President Lee Jae-myung ordered a comprehensive investigation into military suppliers after an MBC report showed that businesses unrelated to defense equipment had won procurement contracts. The cases included a meat restaurant in Gyeonggi Province that secured a contract for military laboratory equipment worth 130 million won, a pharmacy that won a military sound-meter contract and an online clothing retailer selected to supply chainsaws for the Marine Corps.
The report identified a procurement loophole that allows businesses with registration certificates to participate in bidding even when they do not directly handle the products involved. According to an industry source quoted by MBC, a winning bidder can arrange for another company to make the actual delivery and retain a commission of about 5 to 8 percent. Lee told a Cabinet meeting that the practice amounted to selling the right to supply goods and instructed officials to find a way to prevent it at the source.
- Reported contract
- Military laboratory equipment worth 130 million won
- Commission described by industry source
- About 5 to 8 percent of the contract
- Investigation ordered
- Comprehensive review of military procurement suppliers
Public Procurement Service Commissioner Baek Seung-bo said the agency had been preparing countermeasures since January. He said it would first conduct a pilot review focused on military supplies and other important items before expanding the investigation. The planned review shifts attention from whether goods were ultimately delivered to whether the companies winning public contracts had the capacity and role claimed in the bidding process.
Agencies expand scrutiny beyond procurement records
The Ministry of National Defense also plans to conduct on-site inspections rather than leaving the examination solely to the procurement agency. Defense Minister Kang Shin-cheol said ministry officials would visit the businesses, verify conditions on the ground and take part in a full inspection. The Interior Ministry was directed to provide personnel support for the wider inquiry.
Lee also asked officials to consider stronger financial safeguards for small contracts. One option under review would raise the forfeitable bid bond from the current 5 percent to at least 10 percent. The investigation will now need to establish how widely intermediary bidding has been used, which contracts involved suppliers lacking relevant operational capacity and whether tighter eligibility checks or larger financial penalties can close the gap.