Gi Su Kim Director Public Procurement Services ROK New York Office International Public Procurement...

Gi Su KimDirector

Public Procurement Services

ROK New York Office

International Public Procurement Conference

Reinventing Government Procurement

Through Digitalization

October 2004

CONTENTS

1. Why did we develop GePS?

2. What is GePS?

3. What are its achievements?

4. What has made GePS a success?

5. Next steps of GePS

1. Why did we develop GePS?

1.1 Overview of the Public Procurement in Korea

1.2 Understanding Public Procurement

1.3 E-Commerce, the Best Way to Innovation

1.4 Strategic Approach for Adopting E-Commerce

• Combines centralized and decentralized procurement systems

Centralized : Procurement by central and local government agencies over a certain threshold must be assigned to PPS

Decentralized : Procurement under the threshold and state-owned enterprises’ procurement are conducted by themselves

Centralized (17 billion, 30%)

Decentralized(41billion, 70%)

Total Volume: US$ 58 billion(’02)

• May use PPS’ GePS for decentralized procurement

1.1 Overview of the Public Procurement

1. Why did we develop GePS ?

PPS is a centralized procurement agency with a total of 935 employees, and was created in 1949

Importance of public procurement Eases the burden of taxpayers’ by reducing national budgets

Most of public expenditures are distributed by procurement Sharply increases public confidence through the transparent process

Eliminates common suspicions of corruption Plays the role as a tool for fiscal policy

1.2 Understanding Public Procurement

Traditional characteristics of public procurement

High cost

Low transparency

Low service quality

Paper-oriented procedure - excessive paperwork

Labor-intensive work - frequent office visit

Complicated process


E-Commerce, the Best Way to Innovation

– To sharply increase transparency and efficiency by online transactions

– To maximize the return on investment by joint use of one system

No need to establish another e-procurement system by each agency

1.3 Need for Enhancing Performance of Public Procurement

To respond to a changing environment

Low cost

High transparency

Greater convenience

Demand for High Quality - Active participation in public affairs

Expansion of e-Commerce

E-Government trend

Digitalization


1.4 Strategic Approach to Adopting e-Commerce

To become a professional organization by differentiating us

– Transformed our organization with the use of IT

Took initial steps for e-procurement

– Started with PPS’ own business (centralized procurement)

Exchanged e-documents by using EDI and opened e-mall (1997-1999)

Provided e-bidding and e-payment services (2000)

– Facilitated e-Commerce to the entire public sector including decentralized procurement

Initial operational capability September 2002

– GePS is a Single Window for public procurement which digitalized the entire processes from order to payment


2.1 Single Window for Public Procurement

2.2 Digitalized the Whole Procurement Cycle

2.3 Integrated and Shared Service

2.4 Internal & External System Architecture

2.5 Technology base of GePS

Demo : Sample pages of GePS

2. What is GePS ?

2.1 Single Window for Public Procurement

• Single point-of-entry for public procurement opportunities

• Centralized business registration

– With just a one-time registration with GePS, businesses can participate in all government business opportunities

– Repository of vendor data for the public sector

2. What is GePS ?

– All bids are legally required to be announced on GePS

– Examples of bid information : end-users, project size, estimate costs, technical specification, and award criteria

2.2 Digitalized the Whole Procurement Cycle

Automate end-to-end procurement process from requisition to payment

2. What is GePS?

e-Mall e-Paymente-Contracte-Bid

Bid documents preparation and posting

Invitation for bid

Secure submission and storage of bids

Opening of bids

Posting of award decision

One stop shopping source – search products, compare prices, submit PO to vendor

25,000 off-the-shelf products such as office supplies through framework contract

Submission of invoice

Electronic Payment Transfer (EFT)

Fast payment within 4 hours after receipt of invoice

Support electronic contract documents form

Buyers and sellers sign contract documents using digital signature

Storage of contract documents

Submission of inspection request and inspection certificate

2. What is GePS?

Provides one-stop service by linking GePS with 53 external systems including :

– Korea Financial Telecommunications & Clearings Institute for internet banking, National Finance Integrated System by Ministry of Finance and Economy for government financing, etc

– 11 guarantee corporations for warranty of transactions, 6 construction related associations for obtaining business credits, etc

Provides e-procurement services for all public organizations

– Joint use by all agencies from the central and local governments to state-owned enterprises by logging on to GePS

