KONEPS

Best Practice of
e-Procurement

GP
Republic of Korea

e- Republic of Korea
KONEPS
(Korea ON-line E-Procurement System)

Best Practice of
e-Procurement
Contents

06 Overview - Definition of Public Procurement 16 

Transition to e-Procurement - Background
- Main Characteristics of Procurement Administration System: Implementation of - Goals and Strategies
KONEPS - Establishing KONEPS Implementation Plan
- Implementation of KONEPS

08 
Transition and Development of - Government Procurement Policies
Korean Government - Transition of the Korean Government Procurement System
Procurement Policies and - Public Procurement Service (PPS) - Success Factors
25 
Success Factors and
Systems
Benefits of KONEPS - Key Benefits
- International Recognition

13 
Changes in Procurement - Changes in Procurement Environment
Administration Environment and - Role of Digitalization in Innovating Procurement Administration
Innovation of Government 37 
Innovative Seamless - Advancement of KONEPS
Procurement Procurement Service - International Cooperation of PPS
 Overview

Overview Definition of Public Procurement ● High standards of fairness, transparency and ethicality required
- Since a large portion of the national budget is allocated to procurement, it is more
● Government organizations require a vast amount of human and material resources to
likely to involve corruptions and special treatment benefits compared to other
perform not only basic functions for a nation to exist, such as diplomacy, national
administrative acts and considering that the source of revenue for public procurement
defense, and security, but various other missions including education, environment,
comes from citizens, the benefits and opportunities from procurement administration
society, welfare, and transportation.
should be equally given to the general public.
- The taxes collected from citizens are the main source of revenue to procure such
- Any suppliers wishing to participate in public procurement should be given equal
human and material resources, which are then properly allocated through the
access and be assured that the selection process of the winning bidder is always fair
budgeting process
and transparent.
● Financial resources are largely allocated into personnel expenses for managing human
● Function as efficient means to attain policy goals
resources and material costs required to obtain and manage material resources.
-
Since procurement in most countries accounts for 10-15% of GDP and holds a
- The process of obtaining material resources is called procurement and the concept of
powerful purchasing power, it is the leading player of the market.
procurement generally refers to purchasing and supplying goods and services. In
-
It is also necessary that procurement administration should perform political
specific, the act of obtaining materials resources to be used in the public sector 1) is
functions such as ensuring responsible growth of the procurement market through
called government procurement 2).
fair competition between the existing participants, protection of socially disadvantaged
● The categories of government procurement are largely divided into goods purchases for businesses, preferential purchase of environmental products, and providing
supplying material goods, service contracts for providing various services, and opportunities for new businesses that have potential to enter the market.
construction contracts for providing office environment or buildings and other facilities.
● A high level of professionalism required
- In a broader sense of supplying, in addition to human resources, all the environments
- There are numerous laws and regulations to ensure fairness of procurement and
and resources required for government organizations to perform their tasks,
perform political functions. Therefore, to have a thorough understanding and
government procurement also includes real estate, lease, insurance contracts, etc.
interpretation of these laws and prevent any possible conflicts in advance, abundant
experience and a high level of professionalism are required.

● Appropriateness of specifications and prices as more critical factors relative to private

Main Characteristics of Procurement Administration
sector
- The ultimate goal of government procurement is not to seek profits but to supply
The basic concept of procurement, which is to supply resources required for
resources necessary to perform public missions and functions. Therefore, it is
managerial activities in a more economical and effective way, is the same both for the
public and private sector, but what is different in government procurement is that the important to procure goods with appropriate quality and specifications to perform
financial resource to purchase public goods for the public activities of a nation mainly tasks of government agencies.
comes from the taxes collected from its citizens.

1) Public sector: includes the central government, local governments, public agencies, and national
and local public enterprises. The public sector defined by Public Procurement Service, the central
procurement agency of Korea, comprehensively includes all the organizations that have public
characteristics, such as private schools, the union of farmers and fishermen, and nonprofit
corporations.
2) H
 ere, the concept of public procurement and government procurement will not be strictly
distinguished and both will mean to include the public area where the Korean government can act as
a procurer.

06 KONEPS : Best Practice of e-Procurement Public Procurement Service 07

 Transition and Development
of Korean Government
Transition and Government Procurement Policies Procurement Policies and Systems ●
As the need arose to establish an organization to manage aid goods, centralized
procurement appeared.
Development of ● Classification based on end user
- The Provisional Office of Foreign Supply (POFS) and the Office of Foreign Supply with
Korean Government - Centralized procurement: A single specialized purchasing organization orders all the
Exclusive Responsibilities for Foreign Procurement were established in 1949.
Procurement goods and services
- The Provisional Office of Foreign Supply was consolidated into the Office of Foreign
- Decentralized procurement: Each government agency purchases the resources they
Policies and Systems Supply in 1955 to become the foundation of Public Procurement Service, the central
need autonomously
procurement agency in Korea.
⇒ Even in countries that pursue centralized procurement, small amounts of
purchases are left to each government agency’s discretion and generally, local
[ Era of Industrialization ]
governments and public enterprises make purchases autonomously.
● In 1962, when industrialization began, the Korean government established and initiated
⇒ Even in countries that pursue decentralized procurement, certain types of products
a 5-year economic development plan for economic reconstruction. For the efficient
such as medical supplies which are demanded by all government agencies alike
execution of the plan, Public Procurement Service, the central procurement agency,
are ordered in large quantities through centralized procurement.
was established in 1962.
●
In Korea, the history of centralized procurement began after Public Procurement - Good purchases and construction contracts above a certain threshold became subject
Service, the central procurement agency, was established in 1962 to efficiently carry out to centralized procurement.
the national economic development plan. ⇒ At the time, local autonomy was not available, so local agencies were also subject
to centralized procurement.
Korea pursues both centralized and decentralized procurement policy.
● Centralized procurement continued to be expanded and strengthened such as through

- National agencies: are basically subject to centralized procurement except for the the government stockpiling project for daily necessities and key materials including raw
Ministry of National Defense, but each agency is free to make purchases below a materials and facility materials.
certain maximum amount3).
- Local Governments and public enterprises: are free to make purchases without the
amount limit and can request the central procurement agency to make purchases for <1st Stage of Digitalization >
them as required. ●D
 ata management-level computerization for systematic management of procurement
data (1977~ 1986)
- Stage-by-stage computerization of contract management work in the field of
procurement (foreign procurement, accounting, construction work contracts,
Transition of the Korean Government Procurement System
domestic procurement, management of commodity stockpiling) starting from
government goods management (1977-1986)
[ Era of Establishment ]
● In the absence of an integrated procurement policy, each public agency made purchases ● Online work processing started from 1987 limited to construction work contracts,
distribution of supplies, registration of suppliers, etc.
on their own decentralized procurement systems.

[ Era of Globalization ]

After 1993, drastic changes occurred in the public procurement environment,

including decentralization, globalization, and digitalization.

