1. Design, Implementation & Roll-out of e-Procurement May 2013 Kang-il Seo | Deputy Director, International Cooperation Division Public Procurement Service (PPS), the Republic of Korea

2. Contents Ⅰ.Ⅰ. e-Procurement in Korea How did we get here? - Choosing the model & consideration factors - What’s in the law? - the Roll-out Impact of e-Procurement Ⅱ.Ⅱ. Ⅲ.Ⅲ.

3. e-Procurement in Korea Korea Online e-Procurement System (KONEPS) KONEPS is the single portal for public procurement info in Korea End-to-end Functional Coverage KONEPS processes the entire procurement procedures through sub-systems: e-bidding, e-contracting, e-ordering from online shopping mall and e-payment “KONEPS” Korea ON-line E-Procurement System “KONEPS” Korea ON-line E-Procurement System e-Payment e-Biddinge-Contracting Online Shopping Mall e-Ordering e-Notice e-Bidding e-Contracting Online Shopping Mall e-Ordering

4. 2 In 2012, 66% of Korea’s total public procurement($101 billion) was conducted through KONEPS 45,000 government agencies 244,000 registered businesses 93% of all bids are conducted online 24M bidders participated in 292T e-bidding Total transaction value : $42 billion 657T contracts are electronic(99% of all contracts) 100% of all payments are electronic 500T Purchase Orders issued online(99% of all POs) Total e-Mall transaction value : $12.5 billion User Registration e-Bidding e-Contracting & e-Payment Online Sopping mall e-Procurement in Korea

5. Before Certification- Related agencies Industry Associations Ministry of Strategy and Finance Credit Rating Companies Surety Companies Construction Authorities National Tax Office Bid Supplier Public Buyer One Stop Service through Data Integration KONEPS exchanges data with 140 external info systems for supplier information, bid evaluation, bonds and payment, minimizing paper document submissions e-Procurement in Korea

6. Certification- Related agencies Ministry of Strategy and Finance Construction Authorities National Tax Office Industry Associations Credit Rating Company Surety Companies Korea Financial Telecommunications & Clearings Institute Contract Delivery After One Stop Service through Data Integration KONEPS exchanges data with 140 external info systems for supplier information, bid evaluation, bonds and payment, minimizing paper document submissions e-Bid KONEPS Supplier Public Buyer e-Procurement in Korea

7. e-Procurement System Choosing e-GP Model Procurement process involves the exchange of information, agreement (negotiation and contracting), and settlement (delivery and payment). e-Procurement system is an intermediary that enables online processing of these activities Information Exchange AgreementSettlement Buyer Intermediary Electronic platform Supplier

8. State Investment vs. Public Private Partnership Choosing e-GP Model PPP State Investment  Complete outsourcing (development & operation)  Hidden costs - Risk of lock-in effect (limits competition)  Need dispute settlement mechanism (service fees, etc.)  Complete outsourcing (development & operation)  Hidden costs - Risk of lock-in effect (limits competition)  Need dispute settlement mechanism (service fees, etc.)  Government’s operation (facility management outsourcing)  Needs operating agency with expertise in public procurement  Certain level of internalization of technological resources  Easier to share govt. administrative database  Government’s operation (facility management outsourcing)  Needs operating agency with expertise in public procurement  Certain level of internalization of technological resources  Easier to share govt. administrative database

9. Harmonization with e-Govt. Plan Choosing e-GP Model Government e-Procurement system was implemented as one of 11 e-Govt. projects

10. Setting the Goals Choosing e-GP Model Single Window for Public Procurement All public tender notices and related information at a single website Bidders can participate in all public biddings after one-time registration Digitalization of Entire Procurement Cycle Entire procurement processes from supplier registration, bidding through to payment are conducted via the internet Integration with Other Information Systems Maximize the impact of digitalization by using database available at other public authorities

11. Choosing e-GP Model Integrated e-GP System Integrated e-GP System Gateway to Government Procurement E-Procurement Portal Comprehensive Information Contents Integrated Information Search Customer Service Standardized Procurement Process ASP for public institutions Services for suppliers System development for the System Operation Authority Efficient Procurement Process One-time registration for participating in all public bids Reducing the paper document submissions by bidders Integrated Information & Shared Use Comprehensive information on public bids and bid awarding Access to data from public authorities and industry associations Shared use of information Standardization of Data Standardizing Product Catalog based on UNSPSC Creation of e-Catalog Standardizing 149 e-Document forms Reliable e-Document Exchange Conformity to ebXML international standards End-To-End security measures with PKI encryption Security assurance

12. Governing Laws (1) Legal Framework No separate primary legislation for e-Procurement until Feb. 2013 e-GP was rolled out without mandatory-use provisions (except tender notice)

13. Governing Laws (2) e-GP could be implemented under existing laws on e-Commerce Legal Framework

14. Rolling Out Training and User Support Nation-wide training sessions Marketing visits to public entities Web Call-Center - 60 staff offering 4,585 consultations daily via phone and video-conferencing In the early onset of e-Bidding, PPS held 130 training sessions in 2001 and operated training courses at 23 locations Incentives Discount for service fees when procurement request is made via KONEPS e-GP usage was included in the government- wide performance evaluation criteria (‘05-’09) 20022010 20% e-Contracting Ratio 40% 98% 2006

15. Increased Transparency Real-time information disclosure Objectivity in bid evaluation - Bid evaluation based on objective, validated data Informed decision-making - Traceable prices and specifications - Bidding results and contract details disclosed to the public on-line - Peer monitoring on fair results -Reduced risks of biased decisions from information asymmetry 12 Impact of e-Procurement

16. Transaction Cost Savings KONEPS is saving transaction costs of USD 8 billion annually - Private Sector : USD 6.6 billion - Public Sector : USD 1.4 billion Increased efficiency - Receiving bids, validating related docs. and selecting the winning bid Beforeover 30 hrs less than 2 hrs After -Reduction of 7.8 million pages of paper documents per year $ 6.6 bn Public SectorPrivate Sector Transaction Cost Savings $ 1.4 bn 13

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