RESTRICTED
WORLD TRADE S/WPGR/W/11/Add.13
10December 1996
ORGANIZATION
(96-5159)
Working Party onGATS Rules Original: English
COMMUNICATION FROM THE REPUBLIC OFKOREA
Response totheQuestionnaire onGovernment Procurement ofServices
Thefollowing communication isbeing circulated attherequest oftheRepublic ofKorea to
Members oftheWorking Party onGATS Rules.
_____________
I. EXISTING PROCUREMENT REGIMES
Definition
1. What isthedefinition ofgovernment procurement employed incompleting this
questionnaire?
Government procurement refers totheprocurement ofgoods andservices through contracts
bythecentral government, localgovernments, orgovernment-invested enterprises fortheir
ownuse.
Administrative structure
2. Howaregovernment procurement activities administered? Towhatextent areprocurement
activities centralized? Please specify theidentity ofanycentral procurement agencies and
theirrespective responsibilities.
Basically, eachgovernment authority isresponsible forprocuring goods, andservices forits
ownuse. However, goods andworks exceeding agiven threshold value (inthecaseof
construction, morethan2billion won)which aspecialized agency canprocure moreefficiently,
should beprocured andsupplied through theOffice ofSupply oftheRepublic ofKorea which
isthesolecentral procuring entity forgovernment procurement (hereinafter referred toas
OSROK) onbehalf ofcentral andlocal government agencies (so-called end-users). Other
services canbeprocured bytheOSROK when asked.
TheOSROK 'send-users areclassified intotwocategories :obligatory andvoluntary. The
former consists ofcentral andlocalgovernment agencies, which arerequired topurchase their
needed goods andworks above agiven threshold value through theOSROK. Thelatterconsists
ofgovernment-funded orgovernment sponsored agencies, which haveoptions toprocure goods,
services andworks forthemselves orthrough theOSROK.S/WPGR/W/11/Add.13
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Eventheobligatoryendusers,however,areallowedtopurchasegoodsandconcludeconstruction
contracts forthemselves incases ofurgent procurement needs, small purchases below agiven
threshold value orprocurement fornational defense orsecurity.
Eachcentral andlocalgovernment agency willforecast itsneeds forsupplies andconstruction
services during thecourse ofayear; determine thepurchase request planwiththepreparation
ofthebudgeted funds, andsubmit ittoOSROK before thebeginning ofthenextfiscal year.
Upon receipt ofthepurchase plans from theend-users, OSROK draws upacomprehensive
Acquisition Program considering theend-users procurement planforthecoming yearaswell
astheprocurement leveloftheprevious year. Itwillthenprocure andsupply inacost-effective
andtimely manner.
Laws andregulations inforce
3.(a) Please specify thelaws, regulations, rules, guidelines, decrees, decisions andother measures
governing government procurement. What isthescope oftheirapplication? Inparticular,
please describe anyexemptions thatexist. Please provide abrief summary ofthecontent
ofeachofthese measures.
(1) TheActRelating toContracts towhich theStateisaParty ("ARCSP") prescribes details
concerning contracts inwhich thestateisaparty, facilitates procurement proceedings
andcontract administration, andprovides details related togovernment procurement
contracts through international competitive bidding. Italsocontains provisions related
tonational Treatment, Non-discrimination, andtheTransparency ofgovernment
Procurement.
(2) TheEnforcement Decree andRegulation oftheARCSP provides details delegated by
theARCSP andthose necessary fortheenforcement thereof. TheSpecial Enforcement
Decree willenter intoforce on1January 1997. Itisestablished withthegoalof
implementing theprovisions ofWTO/GPA.
(3) TheLocal Finance Lawprescribes details concerning contracts towhich thesub-central
government isaparty. Theprocess ofprocurement applies inaccordance withthe
provisions ofARCSP.
(4) TheGovernment Invested Enterprise Management Lawprescribes thebasic details
concerning contracts towhich thegovernment invested enterprises isaparty. The
process ofprocurement isapplied inaccordance withtheprovisions ofARCSP.
(b) Does theprocurement regime distinguish between theprocurement ofgoods andservices?
Ifso,thenhowistheapplication ofrules determined incases ofjointprocurement involving
bothgoods andservices?
There isnodifferences between goods andservices inthegovernment procurement except
threshold value.S/WPGR/W/11/Add.13
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Procurement procedures applied
4.(a) What procedures arefollowed intheprocurement process?
Incases where acontract official enters intoacontract related toapurchase, saleandlease,
oranyother typeofcontracts, heorsheshall, inprinciple, announce itpublicly andputit
toageneral competition. Provided that,ifitisdeemed necessary inlightoftheobject ornature
ofacontract, hemayrestrict thequalification ofparticipants, orbring nominated participants
intoacompetition, orenter intoaprivate contact. Theexamples areasfollows
- Inthecaseofaconstruction project, whose estimated priceismore than2billion Won,
acontract official may restrict qualification ofabidder, considering thepast
manufacturing orconstruction work performances oftheparticipants.
