According to the rail industry on Saturday, Seoul Metro will hold a project briefing on Feb. 11 in Seongdong-gu, Seoul, for a plan to buy 376 railcars for Lines 6 and 7. The project would replace some aging trains, with an order value of about 950 billion won. Seoul Metro is expected to disclose details such as the bidding method and evaluation criteria at the briefing.
The leading option under review is the existing lowest-price bidding approach. Seoul Metro is reported to have posted a notice last month indicating it would pursue the project through lowest-price bidding.
Under the system, bidders are screened in a first stage based on factors such as quality, capacity and delivery track record, then the contract is awarded in a second stage to the company offering the lowest price. Buyers favor the method because it can reduce upfront costs.
But the lowest-price focus has long been blamed for delivery delays. Industry officials say aggressive price competition can lead to the use of low-cost Chinese parts, more breakdowns and service disruptions. The Public Procurement Service is reported to have sent an official letter to the Seoul city government asking it to consider switching to a “contract by negotiation” model.
Dawonsys delivered Line 4 railcars 597 days late, completing delivery last year after originally agreeing to deliver by May 2024. A separate order for 298 railcars for Lines 5 and 8 is past its deadline and has not yet been delivered.
Industry officials warn similar problems could recur if the lowest-price structure remains, arguing it does not adequately reflect long-term maintenance costs even if it lowers the initial purchase price.
“Railcars are long-term equipment with a service life of up to 30 years,” a rail industry official said. “Maintenance costs are far larger than the initial purchase cost, but lowest-price bidding is structured to judge only the vehicle price.”
Competition is expected between Woojin Industrial Systems, which has recently won a series of urban railcar projects, and Hyundai Rotem, which is seeking to expand its domestic railcar business. Some in the industry say a lowest-price format could disadvantage Hyundai Rotem because it has a higher share of domestic production.
In the National Assembly, discussions on reforming the procurement market are continuing, including the introduction of a set of bills aimed at preventing repeat delivery delays, dubbed the “Dawonsys ban law.”
The proposed revisions would generally cap advance payments for construction, manufacturing and service contracts above a certain amount at 20%, allowing up to 50% only when unavoidable. They would also designate companies with habitual delivery delays or misuse of advance payments as “unfair contractors,” restricting them from public bids.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.