As LIG Nex1 was selected as the preferred bidder for the system and main body project of South Korea's first privately led geostationary weather satellite, Cheollian 5, Korea Aerospace Industries (KAI) raised objections, but they were reportedly not accepted. Claiming that there were problems in the selection process, KAI is reviewing options such as filing a complaint with the Anti-Corruption and Civil Rights Commission.
According to the defense industry, the Korea Meteorological Technology Institute, the ordering agency for the Cheollian 5 system and main body development project, responded to KAI's objection earlier this month, stating that it is difficult to conclude that the evaluation's fairness or transparency was compromised and that it is hard to find evidence of procedural flaws.
In the objection letter submitted on the 14th of last month, KAI mentioned the issue of potential conflicts of interest among the evaluation committee members. KAI claimed, "Some among the evaluators have a history of participating in the development of Cheollian satellite technology and are likely recipients of technical fee compensation." The Cheollian 5 development project is structured in a way that allows LIG Nex1 to receive technology transfers from the Korea Aerospace Research Institute (KARI), where a portion of the compensation is returned to participants.
KAI also argued that there was a lack of adequate evaluation of the practical capabilities and potential of the selection agency. KAI stated, "Despite having no history of independently executing system and main body development or dedicated development infrastructure, LIG Nex1 received excessively favorable evaluations due to structural errors prioritizing the assessment of potential in written documentation over quantitative, objective factors." LIG Nex1 is expected to complete the integrated satellite system and testing facility by the first half of this year, having emphasized this in their proposal.
Since these claims were not accepted, KAI is considering filing a complaint with the Anti-Corruption and Civil Rights Commission. The Central Administrative Appeals Commission, which is under the Anti-Corruption and Civil Rights Commission, re-evaluates the correctness of administrative procedures according to the Administrative Procedure Act. The effect of the disposition will be suspended until the ruling is made. Administrative appeals are separate procedures from lawsuits and are not binding even if dismissed. However, if the administrative agency loses in the appeal, it must comply with the decision of the Anti-Corruption and Civil Rights Commission.
A KAI official noted, "We requested materials on evaluation criteria for internal review but did not receive them. We are being restricted in exercising our substantive rights without receiving at least minimal information," adding that they would complete legal review regarding the filing of a complaint soon. In response to KAI's claims, the Korea Meteorological Administration, which oversees the project, stated on the 22nd of last month that "the evaluation of the Cheollian 5 project was conducted fairly."
KAI's public backlash is interpreted as stemming from the control over the satellite project. Traditionally, for satellite projects, LIG Nex1 and Hanwha Systems handled the payloads, while KAI was responsible for the system and body areas. Each company has secured relevant technical capabilities in their respective fields. Beginning development on satellite systems and bodies in 1994, KAI has carried out over 10 projects in the system sector, including next-generation medium-sized satellites 2 and 3, military reconnaissance satellites, and geostationary composite satellites 2A and 2B. KAI has also developed the bodies for military reconnaissance satellites and geostationary composite satellites.
In addition, since the company developing the system and body is also set to take on the overall research for the Cheollian 5 project, it has put KAI in a position of being eclipsed by a new company that has only been in the system and body business for about four years.
There are claims in the industry that this project is not proceeding normally. The Cheollian 5 project is divided into three parts: system and body, weather payload, and space weather payload. Currently, a contractor for developing the weather payload is being selected, but participation rates are reportedly low. It is agreed that foreign companies will be supplying the payloads, but there are no revenues, aside from purchasing costs.