● Decentralization: Since the autonomy of local governments in 1995, purchasing became

gradually decentralized.
3) U
 p to 100 million won (USD 85 thousand) for goods and 3 billion won (USD 2.56 million) for
construction contracts

08 KONEPS : Best Practice of e-Procurement Public Procurement Service 09

 Transition and Development Transition and Development
of Korean Government of Korean Government
Procurement Policies and Systems - Centralized procurement work was gradually transferred to the local governments Procurement Policies and Systems

and they became absolutely free, regardless of the amount, to purchase products in Management of foreign aid supplies and procurement of financial
revenues (1949 ~ 1960)
2008 and execute construction work contracts in 2010.
⇒The existence of Public Procurement Service, the central procurement agency, was
threatened and Public Procurement Service pushed to innovate the procurement Provisional Office of Foreign Supply (1949) ▶ Office of Foreign Procurement (1949)
administration to strengthen the efficiency of centralized procurement and shift to ▶Office of Foreign Supply (1955) ▶ Public Procurement Service (1961)

a consumer-based service.
● Globalization: After the 1993 Uruguay Round negotiations, Korea joined the WTO ● Manage foreign aid supplies (1949)
Agreement on Government Procurement in 1994 and opened the government ● Purchase foreign goods with financial aid assistance
procurement market in 1997.
- In line with this, contract policies and procedures were modified to meet the world
standards and related laws were improved and revised.
⇒The opening of the government procurement market should ensure transparent
government procurement and market accessibility not only for domestic suppliers Establishment and development of centralized procurement,
but for foreign suppliers as well. At the same time, it brought about the tasks of supporting economic development (1961 ~ 1992)
strengthening global competitiveness of domestic suppliers and supporting them to
enter the global procurement market.
● Manage foreign aid supplies, purchase foreign goods with financial aid assistance
● Digitalization : Digitalization of procurement administration emerged as a very important ● Domestic procurement, contracts for construction work (1961) and centralized
agenda in the reformation of the public sector. procurement structure (1962)
- Especially, in the process of seeking a democratic administration model in the 1990s, ● Stockpiling management(1967), government goods management(1971), provision
the need arose to implement an efficient and fair procurement administration system of stored goods & quality management (1976)
for the procurement market that greatly affects national economy,
-A lso, the digitalization of procurement administration was an essential task to respond to the
environmental changes such as decentralization and globalization of government procurement.

Globalization, Decentralization, and Digitalization of procurement

administration (1993 ~ )
<2nd Stage of Digitalization>
● In 1994, PC and OMR card-based e-Bidding was applied to all the biddings. ● Joining WTO Government Procurement Agreement(1994), Opening the
government procurement market(1997)
● Procurement EDI project, where main procurement documents were distributed in
● Launch of e-Bidding (1994) and procurement EDI system(1997)
the form of e-Documents (1996-2001)
● Following the implementation of an online e-Bidding system in 2001,
● Autonomy of local government (1995), decentralized procurement of local governing
bodies (2010)
● A comprehensive national e-Procurement system was implemented in 2002.
● Transition to e-Procurement by establishing a comprehensive national
- Not only for Public Procurement Service but for all the government agencies e-Procurement system, KONEPS (2002)
making purchases by themselves, all the public procurement in Korea is now ● Introduction of MAS contracts(framework contracts), Launch of KONEPS online
conducted online through e-Procurement. shopping mall (2006)

(Table 1. Transition of Korean Government Procurement)

10 KONEPS : Best Practice of e-Procurement Public Procurement Service 11

 Transition and Development Transition and Development
of Korean Government of Korean Government
Procurement Policies and Systems Public Procurement Service (PPS) Procurement Policies and Systems [ Main services ]

[ Vision & Mission ] ● Procuring for Korean public organizations

- In 2015, Public Procurement Service purchased goods worth 17 billion dollars, service
Maximizing budget usage and guaranteeing customer
worth 4 billion dollars, and construction works worth 10 billion dollars.
Motto satisfaction through efficient acquisition,
supply and management of government resources - PPS also acted as an agent taking care of various processes of construction works
such as construction management and cost review.
● Government Stockpiling

To become a world-class professional procurement - To ensure short- and long-term supply of goods and price stabilization, PPS directly
Vision agency to procure and management material resources purchases and stockpiles necessities and raw materials. PPS also manages related
for the public sector businesses such as transportation, manipulation, storage, and supply.
- Currently, PPS is focusing its efforts on stockpiling raw materials and its stockpiling
projects involve 6 types of nonferrous metals and 9 types of rare metals.
⇒In 2015, its stockpiling and supply amount reached 200 million dollars, respectively.
① Provide the best value service to customers
② Save national budget ● Management of government goods and nation-owned properties
Mission ③ Contribute to developing the national economy through - PPS is in charge of managing approximately 13 million items of national goods owned
transparent and efficient procurement and management of by 50 Korean central government offices and also takes charge of managing real
resources of resources necessary public administration
estate assets owned by the nation.
● Operation of KONEPS
- KONEPS is a comprehensive e-Procurement platform not only for centralized procurement
but also for 50 thousand public agencies (national agencies, local governments,
Procurement Service Stockpile Management national public organizations, etc.) and 340 thousand suppliers,

•Goods Procurement(17B USD) •Nonferrous Metal(6) ,

•Service Contract(4B USD) Rare Metal(9)
•Construction Contract •Reserved(226M USD)
(9.7B USD) Released (205M USD)
•Construction Management → Stability of Price and Supply
Changes in Changes in Procurement Environment
● Autonomous management with decentralization
Public Procurement
- Administrative functions and authority began to be transferred to local regions and
Procurement Administration
decentralized as the local government heads initiated local self-government in 1995.
Service Environment and ⇒ In the procurement administration sector as well, the issue arose to redefine the

E-Procurement
Innovation of role of PPS so that it could support local governments through centralized
Goods & Property Government procurement without limiting their autonomy.
Management System
- The introduction of local self-government was significant not only in political terms of
•Centralized Procurement system
Procurement
•Goods(12M items, 13B USD) increased autonomy of local governments but in terms of efficient procurement and
•Korea ON-line E-Procurement
•Property(794B USD, 24.5%) distribution of resources.
System
⇒ It served as an opportunity to shift the traditional centralized procurement method
by the central procurement agency to a decentralized procurement method based
on local autonomy in an attempt to pursue efficient procurement and distribution of
resources autonomously required and determined for the local issues faced by
(Fig. 1 Vision, Mission & Main Services of PPS) each local government.

12 KONEPS : Best Practice of e-Procurement Public Procurement Service 13

 Changes in Procurement Changes in Procurement
Administration Environment Administration Environment
and Innovation of Government ● Globalization with open government procurement market and Innovation of Government ●Realizing customer-oriented administration
Procurement Procurement
- As the Korean government procurement market opened in 1997, the need arose to - As the central agency for government procurement administration, Public Procurement
ensure transparency in procurement administration and fair competition. Service manages a large portion of national fiscal spending involving clients such as
⇒ Led by the multilateral trading system and regional trade agreement, there was an purchasing agencies and suppliers.
increasing demand for the opening of the procurement market in each nation. ⇒ Therefore, PPS gave various efforts to realize efficient customer-oriented
⇒ Since government procurement is a major agenda in FTAs, which are increasingly administration in response to the emergence of e-Government and the trends of
spreading around the world, the opening of the government procurement market is democratization of the civil society, economic autonomy, and open administrative
expected to expand steadily. service.
•The major assignment is to standardize and liberalize the government procurement - To realize customer-oriented procurement administration, most of all, it was necessary
market and make the legislative and administrative procedures more transparent, to take into account each purchasing agency’s satisfaction in relation to securing
thereby defining nondiscriminatory acts of government procurement. quality procurement items, a wider range of choices, etc.
● Customer-oriented procurement service based on growth of IT industry and demand for ⇒ Until now, procurement administration had problems such as price-based
innovation procurement for each purchasing agency, limited diversity and range of choices,
slow processing of contract and supply, and insufficient post-contract management
-O  ne of the core factors that caused a shift in the paradigm of procurement administration
service.
was the increased possibility of e-Procurement in the digitalization era.
- Since PPS services, which included provision of accurate and various information of
⇒ The growth of the IT industry and the common use of the Internet expanded the
cyberspace, presenting each country with an urgent need to realize e-Government. the goods to be procured and public construction works, post-management, etc., were
- Along with the trend of openness and decentralization, the procurement needs of directly related to efficiency management of national finance, evaluation of each
public agencies became more diverse and advanced, leading to the demand for purchasing agency’s satisfaction level was very important.
⇒ PPS needed to present objective and clear bidding contract criteria to ensure
innovation toward a customer-oriented procurement service.
suppliers’ competitive supply and the accuracy of evaluation criteria and appropriate
⇒ In particular, as administrative reformation emerged as a new paradigm, innovation
comparative evaluation were required not only to ensure fair competition between
for customer-oriented procurement service became more important and the
the participants but to ensure transparency.
redesigning and applying IT technology to procurement emerged as the most
⇒ Ensuring fair competition between suppliers helped not only to reduce unnecessary
powerful means to realize such innovation.
costs but improve the quality of goods and public construction works.
● Support for decentralized procurement

