[Asia Exclusive] Kim Jung-woo, Administrator of Public Procurement Service, "Government Supports Market Expansion by Being the 'First Buyer' of Innovative Products"

135 Trillion KRW in Public Procurement in 2019... Accounts for 7% of GDP
Public Procurement Service Focuses on Innovative Procurement... Budget Up 52% YoY
Complete Overhaul of Nara Market by 2023 to Build 'Next-Generation Nara Market'

Kim Jung-woo, Administrator of the Public Procurement Service, is introducing this year's innovation procurement promotion direction in an interview with Asia Economy on the 5th./Photo by Kim Hyun-min kimhyun81@

[Interview = Lee Kyungho, Head of Social Affairs Department at Asia Economy; Summary = Jung Ilwoong, Asia Economy Reporter] "The government will become a ‘tall uncle’ who invests in companies’ excellent ideas and technological capabilities to commercialize products and helps them pioneer sales channels by leveraging the public procurement market as a stepping stone."

Kim Jungwoo, Administrator of the Public Procurement Service (PPS), said, "For South Korea to transition to a leading economy, the strategic role of public procurement is important, and this is possible only when public procurement capabilities are supported."

The ‘tall uncle’ Kim mentioned refers to innovative procurement. It means supporting companies to launch innovative products in the market with their ideas and technological capabilities, pioneer sales channels, and enable stable business activities.

The scale of public procurement was 135 trillion KRW annually as of 2019, accounting for about 7% of the Gross Domestic Product (GDP). This demonstrates that the role of the PPS and public procurement as government agencies in the domestic market is not insignificant.

Innovative procurement is still in its early stages and occupies a small portion of public procurement, but Kim believes its growth potential is high. He said, "Ultimately, there is a positive function of supporting startups, venture companies, or small and medium enterprises (SMEs) with relatively limited capital to pioneer sales channels in the public procurement market and grow their business scale and strengthen their foundation solely with ‘smart’ ideas and technological capabilities."

- Representative cases of innovative procurement are

▲ ‘Negative pressure carrier for patient transport’ by Ootsam Co., Ltd. and ‘Window ventilation-type air purifier’ by NR Co., Ltd. are representative examples. The negative pressure carrier for patient transport is a product developed to block contamination spread from COVID-19 infected patients and enable rapid movement. This product, previously dependent on imports, was developed with domestic technology and registered on Venture Nara, exporting 267 units to seven countries including Ethiopia, Cambodia, and Mongolia, playing a leading role in K-quarantine in overseas markets. The window ventilation-type air purifier is a convergence product combining a window and an air purifier. It was designated as an innovative product in July last year, laying the foundation for supplying and installing the product in public facilities such as schools.

- Plans for innovative procurement this year are

▲ The innovative procurement purchase budget for this year is 44.5 billion KRW, a 52% increase from 29.3 billion KRW last year. Along with the increased budget, the number of innovative products discovered will expand from 345 last year to over 800 this year. This will allow more companies to join the ranks of innovative product manufacturers. New systems such as ‘incubating,’ which matures innovative demand ideas through expert group consultations, and ‘scouter,’ where technology and startup experts discover innovative products, will also be introduced. We will expand collaboration with research and development lead ministries such as the Ministry of Science and ICT, local governments, and strengthen promotion of innovative products both online and offline to realize innovative procurement that the public can feel.

- Response to COVID-19 related items such as masks and vaccines

▲ Last year, with the spread of COVID-19, there was a severe shortage of masks causing many difficulties. At that time, the PPS quickly signed blanket contracts with about 130 mask companies to stabilize prices. Through the 5-day rotation system and appropriate distribution, masks were supplied smoothly to the public. Behind the scenes, immediate payments were made to mask suppliers and production incentives (bonuses) were provided to secure liquidity for companies, maximizing production capacity. Currently, 150 million masks are stockpiled for crisis response purposes. Going forward, we will focus on procurement administration such as establishing a COVID-19 vaccine distribution management system including vaccine distribution contracts. Above all, we will maintain close cooperation with related agencies to ensure timely supply of vaccination equipment such as ultra-low temperature freezers, syringes, and vaccination systems.

- Marking the 72nd anniversary of the PPS this year

▲ The PPS was launched in 1949 as the Temporary Foreign Exchange Bureau. Public procurement transactions are mainly conducted through the national comprehensive electronic procurement system ‘Nara Market,’ used by about 60,000 public institutions and with about 467,000 registered procurement companies. Especially, the scale of procurement projects, which was only 11.6 billion KRW at the time of establishment, surged to 69.1461 trillion KRW last year. More importantly, the PPS has continuously enhanced its institutional capabilities by taking on tasks beyond traditional goods and construction contracts, such as national stockpiling projects (1967), government goods management (1971), construction management (1978), total project cost management for national projects (1999), introduction of multiple supplier system (2005), and management of state-owned properties (2006).

- There is a plan to revamp the Nara Market, the public procurement platform operated for 20 years

▲ Nara Market was launched in 2002 and has been operated for 20 years. As of last year, the scale of public procurement transactions through Nara Market reached 113 trillion KRW. However, long-term operation caused increased system failures, slower speeds, and inconvenient search environments, causing user discomfort. This is the background for building the next-generation Nara Market from this year through 2023. The next-generation Nara Market will integrate 4th industrial revolution technologies such as artificial intelligence, big data, cloud, and blockchain, and operate user-centered. Responding to the digital environment transitioning due to COVID-19, all procurement tasks will be handled non-face-to-face without paper documents, supporting the government’s digital New Deal policy. Currently, 26 public institutions’ independently operated procurement systems will be integrated into the next-generation Nara Market system to reduce budget waste caused by overlapping operation of similar systems and resolve inconveniences for procurement companies.

- Emphasizing fairness and justice in opportunity, process, and results in procurement transactions

▲ This year, the PPS will improve bidding and awarding systems for fair pricing and payment. A research project will be commissioned to review the appropriateness of bid price evaluation, non-price evaluation items, and scoring. After collecting opinions from stakeholders, improvement plans will be prepared and proposed to the Ministry of Economy and Finance and the Ministry of the Interior and Safety, with a plan to finalize whether to improve the qualification review system by the end of this year.

This content was produced with the assistance of AI translation services.