- Inthecasewhere thegoals ofanagreement arehardtoachieve unless thecontractor
hasspecial facilities ortechnology, andifthenumber oftenderers whomayapply for
thetender isnotmore than10persons, acontract official canputittoanominated
competition.
- Cases forprivate contracts areasfollows :
- where itisimpossible toputittoacompetition duetoatechnique orservice
ofaspecified person, location, structure, quality, etc.;
- where thereisnotimetoputittoacompetition, duetonatural calamity, armed
forces movement fortheoperation, extraordinary disasters, andother similar
cases;
- where itispursuant toaprivate group contract withsmall andmedium
enterprises inaccordance with theprovisions oftheSmall andMedium
Enterprise Promotion Act;
- where thepresumed priceforconstruction workisunder 50million Won(other
goods andservices: under 20million Won).
(b) Under whatcircumstances aredifferent procedures used? Forinstance, ifthemethod used
depends onthevalue oftheprocurement, thethresholds should begiven.
Seeanswer in4(a)above.
(c) What arethetimelimits forsubmission ofbids?
Thedeadline forfiling theapplication documents shallbethedaybefore thedateoftender.
Time limits forsubmissions ofbidsvaryaccording totypes orvalue ofcontracts. Inprinciple,
10daysaregiven from thedateofpublic notice. Incaseofconstruction work tendering, 7
daysshallbegiven fromthedateofconstruction siteexplanation. Thesiteexplanation shall
becarried outbefore thefollowing period from thetendering dateaccording tothesizeof
presumed price: 10daysormore, lessthan1billion Won; 30daysormore, 1billion ormore
butlessthan5.5billion Won; 45daysormore, 5.5billion Wonormore.S/WPGR/W/11/Add.13
Page4
Publicity forinviting tenders
5.(a) How areintended procurements publicised? Areinvitations totender published? Ifso,
where, andinwhat languages?
Thepublic notice onthetendering shallbedone byplacing itinthedaily newspaper oran
official gazette (incaseofacertain threshold value, suchasabove 300million Won in
construction work tendering) orbyposting itonthenotice board (when payment isinaforeign
currency, thepublic notice canbeinEnglish). Apublic notice oftendering shallbegiven
tendaysimmediately preceding theopening ofthetendering.
(b) Dotheextent andformofpublicity differ according totendering procedures applied and/or
onthevalue ofprocurement?
Ifthepresumed price isnotlessthantheamount mentioned inanyofthefollowing items,
itshallbeplaced intheofficial gazette oranydaily newspaper.
i. Forconstruction: 300million Won.
ii. Formanufacturing ofgoods: 100million Won.
iii. Forpurchases ofgoods, services orothers :50million Won.
(c) What details oftheintended procurement arenormally published? Isthere aminimum set
ofinformation thatisrequired tobepublished? Ifso,please specify.
Thepublic notice shallcontain thefollowing details:
- matters assigned fortendering;
- place, dateandtimefortendering anditsopening;
- place, dateandtimeofthesiteexplanation;
- matters onthequalification oftendering participants;
- matters ofthesecurity deposit fortendering anditsreversion tothe
National Treasury;
- place where theconditions ofthecontract willbedisclosed;
- matters onthenullification oftendering;
- where tendering bymallispermitted, suchindication andaddress towhich
thetendering application should besent;
- where ajointcontract ispermitted, thestatements indicating thatitis
possible andthemethod ofperformance ofthejoint contract, etc.
(d) Arethere anycharges forobtaining thefullsetoftender documents? Ifso,please
specify anddescribe howthese charges areset?
There arecharges forobtaining thefullsetoftender documents, which differ according to
number ofpages. Alldocuments related totheprocurement bytheOSROK canberead,brought
orcopied attheTotal Service Centre intheOSROK.S/WPGR/W/11/Add.13
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(e) Areelectronic means usedtoadvertise procurement opportunities? What isthenature of
systems thatareinplace? Aredifferent tendering provisions applied tocontracts advertised
inthismanner? Ifso,please describe.
GINS (Goldstar Information Network Services) isanelectronic system forpublicizing
information related totenders andcontracts through theValue Added Network. Ithasfunctions
fordatabases andE-mall. Itcovers information ontheprocurement ofabout 350procuring
entitles suchasOSROK, Korea Telecommunications, Korea Electric Power Organizations.
GINSalsocoversinformationonprocurementofforeigngoods,servicesandfacilityconstruction
contract.
