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Assessing Performance of e-Procurement Services in Taiwan and Korea

Assessing Performance of e-Procurement Services in Taiwan and Korea. Lung-Teng Hu, Ph.D. Assistant Professor Department of Public Policy and Management Shih Hsin University Taipei, Taiwan. M. Jae Moon, Ph.D. Professor Department of Public Administration Yonsei University Seoul, Korea.

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Assessing Performance of e-Procurement Services in Taiwan and Korea

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  1. Assessing Performance of e-Procurement Services in Taiwan andKorea Lung-Teng Hu, Ph.D. Assistant Professor Department of Public Policy and Management Shih Hsin University Taipei, Taiwan M. Jae Moon, Ph.D. Professor Department of Public Administration Yonsei University Seoul, Korea Organized by : Taiwan e-Governance Research Center (TEG) Supported by : The Research, Development & Evaluation Commission, Executive Yuan.

  2. 1. Purposes of this Study Comparing experiences in e-procurement development e-Procurement Services in Taiwan and Korea Comparing factors for success Gain insights from comparisons 2

  3. 2. Method e-Procurement Case Studies Comparative Approach 3

  4. 2. Method Legal framework Legal framework System platform System platform Comparisons between Taiwan and Korea KSF KSF Performance Performance Achievements Achievements e-Procurement Services 4

  5. To improve government procurement efficiency and prevent bid-rigging by criminal groups To establish an open, transparent government procurement environment To simplify routine government procurement procedures 3. e-Procurement in Taiwan 3.1 Objectives of e-Procurement e-Procurement Objectives 5 Source: http://www.rdec.gov.tw/ct.asp?xItem=4088115&ctNode=10110

  6. 3. e-Procurement in Taiwan 3.2 Development of e-Procurement Service in Taiwan • Accommodating to the Government Procurement Act in 1998 • Launched by the Public Construction Commission, Executive Yuan in 1999 • Single portal: Government Procurement Information Center (http://gpic.pcc.gov.tw) 6

  7. 3. e-Procurement in Taiwan The Public Construction Commission, Executive Yuan (http://www.pcc.gov.tw/) 7

  8. 3. e-Procurement in Taiwan The Government Procurement Information Center 8

  9. 3. e-Procurement in Taiwan 3.3 Government e-Procurement Systems 9 Source: www.pcc.gov.tw

  10. 3. e-Procurement in Taiwan 3.4 Performance As of December 2007 • 56,460,000 hits in Government Procurement Information System (accumulated) • Saving US$ 10 millions • Offering 1,060,179 bid request documents • 987,988 orders placed through Common Supply Contract System • Accumulated transactions of US$ 2.7 billions Source: http://www.rdec.gov.tw/ 10

  11. 3. e-Procurement in Taiwan 3.4 Performance e-Tendering System Usage Source: www.rdec.gov.tw 11

  12. 3. e-Procurement in Taiwan 3.5 Achievements 12

  13. 3. e-Procurement in Taiwan 3.6 Key Factors of Success 2 3 4 1 Government-wide promotion system High investment in e-government Consolidated e-initiative coordination Well-developed IT infrastructure 13

  14. 3. e-Procurement in Taiwan 3.6 Key Factors of Success 3.6.1 Government-wide promotion system • Cabinet-level taskforce: the National Information Infrastructure Committee (NII) (partial predecessor of the National Information and Communications Initiative Committee (NICI) ) • CIO of the government: the Research, Development, & Evaluation Commission, Executive Yuan (Cabinet-level agency) Source: http://www.rdec.gov.tw/public/Data/85201871271.doc 14

  15. 3. e-Procurement in Taiwan 3.6 Key Factors of Success 3.6.2 High investment in e-government • An e-government central funding system established by the RDEC for e-government projects. • From 2003 to 2006, Taiwan government has invested US$ 370 million in e-Government Project. • Averagely spent US$92.5 million per year on e-Government Project. 15 Source: 2007 Taiwan e-Government Report

  16. 3. e-Procurement in Taiwan 3.6 Key Factors of Success 3.6.3 Consolidated e-initiative coordination • Single agency in charge: the Public Construction Commission, Executive Yuan • A clear responsibility for the initiative • Demand-centric/ problem-solving planning • Taking both agencies and firms’ concerns into account • Strong intention of establishing open, fair, transparent competitions • Intending to solve long-standing issues on corruption, scandal and abuse of public resources 16

  17. 3. e-Procurement in Taiwan 3.6 Key Factors of Success 3.6.4 Well-developed IT infrastructure • 2008 EIU’s e-readiness rankings • Taiwan: 19th in the world, 7th in the Asia-Pacific region • 2007-2008 WEF's Networked Readiness Index rankings  • Taiwan: 17th in the world, 5th in the Asia-Pacific region Source: http://www.find.org.tw/eng/home.asp 17

  18. 4. e-Procurement in Korea 4.1 Legal Framework • Public procurement contract Act on Contracts to which the State is A Party (ACSP) • Similar processes for public procurement based on the ACSP from central government, local government to state-owned enterprises • Revised for e-Procurement in 2002 • Mandatory : Integrated bid notice, Registering the black list of businesses, Annual report on contract amount • Voluntary : e-Bidding, e-Contracting, sharing the database of businesses • Approval of e-documents is subject to other Acts • e.g. Digital Signature Act, E-Government Act, etc. • Advancement in e-Procurement after 2002 (ex. Reverse auction in September 2008) 18

