Procurement administrator in touch with SMEs

Ever since Min Hyung-jong took office as the administrator of Korea’s Public Procurement Service last March, he has tried to be out in the field instead of behind his desk, meeting small and medium enterprises or suppliers.

His efforts to get close to SMEs, to listen to their concerns and thoughts on ways to improve the supplier industry, has gained him the reputation of “someone you can really talk to.”

As a procurement specialist for over 30 years, Min said it was important for him to visit as many companies as possible, identify their problems, and try to find solutions in line with the government’s efforts to develop a creative economy.

“Our goal is to make public procurement welcomed by citizens, public organizations and businesses. To this end, we will invite participation from outside and promote collaboration with the private sector,” Min said.

After more than 40 visits and meetings with SMEs, the administrator identified 65 business practices that needed to be improved for a fairer and more efficient procurement process.

One of them included practices in which project owners demand extra work from their contractors, and much more than what had been stated in their contracts, after Min met officials of an ICT company. The administrator discovered that contractors often find it hard to refuse such demands.

Min, the SME advocator, promptly embarked on correcting unfair practices between business partners and setting the right direction by launching the so-called “Public Procurement Innovation Initiatives.”

In the two months since his inauguration, the PPS has so far tackled and implemented measures to improve 17 of the identified issues.

The Innovation Initiatives included 30 initiatives to support the development of a creative economy through leveraging public sector market demand, 47 to provide services for businesses and public sector buyers and 23 to enhance openness and sharing in public administration for the “Government 3.0 Environment.”

The Initiatives are long-term objectives that reflect the voices from the field and aim to help realize the government’s vision through expanded procurement administrative services.

“We will continue to listen to the voices from the field and complement the initiatives,” Min said.

The PPS is the biggest buyer in the public sector, contracting for goods and services worth 34 trillion won ($29.3 billion) out of Korea’s total public procurement of 100 trillion won.

The PPS’ purchasing power has sufficient potential to nurture creative venture businesses with technological competitiveness and high potential for employment creation.

In 2012, the PPS awarded 80 percent of its total contacts in the goods category to SMEs.

Min is seeking to create early-stage market opportunities for small firms with advanced technology, foster them into solid medium-sized enterprises and support their entry into the global market.

To alleviate difficulties for newly established firms in entering the public procurement market, the PPS exempts new companies from meeting requirements such as experiences and finances for a period of time for its “Multiple Award Schedule” contracts.

Since midsize firms also face hardships just after growing out of their small-size status, the PPS will temporarily grant them the same privilege as small firms.

These measures reflect Min’s commitment to relieving the “growing pains” for businesses in their progress from a small firm to a midsize firm, to a global or large firm.

As Korea’s public procurement market became heavily saturated, Min is also developing programs to support SMEs to expand in overseas public procurement markets.

Under Min’s oversight, the PPS selected 76 SMEs whose competitive edge has been proven in the domestic market.

By 2017, the PPS plans to select 500 companies and support them through its various overseas marketing programs.

“I feel it in my bones that people’s expectations for the PPS is changing,” Min emphasized, “The PPS will grow out of its old role as the government’s contracting agency. We will become the standard setter in the public procurement market, and strengthen its role as a watchdog that monitors and prevents unfair and illicit practices.”

By Lee Kwon-hyung (kwonhl@heraldcorp.com)