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Overview & Procedures Content Start

Overview & Procedures

Overview

By the application of the WTO/GPA (Agreement on Government Procurement), the construction market for the public sector in Korea was opened to overseas contractors since January 1, 1997.

The Construction Bureau is a multi-discipline organization with the resources and capability to provide a one-stop service in architecture, contract management, engineering, and project management for medium to large scale construction projects. One of the Construction Bureau's major areas is construction contracts. PPS contracts major construction projects, for central government, and projects needing prequalification, projects allowing alternatives, and design/builc projects for local government.

In order to obtain value for money, in terms of good quality construction at reasonable cost and in a timely manner, PPS provides the award to the bidder who has been determined to be fully capable of undertaking the contract and whose bid is either the lowest or that which in terms of the specific evaluation criteria set forth in the notices or bidding documents are determined to be the most advantageous to the Government. For projects exceeding a pre-determined scale, the Construction Bureau applies pre-qualification systems.

The Construction Bureau's other major area is construction management : PPS selects architects and construction supervisors, and in some cases supervises construction projects using in-house officials. PPS has a decades-long history of contract supervision by PPS officials, providing government bodies, which do not have their own technical professionals, with total services from design to contract and construction supervision. The major buildings constructed recently under PPS's supervision include Training Center for National Athletes, Korea Exchange, Korean Embassy in People’s Republic of China, etc.

Description on Each Process

As a central procurement agency, PPS handles the procurement for large-scale construction works for the use of government agencies and semi-government institutes, and also, with its in-house officials, provides supervision services for major construction projects at the request of the end-user.

  1. 01Contract Request (CR) Upon receipt of a CR for a project from a requesting body, PPS reviews the contents of the CR to ensure that the specifications and drawings state the Government's actual minimum requirements and are designed to promote full and open competition, with due regard to the nature of the construction works to be acquired
  2. 02Decision of Type and Method of Contract On reviewing the CR and taking into account the complexity of the work to be procured, the estimated cost or price, and the type of specifications used, PPS determines the type and method of contract.
  3. 03Pre-qualification of Bidders For very large projects or projects of a complex or special nature, a prequalification process is applied to the qualified bidders. Pre-qualification is based upon the capability of the prospective bidders to perform the particular contract satisfactorily, taking into account, among other things, the following ;
    • experience and past performance on similar contracts,
    • capabilities with respect to technical expertise, equipment and plant,
    • financial position, and
    • trustworthiness.
    The applicants are evaluated by a committee of in-house senior officials from the Construction Bureau. As soon as the pre-qualification is completed, bidding documents are issued to the qualified bidders.
  4. 04Cost Estimation Based on the specifications and drawings, PPS estimates the cost for procuring the proposed project.
  5. 05Public Announcement The invitation for bids is announced on the website www.g2b.go.kr. Generally, bidders are allowed 40 days from the date of the announcement for preparation of the bids.
  6. 06Pre-bid Meeting Bidders are requested to participate in a site orientation which is provided by the end-user. Failure to participate in the pre-bid meeting may cause the rejection of the bid.
  7. 07Bid Bond Bidders must establish a bid bond with PPS for an amount not less than five percent (5%) of the bid price at least one business day prior to the date of bid opening. Bid bonds of unsuccessful bidders will be released on PPS's instructions or automatically on its expiry date.
  8. 08Bid Opening Bids are received and opened in the presence of bidders at the place and time and date specified in the invitation for bids.
  9. 09Performance Bond The successful bidder must establish a performance bond with PPS for an amount not less than ten percent (10%) of the contract amount. The performance bond will be released after satisfactory completion of the contract or automatically on its expiry date.
  10. 10Award of Contract Contract awards will be made to the lowest, qualified and responsible bidder taking into account price, construction plan, compliance with specifications and terms most advantageous to the Government. Written notification of the award to the successful bidder will cause the contract to become effective.
  11. 11Payment When the construction work has been satisfactorily completed and the inspection certificate issued by the appropriate authority has been submitted, the end-user may issue a certificate of acceptance to the contractor. Payment is made by the end-user when the contractor submits a request for payment with the certificate of acceptance and the accompanying inspection certificate
  12. 12Closing 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.

Scope of Business Content Start

Scope of Business

Requisitions for Supplies and Scope of Work

Scope of requisitions for supplies requiring contractual work (Enforcement Ordinance, Article 15 of the Supply Business Act)

  • By a government institutions : Work estimated to be worth more than W3 billion (W0.3 billion in the case of electric or communication work)
  • By a local autonomous body : Work requiring the procedure of design/build and alternative tendering is subject to a package tender
Scope of facility-related contractual work
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Scope of facility-related contractual work
Categories Planning
stage
Designing-stage Stage of tender
and contract
Stage of work
commence ment
Stage of operation
and maintenance
Work needed Earmarking
of budget
Basic design &
As-is design
Tender notice;
signing of contract
Inspection, supervision and
final inspection
Utilization and
maintenance
of facilities
Party
in charge
Ordinary
work
Relevant
institution
Relevant
institution
PPS Relevant
institution
Relevant
institution
Package
proxy
Relevant
institution
PPS PPS PPS Relevant
institution

