The Public Procurement Service is paving the way for advanced public procurement policies with innovative ideas based on expertise from more than half a century in service.

The centerpiece of its achievements is without argument the digitalization of the public procurement process, according to Kang Ho-in, the agency administrator.

But the agency also played a major role in introducing local companies to foreign procurement agencies, in addition to unwavering support for small and medium-sized firms, from which the agency makes a point of buying.

The PPS has been around since 1949, starting out as an office under the prime minister for managing foreign aid supplies. Today, it has become the main government organization in charge of handling all procurement activities for public purposes.

“Aside from these very visible achievements, we’ve also made it our job to turn the agency into a clean and fair organization, and I believe we’ve made much progress as seen in the points we have scored from international groups for being transparent,” said Kang in an interview with The Korea Herald.

Transparency International and the World Anti-Corruption Forum have pinpointed the agency as setting an example as a highly transparent organization.

Online procurement system wins accolades

Kang said the agency is proud of its online procurement system ― officially named the Korea Online E-Procurement System, which is a seamless process designed to eliminate all unnecessary costs and procedures by digitalizing the entire procurement process, from bid to bill.

The system was named the “Best Practice Mode” by the U.N. and OECD, and it was for this achievement that the agency became the first in Asia to win the U.N. public service award.

“Every year, public officials from more than 25 nations across the world come to visit the procurement agency in hopes of benchmarking us,” said Kang.

He added that a number of counties such as Vietnam and Costa Rica have adopted the agency’s E-Procurement System for their own, and others ― Colombia and Honduras ― also are considering following suit.

For companies that place the bids to sell to the procurement agency, they have saved up to 6.6 trillion won annually, Kang said, because the online system allows firms to cut the costs for paperwork and for having to visit the agency.

But this is still only the beginning, according to the administrator, who believes the agency should be able to offer a “total solution” service to users in the so-called third generation of government administration, also known as the “smart government” era.

“Hackneyed as it may sound, the IT environment is changing at an unimaginable speed, and we need to change along with it,” Kang said.

In the third generation, he predicted that the content that was made available via the online system must now be more efficiently analyzed and summarized to provide timely data to all users involved in the procurement process.

For this, the agency is already in the midst of creating a more comprehensive electronic system that will be an upgrade of the current online procedure. The job is expected to be completed by the end of this year.

“We want our online system to become an international standard so that in the long run, our companies can sell their goods to overseas procurement offices directly through our own system,” the administrator said.

Connecting Korean firms to overseas buyers

Another vital role the procurement agency plays for the corporate sector is connecting Korean companies to overseas procurement organizations.

In April, the agency used the exhibition it hosts for high quality procurement goods as a platform for introducing local goods to overseas procurement offices.

The agency invited a dozen buyers from six nations to arrange one-on-one meetings with 40 local firms.

Thanks to such support, six local companies have exhibited their goods in the United States federal procurement exhibition, while 12 others were able to hold meetings with potential clients in Vietnam and Indonesia. The agency also arranged exploratory sessions for companies and potential clients in Turkey and Uzbekistan in July.

“Earlier this month, there was a meeting between the procurement agencies of Korea and China, which I believe will help add to the value and credibility of our companies seeking clients in the region,” Kang explained.

The future also looks bright for companies seeking entry into the U.S. procurement market, he added.

“IT services and equipment took up more than 40 percent of the U.S. General Services Administration Multiple Awarded Schedule, and we expect similarly exceptional performances from office furniture and car equipment,” said the agency head.

Companies selected for the Multiple Awarded Schedule must meet the GSA standards to be given permission to sell goods to the U.S. government.

Propping up the smaller players

The procurement agency makes a point of buying from small and mid-sized companies. As of 2009, the agency has bought more than 70 percent of its yearly procurement supplies from small and mid-sized companies. Last year, 77.6 percent of its goods, worth 13.9 trillion won, were from these smaller companies.

“Products such as cars, steel and televisions, we still purchase from large companies, but anything that can be produced by smaller companies that meet the standards is given a chance,” Kang said.

The agency’s efforts are in line with recent social trends, which is to make sure firms of all sizes are given a fair chance at competition, even if it’s at the risk of denying privileges for the conglomerates.

Meanwhile, one of the lesser-known jobs of the procurement agency is to secure raw materials.

Kang said that the agency will continue to do so, as the global economic conditions have yet to clear up.

Last year, it secured some 362.8 billion won of raw materials, and the volume will be increased to 600 billion won this year.

By Kim Ji-hyun & Lee Kwon-hyung
(jemmie@heraldcorp.com)(kwonh@heraldcorp.com">jemmie@heraldcorp.com)(kwonh@heraldcorp.com)