Role of Digitalization in Innovating Procurement Administration - Public Procurement Service started providing its centralized procurement services,
●Ensuring of transparency and fairness such as e-Bidding, e-Contract, and e-Guarantee, online through its procurement EDI4)
- Unlike private procurement, public procurement pursues not only rational values project in 1996.
focusing on the consequential aspects of budget execution, such as efficiency and ⇒ However, unlike computerized centralized procurement, IT technology was still
unable to be applied to each purchasing agency’s decentralized procurement and
economy, but also moral values focusing on the process itself, such as transparency
was based on paper administration.
and fairness.
- By converting the e-Procurement knowhow gained from centralized procurement into
- The traditional face-to-face method of procurement administration between public
an online environment, all the agencies in need of public procurement were able to
officials and suppliers was mistrusted by citizens mainly due to the lack of bidding
use e-Procurement.
information, nondisclosure of the bidding process and result, etc., and as a result,
⇒ It was possible to share the technology and knowhow of increasing efficiency and
contained ample possibilities of corruption.
transparency of procurement, which were the advantages of centralized procurement.
⇒ e-Procurement utilizing information technology was an opportunity and could play
⇒ Local agencies became possible to receive excellent quality procurement services
the role of securing innovative means to ensure transparency and fairness in that it
by selecting suppliers from across the nation without being limited to the region
can minimize face-to-face contact in the process of procurement administration
they belonged to.
and guarantee opportunities of fair access to interested participants.

4) EDI : Electronic Data Interchange

14 KONEPS : Best Practice of e-Procurement Public Procurement Service 15

 Changes in Procurement Transition to e-Procurement System
Administration Environment : Implementation of KONEPS
and Innovation of Government - At the time, there was no single window available for suppliers through which they
Procurement Decentralized Procurement Centralized Procurement
could get information on the procurement needs of all public agencies including the
central government departments, local governments and public enterprises. Nor
•Low purchasing costs there was information sharing between public agencies.
(economies of scale) - Suppliers had to individually check tender information announced by each public
•Favorable for purchases that agency and get issued and submit the same registration documents for each bid
•Easy to standardize product
exactly meet the needs of a local
specifications participation.
agency
•Professionalism by division of
•Favorable for purchasing ● Most of public procurement was mainly conducted through paperwork and face-to-face
procurement duties
procedures that require urgency contacts, which was likely to involve corruption between public officials and suppliers.
•Possible to select from suppliers
•Possible to promote the
across the nation
growth of locally based small [ Core tasks for implementing e-Government ]
businesses •Minimize waste of time and money
due to overlapping administrative ● To resolve the problems with the existing procurement system, a decision was made to
organizations and processes carry out the comprehensive national e-Procurement (G2B5)) system implementation
project.
- After the G2B system implementation project was selected as one of the 11 core tasks
(Table 2. Merits of Decentralized Procurement and Centralized Procurement) for e-Government by the Special Committee for e-Government, joint government
efforts to implement a pan-governmental system commenced.

Goals and Strategies

Transition to Background [ Implementation goals ]

● (Strengthened transparency) To eliminate possibilities of corruption due to face-to-face
e-Procurement
[ Stable foundation for e-Procurement ] contact, disclose each bidding process to the general public on a real time basis, and
System: ● Large procuring agencies such as Public Procurement Service, Defense Logistics strengthen transparency and trust in public procurement.
Implementation of Agency, and Korea Electric Power Corporation had established internal e-procurement ● (Efficient procurement) To minimize the need for personal visits by suppliers through
KONEPS system from the early stages.
online processing and enhance the administrative efficiency of procuring agencies
* As of 2001, public procurement in Korea accounted for 11% of its GDP of 622 billion dollars,
through automated processing.
which was 67 billion dollars, so it had a great potential ripple effect on the national economy
● (Government budget saving) By implementing an e-Procurement system that public
overall.
agencies can also use: ① costs are saved from enhanced efficiency of procurement
● Public Procurement Service established the e-Procurement Master Plan and
administration; ② budget required for each public agency to implement their own
procurement EDI/EC system in 1996. The Ministry of National Defense and Korea
procurement system can be saved; and ③ costs required to collect and manage
Electric Power Corporation also took actions such as the automation of their internal
procurement contents can be saved by sharing contents required for procurement.
procurement information management and other work processes, the partial exchange
of e-Documents with other companies, etc.

[Need for an integrated window for suppliers]

● The operation of an e-Procurement system by some public agencies was helpful to
suppliers to some extent, but created great inconveniences due to the absence of a
single window for public procurement.
5) Government to Business: government-to-business e-Commerce

16 KONEPS : Best Practice of e-Procurement Public Procurement Service 17

Transition to e-Procurement System : Transition to e-Procurement System :
Implementation of KONEPS Implementation of KONEPS
- Once documents are submitted, they can be reused by other agencies and for other
biddings, so suppliers do not need to get reissued the same documents every time.
With the supplier’s consent, online confirmation can be made through the linkage
Transparency between the related agency systems.
· Decrease
face-to-face contract
· Provide real-time
information

Single Window

Efficiency
Saving budet
· Electronic and
automatic · Commonage
process of entire system for public
procurement enterprise

Standardization One-stop
(Fig 2. Goals of KONEPS Implementation)
of Procurement Service

[ Implementation strategies – three basic directions to achieve goals ]

● (Provision of standardized public procurement processes) 50 thousand public agencies
can jointly use the standardized procurement processes through the KONEPS system.
(Fig. 3 Directions for KONEPS Implementation)
- It is possible to prevent in advance procurement public officials from making arbitrary
interpretations of complicated contract-related provisions and to provide predictable
procurement services. Establishing KONEPS Implementation Plan
● Establishment of an innovation plan for activating G2B (Aug.-Dec. 2001)6): establishment
● (Single window) For integrated provision of tender specifications, bidding notices, and
of Information Strategy Planning (ISP) for business process re-engineering (BPR) and a
contract information for all bids
single-window system for procurement.
- Also, it is possible to disclose to the public in real time each bidding process from
- Determination of the entire project scope of the implementation of a comprehensive
bidding notice to evaluation and selection of the successful bidder.
⇒ Suppliers do not need to check every notice announced by each public agency, but national e-Procurement system and the conceptual architecture of e-Procurement.
simply see the comprehensive information on KONEPS and participate in any - Presentation of how each stage will improve and look like, including the scope of each
ongoing public biddings in Korea. stage of project, schedule, implementation system and plan, redefinition of the

