Status of the Electronic Procurement in Korea and Future Tasks

January 2003

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1. What is the GePS?

2. Overview of the procurement in Korea

3. How to promote the GePS - Success factors

4. Major contents of the GePS

5. Detailed job improvement through the GePS

6. Expected effects of the GePS

7. Future tasks

Table of Contents

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A system that digitally processes complicatedA system that digitally processes complicated procedures and paperwork procedures and paperwork

Digitalizing all the procedure from purchase request to payment

Removing or drastically reducing documents

27,000 public organizations and 70,000 companies use27,000 public organizations and 70,000 companies use the system the system

Government e-Procurement System

1. What is the GePS?

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Centralized procurement system

Where goods, services and construction works exceeds a certain amount has to be entrusted to the Public Procurement Service or PPS

To enhance transparency and save national budget

The amount of the public procurement : $56 billion

PPS handles about 30% of the total public procurement

※ The total public procurement takes about 47% of the entire government expenditure

2. Overview of the Procurement in Korea

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Step-by-stepapproach

Government-widesystematic promotion

President’s strong will

3. How to promote the GePS - Success factors

Internetinfrastructure

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3.1. President’s strong will of ‘Powerful IT Country’

“I am going to make Korea the best IT nation in the world

to build solid foundation of IT country.” (1998 Inauguration)

Adopting a national-wide strategy : Cyber Korea 21(1999~2002)

To build the knowledge-based nation through on-line

To improve national competitiveness and quality of life

To develop as one of the top 10 advanced IT countries

3. How to promote the GePS - Success factor(1)

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3.2. Set up a government-wide promotion system

Organizing ‘e-Government Special Committee’ (Nov.

2001) Under the direct control of the President Consist of officials and private sector specialists Vice minister level officials : planning and budget Private sector specialists : applying new IT technology

Selecting 11 tasks for e-Government Comprising civil service administration, procurement, taxation, education, social insurance, etc The GePS is one of the most important tasks

3. How to promote the GePS - Success factor(2)

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3.3. Step-by-step approach BPR/ISP※ by Ministry of Planning and Budget(MPB)

With a neutral and balanced view MPB has budgetary authority ※ BPR/ISP : Business Process Reengineering/Information Strategic Planning

System building by PPS With rich e-procurement experiences

PPS has developed EDI/EC* system since 1997 With accumulated work experiences and knowledge as the central procurement agency for the past 50 years ※ EDI/EC : Electronic Data Interchange/E-Commerce

3. How to promote the GePS - Success factor(3)

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3.4. Well-developed Internet infrastructure

No. 1 in Internet Connectivity

Internet users : 25 million

Broadband internet subscribers : 10 million

70% of total households

Top Internet using rate in the world

Stock trading, internet shopping, etc

3. How to promote the GePS - Success factor(4)

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4. Major Contents of the GePS

end-user

operationagency

Suppliers

UseUse

Certification-Related agencies

Ministry of GovernmentAdministration

And Home Affairs

Construction-relatedAssociations

Korea Financial Telecommunications& Clearings Institute

Suretyinsurance

Ministry of FinanceAnd Economy

Construction CALS

LinkageLinkage

Linkage

PortalPortal

IntegratedIntegratedNoticeNotice

Commercial Commercial Products Products catalogcatalog

Contracted Contracted productsproductscatalogcatalog

Goods Goods classificationclassification

systemsystem

Documents distribution and outside linkageDocuments distribution and outside linkage

User registration User registration

suppliers’ suppliers’ performanceperformance

e-Guaranteee-Guarantee

e-payment e-payment

e-Procurement systeme-Procurement systeme-Procurement ASPe-Procurement ASP

Supplier supporting serviceSupplier supporting service

Unit contract systemUnit contract system

4.1 System architecture(1) - linked to 30 outside systems

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4.1 System architecture (2)

Applying e-signatureApplying e-signature

In association with 6 authorized certification

agencies

Securing the stability of on-line transaction Abolishing the submission of documentsAbolishing the submission of documents

By sharing various information including suppliers data

Enhancing convenience of suppliers

4. Major Contents of the GePS

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4.1 System architecture (3)

Electronic handling the various contract-related bondsElectronic handling the various contract-related bonds

By being connected with 11 guarantee agencies

On-line submission of bonds for prepayment, tenders, performance, etc.

