Procurement Risk:
Moderate
Score:
61/100
Government Policy
Q57
100/100
Does the country have legislation covering defence and security procurement with clauses specific to corruption risks, and are any items exempt from these laws?
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This indicator is not assigned a score in the GDI. In South Korea, all defence and national security purchases are subject to the Defence…
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The Act addresses corruption risks in procurement and recognises potential corruption issues involving suppliers and intermediaries. Article 26-2 of Enforcement Decree of the Defence…
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A review of media sources, analyses of the legislation and interviews with multiple defence experts indicate that the measure is effective in the defence…
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Q58
83/100
Is the defence procurement cycle process, from assessment of needs, through contract implementation and sign-off, all the way to asset disposal, disclosed to the public?
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The Defence Acquisition Programme Act explains the defence procurement cycle process in detail. The Act requires the Defence Minister to develop a mid-term national…
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The Defence Acquisition Programme Act explains the defence procurement cycle process in detail [1]. The Act requires the Defence Minister to develop a mid-term…
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The Defence Acquisition Programme Act specifies procedures for each step of the implementation process of the procurement cycle. The DAPA is responsible for making…
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Q59
67/100
Are defence procurement oversight mechanisms in place and are these oversight mechanisms active and transparent?
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The Ministry of National Defence (MND), the Defence Acquisition Program Administration (DAPA) and the Board of Audit and Inspection (BAI) oversee the defence procurement…
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Section 3 of the Board of Audit and Inspection Act outlines the scope of inspection of duties. The BAI can summon witnesses involved in…
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While evidence of activity is made public through the oversight institutions’ websites, the full detail of the activities is rarely disclosed publicly. [1] In…
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Article 13 of the Defence Acquisition Programme Act requires that the Ministry National Defence formulate a mid-term national defence plan, including potential defence purchases,…
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Both plans are classified as military secrets which may impact national security if disclosed, and they are not made public. [1] The Ministry of…
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Defence purchases are made public with almost no exemptions in South Korea. Article 7 of the Act on Contracts to Which the State is…
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Data is released in an accessible and downloadable format with excel files via the Defence Electric Procurement System. The information published includes the name…
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Capability Gap and Requirements Definition
Q62
75/100
What procedures and standards are companies required to have – such as compliance programmes and business conduct programmes – in order to be able to bid for work for the Ministry of Defence or armed forces?
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Article 6 of the Defence Acquisition Programme Act states that suppliers and sub-contractors are required to submit a pledge of integrity. The pledge should…
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While laws and procedures discriminate against potential suppliers involved in corrupt actions, it is questionable whether the measures are implemented effectively. Although suppliers are…
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Q63
83/100
Are procurement requirements derived from a national defence and security strategy, and are procurement decisions well-audited? Are defence purchases based on clearly identified and quantified requirements?
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The Ministry of National Defence (MND)’s Defence White Paper, which includes the national security strategy and defence policies, outlines South Korea’s defence needs and…
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Despite the existence of the multiple oversight mechanisms, including the parliamentary committee and the Bureau of Audit and Inspection (BAI), there is limited evidence…
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In South Korea, defence purchases are clearly based on the Defence Acquisition Programme Act. Article 15 of the Act requires that the Chairman of…
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Tender Solicitation, Assessment and Contract Award
Q64
13/100
Is defence procurement generally conducted as open competition or is there a significant element of single-sourcing (that is, without competition)?
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In South Korea, there is restricted competition in defence procurement. The South Korean government has adopted the “Defence Supplies Designation Policy”, designating the type…
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The Ministry of Trade, Industry and Energy and the DAPA are responsible for overseeing single-source procurement procedures. Article 35 of the Defence Acquisition Programme…
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Q65
63/100
Are tender boards subject to regulations and codes of conduct and are their decisions subject to independent audit to ensure due process and fairness?
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Procurement officers designing tender specifications and making tender board decisions are subject to the Code of Conduct for the DAPA’s officials, which includes guidelines…
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An internal audit on defence contracts is conducted by the Inspector General within the DAPA. [1] Occasionally, the Board of Audit and Investigation (BAI)…
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The public can access the Code of Conduct for tender boards in full detail through the Office of Legislation website. [1]
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While the internal audit offices within the DAPA and the BAI conduct an audit of tender board decisions, there is no evidence of external…
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Q66
94/100
Does the country have legislation in place to discourage and punish collusion between bidders for defence and security contracts?