● (One-stop processing of procurement processes) KONEPS significantly enhanced the

administrative efficiency of procuring agencies and suppliers’ convenience through
linkage between various procurement data and automated processing of the data
without requiring to submit any paper documents. 6) Aug.-Dec. 2001 (5 months) The above project cost 1.25 million dollars and was carried out by an IT
company and a specialized consulting company

18 KONEPS : Best Practice of e-Procurement Public Procurement Service 19

Transition to e-Procurement System : Transition to e-Procurement System
Implementation of KONEPS : Implementation of KONEPS
procurement function of the public agencies and establishment of a plan to manage ● (Main areas of project implementation) The KONEPS implementation project was
any resulting changes and a single window for procurement, etc. carried out for 10 months from March to December 2002, and the main areas of project
- Includes role assignments and cooperation plans between government departments comprehensively included infrastructure implementation, program development,
and between public and private sector for implementing G2B, G2B system vitalization standardization, linkage between agencies, law and system modification, etc.
plan, analysis of the ripple effect from using the G2B system, economic efficiency of
e-Procurement for the public and private sector, etc.
KONEPS
Public
Authorized
e-Procurement System Item
Agencies
Implementation of KONEPS G2B
G2B Buyers e-Procurement ASP
Management classification
● As the overall control tower, the Special Presidential Committee for e-Government, Agency Portal Suppliers e-Procurement ASP
system
played the role of coordinating different opinions between departments and promoting MAS contact management system
G4C
cooperation between them.
Use linkage
- Discussion of system development involved 10 government agencies, including the User
e-Guarantee
Ministry of Strategy and Finance, that formed a Supporting Committee for e-Procurement, management
Public Catalog
Agencies Associations
where they discussed institutional challenges, and related 54 organizations which Integrated Past Performance system
constituted the working group for each field. publication & Engine e-Payment
management
Korean Financial
Project Overseer e-ducument excahnge & linkage system Telecommunications
Suppliers and Clearings
Special Committee for Institute
e-Government linkage

Supporting Committee for e-Procurement Guarantee Agencies The Ministry of Strategy Construction CALS
& Finance
Cross-governmental
Advisory Committee (Fig. 5 Conceptual Diagram for the Early Stage of KONEPS Service)

- (Infrastructure implementation) Infrastructure implementation involves the creation

Project Working Group of a computerized environment based on which KONEPS is operated. This area
includes HW, SW, network configuration, security network for bidding security, and a
Director General of Government call center system for customer support.
Goods and Information Management, PPS ⇒ A total of USD 12.4 million was invested in HW (USD 7.5 million) and SW (USD 4.9
million) and the duplicated or triplicated parallel structure from the DB server to
the network enables normal procurement service even when faced with errors in
some of the equipment.
Project Support Project Implementation Reviewer Group - (Program development) Consists of 10 unit services including a portal serving as the
Group Group
framework to overall services, user management for buyer and supplier registration
Development Team Public Institutions and bidding participation management, goods catalog system for managing the list of
PPS Officials
Standardization Team Private Businesses goods to be purchased, e-Procurement processing system for processing procurement, etc.
in each field
Infra Team Etc. Relevant Authorities ⇒ The e-Procurement processing system provides service for each work stage so that
all the procurement processes from procurement request, bidding, contract to
(Fig. 4 Organization Chart for KONEPS Implementation) payment involving public agencies and suppliers can be handled within the system.

20 KONEPS : Best Practice of e-Procurement Public Procurement Service 21

Transition to e-Procurement System : Transition to e-Procurement System
Implementation of KONEPS : Implementation of KONEPS

KONEPS Service for Service for Service for Operating - (System linkage) Linkage with procurement-related systems is one of the key factors
System Public Agencies Suppliers Agency that can significantly enhance the effects of e-Procurement by KONEPS.
⇒ Without the need for suppliers to get issued and submit any required certificates,
- Provide integrated
information KONEPS obtains the required digitalized procurement information by linking itself
- Provide integrated
Portal - User community - Counseling service with the related organizations.
information
- Online education management
System - Notifications for - User community - Survey management ⇒ In the early stage of implementation, the related systems from about 60 organizations
- Online education
operator and public became linked with KONEPS and their various eligibility data required for
agencies
procurement tasks became directly connected with KONEPS.
- Bidding notice ⇒ For decision making required for each process of procurement, the procurement
- Search integrated
registration documents created by KONEPS became linked in a standardized method with the
notices
Integrated management - Integrated notice
- Check bid opening approval systems operated by each of the related organizations.
- Search integrated classification
Notice notices result management
- Check integrated
- Bid opening contract information
management Classification Linked Organizations Linked Information
National finance
- Request for public
and accounting Ministry of Strategy and - Transmit and receive
agency, user Finance information related to payment
- Request for bidding - Public agency, system
User registration participant registration suppliers registration - Business registration
Registration - Search suppliers and alteration management
- Agency user authority certification, national tax
Management - User, bidding agent - User authority G4C Ministry of the Interior
management clearance certification, local
registration management
- Ineligible supplier
registration tax clearance certification
Public agencies - Receive bidding notice
- Goods demand that own a 8 Public agencies
separate information
- Procurement request management → - Unit price contract including the Ministry of
ordering management management procurement Transmit new and changed
e-Procurement - e-Bidding and National Defense
- C
 onclusion of joint - Procurement statistics system supplier information
Processing negotiated contract supply agreement, - Service status
- Contract management - Receive technical experts
bidding, Request for management
evaluation 10 Public agencies information
Associations
including Construction - Receive information on
- Request for Association of Korea suppliers’ performance and
e-Guarantee e-Guarantee - Guarantee agency business management
- Submit e-Guarantee
(bidding, contract, management
payment, defect) - Receive bidding commission
payment information
- Classification system Payment Korea Financial
- cataloging process - Transmit bank account
Telecommunications
Goods List - Assignment of - Request for cataloging - management gateway information
classification and - Search list Request and and Clearings Institute
processing status - Receive bank transfer payment
identification number information
management

- Search cataloged - Product detailed

- Receive a bidding guarantee
Catalog - Cataloged products 9 Guarantee agencies - Receive an advance payment
products information registration Guarantee including Seoul guarantee
- Shopping basket, order registration
Guarantee Insurance - Receive a contract guarantee
- Inspection - Receive a defect warranty
e-Payment - Request for inspection - Determine commission
- Receive request for - Request for payment - Issue notice
payment 6 certificate authorities
Certification - Receive certificate
- Suppliers’ including National
Management - Check suppliers’ information
- Check registered performance Computerization Agency
of Documents performance Information information
Subject to - Check information of - Request for update of management e-Approval Approval systems at the
Examination technical experts registered Information - Information update organizations involved - Documents subject to approval
processing system
with KONEPS

(Table 3. Unit Tasks for the Early Stage of KONEPS) (Table 4. Linked Organizations and Information in the Early Stage of KONEPS)

