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Innovating Public Procurement through
Korea ON-line E-Procurement System
November 2010
Kang-il Seo
Public Procurement Service
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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
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Problems Prior to KONEPS
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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
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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
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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
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KONEPS at a Glance
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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)
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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
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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
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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
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Dimensions of e-Procurement Implementation
Leadership
Business ProcessReengineering Technology
Change
Management
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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
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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
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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
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Technology (2) – Security and Authentication
Digital signature and encryption technology is used for the security of e-Transactions (PKI method)
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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
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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
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19
THANK YOU
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Appendices
e Biddings through KONEPS
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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
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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
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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
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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.