Requirements laiddown forpossible suppliers
6.(a) Arethere registration, residence orother requirements forpotential suppliers?
Inorder toefficiently administer procedures ofcompetitive tendering, acontract official may
annually setaspecific period inwhich theregistration ofeligibility forparticipation in
competitive tendering canbedone. Chances fortheregistration canbeextended onetotwelve
times peryear. Public notice fortheregistration shallbeplaced inadaily newspaper. In
caseofajointcontract, thereisnorestriction ontheplace oftheheadoffice, which issupposed
toexpire on31December 1996.
(b) What isthenature ofanyconditions forparticipation required from suppliers -such as
financial guarantees, commercial standing andtechnical qualifications? Dotheconditions
ofparticipation varyaccording tothenature ofthetender process and/or thevalue ofthe
intended procurement?
Toconfirm eligibility ofsuppliers tofulfil obligations ofacontract official shallreview the
qualifications ofabidder. Requirements forcompetitive tendering areasfollows:
- aparticipant should beowning orleasing thefacilities orstores which arerequired
formanufacturing orsupplying theobjects oftherelevant tendering;
- when anyapproval, permit orlicense, oranyqualification isrequired pursuant tothe
provisions ofother laws, therelevant approval, permit orlicense should havebeen
obtained orshould bequalified forsuchapproval, permit orlicense;
- when anyinspection, suchasinspection forsecurity, isrequired, itsresults mustbe
accepted bytherelevant authority;
- aparticipant should haveabusiness entity registration certificate issued inaccordance
withtheprovisions oftheValue Added TaxLaw.
(c) Dothere existlistsofapproved suppliers? Ifso,what aretheprocedures forchecking the
capability offirms applying forinclusion ontenderers 'mailing lists? Arelistsofapproved
suppliers, ifany,regularly reviewed/updated?
There isnospecific listofapproved suppliers.
Incaseofconstruction works prescribed byaPrime Minister 'sDecree, acontract official may
screen thequalification oftheapplicants fortendering inadvance andthenselect thequalified
persons whomayparticipate inthecompetitive tendering. Inthiscase, heorsheshallnotify
theselected person oftheresults ofsuchaselection.S/WPGR/W/11/Add.13
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Intheevent thatacontract official screens thequalifications oftheparticipants tendering, he
orsheshalldetermine thedetailed screening standards oftherelevant qualification according
tothescreening standards asdetermined bytheMinister ofFinance andEconomy.
Criteria forassessing bidsandawarding contracts
A. Commonwealth Procurement
7.(a) What criteria aretaken intoaccount intheaward oftenders? Arecriteria foraward of
contracts made available inadvance topotential suppliers?
Incaseofacontract forconstruction withapresumed price lessthan10billion Won(incase
ofother services, lessthan1billion Won), asuccessful tender istheperson withthelowest
tender price under theestimated price, provided thatthetender price shallnotbelessthan
theamount of88%oftheestimated price.
Incaseofanycontract withapresumed price more thantheamounts mentioned above, the
successful tenderer shall bedetermined through reviewing theperformance ability ofthe
concerned contract intheorder ofthelowest tender price under theestimated price. The
standard forreviewing theperformance ability ispublicized before thetendering date.
(b) Isprocurement subject toanyoffset provisions, suchaslocal content, technology transfer
orcountertrade requirements?
There isnooffset provision suchastechnology transfer orcounter trade requirements inthe
government procurement.
(c) Ispreference given toanyparticular enterprises orgroup ofenterprises? Ifso,please specify.
Nopreference isgiven toanyparticular group related toservice procurement.
(d) Dotheprocurement criteria differ according tosector orregion oftheeconomy?
There isnodifference incriteria according tosector orregion oftheeconomy, except a
restriction onparticipation intendering bythelocation ofitsprincipal office foracontract
whose estimated price isbelow 2billion Wonincaseofconstruction, and300million Won
forservices.
(e) What isthemargin ofchoice ordiscretion allowed tothepurchasing authority? What does
theextent, ifany,ofdiscretion allowed depend upon?
Apurchasing authority canusenegotiation procedures under specific conditions (e.g.urgency,
security, etc.). Incasethelowest tender price system isapplied, there isnotroom fora
purchasing authority. Incaseoftheperformance ability testsystem, theauthority should
evaluate theperformance ability ofbidders onthebasisofpredetermined assessment criteria.
Disclosure ofbidsreceived andcontracts awarded
8.(a) How aretenders received, registered andopened?
Tofiletheapplication documents forparticipation intendering, abidder shallsubmit them
bythedaybefore thedateoftender. Inprinciple, theapplication fortendering shall beS/WPGR/W/11/Add.13
Page7
submitted bythetenderer forhimself/herself attheplace, dateandtimeindicated inthepublic
notice fortendering. Provided that,iftendering bymallispermitted, thesubmission may
bepossible bymail. Theopening ofthetendering shallbeconducted attheplace, dateand
timeindicated inthepublic notice ofthetendering inthepresence oftheparticipating tenderers.
