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Overview & Main Contracting Content Start

Overview & Main Contracting

Overview

Foreign procurement aims at purchasing foreign goods with comparative advantage over domestic goods, inviting foreign bidders. Thus, the types of goods purchased through foreign procurement procedures tend to change, catering to the changing needs of the government.
With sustained economic growth and the increasingly sophisticated industrial structure, import trends have changed from simple machinery and equipment to high technology goods that are not readily available in Korea.

The continued expansion of the Korean economy is expected to bring about an increase in imports, inevitably resulting in the growth of foreign purchasing in the public sector. PPS is striving to establish a database for all the information needed for the purchase of foreign goods.

PPS is also responsible for revising the specifications of the goods to be procured in order to enhance international competition, provided that such revision does not substantially affect the purpose of the procurement.
Major items procured consist of aircrafts; machinery; medical equipment; rolling stock and its parts; electric, broadcasting, and communications equipment; physics and chemistry lab equipment; furniture and lighting; publications and printed materials, etc.

Main Contracting Methods

Contracting Methods by Competition Scheme
  • Open competition: contracting through an open tender in which all qualified suppliers may participate
  • Nominated tendering: contracting through a tender in which the bidders who are nominated by the contracting authority may participate
  • Direct contracting: contracting method in which the contracting authority selects the contractor candidate and negotiates to establish the contract.
Contracting Methods by Supply Scheme
  • Total amount contract: contract established on the basis of total contract amount. Contract is established per each individual requirement by procuring entities.
  • Unit-price contract: contract established on the basis of unit-price. Contract is established to be commonly used by procuring entities for frequently purchased goods. Procuring entities may place orders against the unit-price contract.