22 KONEPS : Best Practice of e-Procurement Public Procurement Service 23

Transition to e-Procurement System : Transition to e-Procurement System
Implementation of KONEPS : Implementation of KONEPS
- (Standardization and DB establishment) To utilize the e-Procurement infrastructure,
Service 16 types including the service contract request form
which had been mainly used for centralized procurement by Public Procurement
Service but now jointly available for all the public agencies, there was a need for Applied in Common to
standardization and, accordingly, integration and update of the existing DB. To do this, Facility Construction/ 20 types including the request form for the release of
Service retention money
it was necessary to handle mainly three areas: user information integration; catalog
information standardization; and procurement document standardization. Common Documents 20 types including integrated bidding notice
⇒ User information integration: code and item standardization was conducted so that
public agencies could jointly use the buyer and supplier information prior used only Linkage with
by Public Procurement Service. centralized 10 types including the withdrawal and payment receipt
⇒ Product information standardization: to standardize the procurement and purchase procurement
products, a four-level classification system and United Nations Standard Products
and Services Code (UNSPSC7)), an international classification system for Documents subject to 5 types including the product eligibility examination
procurement items based on a unique identification system, were introduced. approval result report
* To manage product information, a separate product catalog management system was
implemented, enabling integration management of a total of 480 thousand product Total 169 Types
items including 350 thousand product items from Public Procurement Service and the
rest from other public agencies. (Table 5. Status of e-Documents Developed in the Early Stage of KONEPS
⇒ Procurement document standardization: the e-Document format was standardized
based on ebXML, the international standard for e-Commerce, and the items and
attributes of the documents used for each process of procurement were defined
(the procurement e-Documents standardized in the early stage of implementation
included 169 types for 9 work processes).

Classification of
Number of Types of e-Documents Developed
Work Processes

User Management 8 types including the application form for competitive

bidding participant registration (alteration)
Success Factors Success Factors
Product management 18 types including the product listing request form
and Benefits of ● (Amendment of the laws and institution related to procurement) To ensure smooth
operation of e-Procurement, related laws and institutions needed to be amended.
Product Purchase 38 types including the product purchase request form KONEPS
- In the early stages of KONEPS implementation, most government agencies’
34 types including the construction contract request procurement administration was paper-based, so there was a lack of institutional
Facility Construction
form basis for electronic processing.
⇒ A specialized law and institution amendment team consisting of experts was
formed to review and amend any regulations relating to the implementation of the
system.
- Based on the G2B innovation plan, it turned out that regarding the effect of
e-Documents, Electronic Transaction Act and Digital Signature Act could be invoked.
- However, amendments were necessary for Enforcement Decree of State Contract Act,
7) A
 n abbreviation of the United Nations Standard Products and Services Code, which is a product and Enforcement Decree of the Government Procurement Act, Enforcement Rule of State
service classification code for e-Commerce developed by United Nations Development Program Contract Act, and Enforcement Decree of the Local Finance Act.
(UNDP), the UN’s global development network. It is the world’s most widely used e-Commerce
product classification system for all the industries (source: Naver Encyclopedia).

24 KONEPS : Best Practice of e-Procurement Public Procurement Service 25

Success Factors and Success Factors and
Benefits of KONEPS Benefits of KONEPS
Date of ● (Mutually compatible systems available through open technical standards) The underlying
Name of Law Description of Amendments Amendment technologies for the G2B system include PKI 8)-based electronic signature and document
- Implemented a single window for procurement by
security, ebXML e-Document standards, SOAP-based document distribution, and Java-
making it obligatory (Article 33) to publish bidding based web service implementation technologies.
notices not in the official gazette or newspaper but
- Through these technologies, a foundation was laid for not only ensuring stable online
through the designated information processing
system service for e-Commerce which can be very sensitive, but also facilitating document
- By strengthening the legal status of and information exchange with any systems in operation at the time by reflecting the
e-Procurement (Article 39), it became legally
possible to allow only e-Procurement excluding technology trend.
offline bidding Amended: - Especially, to ensure stable e-Transaction, certified e-Signature was applied to all the
Enforcement July 30
- It became legally obligatory (Article 76) to publish work processes and an electronic document-based end-to-end security system was
Decree of State
and deliver a notice of sanctions to ineligible Effective:
Contract Act suppliers only through the designated information established by allowing e-Documents created and transmitted from a sender’s PC to
Sept. 30
processing system, enabling systematic supplier be accepted on a receiver’s PC.
information management.
- It became legally obligatory (Article 94) for ● (Establishment of an inter-agency cooperation system through a pan-governmental
suppliers to report all their past performance as
contractor through the designated information implementation system) The G2B system was a project that required cooperation with
processing system. the related departments on such matters as the amendment of the related laws and
- A legal basis (Article 96) for using the designated plans to make the system widely used.
information processing system was prepared.
- Two great challenges emerged. One was consulting with a large number of related
agencies because implementing the system required the over 60 external systems to
- The introduction of the MAS contract system be linked, and the other was effectively identifying each agency’s user requirements
where higher quality and more reasonable price
Enforcement are ensured through competition by allowing and reflecting them in the system.
Amended:
Decree of the buyers to select from multiple contracted July 30 - To overcome these difficulties, in the G2B innovation plan establishment stage, a
Government suppliers (Article 7)
Procurement - The purchasing agencies should pay for the Effective: Working Group for Activating G2B was organized as a standing consultative body
Sept. 30
Act goods they procure by themselves, but upon mainly consisting of the Ministry of Planning and Budget.
request, due to budget reasons and such, ⇒ The direction of system implementation was finalized after collecting ample
PPS can pay instead (Article 12).
opinions from related government departments, Construction Association of
Korea, Korean Standards Association, etc.
Amended: - In order to promote active participation of public agencies and close cooperation with
Enforcement - Prepared a legal basis allowing all the public Aug. 24
Rule of State agencies to use supplier information available the private sector, various opinions were collected from related government
Contract Act on G2B (Article 15). Effective:
Sept. 30 departments and nongovernmental experts by holding commencement, interim, and
final briefing sessions, two workshops, public hearings, three advisory committee
meetings, etc.
- It became legally obligatory to publish all the
regional-limited bidding notices through the - In addition, in the beginning of system implementation, led by Public Procurement
Enforcement designated information processing system Service, which holds experience in implementing and operating an e-Procurement
(Article 70). Amended and
Decree of the system, a joint implementation platform consisting of the Supporting Committee for
- It became legally obligatory (Article 76) to Effective:
Local Finance
publish and deliver a notice of sanctions to Nov. 29 e-Procurement, Reviewer Group, etc. was established and coordinated various
Act ineligible suppliers only through the designated opinions from the related organizations.
information processing system, enabling
systematic supplier information management.

(Table 6. Amendment of Laws Related to G2B)

8) An underlying technology that enables perfect encryption by making a sender and a receiver use a
different public and private key for certification and through non-repudiation, etc.

