Under the central procurement system, the first and foremost aim of domestic procurement is to ensure that the government's needs are met in a cost effective manner, and to help government agencies perform well and manage efficiently by supplying quality products in a timely manner. The magnitude of the Government's outlay on procurement, which annually runs into billions of dollars, creates opportunities for implementing selected national policies. The Procurement Bureau has endeavored to improve the quality of procured goods and achieve socio-economic objectives in its procurement procedures. To this end, great emphasis is placed on promoting small and medium enterprises which are the backbone of the national economy, and supporting the implementation of national environmental policies.

Since becoming a member of the Agreement on Government Procurement (GPA), procurements valued above the threshold specified in the Agreement have been conducted on an internationally competitive basis from January 1, 1997.

The major items which fall into this category are ready-mixed concrete, steel bars, cement, vehicles, OA equipment, and communications equipment.

Domestic supplies procured for Government use are classified into two categories：total amount contracts and uni-price contracts. The procurement procedures are as follows：

• A. Registration
  • All bidders who wish to participate in PPS's bidding for supplying goods and services must register with PPS at least one business day prior to the date of bid opening. Failure to register may result in rejection of the bid.
• B. Procedures for Procurement
  Enlarged view
  • 01Purchase Request (PR) On receipt of a PR from a government agency, PPS carefully examines its contents and decides on the type and method of contract, then initiates the acquisition process.
  • 02Preparation of Bidding Documentation PPS acquires goods and services by means of full and open competition unless otherwise prescribed in the laws or regulations concerning government contracting officer prepares and issues bidding documents, and arranges for a set of documents to be available in the PPS's Information Center for inspection by prospective bidders.
  • 03Public Announcement The invitation for bids is announced in a government-wide point of entry (www.g2b.go.kr) or the government gazette in order to maximize practicable competition in the bidding.
  • 04Bid Bond The bidders must establish their bid bonds with PPS for an amount not less than five percent (5%) of the bid prices according to the terms of the bidding documents at least one business day prior to the date of bid opening. Bid bonds of unsuccessful bidders are released on PPS's instruction or automatically on its expiry date.
  • 05Submission of Bids All bids must be submitted to PPS on or before the date and hour specified in the invitation for bids. Late bids will not be accepted and will be returned to the bidder. PPS's bid form must be used.
  • 06Award of Contract The award will be made to the lowest, qualified and responsible bidder conforming to the requirements specified in the bidding documents, taking into account the price, delivery time, quantity, specifications and terms most advantageous to the Government. Written notification of the award to the successful bidder will cause the contract to become effective.
  • 07Performance Bond The successful bidder must establish a performance bond for an amount not less than ten percent (10%) of the contract amount. The performance bond will be released on PPS's instruction after satisfactory completion of the contract or automatically released on its expiry date.
  • 08Tests and Inspections After satisfactory testing and inspection, the contractor delivers the contracted goods to the end-user.
  • 09Payment The end-user institution directly makes payment to the contractor when the contractor submits a request for payment with the certificate of acceptance and the accompanying inspection certificate. In some special cases, PPS makes payment to the contractor from its fund on behalf of the end-user institution.
  • 10Closing of Contract The contract is closed when all deliveries have been accepted, the contractor has been paid, and the contract's other terms and conditions have been satisfied

• What is the Excellent Quality Products System by the PPS of the Republic of Korea?
  • Since 1996, PPS has been operating the Registration Windows for Excellent Quality Products in thirteen locations including PPS headquarters, and other regional offices to provide support to prominent small- and medium-sized companies and venture companies having difficulty in supplying their products to government institutions. The Excellent Quality Products System refers to the designation of Excellent Quality products which achieve certified standards for KT, NT, EM, IT, GR, GQ, electric technologies, construction technologies, and patent through a rigorous procedure of evaluation and assessment.
    
