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Development Overview

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Overview of Korea’s development experience

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Public Administration

Procurement administration

Overview of the Institutionalization of Government Procurement
 
The first central agency set up in Korea to handle government procurement was the Provisional Bureau of Foreign Procurement (PBFP), which came into being on January 17, 1949. The Bureau managed capital and goods provided as foreign grants or aid, reporting to the Prime Minister. The Foreign Procurement and Purchase Service (FPPS) was created on December 15, 1949, under presidential supervision, to control foreign purchases and foreign currency spending. The PBFP was succeeded by the Provisional Foreign Procurement Service (PFPS), established on December 19, 1949, which focused solely on handling foreign aid.

The FPPS and PFPS were merged on February 17, 1955, to give birth to the Foreign Procurement Service (FPS), which reported to the Minister of Construction. With the First Five-Year Economic Development Plan launched, the FPS was expanded and reorganized into the Public Procurement Service (PPS) that reported to the Minister of the Economic Planning Board (EPB). The PPS inherited the functions and organizational structure of the FPS, and also took on the additional responsibilities of procuring domestic supplies and managing facility construction contracts. The scope of the organization’s roles continued to increase in the subsequent years, eventually coming to include the stockpiling of important goods in 1967, the management of government supplies in 1971, and the survey of prices and the inspection of government facilities under construction in 1978. Figure 5-1 summarizes the evolution of the central procurement agency in Korea.

The central procurement agency was mainly responsible for receiving and managing foreign capital and goods during the post-Korean War reconstruction period, and for supporting economic development in the 1960s and the 1970s by ensuring steady supplies of goods and social overhead capital. In the 1990s, the PPS supported the construction of two million households. During the Foreign Exchange Crisis, the PPS played a crucial role in helping Korean small and medium businesses (SMBs) acquire the raw materials they needed (PPS, 2007).
 
 

PBFP
(Jan. 17, 1949)
PFPS
(Dec. 19, 1949)
  PPS
(Oct. 2, 1961)
Managing foreign aid Managing foreign aid FPS
(Feb. 7, 1955)
Managing foreign purchases; purchasing and supplying domestic goods; managing facility construction contracts (1961); stockpiling important goods (1967); overseeing government supplies (1971); and surveying prices and inspecting facilities under construction (1978)
  Foreign Procurement Department
(Dec. 15, 1949)
Managing foreign purchases
  Making foreign purchases  

Source: PPS, 1999.
[Figure 5-1] Evolution of the Central Procurement Agency in Korea

Source:
Korea Institute of Public Administration. 2008. Korean Public Administration, 1948-2008, Edited by Korea Institute of Public Administration. Pajubookcity: Bobmunsa.