26 KONEPS : Best Practice of e-Procurement Public Procurement Service 27

Success Factors and Success Factors and
Benefits of KONEPS Benefits of KONEPS
⇒ In principle, individual consultations are required with each entity, but if there were ⇒ By enabling 5 times more suppliers to participate in government procurement than
any differing opinions or pending issues, prompt decision making was pushed by before KONEPS was implemented (65 thousand suppliers), small and medium
the Supporting Committee for e-Procurement and Special Committee for enterprises(SMEs) were given more opportunities to participate in public
e-Government. procurement.
- The Supporting Committee for e-Procurement and Reviewer Group which being No. of suppliers No. of public entities
comprised of about 60 organizations also served as the windows for collecting user
350000 343,512
opinions and especially, Reviewer Group which mainly consisted of the expected
purchasing agencies played a leading role in work analysis and system verification. 300000

● (PPS that played a leading role) Another key success factor of KONEPS is the role of
250000
Public Procurement Service, the central procurement agency.
- Public Procurement Service had already partially realized the digitalization of 200000

government procurement through the procurement EDI project before KONEPS was
150000
implemented.
- Starting with PC-based computerized bidding, PPS initiated its e-Bidding service in 100000
2001, followed by e-Guarantee and e-Contract service and online order service. 650,000
50,366
50000
- Such existing e-Procurement infrastructure was integrated into KONEPS and also the
network of user entities and suppliers were successfully transferred to KONEPS, thus
0
newly creating a large-scale government procurement network. 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
⇒ Utilizing PPS’s existing infrastructure and the knowhow obtained from implementing
(Fig. 6 Trend of Increasing Number of KONEPS Users)
its existing e-Procurement system, the G2B development period was shortened,
and user demand in the early stage of the system was stably secured by absorbing
24,000 public agencies and 65,000 suppliers from PPS’s existing e-Procurement
- (e-Bidding) As of 2015, 247 thousand e-Biddings were held and 24.7 million bids were
system.
made, recording an average of about 100 suppliers participating per bidding.
-P ublic Procurement Service played the leading role in the system design, implementation,
- (e-Contract) Through KONEPS, not only biddings are held, but also 710 thousand
and operation and activation stages.
⇒ PPS played the role of the leading agency in activating KONEPS by enabling, from contracts and 830 thousand payments are made electronically.
the beginning stage of KONEPS, all the biddings, contracts, and payments to be ⇒ The reason for a relatively high rate of contracts and payments made compared to
carried out online on KONEPS. the number of bids made is not only competitive bids but also negotiated contracts
are processed through KONEPS.
- (Shopping mall) KONEPS provides a comprehensive online shopping mall, which
allows public entities to purchase products they frequently use by simply ordering
them online. Currently, the shopping mall has a list of about 400 thousand registered
Key Benefits product items previously contracted, so all user entities can simply order them. The
● (Growth into the world’s largest government e-Marketplace) Through such efforts,
number of annual transactions made on the shopping mall amounts to 800 thousand.
starting from the commencement of the service in Oct. 2002, to developing various
contents, amending laws, etc., KONEPS quickly became widely used as a single window.
- (Transaction amount) As of the end of Dec. 2015, KONEPS accounts for 67% (USD
74.56 billion) of the Korean public procurement market (USD 111.9 billion)
- (Supplier users) 50 thousand user entities and 320 thousand suppliers are registered
with KONEPS to use procurement services.

28 KONEPS : Best Practice of e-Procurement Public Procurement Service 29

Success Factors and Success Factors and
Benefits of KONEPS Benefits of KONEPS
(Unit: Million, Billion USD) ● (Significantly improved efficiency of government procurement) The greatest achievement

Centralized Decentralized of implementing KONEPS is the enhanced efficiency of procurement by enabling the
Type of Procurement Procurement Total
whole process to be digitalized and reducing time and money spent by suppliers and
Organization
Amount Percentage Amount Percentage Amount Percentage public entities.
- According to a study conducted in 2008 by Hanyang University in Korea, KONEPS’s
National
agencies 907.7M 29.5% 307M 9.6% 1.21B 19.3% electronic procurement services save about 8 billion dollars annually.
⇒ Among the 8 billion dollars, the 6.6 billion dollars was the amount saved from the
Local
governments 1.17B 36.0% 1.63B 51.1% 2.74B 43.7% private sector and the remaining 1.4 billion dollars from the public sector. The
saving effect from the private sector was mainly due to a reduction in time and
Educational money spent through personal visits, while the saving effect from the public sector
institutions 258.8M 8.4% 393M 12.3% 652M 10.4%
was owing to a reduction in administrative costs from enhanced work efficiency, the
Public reduced amount of paper documents used, etc.
enterprises 226.2M 7.4% 90M 2.8% 317M 5.0%
(Unit: Million USD)
Quasi-governmental National Local Public
organizations 233.9M 7.6% 357M 11.2% 591M 9.4% Classification PPS Subtotal
agencies governments enterprises

Other public Public sector 146 129 196 69 1,440

organizations 97.8M 3.2% 70M 2.2% 168M 2.7% Public /
Private Private sector 975 4,807 815 13 6,610
Local public Sector
enterprises 109M 3.6% 206M 6.4% 316M 5.0% Subtotal 1,121 5,836 1,011 82 8,050

Other Goods 155 963 190 57 1,365

organizations 134.8M 4.4% 141M 4.4% 276M 4.4%
Procurement Facility /
Category 967 4,874 822 25 6,688
Total 3.07B 100.0% 3.25B 100.0% 6.28B 100.0% Service
Subtotal 1,121 58,36 1,011 82 8.050
(Table 7. 2015 KONEPS Usage Status by Type of Organization)
(Table 8. Saving Effect of KONEPS by Public/Private Sector and
Procurement Category)
Num. of Bid Num. of contract Num. of Payment

900,000 827,753
- In the past, suppliers had to apply for a bid published by a public entity and then later
800,000
711,461 visit the entity to submit their bids. Now, however, they are able to check tender notices
700,000
on the KONEPS system and simply electronically submit their bids in time, which will
600,000 not take more than a minute.
500,000 ⇒ In the case of public entities, it used to take more than 30 hours to review bidding
400,000 documents to select a winning bidder. However, using KONEPS, the same process
300,000 246,960 takes them less than 2 hours.
- Before KONEPS, suppliers had to spend 100 to 300 dollars annually to obtain their
200,000
credit rating certificates and additional costs had to be made such as issuance fees
100,000
required documents for bid participation and transportation costs when visiting
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 related entities, etc.

(Fig. 7 The Trend of Increasing Number of Bids, Contracts and Payments

After Implementing KONEPS)

30 KONEPS : Best Practice of e-Procurement Public Procurement Service 31

Success Factors and Success Factors and
Benefits of KONEPS Benefits of KONEPS
⇒ However, with KONEPS in full operation, both public entities and suppliers can Other Bidding Credit Certificate
benefit from accessing the system anytime, anywhere to conveniently check System Authorities
supplier information or be registered as a bidding participant, saving a large 23 10
amount of unnecessary costs.

Bid, Contract Info

o.
Inf
Registration Info

dit
Government / ,

Cre
Class. Before KONEPS After KONEPS t
Public Org ee Supplier
n Sh nt,
e
58
o
-O
 nce suppliers are 34 ati m t
ul tate ee
alc g S r Sh
C
Supplier -Suppliers applied for every bid registered with KONEPS, x i n
Ta Bill Ord
e

Co vit nde Inf

In Te log
registration they wish to participate in. they can immediately

nt ti r o.
Ca
Product

ra on
a
ta

ct
participate in every bid. Quality Quality
Certified Info. Certificate
Authorities
-Public agencies published a -Public entities publish all Catalog Info.
15

e
Standard Linkage

te
tender notice in the official their tender notices on the

an
System

ar
gazette or newspaper KONEPS portal. De Hou

Gu
o
Inf ve s
Ne lopming B
Tender Surety ra
ct
tw e on Bank
nt or nt d,

Pre-performed
notice -Suppliers had to check public -They can get all the Company o k L Bo