  19. Construction- relatedAssociations Certification- Related agencies Ministry of Government Administration and Home Affairs Korea Financial Telecommu- nications & Clearings Institute PPS Operation Public Organizations (Buyers) Private Businesses (Suppliers) Construction CALS Ministry of Finance And Economy Suretyinsurance 4. e-Procurement in Korea 4.2 Internal & External System Architecture e-Procurement system Portal Goods classification system e-Procurement ASP Supplier supporting service Contracted products catalogue Unit contract system Use Linkage Integrated notice User registration E-Guarantee Commercial products catalogue Supplier’s Performance E-Payment Documents distribution and outside linkage Linkage 19

  20. 4. e-Procurement in Korea 4.3 Steps to KONEPS • PPS e-procurement (1997~2001) • 1997:EDI (20 public organizations users) online shopping mall (goods) • 2000: construction and services were included in the shopping mall • 2001: e-bidding, contract, payment • e-bidding services were shared on request with the other Organizations • 2008: reverse auction 20

  21. 4. e-Procurement in Korea 4.4 Performance 4.4.1 Utilization Volume • 30,000 organizations (buyers) + 150,000 businesses (suppliers) 220,000 users • 140,000 daily website hits & 100,000 electronic documents exchange per day 21

  22. Transaction Volume Others 43B Bidding 11B 25B Shopping 7B 4. e-Procurement in Korea 4.4 Performance 4.4.2 Transaction Volume FY2006 (US$ 44 Billion) 22

  23. 4. e-Procurement in Korea 4.5 Achievements 4.5.1 Improved Procurement Administration • Raised productivity • Saved annual transaction costs of US$ 4.5 billion • US$ 4.1 billion of business expenses was saved in terms of time and transportation (US$ 0.4 B for public organizations) • Enhanced transparency • Provision of real time information and expansion of contract information disclosure •  Promoted fair competition by increasing bidding opportunities • Reduction of the need for personal contact 23

  24. 4. e-Procurement in Korea 4.5 Achievements 4.5.2 Support for e-Commerce Development • Expanded the experience of e-Commerce • Public organizations and businesses have accumulated the e-procurement experience and utilized it for their online transactions • Created PC and Internet-friendly environment, and fostered the mindset for e-Commerce • Improved the security of e-Commerce • Facilitated the establishment of infrastructure for digital signature and security including PKI encryption • * PKI : Public Key Infrastructure • Accelerated the application of digital signatures to ensure security for private sector transactions 24

  25. 4. e-Procurement in Korea 4.6 Key Factors of Success 4.6.1 Overcoming Weaknesses 25

  26. 4. e-Procurement in Korea 4.6 Key Factors of Success 4.6.2 Established Government-wide Promotion System (1/2) • Operated an E-Government Special Committee as a top taskforce for building e-government (Jan. 2001 ~ Jan. 2003) • Strong inter-ministerial initiative • The Committee assumed full management of e-government projects • The President himself checked the progress of projects directly through the committee • Joint efforts by officials and private sector specialists in the Committee • Public: Vice-ministers planning and budgeting • Private: Specialists applying new ICT 26

  27. 4. e-Procurement in Korea 4.6 Key Factors of Success 4.6.2 Established Government-wide Promotion System (2/2) • 11 projects for e-government under the principle of Selection and Concentration • KONEPS as one of the projects • (government-wide civil service, education, national finance, tax, social insurance, integrated personnel management, etc) • Top budgetary priority for the e-government 27

  28. 4. e-Procurement in Korea 4.6 Key Factors of Success 4.6.3 Integration of User Input • Best example of collaboration • Established a board for KONEPS development with 9 organizations under E-Government Special Committee • A total of 90 organizations and businesses participating as a user or institutions linked with KONEPS • Operated as advisory committees, trial boards, workshop members, etc • Extension of use by strengthening PR activities • Continuous practical training of users • Built nation-wide education system for various organizations including regional offices and outsourced institutions • Persuading users to promote voluntary use • NO MORE: red tapes, corruption, waste of time 28

  29. 4. e-Procurement in Korea 4.6 Key Factors of Success 4.6.4 Well-Developed IT Infrastructure • Bridged the Digital Divide among different regions and companies • Ranked first in terms of Internet connection • 35 million Internet users(73.4% of the population), 12 million households with broadband Internet subscribers(75%), etc • No problem has been found in e-biddings with 60 million participants • Encouraged technology development of e-commerce by legislating and revising laws • Digital Signature Act (Feb. 1999), Framework Act on E-Commerce (Feb. 1999), Electronic Promotion Act on Administration Processes for the Establishment of an e-Government (March, 2001), etc. 29

  30. 5. Experience Comparisons 30

  31. 5. Experience Comparisons 31

  32. 6. Implications and Conclusions • Similarities are in most of comparative dimensions • The most significant difference between Taiwan and Korea’s experiences in terms of e-procurement service appears in the driving force of e-government • Taiwan: driven by cabinet-level agency and committee • Korea: driven by the President and presidential special committee 32

  33. 6. Implications and Conclusions • Determination of the authority (as the driving force) is very important • The President • The CIO of the government • Multiple participantsin initial development is another critical factor • Resources provision and investment are extremely crucial • IT capacity and inter-agency cooperation need to be taken into account as well 33

  34. 6. Implications and Conclusions Issues need further researches • The President’s involvement is a necessary or sufficientcondition for a successful e-government program? 34

  35. Thank You ! 35

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