U.S. Military Contract Bidding Scandal Leads to Legal Action in South Korea
In a significant legal development, several individuals and corporations involved in collusion during the bidding process for facility management services contracted by the U.S. military in South Korea have been indicted for violating the Fair Trade Act. The Seoul Central District Prosecutors' Office, led by Chief Kim Yong-sik, announced on May 9, 2025, that they have charged nine representatives from 11 subcontracting firms with violations related to bid rigging. Additionally, three employees from a U.S. corporation and its Korean office, which conducted the bidding, have also been indicted on similar charges. In total, 12 individuals and two corporations are facing prosecution.
According to prosecutors, the 11 subcontracting firms and their employees are accused of colluding from January 2019 to November 2023, manipulating bids worth approximately 25.5 billion won (around 17.5 million USD) by pre-selecting winners and submitting dummy bids. During this period, three employees from the U.S. bidding entity allegedly facilitated the bidding process to favor specific companies.
Specifically, between January 2019 and March 2021, these firms agreed to designate Company B as the winning bidder for a subcontract related to facility management services for U.S. Army hospitals, with Companies A and K submitting bids as mere formalities to support Company B. Furthermore, from January 2019 to November 2023, they also colluded on bids for procurement services issued by the Defense Logistics Agency (DLA), agreeing on the winning bidder and bid prices before submission.
This case marks a notable collaboration between South Korean prosecutors and the U.S. Department of Justice, following a Memorandum of Understanding (MOU) on antitrust enforcement signed in November 2020. The investigation is highlighted as the first instance of simultaneous investigations conducted by both countries, with evidence shared through international legal cooperation mechanisms. Prosecutors emphasized that the complexity of the case required cooperation between South Korean and U.S. authorities to uncover the full extent of the collusion, as evidence was dispersed across both nations.
