Question: One hundred days have passed since you took office as the PPS administrator. How do you feel?

Answer: I once thought of PPS as just a government agency for procuring goods and services the government and public organizations need. I, after 100 days in office as PPS administrator as of Aug. 15, feel a heavy sense of responsibility because I know that PPS has other important missions such as the nurturing of new growth industries.

I’ ve had frequent meetings with Korean companies participating in overseas public procurement markets, excellent public procurement suppliers, venture companies, and women-owned companies; and toured local PPS offices and several SMEs since my inauguration to lend an ear to the voices in the field. For firms suffering from external and internal economic hardships, I stress the need for the strengthening of their competitive edge through the enhancing of technology and quality as a means of surviving a crisis and evolving into bigger companies. 

I have lots of tasks to execute as the PPS administrator. Fortunately, PPS staff and officials have a positive mindset and passion, so I expect all of us to join forces in public procurement innovation.

Q: Would you touch on the improvement of major policy tasks?

A: Influenced by the occurrence of gluts, caused by economic growth, and improved market intelligence in the private sector, the external environment of public procurement administration is now changing. On top of the conventional function of securing material resources efficiently, PPS’ s task of providing national policy support is getting more significant. 

Rather than being complacent with just procuring good products at cheaper prices and in a fast manner, PPS needs to overhaul public procurement so that the national economy can gain growth momentum through the nurturing of green industries and new technologies, the assisting of SMEs, and the exploring of overseas procurement markets, so the competitive edge of Korean companies can be enhanced.

We attach priority on changing policies for supporting SMEs among other things. PPS now tends to focus on quantitatively supporting SMEs. From now on, we plan to implement procurement policies in a way so SMEs’ market entry barriers can be lowered and their growth can be attained with competitiveness through the development of technologies. An assessment of an improvement of technology and performance will be reinforced in the case of designating excellent government supply products, while SMEs’ excellent technology products will be given priority purchase by public buyers as a catalyst to induce their technology development. 

We plan to nurture and support green technologies and green companies by designating an additional list of minimum green standards and requirements, and including green products in the design of public works. This technology- and quality-oriented procurement system will be implemented to help Korean SMEs evolve into strong world-class firms. 

Q: Would you introduce PPS’ s steps to explore foreign procurement markets?

A: PPS carries out projects to help Korean companies strengthen their capacity for making inroads into foreign procurement markets as well as the government-private sectors’ joint ventures to explore overseas markets. 

PPS hosted Korea Public Procurement Expo 2012 at COEX in Seoul this past April. PPS invited 12 buyers from six countries who held one-on-one meetings with 40 Korean firms which couldn’ t afford to go overseas for exploring foreign markets. The Korean firms held consultations on exporting a combined $15 million worth of goods with the buyers. Five-hundred twenty-four companies participated in sessions on the explanation of the procurement market for U.S. Forces Korea (USFK) in May and June. A session for medical service contracts for USFK also took place recently. The procurement market for USFK, albeit small in size, is significant since an entry into the market would put a company in a more advantageous position to explore the U.S. mainland market. 

As for overseas market exploration, six Korean companies participated in activities to exhibit and publicize their products at the U.S. Federal Procurement Conference & Expo that took place in Washington, D.C., on May 14, and they held 968 consultations with local public organizations. Korean procurement market exploration delegations from government and private sector were dispatched to Vietnam and Indonesia this past March to hold joint government-private sector cooperation committee meetings with Vietnamese and Indonesian procurement agencies. Twelve prominent Korean procurement firms held 152 consultations on $18.37 million worth of goods. Daejin KOSTAL struck a $300,000 deal to supply paper shredders to Indonesia. 

PPS plans to ramp up efforts to help Korean procurement firms improve their capabilities and provide consulting services to them. To this end, we will publish a quarterly report on the trends of overseas procurement markets, including procurement plans of FTA signatories; procurement systems and their sector-by-sector and item-by-item procurement developments; we nurture promising procurement firms of products which have the potential to penetrate foreign countries; and we plan to provide institutional incentives so that Korean procurement firms can explore overseas markets. 

Q: Would you elaborate on steps to promote the exporting of the “Narajangteo,” or the Korea On-line e-Procurement System (KONEPS)?

A: Korea become the sole non-European country to present the outcomes of operating KONEPS, a best practice system, at the 1st Conference on Electronic Procurement °™ Challenges and Opportunities, organized by the European Commission and the European Parliament in Brussels on June 26. Even though I’ ve heard about KONEPS’ s prominence, I feel both a sense of pride and a sense of responsibility as I’ ve confirmed as the PPS administrator its global standing at the international conference. 

KONEPS, launched in 2002 as a sort of cyber market for digitalizing the entire procurement procedure ranging from registering bidding participants to payments, has gained global recognition. The procurement system made Korea the first Asian country to win the U.N. Public Service Award in 2003, and it has been rated as a world-class e-procurement brand by the Organization for Economic Cooperation and Development (OECD) and the World Bank.

Countries seeking to use KONEPS as a benchmark are on the rise. In this regard, foreign delegations toured PPS on 25 occasions during 2011 and on 24 occasions for the first seven months of this year. Developing countries want to introduce an e-procurement system as a way of improving transparency and eradicating corruption and wrongdoings, while developed countries strive to spread and upgrade e-procurement systems in order to improve fiscal efficiency in the wake of the fiscal crises. 

Vietnam, Costa Rica and Mongolia are running an e-procurement system based on KONEPS, and Korea is to establish an e-procurement system for Tunisia by the end of this year. The prospect is upbeat for exporting KONEPS to Uzbekistan and Honduras where a feasibility study on the introduction of an e-procurement system has already been done, as well as to Algeria, Jordan, and Cameroon where a feasibility study is now underway. 

Exporting KONEPS has an effect of not only exporting just a system, but also spreading a Korean e-procurement model and laying a footing for Korean firms to make inroads. PPS plans to redouble its efforts to boost the exporting of the Korean e-procurement system to not only developing countries but also advanced countries. 

Q: Would you tell us about your plans to stockpile major raw materials?

A: Raw materials prices, which showed signs of a bear market since late last year, rose briefly due to an improvement in U.S. major economic indexes, but reversed to a decline as uncertainties in Europe have expanded since March. 

PPS plans to expand the nation’ s stockpile of raw materials, making the most of lower price levels; ramp up the monitoring of raw materials markets against uncertainties, form a consultative body of procurement agencies, and take other joint steps; expand a joint stockpile business between the government and the private sector by soon listing the Copper ETF (exchange trade fund) on the stock market based on the copper stockpiled by PPS, expand stockpile items in favor of SMEs, and take stock of stockpiles to enhance the efficiency of supporting SMEs. 

Q: Are there any changes in PPS’ s purchase of products made by SMEs?

A: The portion of PPS’ s purchase of items produced by SMEs, which passed the 70 percent barrier in 2009, reached a record high of 77.6 percent, or 13.92 trillion won in value. This is owed to PPS's allocating of a given share of procurements to the competition among SMEs, raising the lowest bidding landing prices to guarantee certain levels of profits, and designating excellent items produced by SMEs for priority purchase by public buyers.

The policy of purchasing SMEs’ products, however, has side effects such as their becoming complacent with the vested rights of the SME’ s status. 

PPS plans to shift procurement policy to a paradigm in which Korean companies can attain their competitive edge and contribute to industrial development through technology development and quality management rather than quantitatively expanding SMEs’ participation.