Business · Companies · 16 hrs ago
South Korea bars LIG D&A from bidding on defense contracts for two years
South Korea's defense agency barred LIG D&A from bidding for 24 months after employees were indicted over alleged bribery.
The agency said the case involved more than 400 million won in alleged bribes and imposed the ban on October 20.
The restriction could affect new Korean defense contracts, including a long-range air-to-air missile project for which LIG D&A was selected as preferred bidder.
A separate electronic warfare project is also under scrutiny, and lawmakers have called for checks on contracts linked to the period when the alleged bribery took place.
Existing contracts are generally expected to remain in place, and overseas exports are not directly covered by the ban.
LIG D&A is preparing to ask a court to suspend the measure and to challenge it, while some industry and legal voices say projects affected by alleged improper conduct should also be reviewed.
The missile contract's future depends partly on the legal challenge and on the contracting agency's decision; if the ban takes effect before a final agreement, there may be a legal barrier to signing it.
South Korea’s Defense Acquisition Program Administration decided on Oct. 20 to bar LIG Defense & Aerospace from bidding on defense contracts for 24 months.
The agency cited the prosecution of company executives and employees over alleged bribery worth more than 400 million won.
The decision has raised uncertainty over new domestic contracts, including a long-range air-to-air missile project for the KF-21 fighter.
LIG D&A is preparing legal challenges, including a request to suspend the penalty.
Analysts said the measure could affect domestic orders but have limited effects on short-term earnings and overseas contracts.
- Who
- South Korea’s Defense Acquisition Program Administration and LIG Defense & Aerospace.
- What
- The agency decided to impose a 24-month ban on LIG D&A bidding for defense contracts.
- When
- The decision was made on Oct. 20, 2026.
- Where
- South Korea.
- Why
- The agency cited the prosecution of company executives and employees over alleged bribery and cost manipulation.
Industry and legal critics calling for further action
LIG D&A
Scope of action
Industry and legal critics calling for further action
Critics say the penalty should also affect contracts allegedly won through bribery.
LIG D&A
LIG D&A is preparing to challenge the penalty, arguing it was imposed based on the indictment.
Existing and pending projects
Industry and legal critics calling for further action
Critics say projects connected to the alleged bribery should be reviewed, and some argue the company should lose its preferred bidder status for a missile project.
LIG D&A
LIG D&A’s legal challenge and the contracting agency’s decision will affect the future of pending projects.
Prosecutors announced the bribery and cost-manipulation case involving LIG D&A.
At a parliamentary audit of the defense agency, lawmakers discussed the penalty and whether related projects were being pursued appropriately.
The agency’s contract review committee decided to impose a 24-month bidding restriction on LIG D&A.
LIG D&A shares fell for two consecutive trading days after news of the penalty.
- Penalty
- 24-month bidding restriction
- Committee decision
- Oct. 20, 2026
- Alleged bribe
- More than 400 million won
- LIG D&A order backlog
- About 24.6 trillion won as of the first half of 2026
- Domestic order backlog
- About 10.5 trillion won as of the first half of 2026
- Related precursor projects
- Six projects worth a total of 915 billion won
3 sources
What people are saying
If a weapons system tainted by improper evaluations and bribery is deployed, performance failures and security gaps could return as a more serious security threat than a temporary delay to a project.
Uncertainty over new domestic orders will increase through 2028, but considering the Defense Acquisition Program Administration’s deployment schedule over the next one to two years, the scale of related new projects will not be large.
As of the first half of this year, about 24.6 trillion won of LIG D&A’s order backlog included 10.5 trillion won in domestic orders; existing contracts are generally maintained, and overseas export projects are not directly subject to the penalty, so the impact on short-term earnings is limited.