PPS-Korea Presentation PPI Hanoi Mtg

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Innovating Public Procurement through

Korea ON-line E-Procurement System

November 2010

Kang-il Seo

Public Procurement Service



9 Consolidation of e-Document Exchange

and e-Reporting

2

4

Innovation in Services

The Korean Government initiated 11 e-Government projects to enhance nationalcompetitiveness utilizing information technology

Foreword: Korea’s e-Government Project

e-Government

Single Window for Civil Services

3 Integrated Social SecurityInformation System

Internet-based National Taxation System

1 Government-wide e-Procurement System

INFRASTRUCTURE

Administrative Productivity

5 National Finance system

6 Integrated Administration System forLocal Governments

7 Nation-wide Educational AdministrationSystem

8 Standardized HR Management System

10 e-Authentication and e-SignatureSystem

11 Government-wide IT-governanceEnvironment



Problems Prior to KONEPS



Korea ON-line E-Procurement System (KONEPS)

Government-wide e-Procurement System

Developed and operated

by PPS

Commonly used by allpublic agencies forprocuring goods andconstruction works

International standardsto ensure inter-operability

KONEPS



Characteristics of KONEPS

Single Window for Public Procurement

Publication of all public tender notices

Bidders can participate in all public biddings after one-

time registration

One-stop Service

Integration of Entire Procurement WorkEntire procurement processes from supplier registration,

bidding through to payment via the internet

One-click purchase at the Online Shopping Mall

160 types of documents handled online through the data

exchange linkage with 100 information systems



KONEPS processes the entire procurement procedures through the 4 majorsub-systems: e-bidding, e-contracting, e-payment and the online shopping mall

e-ContractingContract Registration

Composition and

sealing of Contracts

Contract Review

e-Bidding

Tender notice

Price Assessment

Evaluation / Analysis

OnlineShopping Mall

Product Registration

E-Catalogue

Product Search

Online Order

e-Payment

E-Payment

Expenditure Mgmt.

Fee Management

KONEPS

Functions of KONEPS



KONEPS at a Glance



KONEPS e-Tendering Processes

Authentication

Certificate

CertificateAuthorities

Integrated

Notice

Other BiddingSystems

Commission for

Bid Participation

PG SystemCertificate

Supplier Data

RelatedAssociations

Authentication

Certificate

CertificateAuthorities

Contract

Information

D-BrainSystem

Certificate for

Tex Payment

G4C System

OnlineTransaction

Supplier

Registration

Integrated

Notice

Bid Bond Encryption/

Time Stamp

PerformanceBond, etc

Electronic Funds

Transfer

G4C SystemPublic Org.

(40,000)Surety

Company

EncryptionKey Issuance

System

SuretyCompany

D-BrainSystem

Banks

Supplier

Registration

Integrated

For BidBidding

Bid Opening/

EvaluationContracting

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)



Transactions through KONEPS

2007 2008 2009

$56 bn

$63 bn

$86 bn

In 2009, over 70% of Korea’s total

public procurement (122 billion

USD) was conducted through

KONEPS

41,000 Public Entities

191,000 Registered Suppliers

Total Volume of TransactionsConducted via KONEPS



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 informationSavings from increased competition (not included in the figure)

Enhanced efficiency and transparency

Estimated transaction cost savings of USD 8.1B annually

Improves transparency in doing business with the government

Transparency and Cost Efficiency



11

Corruption Prevention through KONEPS

Increase public access to procurement information & decreasecontracting officer’s discretion

•Reduce the possibility for corrupt and illegal activities involving abuse of classifiedinformation•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 exchangebetween 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



Dimensions of e-Procurement Implementation

Leadership

Business ProcessReengineering Technology

Change

Management



Business Process Reengineering

• 80% of the total 565 processes in three categories (goods, services, constructionworks) were revised

• 152 processes were removed, and over 300 processes were streamlined throughintegration 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)

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



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



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 sender’s 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 official’s PC, so that the system operator may not access

the bid information

Adopting the government’s standard values (business registration information,standard public institution codes, etc.) to ensure compatibility for data exchange

with other external systems



Technology (2) – Security and Authentication

Digital signature and encryption technology is used for the security of e-Transactions (PKI method)



Experiences in Other Countries

E-Procurement System Implementation in Costa Rica (MER-link)

• Opened in June, but final modifications still going on

• Principles of single window, process & data integration, and one-stop service

• e-Tendering, e-Contracting, e-Catalogue, e-document exchange

• PKI authentication system

Lessons

• Inter-departmental Coordination, in addition to legal foundation, to promote

broader use

• Organizational manpower to operate the support center (call center) and for IT

maintenance

• National certification system and standards to be planned in well in advance

R d ti



18

Recommendations

A single e-procurement system for all public

organizations

Standardized procurement process and electronic

document forms (XML) with digital signature

Simplification and Clarification of Procurement

Regulations for Process Transition through BPR

Take the step-by-step approach from integrated bidnotice (e-Notice), bidding (e-Submission) and e-

Shopping Mall



19

THANK YOU



Appendices

e Biddings through KONEPS



e-Biddings through KONEPS

2006 2007 2008 2009

207,633 213,539207,960

20.820.9 20.5

23.2

235,178

Number of e-Biddings Total number of bid participants (unit: million)

F l i t i th i l t ti f KONEPS



Korea

ON-lineE-ProcurementSystem

(KONEPS)

Focal points in the implementation of KONEPS

Gateway to Government Procurement

E-Procurement Portal

Comprehensive Information ContentsIntegrated Information SearchCustomer Service

Standardized Procurement Process

ASP for public institutionsServices for suppliersSystem development for the SystemOperation Authority

Efficient Procurement Process

One-time registration for participating inall public bidsReducing the paper documentsubmissions by bidders

Integrated Information & Shared Use

Comprehensive information on public

bids and bid awardingAccess to integrated data from publicauthorities and industry associationsShared use of information

Standardization of Fundamental data

Standardizing Product Catalog andconsolidating the databaseCreation of e-CatalogStandardizing 149 e-Document forms

Reliable e-Document Exchange

Conformity to W3C/ebXML internationalstandardsEnd-To-End security measuresSecurity assurance

Security and Operation Policies



Network Security

Separation of Internet and Extranet, Dual Fire-wall, Intrusion DetectionSystem, Security Solutions, etc

System Operation complying with ITIL

Check and Balance between PPS and outsourced Operator, Programmersand 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

Features of KONEPS Modules



Features of KONEPS Modules

Generation of e-Contact forms and electronic signing of the contract document

The contract info is stored in the systeme-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-ShoppingMall

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.

PPS-Korea Presentation PPI Hanoi Mtg

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