&A of its designated defense contractor status for a counter-drone development project, MBC reported. The agency recently asked the Ministry of Trade, Industry and Energy, which has the authority to revoke the designation, to examine the case. The ministry is expected to hear from the parties involved before deciding whether to impose the sanction.
The review follows the prosecution of LIG D&A employees over allegations that they provided hundreds of millions of won in bribes to defense acquisition officials to secure favorable assessments. MBC reported that the allegations cover six defense projects worth a combined 91.5 billion won, including the 22.9 billion won small unmanned aircraft response system. The system is intended to detect small hostile drones and disrupt their signals so they deviate from their routes or crash.
- Counter-drone project value
- 22.9 billion won
- Projects covered by allegations
- Six projects worth a combined 91.5 billion won
- Existing bidding restriction
- Two years for participation in new bids
DAPA has already imposed a two-year restriction on LIG D&A’s participation in new bids, according to the agency’s announcement following an October 20 committee decision. That restriction still permits direct contracts. Revocation of the company’s defense contractor designation for the counter-drone project would be more severe because it would remove its status as an approved producer and prevent direct contracting for the affected work.
Cost certification faces a separate review
Officials are also considering revoking LIG D&A’s defense cost management certification over alleged cost manipulation. Investigators allege that bribe payments were incorporated into subcontracting costs and presented as legitimate development expenses. If the certification is withdrawn, authorities plan to recover the additional 1 percent incentive profit previously paid to the company. MBC said the potential recovery could amount to hundreds of billions of won, although the eligible transactions and final sum remain subject to an investigation and separate review.
LIG D&A said it regretted sanctions being discussed while the criminal trial was underway and would respond through the prescribed procedures.
No final decision has been made on either the contractor designation or the cost certification. LIG D&A has challenged the two-year bidding restriction in court, including through an application to suspend enforcement. The company said it deeply regretted that sanctions were being discussed while the criminal trial remained underway and that it would provide its explanation through the prescribed procedures. The ministry’s decision and the results of the cost review will determine whether the company faces restrictions extending beyond new competitive bids.