2.3 Integrated and Shared Service

End-userEnd-user

PPS OperationPPS Operation

SuppliersSuppliers

UseUse

Certification-Related agencies

Certification-Related agencies

Ministry of GovernmentAdministration

And Home Affairs

Ministry of GovernmentAdministration

And Home Affairs

Construction-relatedAssociations

Construction-relatedAssociations

Korea Financial Telecommunications& Clearings Institute

Korea Financial Telecommunications& Clearings Institute

Suretyinsurance

Suretyinsurance

Ministry of FinanceAnd Economy

Ministry of FinanceAnd Economy

Construction CALSConstruction CALS

LinkageLinkage

PortalPortal

Integ-Integ-ratedrated

NoticeNotice

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 system

e-Procurement ASPe-Procurement ASP

Supplier supporting serviceSupplier supporting service

Unit contract systemUnit contract system

LinkageLinkage

2. What is GePS?

2.4 Internal & External System Architecture

2. What is GePS?

2.5 Technology Base of GePS

Adopting encryption technology based on public key infrastructure and digital signature

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

TSS (Time stamp service) and authentication

Combination of Information Protection Technologyand the new eCommerce Model

Demo : List of invitation for bids & Click on e-bid

Click Here for Bid Participation

2. What is GePS?

Demo : Detailed information for each bid

Deadline for participation, estimated costs, technical specification, award criteria, etc

2. What is GePS?

Demo : Bid results on a real-time basis

List of participants and price proposed

2. What is GePS?

Demo : First screen of e-Mall

Lately listed Items on e-Mall

2. What is GePS?

3.1 Enhanced Efficiency of Public Procurement

3.2 Improved Transparency of Public Procurement

3.3 Stimulated E-Commerce in the Private Sector

3.4 Facts and Figures

3.5 Received High Appraisal from the International Community

3. What are its Achievements ?


• Lower information costs

3.1 Enhanced Efficiency of Public Procurement

– Supplier’s access to business opportunities is timely, complete, and unconstrained by space or time

– Reduce market research time and facilitate strategic sourcing

• Lower transaction costs – Reduce in business hours by document exchanges online – Supplier is not required to visit to government agencies – Research, ordering, bidding, fulfillment, are all more efficient

• Increased competition– The number of bidders has tripled as a result of e-procurement– Electronic bidding allows more dynamic price competition

Reduced US$ 2.8 billion a year by GePS : US$ 2.5 billion(90%) in savings by the private sector and 0.3 billion(10%) by the public sector

• “Before GePS, over 1,000 participants

sometimes arrived for one bid… in that

case regardless of their posts, all mem

bers of our agency had to support the e

xecution of it from the registration to bid

opening for several days… But now I c

an finish all of my work alone at my PC

in ten minutes… A total of 210,000 parti

cipants participated last year…..:” (a

city-official in charge of procurement)

• “I can reassign the employees’ duty because of GePS from the paper or routine work to management or sales divisions for more productivity…:” (a CEO of a private enterprise)

• “Before GePS, the time for participating in a bidding required at least half day, but now… only 1 minutes is enough for the same work, our company participated in bids 2,000 times a year….” (a clerk of a construction company)

• “I used to check the gazette and newspapers at all times for information, but now, I start my day surfing GePS with my morning coffee…” (a businessman in charge of sales)


GovernmentBusiness

Public, equal announcement and access on a real-time basis

Increase competition of small purchases by using e-Bidding

• Increased the disclosure of procurement information

• Diminished the possibility of corruption

3.2 Improved Transparency of Public Procurement

Online contact instead of face-to-face contact

Substantially reduce the opportunities and incentives for corrupt practices

Increase the likelihood of detection and positive proof of irregular transactions



• “Because of the peculiar characteristics

of procurement due to conflicting intere

sts, citizens had doubts about transpar

ency, however hard we may have tried

… But now, most of cases are execute

d by GePS, I feel citizens’ trust improvi

ng…:” (a city-official in charge of procur

ement)

• “Before GePS, sometimes we formed collusion with our rivals in front of the the bidding place for prearranged bidding… But now the chances of such an irregular practices are virtually non-existent…:” (a clerk of a construction company)

• “I used to visit the agency for the contract process, so I sometimes felt uncomfortable, whether I had to give a gift to my clients or not, but now I don’t need to visit the client, so I am happy with the new situation…:” (a businessman in charge of sales)

GovernmentBusiness

Promoted an e-Commerce mindset

Built the Infrastructure

3.3 Driving force of eCommerce in the Private Sector

Accumulated business experiences of online transactions

92,000 companies are required to use GePS, a common mode of e-Commerce

CEOs have emphasized the importance of the Internet and e-Commerce

Created the computer environment such as PC, Internet connection, etc Promoted the use of digital signatures as the best way to ensure security

