KONEPS_presentatin_Kang_il_Seo by fanzhongqing


									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

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

 2. Impacts of KONEPS

 3. Implementation Experiences

 4. Recommendations
1. Korea ON-line E-Procurement
   System (KONEPS)
Foreword: Korea’s e-Government Project
The Korean Government initiated 11 e-Government projects to enhance national
competitiveness utilizing information technology


             Innovation in Services                        Administrative Productivity
 1   Government-wide e-Procurement System        5     National Finance system

                                                 6    Integrated Administration System for
 2                                                    Local Governments
     Single Window for Civil Services
                                                 7    Nation-wide Educational Administration
 3   Integrated Social Security                       System
     Information System                          8    Standardized HR Management System
 4                                               9    Consolidation of e-Document Exchange
     Internet-based National Taxation System
                                                      and e-Reporting


        10   e-Authentication and e-Signature   11   Government-wide IT-governance
             System                                  Environment
Public Procurement System in Korea

  Combination of Centralized and Decentralized Procurement
    Medium to
 Increasing large scale procurement for central government
              SME’s Market Opportunities
    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 Korea’s
     total public procurement)
     PPS operates KONEPS, Korea’s public e-Procurement system
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-
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
Characteristics of KONEPS

         Integration of Entire Procurement Process
         Entire procurement processes from supplier registration,
         bidding through to payment are conducted via the
         One-click purchase at the Online Shopping Mall

                       One-stop Service
         160 types of documents handled online through the data
         exchange linkage with 100 other public sector & private
         sector information systems
Functions of KONEPS
 KONEPS processes the entire procurement procedures through the 4 major
 sub-systems: e-bidding, e-contracting, e-payment and the online shopping mall

                e-Bidding                            e-Contracting
                                                     Contract Registration
          Tender notice
                                                     Composition and
          Price Assessment                           sealing of Contracts
          Evaluation / Analysis                      Contract Review

     e-Payment                                                 Online
                                                            Shopping Mall
                                                            Product Registration
    Expenditure Mgmt.
    Fee Management                                          Product Search
                                                            Online Order
KONEPS at a Glance

                                                                  Related Agencies

                                                                     Ministry of
                                                                    and Security


                                                                  Korea Financial
                  Surety    Ministry of Strategy   Construction   Telecommuni-
                Insurance      and Finance            CALS          cations &
KONEPS e-Tendering Processes
 Certificate     Other Bidding     PG System           Related        Certificate      D-Brain
                                                                                                      G4C System
 Authorities       Systems         Certificate       Associations     Authorities      System
Authentication    Integrated     Commission for      Supplier Data   Authentication     Contract      Certificate for
 Certificate        Notice       Bid Participation                    Certificate     Information     Tex Payment

 Supplier         Integrated                         Bid Opening/
                                    Bidding                          Contracting      Inspection/        Payment
Registration        For Bid                           Evaluation

                  Public Org.       Surety                             Surety          D-Brain
 G4C System                                          Key Issuance                                        Banks
                   (40,000)        Company                            Company          System
  Supplier        Integrated        Bid Bond          Encryption/    Performance            Electronic Funds
 Registration       Notice                            Time Stamp      Bond, etc                 Transfer

                       All procurement processes are digitalized
  Online               KONEPS electronically obtains information on the bidders (business
Transaction            registration, credit rating, past performances, etc) from other public and private
                       information systems (no need for submitting paper documents and certificates)
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
Phased Establishment

     Development       Electronic Data Interchange System (1997)
                       Online Shopping Mall System (1998)
      (1997-2001)      e-Tendering System (2000)
                       e-Guarantee and e-Payment System (2001)

        (2002)         Establishment of KONEPS for the use of all
                       public organizations (2002)
2. Impacts of KONEPS
Transactions through KONEPS

      41,000 Public Entities

                                                            $86 bn
                                                 $63 bn
  191,000 Registered Suppliers
                                       $56 bn

  In 2009, over 70% of Korea’s total
  public procurement (122 billion
  USD) was conducted through
  KONEPS                               2007       2008        2009

                                         Total Volume of Transactions
                                           Conducted via KONEPS
Transparency and Cost Efficiency
  Enhanced efficiency and transparency

   Improves transparency in doing business with the government

     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

   Saves USD 8.1B worth of transaction costs annually

     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)
Corruption Prevention through KONEPS
 Increase public access to procurement information & decrease
 contracting officer’s 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
Contribution to the Growth of SMEs

          Benefits for SMEs                   SMEs participation

     Minimal cost for marketing and      99.5% of the total 191,000
     promotion in the public sector      registered bidders are SMEs
     Easy access to tender information
     and broader bidding opportunities   97% of the suppliers of the On-line
                                         Shopping mall are SMEs
     Market opportunities for new
     technology products
3. Implementation
Dimensions of e-Procurement Implementation

      Business Process
       Reengineering         Technology


Business Process Reengineering

Redesigning Procurement Work Process for Improvement
• 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

Standardization of e-Document forms and contents
• Foundation for standardized product catalogue system
    (product classification / identification)
•   Determining standard e-Document forms
    (eb-XML based standards with development guidelines)

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
  Framework Act on Electronic Commerce
   • Ministry of Knowledge & Economy
   • Established in 1999/ revised in 2002, 2005, 2007
   • Provides for legally binding effect for digital documents

  Digital Signature Act
   • Ministry of Public Administration and Security (MOPAS)
   • Established in 1999/ revised in 2001, 2005
   • Legal force clarification for a digital signature

  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)
International Cooperation for e-Procurement

                                                   Mongolian e-GP System
                                                   Implementation by Aug.
                 F/S in 2009

 F/S in 2009
                  e-Procurement                                                Costa Rica
                  F/S in 2008
                                                                            Commenced Full Service
                                                                            in Dec. 2010

                                  e-GP Pilot System
                                  Operated since Jul. 2010
                                  expansion in planning
4. Recommendations

    Simplification and Clarification of Procurement
    Regulations for Process Transition through BPR

    A single e-procurement system for all public

    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


e-Biddings through KONEPS

         207,633      213,539

             20.8            20.9             20.5

          2006             2007            2008             2009

    Number of e-Biddings          Total number of bid participants (unit: million)
Focal points in the implementation of KONEPS

Gateway to Government Procurement                              Integrated Information & Shared Use

  E-Procurement Portal                                          Comprehensive information on public
  Comprehensive Information Contents                            bids and bid awarding
  Integrated Information Search                                 Access to integrated data from public
  Customer Service                                              authorities and industry associations
                                                                Shared use of information

 Standardized Procurement Process                Korea         Standardization of Fundamental data

  ASP for public institutions
                                                 ON-line        Standardizing Product Catalog and
  Services for suppliers                       E-Procurement    consolidating the database
  System development for the System                System       Creation of e-Catalog
  Operation Authority                                           Standardizing 149 e-Document forms

   Efficient Procurement Process                                 Reliable e-Document Exchange

  One-time registration for participating in                    Conformity to W3C/ebXML international
  all public bids                                               standards
  Reducing the paper document                                   End-To-End security measures
  submissions by bidders                                        Security assurance
Security and Operation Policies
    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                                                                        32
Features of KONEPS Modules

              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.

              Generation of e-Contact forms and electronic signing of the contract document
              The contract info is stored in the system

              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.

              Businesses can take impartial opportunities, and public organizations can have multiple
e-Shopping    choices, which satisfies various demands.
   Mall       Repetitive purchase and vexatious bidding process have been simplified via registration of the
              unit-price contract product and ordering function.


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