Division of Business between Main Office and Provincial Offices of PPS

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Scope of facility-related contractual work
PPS Provincial offices Remarks
Ordinary work
  • Work requiring the procedure of PQ
  • Work requiring the package deal of design and actual work
  • Work requiring alternative tender
  • Work requiring a tender based on performance record and open, specified tenderers
  • Work requiring a private contract
  • Work located in their area of jurisdiction (i.e. work other than those in jurisdiction of Main Office)
  • Provincial offices: signing of contracts and their management (Seoul Provincial Office: a part of screening work for qualification)
  • Main Office: notice of tender and provision of support for screening for qualification
Specialized Electric, Information, Communication work Work whose estimated value comes to more than W3 billion Work whose estimated value comes to less than W3billion

Criteria of international Bid Content Start

Criteria of international Bid

Basic principle of Agreement on Government Procurement

  • National treatment and Non-Discrimination
  • Prohibition of Offsets ("Offset" as used in Agreement on Government Procurement means attempts that aim for encouragement of domestic industries or improvement in balance of international payment through the compulsory application of the ratio of localization, technological licensing, investment conditions, and linkage trade.)
  • Guarantee of transparency

Threshold for Authorization

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Threshold for Authorization
Categories Supplies Services Construction Works
Central government entities 250 million won 250 million won 9.5 billion won
Local government entities 380 million won 380 million won 28.4 billion won
State-invested enterprises 850 million won Not included in the coverage 28.4 billion won

Basic principle of Agreement on Government Procurement

  • Those, ordered by authorized institutions, whose value comes to higher than the threshold set after deducting the value of the government-supplied items and value-added tax
  • To be appraised based on one new contractual work subject to open competition tender

Qualification of foreign contractors in international tenders

  • Those registered that have obtained license and approval as per the domestic law
  • Limits in value of sub-contract work applicable
  • Those from a member nation (25 nations in all excluding Korea) of the Agreement on Government Procurement

Information on AGP Contracts Content Start

Information on AGP Contracts

Public Notice of Successful Bidder (Special Exemption Regulation, Article 17)

In case of the final selection of the successful bidder in special supply contracts, the following shall be put on a public notice (or in case of an international tender or a private contract as per the Special Exemption Regulation, Article 23) no later than 72 days from the date of such final selection

  • Description, quantity and value of the relevant items
  • Name and address of the successful bidder or the party who has won the private contract
  • Address of the supply institution
  • Procedure of selection of the successful bidder or the party who has won the private contract
  • Procedure of public notice for the tender or reasons of the private contract

To be published on the website www.g2b.go.kr every two months

  • Past practice and procedure of supply
  • Reason for disqualification, if any
  • Reasons of the success of such a tenderer

Things not to be disclosed (Special Exemption Regulation, Article 4)

  • In case such disclosure is feared to cause disturbance in law enforcement and do harm to public good
  • In case such disclosure is feared to do harm to a particular business' commercial interest or hinder a fair competition elsewhere

Dispute Over International Bid Content Start

Dispute Over International Bid

Procedure to deal with disputes

Appeal (Request for cancellation or remedial action)
  • A party to an international tender for supply to the government has a right to appeal with regard to each of the following:
    • Matters concerning the scope of a contract for government's procurement through an international tender
    • Matters concerning qualification for tender, notice of tender, or decision on the successful bidder
  • Such an appeal shall be filed no later than 15 days of the date on which the cause of the appeal has occurred, or no later than 10 days of the date on which the party has come to know the cause of the appeal.
  • Filing for Arbitration (in case the party does not agree to the result of his appeal)
    • To be filed within 15 days of receipt of the notice of the result such an appeal
    • The Committee shall conclude its judgment within 50 days of such filing, unless there is a particular reason for delay (and the judgment shall have the same effect as that of a justice court)

International Contract Dispute Arbitration Committee

Composition (Special Exemption Regulation, Article 28 of the Government Contract Law)
  • Vice Minister (Chairman) of MOSF and 14 members of central government ministries (such as those with the rank Gr. II or III from Ministry of Public Administration and Security, Ministry of National Defense, Ministry of Knowledge Economy, Ministry of Land, Transport and Maritime Affairs, PPS etc)
  • The term for non-public official members is 2 years and can be extended.
Role of the Committee
  • To inform each head of the government ministries of a filed request for arbitration, deliberate and make an arbitration for it.
  • The Committee is authorized to delay the relevant tender procedure or stop the signing of the contract.

Expense to be borne by the party who has filed request for arbitration or other parties

  • Expense for appraisal, check and test; for calling for witnesses or evidence
  • Expense for inspection, investigation, recording, stenographer, interpreter etc