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Article 4.2 of the Enforcement Decree of the Act on Contracts to which the State is a Party outlaws collusion between bidders. It states…
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The South Korean government restricts bidders who colluded to guarantee the selection of the designated winner or agreed on the tender price with other…
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Cases are investigated and prosecuted through formal processes, but prosecutions are not always successful. Based on analysis of the available information, ineffective prosecution is…
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Procurement officials are supported by legislation and specific guidelines to identify collusion patterns and report potential malpractice. According to Article 32 of the Act…
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Contract Delivery and In-Service Support
Q67
69/100
Are there mechanisms and procedures that ensure that contractors meet their obligations on reporting and delivery?
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The Act on Contracts to Which the State is a Party outlines how to monitor, assess and report on a supplier’s service. It includes…
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While there is a clear policy which requires the public disclose of information on contracts via the Government Electronic Procurement System or the Defence…
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Contract officials should produce contract monitoring and completion reports to ensure proper performance of a contract, according to Article 13 of the Act on…
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While some contractors have been charged with bribery, most breaches of contract are adequately acted upon. Article 74 of the Enforcement Decree of the…
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Q68
67/100
Are there mechanisms in place to allow companies to complain about perceived malpractice in procurement, and are companies protected from discrimination when they use these mechanisms?
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South Korea has a legal framework which outlines the protection of those who report malpractice in the public interest. Companies that perceive malpractice in…
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A review of legislation and government data suggests that complaints mechanisms are accessible and used occasionally. Companies can use the service free of charge…
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An interview with a defence expert and media sources reveal that companies are likely to be discouraged from complaining about perceived malpractice in procurement…
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Procurement officials and authorities can terminate a contract with a supplier found to be corrupt by cancelling its qualification as a defence contractor under…
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The South Korean government has made significant efforts to tackle corruption within defence procurement since several allegations of corruption emerged in 2015. [1] The…
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As mentioned above, if corrupt activities of suppliers are detected, they can be prosecuted through formal processes. There is legislation that restricts corrupt suppliers…
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Offset Contracts
Q70
50/100
When negotiating offset contracts, does the government specifically address corruption risk by imposing anti-corruption due diligence on contractors and third parties?
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In South Korea, offset contracts are permitted and regulated by the Defence Acquisition Programme Act. According to Article 20 of the Act, offset contracts…
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There are no specific rules for offset contractors and third parties. General rules for defence contractors and third parties apply, including pledge of integrity…
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South Korea has formal procedures that outline the reporting and delivery obligations for offset contracts. Offset contracts are made under the terms of the…
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Due to the nature of the defence industry, which requires a level of confidentiality, information on offset contracts is rarely disclosed publicly in South…
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Procurement officers overseeing offset contracts are responsible for managing and analysing offset contracts, including suppliers’ performance appraisals, in theory. [1] However, the BAI audit…
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There is clear evidence action was not taken following a breach of contract. When the DAPA signed an agreement with the U.S. government to…
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Offset contracts are made under the terms of the Defence Acquisition Programme Act, Enforcement Decree of the Defence Acquisition Programme Act and Defence Acquisition…
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Agents / Brokers
Q73
63/100
How strongly does the government control the company’s use of agents and intermediaries in the procurement cycle?
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While the use of agents and intermediaries in the South Korean defence procurement sector is not legally prohibited, defence agents are regulated by the…
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The Amendment of the Defence Acquisition Programme Act came into effect in June 2017, containing restrictions on registered agents and intermediaries. If registered agents…
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Financing Package
Q74
0/100
Are the principal aspects of the financing package surrounding major arms deals, (such as payment timelines, interest rates, commercial loans or export credit agreements) made publicly available prior to the signing of contracts?
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A review of the Defence Acquisition Programme Act and relevant defence documents suggest that details of the financing package regarding major arms deals are…
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Seller Influence
Q75
NS/100
How common is it for defence acquisition decisions to be based on political influence by selling nations?
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This indicator is not assigned a score in the GDI. South Korea was the 9th largest importer of major arms worldwide between 2014 and…
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This indicator is not assigned a score in the GDI. Due to the long-term military tension between the two Koreas and close military alliance…
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This indicator is not assigned a score in the GDI._x000D_ _x000D_ Although South Korean defence purchases are conducted within a clear defence procurement policy,…
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