Contents
- How the restriction works and what triggers it
- Periods by violation, extension and reduction
- Effect on KONEPS bidding
- FAQ
Under the Act on Contracts to Which the State Is a Party, a bidding eligibility restriction for an unfair business operator (부정당업자) is imposed by the head of a central government agency for 1 month to 2 years. It is posted on the e-procurement system, and for that period the company cannot bid at other central agencies either. It is a sanction separate from KONEPS (Narajangteo) bidder registration, so bidding is blocked even while the registration stays in place. The period follows a schedule by type of violation and can be extended or reduced.
Registration basics are covered in our KONEPS registration guide, and name or representative changes in our change registration guide. This page focuses on periods and practical effects.
How the restriction works and what triggers it
The Act lists the grounds, the Enforcement Decree sets the range and the Enforcement Rule schedule sets the period for each act. The agency must notify other central agencies immediately, and they must restrict the same company. Common triggers in bidding practice are:
- agreeing bid amounts or volumes in advance, or colluding so a particular bidder wins
- forging or altering bid or contract documents, or submitting false documents, including registration documents
- failing to sign or perform a contract without justifiable reason
- intentionally submitting an invalid bid
- subcontracting in breach of the rules, such as without the ordering agency's approval
- obstructing bidding, contract performance, supervision or inspection
No restriction is imposed if the act was committed by an agent or employee and the company exercised due care and supervision to prevent it, or if the violation resulted from a natural disaster or similar unavoidable cause.
Periods by violation, extension and reduction
| Violation | Standard period |
|---|---|
| Leading collusion and winning the award | 2 years |
| Leading collusion | 1 year |
| Agreeing bid amounts or colluding | 6 months |
| Winning the award with forged, altered or false documents | 1 year |
| Submitting forged, altered or false documents | 6 months |
| Not signing or not performing a contract | 6 months |
| Intentionally submitting an invalid bid | 6 months |
| Subcontracting without the ordering agency's approval | 6 months |
| Breaching major contract conditions | 3 months |
| Obstructing bidding, performance, supervision or inspection | 3 months |
The schedule is a starting point. If a new ground arises between the date of the restriction and 6 months after it ends, the period may be extended by up to 1/2, but the total cannot exceed 2 years. Where several acts are involved, the longest standard applies. The period may also be reduced by up to 1/2 considering motive, content and frequency, and by a further 1/2 where the violation is clearly minor. The reduced period must still be at least 1 month, and bribery cannot be reduced. No restriction may be imposed once 5 years have passed since the act ended (7 years for collusion and bribery).
Effect on KONEPS bidding
The agency posts the company name, representative, business registration number, period and specific grounds on the e-procurement system before the period starts. Every agency checks bidders against this system, so a restriction from one agency applies to bids at all central agencies. Restrictions by local governments or public institutions under other laws also block national bids once notified or posted.
When a corporation is restricted, the representative in charge of the bid or contract is restricted too, and other corporations headed by that person cannot bid either. Ordering agencies must check corporate registration and licence or registration numbers to stop companies evading restrictions by changing names or representatives. If you receive a notice, check the following in order.
- Match the stated ground to an act in the schedule.
- Gather evidence of due care, unavoidable causes or other reduction factors.
- Review pending awards: if the restriction starts before signing, the agency cannot sign with that winner.
- For long-term continuing contracts, confirm whether annual contracts may still be signed after the first contract.
- Adjust bid schedules of other corporations headed by the same representative.
Private (negotiated) contracts are in principle also unavailable during the period.
FAQ
Q. Is my KONEPS registration cancelled?
A. The rules do not cancel the registration. They bar bidding during the period and post the restriction on the e-procurement system, so bidding is blocked regardless of registration status.
Q. Can we bid after changing our name or setting up a new company?
A. Agencies must check corporate and licence or registration numbers, and other corporations headed by a restricted representative cannot bid.
Q. Can the period be shorter than the schedule?
A. Yes, by up to 1/2, and by a further 1/2 if clearly minor, but never below 1 month, and bribery is never reduced.
Q. Is there an alternative to the restriction?
A. Where responsibility is minor or the restriction would prevent valid competitive bidding, a penalty surcharge may replace it. For help, see our KONEPS registration service.
Review your position after a restriction notice
YouSun Administrative Agency helps organise the grounds, prepare reduction materials and check KONEPS registration details. Call 02-325-8222, weekdays 09:30~17:30 KST.
Request a consultation