Korea began implementing the World Trade Organization's Government Procurement Agreement (GPA) on January 1, 1997. The GPA establishes non-discriminatory procedures for the procurement process so that a maximum number of qualified suppliers can fairly compete. In its accession offer, Korea agreed to cover procurements valued over certain "threshold" amounts made by Korean central government agencies, their subordinate entities, Korean provincial and municipal governments, and some two dozen government-invested companies. Korea included procurement of services and construction services. Other features of the GPA for Korea include a prohibition against offsets as a condition for awarding contracts on covered procurements, and a provision requiring procuring entities to allow suppliers to pursue alleged violations of the Agreement through GPA-defined bid challenge procedures. The Korean Ministry of Finance & Economy (MOFE) has established an International Contract Dispute Settlement Committee to deal with any challenges by foreign suppliers that Korean procuring entities have not complied with GPA provisions.
The annexes to Korea's accession document specify certain thresholds, below which GPA rules do not apply. Thus, the threshold for Annex 1 (central government) entities for supplies and services is approximately USD 180,000, and for construction services approximately USD 7 million. Thresholds for supplies/services and construction services are considerably higher for Annex 2 (sub-central government entities) and Annex 3 (government-invested corporations). Korea also specified certain categories of purchases that would be exempt from GPA coverage altogether, including procurement related to national security and defense, Korea Telecom's purchases of telecommunications commodity products and network equipment, procurement of satellites, and purchase by the Korea Electric Power Corporation (KEPCO) of certain electrical transmission and distribution equipment.
The Public Procurement Service (PPS) is responsible for the purchase of goods and incidental services required by central and sub-central government entities, government construction contracts and stockpiling raw materials. Not all GPA-covered procurement is handled by the PPS. In the case of Korean government-invested corporations (listed in Annex 3 of Korea's accession agreement), procurement is handled in-house, with these entities following the same GPA rules. Thus, tendering under open, formal procedures are required.
All bidders who wish to participate in PPS tenders for supplying goods and services must register with PPS at least one business day prior to the date of the bid opening. However, foreign bidders are allowed to register with PPS prior to entering into a contract. Failure to register constitutes cause for rejection of the bid. Korea began the Government e-Procurement System (GePS) in October of 2002, a single window for public procurement which digitalized the entire process from order to payment for all public organizations. Bids can be viewed on the PPS website and are valid for at least 45 days after the bid opening date shown on the site. Additionally, as required by the GPA, the procuring entity must publish information on bid opportunities in at least two sources: the daily newspaper Seoul Shinmun (daily newspaper) and the Korean Government Gazette. While these sources are published in the Korean language, any given tender announcement must be accompanied by a summary in English, including the subject matter of the contract, the deadline for submission of tenders, and the address and contact point from which full documents relating to the contracts may be obtained. The tender announcement must contain a statement that the bid is covered by the GPA.
The U.S. is currently negotiating a Free Trade Agreement (FTA) with Korea. Government Procurement is one of the chapters under negotiation in the FTA. For further information please visit the website for the Office of the United State Trade Representative at http://www.ustr.gov.
For more information on the Korean Public Procurement Service, please visit their website at www.pps.go.kr/english.
Defense Procurement
The Defense Acquisition Program Administration (DAPA) was launched on January 2, 2006 as a streamlined military procurement agency, replacing the former Defense Procurement Agency (DPA). DAPA is responsible for defense industry equipment purchases. The new agency was formed in order to ensure transparency in the defense procurement process and consolidates eight organizations that were responsible for procurement and the development of technology that were formerly under the purview of the Ministry of National Defense and the separate military services. The DPA was managed by the military. However, DAPA is a civilian agency with military support. DAPA continues to report to the Defense Minister, who is a civilian. Please visit the DAPA website at www.dapa.go.kr for further details on the agency.
U.S. defense industry equipment standards are generally accepted in Korea since most Korean defense systems are based on American standards. Defense equipment is marketed in Korea through the following channels: direct purchase, sales agents, and importers. U.S. manufacturers and suppliers of defense equipment generally use a well-qualified agent in Korea who is familiar with the Korean defense system and who knows key members of the Republic of Korea Air Force (ROKAF), ROK Navy (ROKN), ROK Army, and the Agency for Defense Development (ADD). The selected agent can provide U.S. suppliers with information about the status of bids and procurement plans for defense equipment. Former ROKAF, ROKN, and ROK Army officials have good potential as agents in Korea. Local agents should register and be certified by the DAPA to supply their products and services to the Ministry of National Defense (MND).
For enquiries on the current status of DAPA, please contact Mr. Yong Tak Lee at Yong.Tak.Lee@mail.doc.gov .