Description on Each Process

  1. 01Purchase Request (PR) To procure goods from overseas, public entities submit Purchase Requests to PPS through Korea ON-line E-Procurement System (KONEPS).
  2. 02Advance disclosure of tender specifications and review Upon the receipt of PR, PPS prepares the preliminary terms and conditions, and the specifications to be included in the Invitation for Bids. The preliminary Invitation for Bids is disclosed to the public at KONEPS for 7 days to receive feedback from the relevant industry, in order to ensure equal opportunity and fair competition. PPS then reviews the feedback and consults the end-user entity to finalize the tender documents and the specifications, in compliance with international laws and trade practices.
  3. 03Publication of Invitation for Bids PPS registers the finalized Invitation for Bids, assigns the bid invitation number, and publishes it through KONEPS.
  4. 04Registration for Bid Participation All bidders who wish to participate in PPS's bidding must register with PPS at least one day prior to submitting their bids. However, foreign bidders are allowed a late registration, provided that the registration is completed prior to entering into a contract. Failure to register will result in the rejection of the bid. In order for foreign bidders to register for bid participation, the bidder must be a manufacturer, wholesaler, or a retailer of the tendered goods. The applicant must attach to their registration form the business registration or the certificate of office to prove the above. The attached documents are considered valid if issued by a relevant public authority in the applicant's country. If not issued by a public authority, the documents must be publicly notarized.
  5. 05Deposit of Bid Bond In principle, the deposit of bid bond is waived with the submission of the Memorandum of Bid Bond Payment. However, in the case where the deposit of bid bond is required, the bidder must deposit the bid bond in the amount no less than five percent (5%) of the total bid price at least one day prior to the bid submission. The bid bond must be valid throughout the validity period of the bid.
  6. 06Submission of Bids All bids must be prepared in English and submitted at the designated place on the date and hour (Korean Standard Time) and by submission method specified in the Invitation for Bids. Bids that arrive after the deadline date or the bid opening will not be accepted. Bids must be prepared using the form provided by PPS.
  7. 07Opening of Bids PPS shall open bids, in the presence of the representatives of the bids, at the time and place designated in the Invitation for Bids. In case of electronic bidding, bids shall be opened electronically through KONEPS. At any time, reserves the right to return a bid or exclude it from the bid evaluation process if it is found to be invalid or defective while being examined. Even if a bid has been received and opened without rejection, the above still applies.
  8. 08Technical Review on Bids Technical review on bids, in principle, shall be conducted by the end-user entity. However, if necessary (by the procuring entities request, etc.), PPS and the end-user entity may conduct the review together in collaboration. Technical review makes three types of decisions: acceptable, conditionally acceptable, and non-acceptable. Bids are deemed "acceptable" if the bid specifications are compliant with or superior to the specifications in the bid invitation, and the proof documentation is sufficient. "Conditionally acceptable" decision is given if the bid specifications are compliant with or superior to the specifications in the bid invitation, but the proof documentation is unclear. This may include the following cases:
    • In case that a part or parts is/are required to be 'standard' in the bid invitation, but the bidder submitted the bid with 'recommended' part or parts.
    • In case that the bidder's specifications are compliant but the model is not indicated on the bid documents, the bid is "conditionally acceptable" provided that the bidder's catalogue contains a compliant model and the bidder supplies the compliant model.
    • In case that the main equipment is acceptable, but minor non-compliant parts are included or minor low-value parts are missing in the bidder's specifications, provided that such non-compliant parts can be replaced or missing parts can be supplied with compliant parts.
    • In case of customized manufacturing, "conditionally acceptable" decision is given when an approval on the design is deemed necessary.
    "Non-acceptable" decision is given in the following cases:
    • When the bidder's specifications do not comply with the bid invitation to a substantial degree.
    • When it is impossible to ascertain the specifications on the bid due to insufficient proof documentation, such as the catalogue, drawing, description, etc.
    • When the bidder submitted a Catalogue containing pictures and specifications copied from drawings or specifications of other companies' products.
    • In case of customized manufacturing, when the details of customized manufacturing cannot be confirmed due to the non-submission of the outline of structural design.
    • When the bid's specifications are acceptable, but the bidder did not specify the model and the bidder's proof documentations do not contain compliant models that are clearly identifiable.
  9. 09Award of Contract The award will be made to the bidder who submitted the bid with lowest price provided that the bid satisfies the requirement specified in the bid invitation, including the price, delivery schedule, quantity, and specification, and the bid's overall terms and conditions are advantageous to the Korean government. Written notification of award to the successful bidder will cause the contract to come into effect. In general, contracts are made on a FCA (FOB) price basis and PPS arranges the transportation. Upon the end-user's request, contacts may be made on other price terms, such as CFR, CIF, DDP, etc.
  10. 10Issuance of Letter of Credit After the contract is made, PPS will apply to an authorized foreign exchange bank in Korea, for issuance of an irrevocable, without recourse and non-transferable; commercial letter of credit. The corresponding bank of the L/C opening bank will notify the beneficiary.
  11. 11Deposit of Performance Bond Upon the notice of the L/C opening from the notifying bank, the contractor or supplier must deposit the performance bond, for an amount not less then ten percent (10%) of the contract amount at the notifying bank in favor of PPS. The performance bond will be released upon PPS's instruction after satisfactory completion of the contract or on its expiry date.
  12. 12Tests and Inspections If independent (3rd party) inspection is deemed necessary, PPS will select an inspector who will perform the inspection of the contracted goods prior to delivery.
  13. 13Shipment After receiving the L/C, the supplier carries out its contractual obligations in accordance with the L/C and the contract. Shipment must be made by the delivery date specified in the L/C, otherwise liquidated damages will be imposed for the delayed shipment. If the contractor fails to comply with the contract, the performance bond is confiscated and the contractor is subject to debarment from contracting with PPS and other public entities of Korea. In the event of loss or damage to goods found at the time of delivery, such as non-delivery, shortage, breakage, discrepancy in specifications, PPS will take all necessary actions to ensure replacement, repair or cash compensation by the liable party.
  14. 14Procedures for Cargo Handling of Imported Goods
    • Shipping Advice
      When ready to make shipment, the contractor shall advise the related parties including PPS (or the head of the regional PPS office in charge) and the L/C opening bank. The shipping advice shall include the contract number, L/C number, invoice amount, description of shipped goods, and B/L number (or AWB number).
    • Delivery
      When the cargo arrives at the port, the regional PPS office in charge nominates a stevedoring firm to unload. Once the cargo is in the custody of a bonded warehouse, the regional PPS office takes measures for customs clearance in close cooperation with the end-user entity. After customs clearance, the the regional PPS office delivers the contracted goods to the end-user entity. If the goods have been contracted on FCA or FOB terms, a transport operator nominated by PPS shall deliver the goods to the place designated by the end-user entity.
    • Claims for Inland Loss and Damage
      For loss and damage to goods that occurs during cargo handling after receipt from the carrier, PPS takes all necessary actions to ensure the replacement or repair of the goods by the liable party. If this is not possible, the liable party is responsible for paying compensation for the loss or damage to the goods including any accessory charges which may arise.
  15. 15Examination of Shipping Documents Upon receipt of the original and non-negotiable copies of the shipping documents, PPS examines the documents. Any discrepancy may cause claims against the supplier (exporter).
  16. 16Payment for Shipped Goods Payment is made by the negotiating bank under irrevocable L/C, when all required shipping documents are presented by the supplier after completion of the shipment.
  17. 17Closing of Contract Upon receipt of the notice from the end-user entity stating that the contract has been completed in good order, PPS instructs the issuing bank to close the L/C and release the performance bond to the supplier.

