Restaurants and pharmacies win South Korean military supply tenders as brokers, MBC finds

A barbecue restaurant and a pharmacy are among the unlikely businesses that have won contracts to supply equipment to South Korea's army and navy, according to an investigation broadcast by MBC on Sunday 25 October. The broadcaster said it had examined about 5,200 military supply tenders from the past five years and found many cases of firms with no link to the goods they were contracted to deliver.

In one case MBC reported, a barbecue restaurant in Uijeongbu, Gyeonggi Province, won a contract in May to supply the army with microbial testing equipment worth 130 million won. In another, a pharmacy in Seoul's Yeouido district won about 250 million won of military supply contracts over three years, including a noise and vibration meter for the navy. In comments aired with altered voices, a restaurant employee said the business had wanted to expand beyond food, while a pharmacy employee said it could not produce such goods itself and placed orders for them.

MBC said the pattern works because anyone holding a business registration certificate can bid. Once a bid succeeds, another company supplies the goods and the winning bidder keeps a commission in between. A bidding consultant told the broadcaster that such middlemen could earn roughly 5 to 8 percent simply by submitting bids. MBC said each tender now draws close to 500 bidders on average and that so-called consulting firms that help businesses bid have multiplied.

To test the system, MBC journalists rented a space for 40,000 won a month, registered a business there, and bid to supply the navy with satellite navigation equipment. According to the report, the newly registered firm was listed for eligibility screening in less than a day.

The investigation, part of the MBC current affairs programme Straight, tied the problem to a 2020 change in how the military buys general supplies. According to a programme preview carried by MHN, procurement of non-weapon military goods moved that year from the Defense Acquisition Program Administration to the Public Procurement Service, whose online marketplace handles the bidding.

MHN reported that the programme's analysis found a vocational training institute winning a contract for Marine Corps buoyancy compensators, a banner maker winning a deal for army automatic oxygen resuscitators, and a construction machinery firm supplying dental equipment. The preview also said that some companies previously sanctioned for delivering defective goods or failing to fulfil contracts had later won military supply contracts again.

Quality complaints followed, according to both outlets. MBC reported that life jackets delivered to the navy had their fastening buckles fitted on the wrong side and poor stitching, and that the bottom of a new army canteen came off when it was disinfected with hot water. MHN said defect reports had also been filed for container bags used by troops.

The reports did not include a response from the defence ministry, the Defense Acquisition Program Administration or the Public Procurement Service. Taken together, the reports describe an open bidding system in which almost any registered business can compete to supply the everyday equipment that soldiers and sailors depend on, with defects surfacing only after delivery.