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Development Overview

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Overview of Korea’s development experience

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Development Overview
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Public Administration

Public procurement service

Public Procurement Service (PPS)

The Second Republic that came into being in 1960 recognized the crucial importance of centralizing government procurement in a single body in order to ensure efficiency in national economic policy and public administration. The absence of such a centralized body meant different ministries and departments made separate purchases that inevitably led to government budget wastes. Nevertheless, such a central procurement agency did not materialize until later.

The launch of the Five-Year Economic Development Plan in the 1960s intensified the need to ensure more efficient budget spending. It also became urgent to develop a system to guarantee the steady supplies of goods, through government purchases, so as to encourage technological research in corporations and promote economic development. Accordingly, the Government Organization Act (GOA) was amended comprehensively in October 1961, and the Public Procurement Service (PPS) finally came into being as a part of the Economic Planning Board (EPB). The PPS inherited the main functions and organizational makeup of its predecessor, the Foreign Procurement Service (FPS), while also taking on the new responsibilities of ensuring domestic supplies and managing facility construction contracts.

Upon its establishment, the PPS was responsible solely for handling domestic and foreign purchases and facility construction contracts on the government’s behalf. Over the years, however, the range and scope of its responsibilities broadened, reflecting changes afoot in society at large. The Procurement Fund Decree took effect in February 1967, mandating the stockpiling, by the PPS, of essential goods, materials and equipment. The purchase and stockpiling of these goods were crucial to supporting economic development and stabilizing prices. The PPS thus came to play a greater role in economic policymaking and implementation. In 1971, the passage of the Regulation on Special Cases of the Supplies Management Enforcement Ordinance led the PPS to oversee the management of all assets publicly owned. This meant that the PPS was now authorized to oversee, survey, audit and inspect, instruct, and train officials in not only the central government, but also in local government organizations and government-invested corporations and institutions regarding the assets they held.  Moreover, the PPS went on to take part in futures trading overseas in 1975, setting up the Futures Trade Council and ushering in the era of commodity futures trade. In 1978, the PPS was further granted the authority to inspect the construction of government facilities to ensure the quality of results. In an effort to carry out all these responsibilities effectively and minimize the burden on the national treasury, the PPS established a thoroughgoing price survey system to ensure the appropriate prices of goods. It purchased and supplied quality goods that facilitated public administration. The PPS also began to organize engineering and chemical tests and other forms of quality assurance activities to ensure the technological competitiveness of Korean manufacturers.

The PPS was initially set up as a body reporting to the EPB. As accounting became increasingly important for the PPS due to its responsibility for managing government contracts, the GOA was amended in December 1963 to transfer the PPS to the Ministry of Finance. After government stockpiling of goods became institutionalized, and it became increasingly necessary to support economic development by securing the necessary goods and resources and stabilizing prices, the PPS was again transferred to the EPB. After being transferred to the Institute of Finance and Economy in 1994, the PPS eventually became part of the Ministry of Finance and Economy in 1998, where it has remained until now.

The PPS was originally comprised of one Director, one Vice Director, the General Accounting Division, the Secretariat, three bureaus, seven local offices, and five official overseas branches. The three bureaus included the Bureau of Domestic Supplies (including the domestic supplies, contract, purchase, standard, and distribution divisions); the Bureau of Foreign Supplies (including the foreign supplies, ready goods, machinery, and consumer goods divisions); and the Bureau of Management (including the finance, accounting, inspection, field management, and management divisions). The seven offices were located in Busan, Incheon, Gunsan, Mokpo, Yeosu, Masan, and Pohang. The five official overseas branches were in New York City, Washington, Taipei, Tokyo, and Bonn). The organizational structure continued to evolve in line with socioeconomic changes elsewhere, and the PPS finally became an “administrative agency-in-charge”. Table 5-2 summarizes the evolution of the PPS organization.
 

Evolution of the PPS Organization
 

Name Year Political Specially appointed Regular civil servants Technical Contracted Total
Institution 1 2 3 3 and 4 4 4 and 5 5 6 7 8 9 Subtotal
PBFP 1949   2   8     14   30                
PFPS 1953   2   6     15   49                
FPPS 1954   2   7     18   25 27   13   91     94
FPS 1955   2   4     13   22 49   14   102     104
PPS 1956   2   5     17   26 65   14   127     129
1957   2   5     17   22 95   3   142     144
1958   2   7     25   47 411   285   775   304 1081
1960   2   7     23   47 203 208 140 145 773   304 109
1961   2 1 3 4   27   39 113 86 77 26 376   73 451
1962   2 1 4 4   31   56 137 98 86 32 447   88 537
1963   7 1 4 4   31   55 136 95 86 32 444 74 12 537
1964   7 1 4 4   31   55 132 90 78 20 415 77 12 511
1965   6 1 4 4   29   56 132 90 78 20 414 77 12 509
1966   6 1 4 4   31   56 132 90 78 20 416 77 12 511
1968   6 1 4 4   31   56 134 91 77 18 416 83 19 524
1969   6 1 6 3   30   59 135 91 72 18 415 83 19 524
1970   7   6 3   30   59 134 90 60 18 400 83 19 524
1971   8   7 3   37   70 153 93 56 16 435 37 65 545
1972   8   8 3   40   85 201 105 56 13 511 36 70 625
1974   8   8 3   40   88 201 105 56 13 514 36 70 628
1975   8   8 4   45   98 193 105 56 13 522 36 73 639
1976   12   6 4   46   106 219 121 58 14 574 24 90 700
1978   22   8 2   50   115 236 152 60 14 637 16 118 793
1979   22   8 2   50   117 246 162 62 17 664 15 143 844
1980   32   8 2   50   129 253 164 64 17 687 61 209 989
1981 1 31   7 2   47   130 265 164 64 17 696 58 346 1132
1983 1 31   7 2   47   130 265 164 64 17 696 58 341 1127
1987 1 29   7 3   50   138 265 166 64 17 710 58 343 1141
1988 1 15   7 3   50   141 271 169 66 17 724 115 286 1141
1990 1 15   7 3   50   141 271 169 66 17 724 401   1141
1992 1 15   8 2   52   148 291 179 72 18 770 394   1180
1993 1 15   8 2   52   148 291 179 72 18 770 390   1176
1994 1 15   6 2   45 8 130 285 166 72 18 732 365   1113
1995 1 15   6 2 5 40 21 117 285 166 72 18 732 365   1113
1996 1 15   6 2 10 35 35 116 284 166 75 18 747 338   1101
1997 1 13   6 2 10 35 36 130 269 143 75 18 724 320   1058
1998 1 12   6 2 10 34 36 127 265 139 64 18 701 287   1001

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