FTC Says Doosan Failed to Issue Required Subcontract Documents for 516 SI Cases
View of Doosan Group headquarters
The Fair Trade Commission has imposed sanctions on Doosan for failing to issue contract documents to subcontractors on time while outsourcing system development and management services.
According to the Fair Trade Commission on May 10, Doosan outsourced 516 cases of system development and management (SI) services to 182 subcontractors from January 2022 to October 2024, but failed to issue written documents containing legally required details, including subcontract payments, by the start date of service performance.
The Fair Trade Commission accordingly decided to impose a corrective order and a fine of 230 million won ($167,900) on Doosan.
The Subcontracting Act stipulates that when a prime contractor outsources services, it must issue a written document stating the contents of the subcontract before the subcontractor begins work.
However, the Fair Trade Commission said Doosan in some cases provided the documents as late as 291 days after the start of the services. The average delay was 26 days.
The Fair Trade Commission said it determined the level of sanctions in consideration of the large amount involved, with the total subcontract payments for projects in which contract documents were issued late reaching 40.8 billion won ($29.8 million), and the fact that the violations continued over a long period.
Doosan had also agreed to pay SI providers in installments after interim inspection, but failed to specify the timing and instead used vague wording such as “after completion of interim inspection” in incomplete written documents. It was also given a warning measure over this issue.
In addition, the company was found to have failed to comply with the requirement to retain documents related to subcontract transactions for three years after the end of the contract.
Jung Min-hee
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