Public Procurement Service, Linking and Creating Synergy with Major Government Policies on 'Public Purchasing Power'

Lee Jong-wook, Administrator of the Public Procurement Service, is briefing the '2023 Work Plan' at the Government Daejeon Complex on the 9th. The work plan was prepared based on the 'Public Procurement Innovation Measures' announced at the Emergency Economic Ministers' Meeting in December last year. The main keywords are 'Overcoming the Economic Crisis' and 'Enhancing the Dynamism of the Procurement Market.' Provided by the Public Procurement Service

[Asia Economy (Daejeon) Reporter Jeong Il-woong] The Public Procurement Service (PPS) aims to overcome the economic crisis and enhance the dynamism of the procurement market through the strategic utilization of public purchasing power.

The strategic utilization of public purchasing power means linking large-scale public procurement with major government policies to support them as policy tools. For example, as of last year, about 63,000 public institutions and 520,000 procurement companies participated in the public procurement market, which grew from 160 trillion won in 2019 to 184 trillion won last year. The PPS explains that linking this to major government policies can create a synergy effect in policy implementation.

On the 10th, the PPS announced that it has finalized and will implement the '2023 Work Plan' based on these contents. The work plan was prepared based on the 'Public Procurement Innovation Plan' announced at the Emergency Economic Ministers' Meeting in December last year. The main keywords are 'overcoming the economic crisis' and 'enhancing the dynamism of the procurement market.'

◆ Support for Overcoming the Economic Crisis = First, the PPS plans to support overcoming the economic crisis by early execution of procurement contracts and reducing the burden on procurement companies.

It aims to execute 65% of procurement contracts early by, for example, reducing procurement fees by up to 10% for demand institutions requesting procurement in the first half of the year. Using a new budget of 50 billion won, it will expand stockpiles of items that have so far been entirely dependent on imports and continuously discover and respond to economic security items that require new stockpiling.

In particular, the PPS will focus on supporting sales channels for small and venture companies vulnerable to the economic crisis. The scale of public procurement through Venture Nara will be significantly expanded from 159.2 billion won last year to 200 billion won this year (a 26% increase), encouraging the growth of startups and venture companies.

Additionally, the PPS plans to hold the Nara Market Expo on the largest scale ever, creating a foundation for procurement companies to increase export volumes beyond domestic markets.

◆ Private and Market-Centered, Dynamic Procurement = The PPS will also concentrate its capabilities on dynamic procurement centered on the private sector. It intends to drastically revise outdated regulations and procurement systems that hinder vitality and competition.

Regulatory innovation will be achieved by improving unreasonable sanctions that were excessively imposed without detailed application guidelines and expanding the scope of direct production.

Direct production has so far been recognized only if criteria such as personnel, processes, equipment, and factories were met. However, going forward, it will be recognized as direct production in principle if companies do not deliver other companies' finished products (label switching) or subcontract the entire product manufacturing process, thereby reducing the burden on companies.

Innovation product discovery and system operation, which have focused on quantitative growth led by the government, will be completely reorganized to be led by the private sector. A representative example is linking each ministry's public proposal system for discovering innovative ideas and products and expanding private participation by increasing the number of scouts (responsible for discovering innovative products by region) from 74 last year to 100 this year.

Furthermore, the PPS plans to prepare and implement a market competitiveness system to alleviate the oligopolistic structure occurring in some items.

◆ Fair Public Procurement = The PPS will also strengthen responses to unfair procurement practices. From this year, it will strictly sanction serious violations up to the maximum legal limit without mitigation and focus on preventing dishonest contractors from participating in the procurement market through procedural loopholes such as execution suspension.

In addition, for items such as rebar, which have recently been problematic due to large-scale bid rigging, the bidding method will be improved to allow transactions in a shopping mall style with enhanced competitiveness.

The PPS will enhance the expertise of procurement review and evaluation processes and strengthen the management of evaluation committee members to ensure transparency and fairness. To this end, the PPS plans to expand the pool of evaluation committee members from the current 5,000 to 10,000 to block lobbying possibilities and introduce a new system to analyze biased evaluations by committee members.

Lee Jong-wook, Administrator of the PPS, said, "This year, the PPS will make it a milestone year to overcome the current economic crisis with public procurement purchasing power, support economic re-leap, and establish its status as a trusted procurement specialized agency for the public. Above all, we will strive to ensure that the work plan prepared reflecting these goals is actually implemented to create procurement outcomes that the public can feel."

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