Certified Info.
Contract Info.
,C
22
Bi
d oa nd
n , 6

Result
agencies one by one to obtain necessary bidding
procurement information information in one place at
including tender notice, etc. one time on KONEPS.
Related Certificate
-Suppliers had to personally visit -T
 hey can submit an Associations Authorities
the agency to submit their electronic bidding
Bid
bidding application or send it by application and check the
12 8
submission
mail, after which they visited the result of bid opening online
agency later for bid opening. at home or office. (Fig. 8 Organizations Linked with KONEPS)

Contract -Contract requests were made -C

 ontract requests can be
request through paperwork. made online. - Despite the reduction in the number of employees at PPS, PPS achieved enhanced
procurement efficiency as the number of purchases made and processed has
-Contracts were written by increased greatly.
Contract -C
 ontracts can be written
attaching the required
management and altered online using
documents and putting a seal
e-Signature. 4.6-fold
upon them. 1,058
950 912,000 960
220,000 208
Payment -Inspection and payment requests -Inspection and payment
were made manually. requests are made online.
1997 1997
2014 2014
1997 2014
(Table 9. Before and After KONEPS)
Total No. of Employees No. of Contracts and No. of Contracts and Orders
Orders Processed Processed per Employee
- One of the most important factors that made it possible to enhance the efficiency of
KONEPS e-Procurement services was the linkage and sharing of procurement related
(Fig. 9 Number of Transactions Processed per Employee at PPS)
data.
⇒ KONEPS provides online linkage with all the resources required for every process
● (Enhanced government procurement transparency and fairness) All the information
of procurement and shares its procurement information with 188 government
including bidding application and results are disclosed in real time, and all the
organizations and suppliers.
procurement processes are automated, reducing face-to-face contact between public
officials and suppliers, thus ensuring more transparent procurement administration.

32 KONEPS : Best Practice of e-Procurement Public Procurement Service 33

Success Factors and Success Factors and
Benefits of KONEPS Benefits of KONEPS
- All the specifications of public entities are provided in an integrated manner, enabling (Unit: Million USD)
to compare and identify if any specification contains any description that limits 2013 2014 2015
competition in any way, thereby promoting fair bidding competition. Company
Type Transaction Percentage Transaction Percentage Transaction Percentage
- The fact that the system’s standardized work processes relatively reduced public amount amount amount
officials’ discretion also played an important role in increasing transparency.
Large
- With all the information including bidding and its opening results disclosed in real companies 13,042 17.93% 8,621 12.81% 8,405 11.27%
time, the integrity of Public Procurement Service has increased annually, proving that
the government procurement process has become much more transparent after Medium
companies 6,587 9.05% 5,007 7.44% 4,700 6.30%
implementing KONEPS.
⇒ The Korea Independent Commission Against Corruption announced that the Small
companies 48,380 66.49% 51,526 76.53% 58,668 78.68%
integrity of Public Procurement Service increased by 27.2% from 2002 to 2005.
⇒ KONEPS was selected as the best practice of having significantly increased Nonprofit
transparency in procurement through digitalization and was introduced by corporations 4,749 6.53% 2,171 3.22% 2,792 3.74%
Transparency International, UN Anti-Corruption Forum, OECD Global Forum on
Integrity in Public Procurement, etc. Total 72,758 100.00% 67,325 10.00% 74,565 100.00%

● (Function of policy support) After establishing itself as an effective means to implement (Table 11. Status of KONEPS Transaction Amount by Company Type)
public procurement policies, KONEPS strengthened its function of providing policy
support by supporting green procurement, socially disadvantaged businesses, new
technologies, environment-friendly suppliers, etc. and creating and promoting related - In addition, KONEPS monitors in real time the procurement status of local companies
markets as well. and socially disadvantaged businesses such as those owned by females or people with
-Among all the suppliers registered with KONEPS, 97.2% of them are socially disabilities and, based on their procurement results, gives feedback to the related
disadvantaged SMEs whose transaction volume amounts to USD 59 billion, which organizations to help attain their policy goals.
accounts for 78.7% of the total transaction volume on KONEPS. - Regarding its support for new technologies, KONEPS supports products that use a
new technology, products that have obtained quality certification, designated products
with excellent quality, etc. As for its environment-friendly policies, KONEPS supports
2013 2014 2015
recyclable products, products that have obtained high-efficiency energy certification,
Company No. of No. of No. of
Type Companies Percentage Companies Percentage Companies Percentage environment-friendly products, etc. (KONEPS is currently pushing a policy to support
Registered Registered Registered social enterprises.)
Large - According to a survey, the online process of KONEPS itself cuts down on carbon
companies 871 0.33% 919 0.31% 955 0.30%
emissions by about 600 thousand tons through the reduction in personal visits and the
Medium use of paper documents.
companies 2,047 0.76% 2,127 0.72% 1,294 0.40% ⇒ Based on the EU Emissions Trading System (EU ETS), the amount reduced
corresponds to an annual amount of USD 26 million saved and is about 5 times the
Small
259,827 96.96% 284,541 96.97% 311,971 97.19% amount of carbon emitted from LG Chemical Ulsan Plant, the largest chemical
companies
factory in Korea.
Nonprofit ⇒ According to an analysis of the work processes, bid application (49%) and bid
corporations 5,218 1.95% 5,831 1.99% 6,763 2.11%
participation (45%) had the greatest carbon reduction effects.
Total 267963 100.00% 293418 100.00% 320983 100.00%

(Table 10. Status of KONEPS Registration by Company Type)

34 KONEPS : Best Practice of e-Procurement Public Procurement Service 35

Success Factors and Success Factors and
Benefits of KONEPS Benefits of KONEPS

Reduction amount Economic effect - The UN selected the world’s 23 best practice models of e-Government classified into
Process (unit: ton) (Unit: M ton) different categories and KONEPS was selected as a representative best practices of
Registration for bidding 288,695 12 procurement.
- In the 6th UN/CEFACT Forum, a conference on international standards in the field of
Application for PQ validation 27 0 trade and e-Commerce, a proposed standard reflecting PPS’s e-Bidding procedures
Submit eligibility test document 371 0 was passed.
- Being awarded the Global IT Excellence Award by being selected as the public agency
Submit tender document 268,404 11
that showed the world’s most innovative example of IT-applied service at 2006 World
Contract and submit guarantee 17,302 0.7 Congress on Information Technology.
- Under the sponsorship of UN/CEFACT (UN Center for Trade Facilitation and Electronic
Delivery inspection and payment 18,144 0.8
Business), AFACT Conference biennially selects the best practices of trade facilitation
Total 592,944 25 and electronic business classified into 4 categories in the public and private sector in
the Asian region and KONESP was given the 2007 e-ASIA Award.
Contract & guarantee Inspection & payment ⇒ Awards are given for 4 different categories including Trade, Public Sector
17,302 18,144
e-Business, Private Sector e-Business, and Bridging Digital Divide.
- According to the OECD report, The Korean Public Procurement Service: Innovating for
Effectiveness (Feb. 2016), it states, “Korea shows the best practices that can inspire
public procurement innovations in other countries.”
Submit - Reform, one of main think tanks based in the United Kingdom, mentioned the
tender
268,404 Registration procurement system in their country in 2016, saying “Britain should strongly push a
288,695
conversion into e-Procurement, and recommended that their country’s system be
benchmarked from the internationally recognized Korean e-Procurement system.”