Realizing real-time electronic paymentRealizing real-time electronic payment

In association with 13 major commercial banks

Shortening payment time

4. Major Contents of the GePS

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4.2 The GePS technology base

Adopting encryption technology based on public key infrastructure and digital certification

Based on the world-wide standards of e-document (XML, SOAP, EBMS, etc)

A point-in-time confirmation service and an individual ID confirmation service

Combination of information protection technologyCombination of information protection technology and a new e-commerce modeland a new e-commerce model

4. Major Contents of the GePS

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4.3 Major functions of the GePS

All the bid-info is required to be placed on the GePS 81% of bids were conducted electronically (As of Dec. 2002)

Providing integrated domestic bidding informationProviding integrated domestic bidding information

Covering the whole procurement processes on the internet

From specification review to payment

Accessing to standardized commodities and supplier’s info

Information on 420,000 goods, and 70,000 suppliers Purchasing of commodities pre-contracted by PPS

4. Major Contents of the GePS

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4.3 Major functions of the GePS (www.g2b.go.kr)

4. Major Contents of the GePS

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Use registrationIntegrated Notice

Informationsharing

Before After

5. Detailed job improvement through the GePS

5.1 Integrating the supply of bid Information

PPS

PublicOrganization

Suppliercompany

Construction- RelatedAssociations

Registration

Bid Info.

Bid Info.

Registration

Suppliersinformation

PPS

PublicOrganization

PublicOrganization

Construction- RelatedAssociations

Suppliercompany

The GePS

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5.2 Simplification of documents and prompt e-Payment

Financial officer

Inspectionofficer

Paymentofficer

Suppliercompany

6.Payment request

4. D

eliv

ery

confi

rmat

ion

1.Delivery3.Deliveryconfirmation

2.Request of inspection

5.Payment request

7. National treasury check/paym

ent2D

elive

ry

confi

rmat

ion

and p

aymen

t req

uest

3.Payment handling

1.Request of delivery

and payment

Paymentofficer

Inspectionofficer

SupplierCompany

Before After

5. Detailed job improvement through the GePS

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5.3 Expanding the range of commodity selection

1.Request for quotation

Public Organization

Suppliercompany

Suppliercompany

Supplier company

Supplier company

Public Organization

3.Order Placement3.Order

placement

2’.On line quotationsubmission

e-Cataloge-Catalog2.Search 1.Product

registration

Before After

2. Quotation Submission(off-line)

5. Detailed job improvement through the GePS

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5.4 Standardization of the classification of commodities

Before

Different item classification/attributes/management

system

PPS classification

Publiccorporation

classificationDefense

Classification

Application of differentsystem

PPS

Localgovernments

Othergovernment

agencies

BasedOn

UNSPSC

Application of standard classification/attribute

system

PublicOrganization

After

5. Detailed job improvement through the GePS

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Competitiveness

Efficiency

Transparency

6. Expected effects of the GePS

Policy making

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By blocking up face-to-face transactionsBy blocking up face-to-face transactions Making public in real time of the status where the Making public in real time of the status where the

procedure goesprocedure goes Disappearance of prearranged biddingDisappearance of prearranged bidding

By enhancement of suppliers’ competition

※ The number of bidders increased by three times after the e-bid started

Centralized system to avoid duplicate system development

6.1 6.1 Enhancement of transparency

6.2 Saving of government budgetSaving of government budget

6. Expected effects of the GePS

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Stimulating the e-commerce in the private sector

Inducing the competitive environment in price and quality

Unification of commodity classification system will also help

Obtaining the statistical data of public procurement

6.3 Strengthening corporate competitiveness6.3 Strengthening corporate competitiveness

6.4 Improving government procurement policies6.4 Improving government procurement policies

6. Expected effects of the GePS

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The Government e-Procurement

System(GEPS)

Enhancement of PPSexpertise in procurement

Focusing on stable system operation

Maximizing customersatisfaction

7. Future tasks(1)

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System securities strengthened against hacking possibilities

User training to spur on the public e-procurement

Continuous system upgrading to renew the functions

Improving the reliability of the GePS contents

Broadening the product choices

Developing more flexible contract methods

7.1 7.1 Focusing on stable system operation

7.2 Maximizing customer satisfaction7.2 Maximizing customer satisfaction

7. Future tasks(2)

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Strengthening procurement-related consulting Strengthening procurement-related consulting

servicesservices

Developing new contents for price, products, etcDeveloping new contents for price, products, etc

Working out new managerial expertise in various Working out new managerial expertise in various

areasareas

IT, research service contract, etcIT, research service contract, etc

Settlement of contract disputes in e-procurementSettlement of contract disputes in e-procurement

7.3 Enhancement of PPS expertise in procurement7.3 Enhancement of PPS expertise in procurement

7. Future tasks(3)

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Great impact on anti-corruption and enhancement ofGreat impact on anti-corruption and enhancement of transparency transparency

Sharing know-how of the GePS with other countriesSharing know-how of the GePS with other countries

Training program, system building, problem solvingTraining program, system building, problem solving

Maximizing the benefits of the GePSMaximizing the benefits of the GePS

e-bid, e-shopping, e-payment, sharing informatione-bid, e-shopping, e-payment, sharing information