Division of Work Content Start

Division of Work

Foreign Equipment Division

Foreign Equipment Division
Phone +82-42-481-7316
FAX +82-42-472-2355
  1. 01Review of specifications, survey for the preparation of estimated contract value, tendering, establishment of contract and other incidental tasks for the procurement of the following items from foreign source;
    • A. Aircrafts
    • B. Machinery
    • C. Medical equipment
    • D. Other items not handled by Foreign Machinery Team
  2. 02Tasks related to L/C, cargo insurance and inspection
  3. 03Logistics contracts for foreign procurement
  4. 04Logistics management and incident processing for foreign procurement items listed in 1
  5. 05Chartering of vessels and scheduling of vessel operation
  6. 06Advance notices for tender for foreign procurement and development of procurement plans
  7. 07Evaluation, analysis and statistics on foreign procurement
  8. 08Implementation of foreign procurement policies and improvement
  9. 09Research on foreign procurement methods

Foreign Machinery Team

Foreign Machinery Team
Phone +82-42-481-7312
FAX +82-42-472-2301
  1. 01Review of specifications, survey for the preparation of estimated contract value, tendering, establishment of contract and other incidental tasks for the procurement of the following items from foreign source;
    • A. Railway vehicles, their components and parts
    • B. Electrical, broadcasting and communication equipment
    • C. Physical or chemical analysis equipment
    • D. Furniture and lighting
    • E. Publications and printed materials
    • F. Agricultural products
  2. 02Implementation of electronic tendering for foreign procurement and improvement
  3. 03Logistics management and incident processing for foreign procurement items listed in 1

Product Information Solicitation Content Start

Product Information Solicitation

Product Information Solicitation

For foreign supplied goods, there have been difficulties for end-user entities in collecting product information, and for suppliers in collecting information on procurement requirements from public entities.

To relieve these difficulties, PPS operates the Product Information Solicitation page for foreign goods within KONEPS, where end-user entities may announce their requirements and openly solicit available product information from suppliers.

To solicit product information, public entities with procurement requirements post their requirements onto the page. Suppliers browse the posts and offer their product information including specifications, prices, manufacturer, etc. Public entities prepare the specifications for purchase, using such information as a reference, and submit purchase request to PPS.

The Product Information Solicitation page facilitates the exchange of product information between end-user entities and the suppliers, and is significantly contributing to increasing competition and the suppliers' bidding opportunities.

Terms and Conditions Content Start

Terms and Conditions

Product Information Solicitation

For foreign supplied goods, there have been difficulties for end-user entities in collecting product information, and for suppliers in collecting information on procurement requirements from public entities.

To relieve these difficulties, PPS operates the Product Information Solicitation page for foreign goods within KONEPS, where end-user entities may announce their requirements and openly solicit available product information from suppliers.

To solicit product information, public entities with procurement requirements post their requirements onto the page. Suppliers browse the posts and offer their product information including specifications, prices, manufacturer, etc. Public entities prepare the specifications for purchase, using such information as a reference, and submit purchase request to PPS.

The Product Information Solicitation page facilitates the exchange of product information between end-user entities and the suppliers, and is significantly contributing to increasing competition and the suppliers' bidding opportunities.