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