First adopted and verified digital signature for e-bid (September 2000)

The number of issued signatures rose ten times for first 3 months

Finally, government adopted them as mandatory for the private shopping mall (February 2004)


3.4 Facts and Figures


Registration

ElectronicBid

e-Contract & e-Payment

•92 thousand registered businesses •26 thousand government agencies utilize GePS •More than 80 thousand visits to GePS daily

•92% of all bids are conducted online through GePS•140 thousand tenders published annually 3500•15 million businessmen participated on the web (1.25 million a month) •Total transaction value a year : $21.5 billion (FY 2003)

• No of purchase orders issued online a year : 0.5 million (99% of all purchase orders )•Total e-Mall transaction value : $4.3 billion (FY 2003)

ElectronicMall

• 23 thousand electronic contracts a year • 99 % of PPS payment transactions are electronic(FY 2003)• 213 thousand electronic payments a year

3.5 Received High Appraisal from the International Community

World Bank Conference on Transparency (Jan. 2003)

11th IACC(International Anti-corruption Conference) (May 2003)

UN/CEFACT(United Nations Center for Trade Facilitation and Electronic Business) (Sep. 2003 & Feb. 2004)

5th Global Forum on Re-inventing Government (Nov. 2003)

Recipient of the first UN Public Service Award(UNPSA) 2003

Selected for innovations in the public service for Asia Pacific Region (June, 2003)

International Recognition (presentation)


4. What has made GePS a success ?

4.1 Government-wide steering organization

4.2 World-class Internet Infrastructure

4.1 Establishment Government-wide Steering Organizations

Establishment of “special committee for e-Government” as a supreme taskforce for building e-government (JAN 2001 ~ JAN 2003)

Strong will for pan-government initiative

The Committee assumed full management of e-government project

Joint efforts from public sector and private sector

Public sector : planning and budgeting

Private sector : applied new IT

11 e-government initiatives under the principle of selection and concentration

GePS is one of e-government initiatives ; including government-wide civil

service, tax, national finance, education, social insurance, integrated

personnel management, etc


4.2 World-class IT Infrastructure

– Ranked first in internet connectivity 30 million Internet users(65.5% of the population), 11 million households with broadband Internet subscribers(75%), etc– By solving the Digital Divide in business, e-Commerce was not

considered a barrier to public procurement

Well-developed Internet Infrastructure

Demands of the stakeholders– Voluntary use due to profitability No more red tape, no more suspicion of corruption, no more wasted time, etc– Transparency from Public– Accumulated experiences of PPS’ staff, for example, continuous

practical training of users (23,000 customers in 2003)


5. Next Steps of GePS

5.1 Customer Relationship Management (CRM)

5.2 leading eCommerce through standardization

5.3 Ubiquitous e-Procurement environment

5.1 Customer Relationship Management (CRM)

• Deliver personalized service to each customer

– Give the customers what they want, when they want it

– Create the optimal channel mix combining new channels (PDA, mobile, web call center) with conventional methods (phone, internet, e- mail)

• Real-time access to and use of customer data


• Offer ongoing customer care across all channels -- with a customer interaction center

– Capture complete history of customer activity across channels and products

– IP based call center, Inbound & outbound call, escort browsing, voice chatting

• To standardize electronic documents in compliance with global standards– Appling IT infrastructure based on global standard

– To participate actively in United Nations Center for Trade Facilitation and Electronic Business (UN/CEFACT)

• To discuss the GePS standards as the global one of e-document and business process, etc

• To expand standardization of e-catalog – GePS adopted United Nations Standard Products and Service Classifica

tion (UNSPSC) as a standard for commodity classification (410,000 items)

– Partnership with private industry to ensure e-catalog interoperability between public and private


5.2 Leading eCommerce through Standardization

5.3 Ubiquitous e-Procurement Environment

• Mobile service

– Providing Access to procurement information through internet-connected

mobile device such as PDA (Personal Digital Assistant) – Presently running Wireless PDA service through WLAN or CDMA – Off-line web browser service will be available in September 2004

• Wireless e-bid pilot project

• RFID-based personal property management

– Radio Frequency Identification (RFID) allows government to more efficiently manage asset management

– Phase 1 : High-value equipment such as computer in PPS (Dec 2004) → Phase 2 : all assets exceeding given amount in government (2005 ~ 2006)

– PPS will pilot e-bid through mobile device such as PDA by wireless digital certificate technology (December 2004)


Demo : Mobile Service

Main pageSearch

results of bid information

Detailed bid

information

Thank YouThank You

Gi Su Kim Director Public Procurement Services ROK New York Office International Public Procurement...

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