September 2012 Da-un, Jeong - ADB Procurement Foru · PDF fileMerits and Demerits of ......

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Transcript of September 2012 Da-un, Jeong - ADB Procurement Foru · PDF fileMerits and Demerits of ......

  • September 2012

    Da-un, Jeong Deputy director, Public Contract and Procurement Policy Division

    Ministry of Strategy and Finance, the Republic of Korea

  • Coverage

    1. Authorities Responsible for Public Procurement

    2. Regulatory Framework

    3. Liberalization of Government Procurement Market

    4. Public Procurement Service

    5. Volume of Korean Government Procurement Market

    6. G.P. Process overview

    7. Merits and Demerits of Centralized Procurement

  • Legal and regulatory framework for central government procurement

    Ministry of Strategy and Finance (MOSF)

    Executive agency under MOSF

    Public Procurement Service (PPS)

    Oversees public procurement policies and strategies

    Procures goods, services and construction works for central government entities

    Legal and regulatory framework for local government procurement

    Ministry of Public Administration and Security (MOPAS)

    Provides procurement services for local government entities and public enterprises upon request

  • Legislation of Korean Government Procurement

    Act on Procurement to Which the State is a Party

    Guideline on bidding and contracting for the

    central government : method of contracting and

    awarding

    Act on Procurement to Which a Local Government is a Party

    Guideline on bidding and contracting for local

    governments

    Act on the Management of Government-invested

    Institutions

    Guideline on bidding and contracting for public

    enterprises and other government-invested orgs.

    Public Procurement Act Mandates the establishment of central

    government procurement agency (PPS) and its

    responsibilities

  • Act relating to the Contract to which the State is a Party

    Presidential Decree of Act relating to the Contract

    to which the State is a Party

    Enforcement rule of Act relating to the Contract

    to which the State is a Party

    Special Decree of Act and Special enforcement rule of Act relating to the specific contract to which the State is a partyfor International Bidding

  • Acceded to the 1994 Government Procurement

    Agreement (GPA) under the WTO

    Bilateral Free Trade Agreement

    - Korea- Chile FTA , Korea-Singapore FTA, Korea-US FTA,

    Korea-EU FTA, Korea-Peru FTA, Korea-EFTA FTA etc.

    Category Thresholds of Central Government

    Goods 130,000 SDR

    ( US$ 2,200,000)

    Services 130,000 SDR

    ( US$ 2,200,000 )

    Construction Contracts 5,000,000 SDR

    ( US$ 8,500,000)

  • l Buys goods and services

    l Contracts for construction services

    l Stockpiles raw materials such as aluminum, copper, etc.

    l Manages government-owned properties

    l Operates Korea on-line e-Procurement System (KONEPS)

  • - - Foreign aid materials management

    Established as Office of Foreign Supply (1949)

    History

    Developed into central government procurement agency

    - Became responsible for domestic and foreign procurement, and contracting for public construction projects (1961)

    - Management of government-owned goods (1971)

    - - Procurement of goods and services from abroad

    - Operation of the government e-Procurement system (2002)

  • Organization

    Administrator

    Deputy Administrator

    Audit and Inspection Officer General Services Division

    Office of Planning & Coordination

    e-Procurement Service Bureau

    International Goods Bureau

    Procurement Service Bureau

    Construction Works Bureau

    Quality Management Office

    11 Regional Offices Overseas Procurement Attachs in

    Chicago, London, Beijing

    Vice-ministerial level organization

    945 Staff

  • Combination of Centralized and Decentralized Procurement

    Central government entities

    Construction Works

    Above US$ 100,000

    Above US$ 3,000,000

    Goods & Services

    - Centralized procurement

    Local government entities and public enterprises

    - Decentralized (autonomous) procurement

    - Legally required to procure through Public Procurement Service (central procurement agency) for requirements above threshold

    [ thresholds for centralized procurement]

  • Centralized

    33%

    Decentralized

    67%

    - Centralized : US$ 33 billion

    - Decentralized : US$ 67 billion

    Public Procurement Total (2011) : US$ 100 billion (10% of GDP)

  • PPS recovers its operational costs from procurement service fees from

    public entities

    PPS

    Public

    Entities Suppliers

    Contracting

    Payment

    Supply of Goods

    & Services

    Procurement Request

    Payment

    Reimbursement

    Procurement Service

    Fee

    Operation

    PPS offers its procurement services upon receiving procurement requests

  • Procurement Workflow (Goods & Services)

    PPS

    Public Buyer

    2. Public disclosure of PR Details

    3. Review of Requirements

    4. Determining Procurement Method

    5. Tender Notice

    6. Preparation of Estimated Value

    7. Bid Evaluation and Awarding

    13. Contract Closure

    1. Purchase Request (PR)

    Contractor

    12. Reimbursement 11. Payment

    9. Contract Delivery

    8. Notification of Contract

    10. Inspection

  • Determining the most suitable contract and award method, considering the

    purpose, characteristics and size of the contract.

    Limited

    Tendering Selective

    Tendering Single

    Tendering

    LOW

    Competitiveness

    HIGH

    Open

    Tendering

    l Tendering Methods

    l Awarding Methods

    Lowest Price

    Awarding

    Qualification

    Evaluation

    Contract by

    Negotiation

  • Local govt

    Govt Corp

    Educational

    institute

    Independent org

    Central

    govt

    Services

    Construction

    Goods

    Foreign Procurement

    User of PPSs Procurement Services

  • Merits Demerits

    Centralized

    Procurement

    Volume purchasing

    Accumulated know-

    how

    Closer monitoring for

    transparency

    Effectively utilizes

    GP as economic

    policy tool

    Complex and longer

    procurement process

    Limited choice for the

    procuring entity

    Decentralized

    Procurement

    Freer choices for the

    procuring entity

    Urgent procurement

    Tend to be more

    expensive

    Difficulties in

    standardization and

    quality monitoring

    Loose monitoring

    risk of moral hazard

    Complemented with

    e-Procurement:

    Reduced lead time

    via e-Processing

    Convenient

    e-Ordering for

    commercial goods

  • Da-un, Jeong

    e-mail: leina@mosf.go.kr

    mailto:leina@mosf.go.kr