    Once a product is designated as an Excellent Quality Product, PPS makes contract with the manufacturing company, which included the registration as the government-supply product and the annual contract price. Afterwards, PPS conducts intensive advertisement and promotional activities and opens the path for supplying the product to various government agencies and public institutions, and supporting the sales of the product designated as a Excellent Quality Product.
• Which products can be designated as Excellent Quality Products?
  • Any products or software manufactured by small- and medium-sized companies and venture companies will be subject to the designation as Excellent Quality Products.
• What steps should be taken for applying to be examined for Excellent Quality Products?
  • Any company wishing to be designated as supplying an Excellent Quality Product can apply on this homepage or by filling out the registration form at the Registration Window for Excellent Quality Products located at seventeen places nationwide including the Customer Support Office in the headquarter of PPS (Daejeon Government Complex), Customer Support Office in the Seoul Regional Administration, and other regional offices
    
    Registration forms are kept at the Registration Window or can also be downloaded from the homepage of the PPS.(http://www.pps.go.kr/)
• Which products have high chances of being selected as Excellent Quality Products?
  • As the main purpose of the Excellent Quality Products System lies in supporting the sales for promising small- and medium-sized companies and venture companies, the following products are highly likely to be designated as Excellent Quality Products. -Advanced technology products (KT, NT, EM, IT, GR, GQ, new technologies related to electricity and construction) -Products under patent and practical new design manufactured by small- and medium-sized companies or venture companies.
• How often does the screening of the Excellent Quality Products take place every year?
  • The examination and designation take place at least four times a year.
• What are the screening procedures and methods?
  • The examination procedure comprises two stages. At the first stage, a committee composed of university professors, patent examiners, patent attorneys, prominent industrial figures, and the manager in charge of purchase at PPS, will be undertaking various analysis and evaluation on technological and quality aspects as well as administrative assessment. Only the products qualified at the first stage with scores above the minimum level will be subject to consideration at the second stage examination. If a product passes such procedures successfully, the PPS issues certificates of Excellent Quality Product to the manufacturer.
• How long is the certificate of Excellent Quality Product valid?
  • The recognizing period is effective for three years. In addition, in response to a request for an extension by the manufacturer, PPS has a discretion of extending the recognition period for one year considering the possibility of future contracts, past supply performance, quality and technological aspects.
• What kinds of supports are provided to an Excellent Quality Product?
  • PPS facilitates the supply of the Excellent Quality Products through a unit price contract where the supplier does not have to make contract with individual customers. Therefore, upon the customer's request, the product can be supplied instantly without any administrative procedures.
    
    In order to help small- and medium-sized companies and venture companies expand their market to other public institutions and to the private sector as well, PPS holds display shows, publishes catalogues, and promotes sales by advertising the product on the PPS website and daily newspapers.

The Agreement on Government Procurement is a trade agreement signed by 22 WTO-member nations in Marrakesh, Morocco on April 15, 1994 and became effective January 1, 1996, except in the case of Korea, where it became effective January 1, 1997 after a year's grace period.

Details are available at : www.fta.go.kr

The Agreement on Government Procurement is applied only to those nations that agreed to the Agreement. It authorizes PPS to provide national treatment for the nationals of each nation to access to their own market. It further makes it a rule to enter through international open competition for tenders to secure higher validity of the authorization. In more detail, such tables of authorization for each country are attached to the Agreement. The Agreement also stipulates detailed provisions on procedure (including the notice of a tender, the opening a tender and the selection of a successful bidder) for higher transparency and fairness for supply by each authorized office in accordance with international competitive tender. The contents of the Agreement can be summarized as follows

• A special supply and international tender with the government as a party to it shall be based on the International Contract Law and its Special Enforcement Ordinance, Article 4.
• Those subject to authorization (special supply) and exceptions A contracts made by government offices for supplies, services and contractual works whose value is higher than that put on a public notice by Minister of Strategy and Finance in accordance with the Agreement on Government Procurement and international norms based on it, excluding those connected with procurement, re-Sales or sales of SME products and agricultural, marine and livestock products stipulated by the Grain Control Act.
• Criteria for Authorization [set by Ministry of Strategy and Finance (MOSF)]

  Criteria for Authorization [set by Ministry of Strategy and Finance (MOSF)]

  * Central government office : W250 million(estimated)	Estimated amount means budget amount minus value-added tax and fees for supply.
  * Local autonomous bodies : W380 million (estimated)
  * Government-invested institutions : W850 million(estimated)

• A Special Exemption Regulation pertaining to implementation of the Government Contract Act. This Special Exemption Regulation stipulates the matters necessary for international tenders, of which major contents are:
  1. 01cases in which estimated price may not be given,
  2. 02a public notice of a decision made, as on the successful bidder,
  3. 03scope of disclosure such as information on the successful bidder,
  4. 04a public notice of list of those qualified for specified competition,
  5. 05an open bidding for design ,
  6. 06request for data on a contract,
  7. 07a report on records of contracts, and
  8. 08qualification and how to operate international contract-related arbitration.