371 27
Eligibility test PQ validation ● KONEPS has established itself as an internationally recognized brand of e-Procurement
system which has so far been exported to 7 countries in the world.
(Fig. 10 Analysis of Carbon Reduction Effects Created by KONEPS, 2009) - Among the countries that have adopted the e-procurement system based on KONEPS,
Costa Rica’s e-Procurement system (Mer-link) was awarded the grand prize at 2012
South America e-Government Conference.
International Recognition - As another example, Tunisia was given the Regional Award for Improved Public
● The innovations KONEPS achieved in the field of e-Procurement were not only awarded Service at OGP Global Summit 2015.
domestically, but also by the international society as the most advanced e-Procurement
system, raising the status of Korean e-Government to a higher level.
- KONEPS won the Public Service Award, an award given by the UN to the public agency
that has achieved the greatest innovation in administrative service in the world.
⇒ As an award made by the UN Economic and Social Council in an attempt to raise the
Innovative Advancement of KONEPS
level of global public service and citizens’ awareness of public service, Public
Procurement Service was given this award for the first time in the Asia-Pacific Seamless ● Even after implementing KONEPS, which integrates main government procurement
processes with various related networks, Public Procurement Service has given
region, having been recognized its achievements of digitalizing and disclosing all Procurement
the procurement processes, converting procurement service into customer- continuous efforts to expand e-Procurement services.
Service
oriented and ensuring transparent and fair procurement. - PPS gradually expanded its system so that all the detailed procurement work can be
- According to an OECD report on corporate information policy in Korea, ‘no further processed online by adding the online technology assessment system, online eligibility
action is required’ for Korea’s e-Procurement system. examination system, construction cost calculation system, etc.

36 KONEPS : Best Practice of e-Procurement Public Procurement Service 37

 Innovative Seamless Innovative Seamless
Procurement Service Procurement Service
● The public procurement statistics system implemented in 2014 maintains an integrated
Next-
Generation database by collecting information on not only the contracts made through KONEPS but
KONEPS
launched all contracts made by public agencies in Korea.
- The collected information is again analyzed from various different perspectives and
Subcontract provided for end users in the form of reports. 110 types of various procurement
Biometrics management
Integrated system statistical data provided by this system are utilized for making procurement and policy
Shopping based
KONEPS On-line
mall evaluation bidding decisions, drawing up and executing budget, etc.
Launched
system Mobile
2004 2007 KONEPS ● The Integrated IT Contract Management System, initiated as a 3-year plan in 2014, is a
2010 2015
2012 system to manage the entire life cycle of IT procurement including supporting RFI
2002 2006 2008
CRM based 2013
2014
IT contract
(Request for Information) and RFP (Request for Proposal), allowing suppliers to submit
service Construction integrated their proposals online, conducting online/offline technology assessment, and project
enhancement cost management
management Statistics system management after contract.
On-line system for
Technology system
public
assessment procuremen
system KONEPS
private
purchaser
User Construction Cost Estimate System External
(Fig. 11 A Series of System Expansions After Implementing KONEPS) System
KONEPS Single Logine

● Recently, the achievements of government procurement have also been applied to

PPS Cost Management Portal
private bid contracts that influence the general public, some of which include the KONEPS
Subcontract Management System (2013) for subcontract and payment management Cost Management

guaranteeing fair subcontracts and e-Procurement System for Public Housing

Material Cost Contract
Management and Nonprofit Organizations (KONEPS for Private Purchaser, 2015). Specification Evaluation
Code Estimate Default
DW
Public 1st phase Review
Linked Agency evaluation details
User Subcontract Management System Org.
Contraction
material code
Labor cost
Material cost Quantity Create
details contract
management Expenses
2nd phase details Shopping
Contract Payment Past-performance evaluation
Certificate Mall
Public
Agency Draft Request Request Gov. Common Library
Internet Finance
System
Agreement Verification Verification Supplier User System Portal Catalog
Management Announcement Management Info
Contract Payment Issue Linkage
Main with other
Contractor
systems
Mobile Statistics of Subcontract
Banks e-Gov. Standard Framework

Sub Execution Operation Development Management Component

Contractor Linkage

KONEPS(G2B)
Surety
Agency Info. Supplier Info. Contract Info. Company (Fig. 13 IT Management System of KONEPS)
Employee

(Fig. 12 Subcontract Management System of KONEPS)

38 KONEPS : Best Practice of e-Procurement Public Procurement Service 39

 Innovative Seamless Innovative Seamless
Procurement Service Procurement Service
International Cooperation of PPS model of an e-Procurement system has been implemented in 7 countries 9), and is
● International financial institutions such as the World Bank are recognizing the worldwide currently in operation.
spread of e-Procurement systems like KONEPS to increase public procurement - By regularly interacting with China on government procurement, PPS is continuously
transparency and efficiency in developing countries. giving efforts to expand cooperation in government procurement, especially through
- Especially, many countries including developing countries are paying attention to e-Procurement, between Korea and China.
PPS’s example of innovative procurement administration and positively reviewing the
adoption of an e-Procurement system. ● As of 2016, PPS was visited by 298 foreign public officials from 80 different countries.
⇒ PPS started to export its e-Procurement policies based on international recognition The visits were made for various purposes such as benchmarking, international
it had gained since 2007. conferences, and training.
In particular, PPS hosted the Asia Pacific Public Electronic Procurement Network at the
PPS Hall on 10-11 October 2016 where about 90 procurement officials and experts
Mongolia participated from governments and international organizations of the World Bank and
Jordan e-GP System ADB. In addition, capacity building courses for procurement officials of Uganda,
(MEPS, 2012)
e-GP System
Mongolia, and Afghanistan were held in the PPS training institute in cooperation with
Tunisia (JONEPS, 2017) KOICA in 2016.

e-GP System ● With KONEPS providing e-Procurement services, PPS holds a long history of efforts to
(TUNEPS, 2013)
enhance the efficiency and transparency of public procurement in Korea, and based on
Vietnam these efforts and experiences, PPS will continue its international cooperation and the
Rwanda role to keep on contributing to increase the transparency and efficiency of public
e-GP System
(muasamcong, procurement in the international society.
e-GP System
(RONEPS, 2016)
2010)
Cameroon Costa Rica

e-GP System e-GP System

(COLEPS, 2016) (Mer-Link, 2010)

(Fig. 14 Global KONEPS)

● PPS participated as a member in the Multilateral Meeting on Public Procurement

consisting of 6 member states; Korea, U.S., Canada, U.K, Italy, and Chile.
- PPS also participated in the OECD-MENA international procurement network, and
jointly conducted a review of the operation direction of the public procurement
consultative body and of the procurement system and status in the MENA region with
OECD.
● Currently, PPS is cooperating with 25 countries signing 27 MOUs regarding the development
of the procurement system and worldwide spread of e-Procurement including U.S.,
Canada, etc.
- PPS conducted feasibility studies for introducing an e-Procurement system in 13
countries around the world starting with Vietnam in 2005. Among them, the KONEPS
9) Vietnam (2010), Costa Rica (2010), Mongolia (2012), Tunisia (2013), Cameroon (2016), Rwanda (2016),
Jordan (2017)

40 KONEPS : Best Practice of e-Procurement Public Procurement Service 41

Public Procurement Service
Government Complex-Daejeon, 189 Cheongsa-ro,
Seo-gu, Daejeon 35208, Republic of Korea

Website : www.pps.go.kr/eng
Contact : +82-70-4056-7470 / [email protected]
Publication Date : Dec. 2016
Planned & Sponsored by Ministry of the Interior

Cover design “Korean Public Service! Fly High with the World!”
Gold symbolizes wealth, wishing for global sustainable development and prosperity
Diagonal motif Korean public service flying high with the world through international cooperation