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Innovating Public Procurement through Korea ON-line E-Procurement System April 2011 Kang-il Seo International Cooperation Division Public Procurement Service.

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Presentation on theme: "Innovating Public Procurement through Korea ON-line E-Procurement System April 2011 Kang-il Seo International Cooperation Division Public Procurement Service."— Presentation transcript:

1 Innovating Public Procurement through Korea ON-line E-Procurement System April 2011 Kang-il Seo International Cooperation Division Public Procurement Service (PPS) The Republic of Korea

2 Contents 1.Korea ON-line E-Procurement System (KONEPS) 2.Impacts of KONEPS 3.Implementation Experiences 4.Recommendations

3 1. Korea ON-line E-Procurement System (KONEPS)

4 9 Consolidation of e-Document Exchange and e-Reporting 2 4 Innovation in Services The Korean Government initiated 11 e-Government projects to enhance national competitiveness utilizing information technology Foreword: Koreas e-Government Project e-Government Single Window for Civil Services 3 Integrated Social Security Information System Internet-based National Taxation System 1 Government-wide e-Procurement System INFRASTRUCTURE Administrative Productivity 5 National Finance system 6 Integrated Administration System for Local Governments 7 Nation-wide Educational Administration System 8 Standardized HR Management System 10 e-Authentication and e-Signature System 11 Government-wide IT-governance Environment

5 Increasing SMEs Market Opportunities Combination of Centralized and Decentralized Procurement Medium to large scale procurement for central government agencies : handled by Public Procurement Service (PPS) Small scale procurement: handled by each government agency Local governments and public enterprises: autonomous procurement Medium to large scale procurement for central government agencies : handled by Public Procurement Service (PPS) Small scale procurement: handled by each government agency Local governments and public enterprises: autonomous procurement Public Procurement Service (PPS) PPS is the central government procurement agency of Korea under the Ministry of Strategy and Finance Total procurement volume of 38 billion USD in 2010 (30% of Koreas total public procurement) PPS operates KONEPS, Koreas public e-Procurement system PPS is the central government procurement agency of Korea under the Ministry of Strategy and Finance Total procurement volume of 38 billion USD in 2010 (30% of Koreas total public procurement) PPS operates KONEPS, Koreas public e-Procurement system Public Procurement System in Korea

6 Korea ON-line E-Procurement System (KONEPS) Government-wide e- Procurement System Developed and operated by PPS Commonly used by all public agencies for procuring goods and construction works International standards to ensure inter- operability KONEPS

7 Characteristics of KONEPS Single Window for Public Procurement Publication of all public tender notices and related information at a single website Bidders can participate in all public biddings after one- time registration

8 Characteristics of KONEPS One-stop Service Integration of Entire Procurement Process Entire procurement processes from supplier registration, bidding through to payment are conducted via the internet One-click purchase at the Online Shopping Mall 160 types of documents handled online through the data exchange linkage with 100 other public sector & private sector information systems

9 KONEPS processes the entire procurement procedures through the 4 major sub-systems: e-bidding, e-contracting, e-payment and the online shopping mall e-Contracting Contract Registration Composition and sealing of Contracts Contract Review e-Bidding Tender notice Price Assessment Evaluation / Analysis Online Shopping Mall Online Shopping Mall Product Registration E-Catalogue Product Search Online Order e-Payment E-Payment Expenditure Mgmt. Fee Management KONEPS Functions of KONEPS

10 KONEPS at a Glance Ministry of Public Administration and Security Ministry of Strategy and Finance Certification- Related Agencies Construction- Related Associations Korea Financial Telecommuni- cations & Clearings Institute Construction CALS Surety Insurance

11 KONEPS e-Tendering Processes Authentication Certificate Certificate Authorities Integrated Notice Other Bidding Systems Commission for Bid Participation PG System Certificate Supplier Data Related Associations Authentication Certificate Certificate Authorities Contract Information D-Brain System Certificate for Tex Payment G4C System Online Transaction Supplier Registration Integrated Notice Bid BondEncryption/ Time Stamp Performance Bond, etc Electronic Funds Transfer G4C System Public Org. (40,000) Surety Company Encryption Key Issuance System Surety Company D-Brain System Banks Supplier Registration Integrated For Bid Bidding Bid Opening/ Evaluation Contracting Delivery/ Inspection/ Acceptance Payment All procurement processes are digitalized KONEPS electronically obtains information on the bidders (business registration, credit rating, past performances, etc) from other public and private information systems (no need for submitting paper documents and certificates)

12 KONEPS Online Shopping Mall PPS establishes unit-price contracts for commonly and repetitively purchased products Products on unit-price contracts are made available at Online Shopping Mall for direct orders from public entities

13 Electronic Data Interchange System (1997) Online Shopping Mall System (1998) e-Tendering System (2000) e-Guarantee and e-Payment System (2001) Early Development ( ) Early Development ( ) KONEPS(2002)KONEPS(2002) Establishment of KONEPS for the use of all public organizations (2002) Phased Establishment

14 2. Impacts of KONEPS

15 Transactions through KONEPS $56 bn $63 bn $86 bn In 2009, over 70% of Koreas total public procurement (122 billion USD) was conducted through KONEPS 41,000 Public Entities 191,000 Registered Suppliers Total Volume of Transactions Conducted via KONEPS Total Volume of Transactions Conducted via KONEPS

16 Minimized face-to-face contacts All the information are published on-line on a real time basis The number of bid participants increased three-fold USD 6.6 on the suppliers side, USD 1.5 in the public sector Reduction of visits and contract-related papers, time-saving, etc Savings of labor and time for searching for tender information Savings from increased competition (not included in the figure) Enhanced efficiency and transparency Saves USD 8.1B worth of transaction costs annually Improves transparency in doing business with the government Transparency and Cost Efficiency

