Contents 1.Concept and Service ………………….…………. 1 2.Background of Digitalization ……………………. 4 3.Operational Performance ………….……………. 7 4.Achievements ………………………………… Factors for Success ……………………..………16 6.Latest Achievements ….…………………… … …21 7.Comparative Study ….………………… … … … …22

1.1 A Cyber Market for the Entire Public Procurement A single website for public procurement -GePS provides integrated bidding information including detailed specifications and criteria for the evaluations, etc -One-time registration enables participation in all bidding 1. Concept and Service Online transactions -All processes are digitalized from purchase request, bidding, contract, to payment, and information is provided online -Accessible to information of 58 other institutions whose systems are linked with GePS, and one-stop service is available  Just by connecting to the Internet, public organizations and private businesses can process their procurement work online based on the autonomy of each procuring entities

1.2 Internal & External System Architecture Public Organizations (Buyers) PPS Operation Private Businesses (Suppliers) Use Certification- Related agencies Ministry of Government Administration and Home Affairs Construction- related Associations Korea Financial Telecommu- nications & Clearings Institute Surety insurance Ministry of Finance And Economy Construction CALS Linkage Portal Integrated notice Commercial products catalogue Contracted products catalogue Goods classification system e-Procurement system e-Procurement ASP Supplier supporting service Unit contract system Linkage User registrationE-Guarantee Supplier’s Performance E-Payment Documents distribution and outside linkage 1. Concept and Service - 2 -

Government contract : Act on Contracts to which the State is A Party (ACSP) -Regulations implementing ACSP: Executive orders, enforcement rules issued by the Minister of Finance and Economy -PPS has authority to interpret regulations regarding government procurement and contract terms, starting from June, 2003 Local government, state-owned enterprises contracts : subject to separate laws, but in most cases, ACSP is applied. 1.3 Legal Framework Concept and Service

2.1 To Enhance Public Trust by Improving Transparency & Efficiency 2. Background of Digitalization - 4 -

PPS e-procurement (EDI, 1997~2001) -PPS adopted EDI to initiate e-procurement As a centralized procurement agency, PPS accounts for 30% of the entire public procurement E-procurement applied to procurement of goods and to the online shopping mall in 1997, expanded to construction and services in 2000, and upgraded from EDI to XML based on the Internet in 2000  In 1997, we started with 20 public organizations as users In 2001, digitalization extended to all work including bidding, contract, and payment  e-bidding service were shared on request with the other organizations -Per-capita productivity rose by 75%(from 280 to 489 cases annually) 2.2 Steps to GePS (1/2) 2. Background of Digitalization - 5 -

Government-wide expansion (GePS, 2001~2002) -Prompted as one of the 11 e-government projects Government-wide efforts made by creating a task force comprising relevant institutions and businesses Utilization enhanced by expanding participation and receiving various requests -The GePS launched in October 2002 after the BPR/ISP for GePS started in July 2001 * BPR: Business Process Reengineering / ISP: Information Strategy Planning -We built the DRS (Disaster Recovery System), DW (Data Warehousing), CRM (Customer Relationship Management System), and Ubiquitous Service from 2003 to Steps to GePS (2/2) 2. Background of Digitalization - 6 -

200,000 users from 30,000 organizations (buyers) and 150,000 businesses (Suppliers) -Jointly used by all organizations from the central and local governments to state-owned enterprises including all entities belonging to themselves Records a daily average of 100,000 website hits, and exchange 100,000 documents online which, in the past, were delivered via mail or in person 3.1 Utilization Volume 3. Operational Performance - 7 -

93% of all biddings were conducted online -18 millions businesses participated in 120,000 biddings amounting to US$ 25 billion Construction materials, software and office supplies, which are regular purchase items of public organizations, were ordered by one-click purchasing in the shopping mall according to the unit costs, which were contracted by PPS -US$ 7 billion for 500,000 orders Other transactions of US$ 11 billion including private contracts were made electronically 3.2 Transaction Volume (US$ 43 Billion annually, FY2004) 3. Operational Performance - 8 -

Raised productivity -Saved annual transaction costs of US$ 3.2 billion US$ 2.9 billion of business expenses was saved in terms of time and transportation (US$ 0.3 B for public organizations) Improved transparency -Achieved a crystal clear administration by providing information in real time and expanding the provision of information Promoted fair competition by expanding bidding opportunities -Reduced face-to-face contacts between businessmen and officials 4.1 Enhanced Procurement Administration 4. Achievements - 9 -

“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 required for participating in a bidding took at least half day, but now… only 1 minute 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 gazettes and newspapers at all times for information, but now, I start my day surfing GePS with a cup of morning coffee…” (a businessman in charge of sales ) Ap pendices – Public offering for descriptions of user’s experience  GePS Influence on productivity for businesses 4. Achievements

“Before GePS, we sometimes formed collusion with our rivals for prearranged bidding in front of the bidding place … But now the chances of such 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, pondering 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 newly changed situation…” (a businessman in charge of sales) Ap pendices – Public offering for descriptions of user’s experience  GePS Influence on transparency for businesses 4. Achievements

