Gi Su Kim Director 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 1. Why did we develop GePS ?

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. Why did we develop GePS ?

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 ( )  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 1. Why did we develop GePS ?

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-Malle-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-user PPS Operation Suppliers Use Certification- Related agencies Certification- Related agencies Ministry of Government Administration And Home Affairs Ministry of Government Administration And Home Affairs Construction-related Associations Korea Financial Telecommunications & Clearings Institute Korea Financial Telecommunications & Clearings Institute Surety insurance Ministry of Finance And Economy Ministry of Finance And Economy Construction CALS Linkage Portal Integ-ratedNotice CommercialProductscatalog Contractedproductscatalog Goodsclassificationsystem Documents distribution and outside linkage User registration suppliers’performance e-Guarantee e-payment e-Procurement system e-Procurement ASP Supplier supporting service Unit contract system Linkage 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 Technology and 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 ?

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 members of our agency had to support the execution of it from the registration to bid opening for several days… But now I can finish all of my work alone at my PC in ten minutes… A total of 210,000 participants 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) 3. What are its achievements? Government Business

 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 3. What are its achievements?

“Because of the peculiar characteristics of procurement due to conflicting interests, citizens had doubts about transparency, however hard we may have tried… But now, most of cases are executed by GePS, I feel citizens’ trust improving…:” (a city-official in charge of procurement) “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) Government Business

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. What are its achievements?

3.4 Facts and Figures 3. What are its achievements? Registration Electronic Bid 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 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) Electronic Mall 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)  11 th IACC (International Anti-corruption Conference) (May 2003)  UN/CEFACT (United Nations Center for Trade Facilitation and Electronic Business) (Sep & Feb. 2004)  5 th 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) 3. What are its achievements?

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. What has made GePS a success ?

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) 4. What has made GePS a success ?

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 5. Next Steps of GePS 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 Classification (UNSPSC) as a standard for commodity classification (410,000 items) –Partnership with private industry to ensure e-catalog interoperability between public and private 5. Next Steps of GePS 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) 5. Next Steps of GePS

Demo : Mobile Service Main page Search results of bid information Detailed bid information

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