17 17 Corruption Prevention through KONEPS Increase public access to procurement information & decrease contracting officers discretion Reduce the possibility for corrupt and illegal activities involving abuse of classified information Clarify criteria for bid evaluation & disclose evaluation results Digitalization of successful bidder selection reduces public officers discretion at the bid evaluation stage, therefore prevents corruption Minimize face-to-face contact and increase information exchange between public organizations Minimize possible corruption between government officials and suppliers Discourage defected companies participation in biddings & prevent documents from being forged, consequently preventing corruption Increased competition as a remedy to bid rigging Augmenting the number of bidders curbs collusion between bidders

18 Contribution to the Growth of SMEs Benefits for SMEs Minimal cost for marketing and promotion in the public sector Easy access to tender information and broader bidding opportunities Market opportunities for new technology products SMEs participation 99.5% of the total 191,000 registered bidders are SMEs 97% of the suppliers of the On-line Shopping mall are SMEs

19 3. Implementation

20 Dimensions of e-Procurement Implementation Leadership Business Process Reengineering Technology Change Management

21 Business Process Reengineering 80% of the total 565 processes in three categories (goods, services, construction works) were revised 152 processes were removed, and over 300 processes were streamlined through integration and digitalization 80% of the total 565 processes in three categories (goods, services, construction works) were revised 152 processes were removed, and over 300 processes were streamlined through integration and digitalization Redesigning Procurement Work Process for Improvement Foundation for standardized product catalogue system (product classification / identification) Determining standard e-Document forms (eb-XML based standards with development guidelines) Foundation for standardized product catalogue system (product classification / identification) Determining standard e-Document forms (eb-XML based standards with development guidelines) Standardization of e-Document forms and contents Revision of Legal and Institutional Basis Provisions for the registration of information and mandatory reporting for e-Procurement services Revisions for the streamlining of procurement procedures Provisions for the registration of information and mandatory reporting for e-Procurement services Revisions for the streamlining of procurement procedures

22 Revision of Laws and Regulations for e-Procurement Ministry of Knowledge & Economy Established in 1999/ revised in 2002, 2005, 2007 Provides for legally binding effect for digital documents Ministry of Public Administration and Security (MOPAS) Established in 1999/ revised in 2001, 2005 Legal force clarification for a digital signature Framework Act on Electronic Commerce Digital Signature Act Revision of Relevant Regulations Mandatory: tender notice via KONEPS, sanctions against fraudulent bidders, disclosure of award information Optional: use of e-Bidding and e-Contracting Grace period (3 months) and interim measures for smooth transition

23 Technology (1) – Intl. Standards for Interoperability Adopting the most up-to-date technology standards to ensure compatibility for data exchange with other external systems eb-XML based web applications Application of public digital signature e-Documents are generated on and sent from the senders PC, and received by the recipient's PC, to ensure end-to-end security system for e-Documents PKI-based personal keys are issued for each individual tender and stored in the responsible contracting officials PC, so that the system operator may not access the bid information Adopting the governments standard values (business registration information, standard public institution codes, etc.) to ensure compatibility for data exchange with other external systems

24 Technology (2) – Security and Authentication Digital signature and encryption technology is used for the security of e- Transactions (PKI method)

25 International Cooperation for e-Procurement Costa Rica MER-LINK Commenced Full Service in Dec Mongolia Mongolian e-GP System Implementation by Aug Vietnam e-GP Pilot System Operated since Jul Cross-governmental expansion in planning Tunisia e-Procurement F/S in 2009 Iran e-Procurement F/S in 2008 Uzbekistan e-Procurement F/S in 2009

26 4. Recommendations

27 27 Recommendations A single e-procurement system for all public organizations Simplification and Clarification of Procurement Regulations for Process Transition through BPR Take the step-by-step approach from integrated bid notice (e-Notice), bidding (e-Submission) and e- Shopping Mall Government leadership and establishment of a lead agency

28 28 THANK YOU

29 29 Appendices

30 30 e-Biddings through KONEPS , , , ,178 Number of e-Biddings Total number of bid participants (unit: million)

31 31 Korea ON-line E-Procurement System (KONEPS) Korea ON-line E-Procurement System (KONEPS) Focal points in the implementation of KONEPS 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 integrated data from public authorities and industry associations Shared use of information Standardization of Fundamental data Standardizing Product Catalog and consolidating the database Creation of e-Catalog Standardizing 149 e-Document forms Reliable e-Document Exchange Conformity to W3C/ebXML international standards End-To-End security measures Security assurance

32 32 Network Security Separation of Internet and Extranet, Dual Fire-wall, Intrusion Detection System, Security Solutions, etc System Operation complying with ITIL Check and Balance between PPS and outsourced Operator, Programmers and System managers Access control to system, program and D/B National Computing & Information Resources Center Automatic management of log access and program modification history, post-verification system Service Stability against accidents Dual operation of servers and networks, Back-up Center(Data mirroring), ITSM Security and Operation Policies

33 33 Features of KONEPS Modules Generation of e-Contact forms and electronic signing of the contract document The contract info is stored in the system e-Contract The real-time fund transfer via data-linkage to the dBrain after payment request. Unnecessary documents for inspection/tally and off-line payment request were removed. e-Payment Businesses can take impartial opportunities, and public organizations can have multiple choices, which satisfies various demands. Repetitive purchase and vexatious bidding process have been simplified via registration of the unit-price contract product and ordering function. e-Shopping Mall e-Bidding All bidding notices of public organizations (central government entities, local autonomies and educational institutions) are published thru KONEPS. It secures stability and confidentiality via digital-signature, encryption and e-Data.


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