• A. Public Notice of Plan for Supply
  Contents
  • Requirements: Subject of Contract (description, size, quantity and amount) Deadline for submittal of tender documents and tender application Name and address of relevant office (PPS)
  • Things to be included in a notice. The contents of the tender notice concerning relevant item should be included in the notice of the plan for supply, if possible.
• B. List of those qualified
  • When short-listing based on records of past tenders, technological capability or managerial status or selecting tenderers for an ordinary open competition tender or a tender by specified bidders for a special supply The qualification of the tenderers and the criteria of the selection should be put on a public notice, and then the tenderers' application be received to be used for screening process for prequalification or selection of tenderers'.
• C. Those to be excluded
  Each case in the following shall be excluded from those subject to the Agreement.
  1. 01A private contract,
  2. 02Procurement of items for which SMEs compete with each other,
  3. 03Procurement of defense industry-related items or extremely sensitive items,
  4. 04Procurement of items related to national security, human lives, intellectual property rights,
  5. 05Procurement related to charity activities,
  6. 06Procurement of agricultural, marine or livestock products,
  7. 07Procurement of general communication equipment for Korea Telecom, some heavy electric equipment for KEPCO, manufacture or procurement of artificial satellite stipulated in the Aerospace Development Promotion Act,
• D. Method of Contract
  Each case in the following shall be excluded from those subject to the Agreement.
  1. 01Open Tendering
  2. 02Selective Tendering
  3. 03Limited Tendering
• E. Preparation of Tender Notice
  Terms used
  • The Korean language should be used in principle, provided that in case suppliers of a certain items are confined to those from a particular region and thus it is inevitable to use a foreign language, then one among English, French or Spanish or the language of that particular regions could be chosen.
  • Korean language should be used in a tender notice, explanation for tender, specification and contract document, but not in the case of summarized public notice
  Specification to be notified. Such specification shall be re-considered that may cause unnecessary argument in international trade. Tender Notice Tender notice (call for tender) shall be on the same basis as that for domestic tender, provided that tender participants shall meet the following qualifications:
  1. 01A tenderer, a supp]lier or a manufacturer shall be a national of a member nation to the Agreement on Government Procurement and one who supplies a commodity from a member nation (going through a process that gives substantial change to the nature of commodity)
  2. 02One registered as per "regulation for registration as a qualified party for tenderer in a tender performed by the PPS,
  3. 03One qualified as per other regulations or tender notice conditions
• F. Preparation of Summarized Public Notice
  In notice of a tender, the following shall also be included:
  1. 01Subject of the contract
  2. 02Deadline for submission of tender documents and tender application
  3. 03Name of Client (PPS) and address
• G. Principle of Contract
  In a special supply contract, the following principles shall be observed for fair selection of the supplier:
  1. 01national treatment and non-discrimination
  2. 02no violation of the Agreement on Government Procurement
  3. 03observation of regulations concerning the country of origin
  4. 04prohibition of application of offset that may set particular conditions in selection of the
  successful bidder or appraisal of tenderers, such as compulsory designation of the ratio of localization] of parts, technical transfer or cross sales
• H. Signing of Contract
  • The Korean language shall be used in principle. If necessary, a foreign language may be used together with Korean. But, in the case of discrepancy in interpretation, the Korean language shall prevail A foreign supplier may sign the contract document without using a seal.
• I. Appeal of Decision
  An appeal of a decision made may be submitted to the relevant ministry within the deadlines set as follows:
  Deadlines
  1. 01Within 15 days of the date on which the cause of such an appeal has occurred.
  2. 02Within 10 days of the date on which the appealing party has come to know about the cause of the appeal.
  The appealing party may bring the matter to the International Contract Dispute Arbitration Committee, Korea for arbitration concerning the result of his appeal.