Ap pendices – Public offering for descriptions of user’s experience  GePS Influence on productivity and transparency for public organizations 4. Achievements “Before GePS, in some cases, over 1,000 participants came to attend just one bid… in that case regardless of their job positions, all members of our agency had to support the execution of the bidding 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 people participated last year…” (a city-official in charge of procurement) “Because of the peculiar characteristics of procurement arising from conflicting interests, citizens had doubts about transparency, however hard we may have tried… But now, most of the biddings are implemented by GePS. I feel citizens’ trust improving…” (a city-official in charge of procurement)

Expanded the experience of E-Commerce -Public organizations and businesses accumulated the e-procurement experience and utilized it for online transactions -Created an environment for PCs and the Internet, and fostered the mindset for e-Commerce Improved the security of E-Commerce -Facilitated the establishment of infrastructure for digital signature and security including PKI encryption * PKI : Public Key Infrastructure -Accelerated the application of digital signatures to ensure security for private sector transactions 4.2 Leading the Development of E-Commerce 4. Achievements

Received with the Public Service Award (UN, Jun. 2003) Evaluated as the best e-government service provider (OECD, May 2004) -A strong pull-through effect on ICT use in the private sector and no further actions are required 4.3 World’s Best E-Government Operator 4. Achievements Reflected the standardized process in the UN global standard (UN/CEFACT, Mar. 2005) -Registration → Public Invitation → Tender/Opening Tender → Publication of Award

4.3 World’s Best E-Government Operator 4. Achievements Best practice model for e-procurement from around the world (UN, “E-government Readiness Index”, Nov. 2004) -Accentuated the integrated portal approach The model policy export case for Korea -Benchmarked by many countries including developed countries such as Japan -International collaboration with Pakistani and Vietnamese governments’ e-procurement projects

5.1 Overcoming Weaknesses 5. Factors for Success ObstaclesStrategies  Need for inter-governmental cooperation  Established government-wide promotion system  Difficulty in integrating user inputs for providing user- friendly service  Activated user input at the initial developmental stage  Digital Divide  Well-developed infrastructure

5.2 Established Government-wide Promotion System Operated an E-Government Special Committee as a top taskforce for building e-government (Jan ~ Jan. 2003) -Strong inter-governmental initiative The Committee assumed full management of e-government projects The President himself checked the progress of projects directly through the committee -Joint efforts by officials and private sector specialists in the Committee Public: Vice-ministers planning and budgeting Private: Specialists applying new ICT 5. Factors for Success

-11 projects for e-government under the principle of Selection and Concentration GePS is one of the projects: including government-wide civil service, education, national finance, tax, social insurance, integrated personnel management, etc Top budgetary priority for the e-government Fiscal Year E-Government Projects Budget (US$ M) Change(%) Total Budget (US$ M)90,28398,065106,087119,418124,966 Change(%) Factors for Success

5.3 Integration of User Input Best practice of collaboration -Established the board of GePS development with 9 organizations under E-Government Special Committee -A total of 90 organizations and businesses participating as a user or institutions linked with GePS Operated as advisory committees, trial boards, workshop members, etc -Continuous practical training of users Built nation-wide education system for various organizations including regional offices and outsourced institutions -Persuading users to promote voluntary use No more red tapes, no more corruption, no more waste of time, etc Extension of use with PR 5. Factors for Success

-Ranked first in terms of Internet connection 30 million Internet users(65.5% of the population), 11 million households with broadband Internet subscribers(75%), etc -No problem occurred in e-biddings with 30 million participants Bridged the Digital Divide among different regions and companies 5.4 Well-Developed Infrastructure Encouraged technology development of e-commerce by legislating and revising laws  Digital Signature Act (Feb. 1999), Framework Act on E-Commerce (Feb. 1999), Electronic Promotion Act on Administration Processes for the Establishment of an e-Government (March, 2001), etc. 5. Factors for Success

Face-to-face consultation services through a computer screen are provided by establishing Web Call-Center Differentiated services are provided for each customer by introducing Customer Relationship Management (CRM) 6.1 Individually Customized Service(2004) 6. Latest Achievements 6.2 Focusing on the Ubiquitous Service(2005) Mobile service channels shift away from the PPS homepage to wireless channels such as PDAs Wireless e-bidding and property management through Radio Frequency Identification (RFID) About 200 participants monthly through PDA

7. Comparative Study Pre Qualifications Procurement Planning Procurement Advertisement Bidding Selection of Successful Bidder Closing of Contract Procuring agencies may engage in pre- qualification in case of service, civil work, turnkey project, expensive and technically complex equipment Decision of Procurement Performance of Contract and Inspection Opening of the Bids Bidding Process Project FS Procurement Plan (package, types) Bidding docs. For each package Bid Announcement Bid Opening Bid evaluation Review and approve bid results Announce bid results Each bidding procedure Project Procedure Should be posted to the public by Decree 66 1.bulletin 2.website(future) Contract Closing of Contract 7.1 Standardized Process for Applying GePS Approach PakistanVietnam

Integrate and share all information about government Procurement Make a single e-Procurement system for all public organizations Standardize procurement process and electronic document (XML) with digital signature Take the step-by-step approach from integrated bid information and e-bidding Need to make more clear rules and regulations according to the reforming the process 7.2 Advices to Establishing e-Procurement System Comparative Study

Jae Yong Lee Director of Information Management Team Public Procurement Service of Korea ( / Thank You