Incaseaparticipating tenderer isnotpresent attheopening ofthetendering, apublic officer
notrelated totheopening ofthetendering shallbepresent onbehalf ofsuchpersons.
(b) Areentities required topublish details ofthecontracts awarded and/or notify unsuccessful
tenderers?
There arenoregulations required topublish details ofthecontracts awarded ornotify
unsuccessful tenderers.
(c) Areentities required topublish, orprovide tounsuccessful bidders, pertinent reasons why
theirbidwasrejected?
When inquired, acontract official mayinform theunsuccessful bidders ofpertinent reasons.
Treatment granted todomestic andforeign services and/or suppliers
9. What laws, regulations, procedures orpractices accord domestic services and/or suppliers
treatment more favourable thanthataccorded toforeign services and/or suppliers, oraccord
services and/or suppliers ofaMember more favourable treatment thanthose ofanother
Member? Please specify how, ifatall,more favourable treatment isaccorded. Please also
specify theworking definition of"domestic" inrelation todomestic services andsuppliers.
Provisions ofNon-discrimination areprescribed intheARSCP. Therelated presidential decree
andother regulations willbeestablished bytheendof1996.
Procedures forhearing andreviewing complaints/appeals
10. What, ifany,aretheprocedures available forparties, domestic andforeign, tolodge
complaints against theaward ofacontract? Please provide details.
(1) Thescope ofcomplaint orappeal
According totheprovisions oftheWTO/GPA andrelated domestic regulations, the
Committee forInternational Dispute Mediation shallbeestablished inJanuary 1997,
when theGPA takes effect.
Thescope ofcomplaint orappeal include:
- details related tothescope ofthegovernment procurement contracts in
International tendering;
- detailsrelatedtoqualificationsforthebidder,tenderingproceduresandawarded
ofcontract.
(2) Procedure forcomplaint/Appeal
Asupplier orcontractor shallsubmit acomplaint within 15daysaftertheoccurrence
oftheactwhich isthecause oftheobjection or10daysafteracquiring knowledge
ofsuchanact.S/WPGR/W/11/Add.13
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Theheadoftherelevant procuring entity shall, within 40daysofthereceipt ofthe
complaint, examine andtakenecessary measures suchasacorrection andgiveaprompt
notice ofthedecision tothesupplier orcontractor submitting thecomplaint.
Thesupplier orcontractor whohasnoobjection totheabove measure canrequest a
review from theCommittee forInternational Dispute mediation within 15daysafter
thereceipt ofthenotice decision.
TheCommittee, unless there areanyother specific reasons, willreview andarbitrate
theappeal filedwithin 50daysafteritsreceipt.
(3) Type ofremedy thatmaybegranted
Suspension oftendering proceedings orawarding ofcontractors maybegranted by
theCommittee, when necessary, until thearbitration (mediation) process inthe
Committee iscompleted.
Themediation shallbefinalunless theapplicant oftheappeal ortheheadofaprocuring
entityconcernedhasanyobjectiontoitwithin15daysafterthecompletionofmediation.
Itshallhavethesame effect asanout-of-court settlement.
Legal channels forcomplaints orappeals areopentoanysuppliers. Appeals canbe
raised toacivilsuit.
II. MEMBERSHIP OFPLURILATERAL, REGIONAL AND/OR BILATERAL AGREEMENTS
11. IstheMember party toanyplurilateral, regional and/or bilateral agreements withprovisions
ongovernment procurement? Ifso,please describe therelevant provisions.
Korea joined thePlurilateral Agreement, WTO/(GPA, in1994.
III. ECONOMIC IMPORTANCE OFSERVICES PROCUREMENT
12.(a) Please provide statistics (ifavailable) onthenumber andvalue ofservices procurements
- onbothanaggregate andsectoral basis;
- byorigin ofservices andsuppliers.
(b) Please provide statistics (ifavailable) onthe
- share ofservices procurement intotalprocurement;
- share ofprocurement ofeachservice intotaldomestic output oftheservice;
- share ofprocurement ofeachservice intotaldomestic consumption oftheservice.
Total domestic consumption isdefined asthesumofpublic andprivate consumption orthe
sumofdomestic output andnetimports (i.e.imports minus exports) oftheservice inquestion.
Theaggregate value ofservices procurement byentitles pursuant totheprovisions ofthe
WTO/GPA isabout 1,012 billion Wonin1995. Theshare ofservices procured ofthetotal
procurement (27,270 billion Won) was3,7% in1995. Detailed dataontheservice procurement
isnotavailable.