Public Procurement Service: "Pilot Purchase of Innovative Products Serves as a Stepping Stone for Corporate Growth"

[Asia Economy (Daejeon) Reporter Jeong Il-woong] The Public Procurement Service (PPS) is laying the foundation for the growth of innovative companies through pilot purchases of innovative products.

On the 17th, the PPS announced that it will promote pilot purchases of innovative products worth 48.3 billion KRW this year. The pilot purchase project is promoted to have the PPS act as the first buyer to directly purchase innovative products that were not available in the market, supply them to the government and public institutions, and help them be traded in the actual public procurement market once their commercial viability is proven.

Lowering the entry barrier for innovative products into the public procurement market to promote the purchase of innovative products in the public sector and feeding back usage results to companies to enable further product development are also considered positive functions of this project.

The pilot purchase project started in 2019. Up to last year, a total of 426 innovative products supplied through the PPS to government and public institution administrative sites amounted to approximately 121.6 billion KRW in market value.

In particular, more than 70% of the innovative products pilot purchased by the PPS were repurchased independently by public institutions, and the cost of repurchasing is estimated to be about 300 billion KRW. This means that more than twice the budget initially spent by the PPS on pilot purchases was used to buy innovative products.

As sales of innovative products increased, the sales and employment performance of the companies producing them also grew. In fact, as of 2021, the average sales of innovative companies increased by 40.4% compared to the previous year, and employment performance increased by 30.9% during the same period.

Based on this, the PPS analyzes that the pilot purchase project supports innovative companies in pioneering sales channels within the public procurement market and acts as a growth ladder for companies.

Building on this momentum, the PPS plans to establish an efficient demand-supply matching system such as regularizing pilot purchases of innovative products this year, strengthen performance management of the pilot purchase project, and revamp the incentive system to promote the activation of the pilot purchase project.

Regularizing pilot purchases will be done by publicly announcing the entire pilot purchase schedule four times a year in advance on the Innovation Market (a dedicated platform for trading innovative products) and inducing optimal purchases between public institutions and innovative companies in the right place at the right time.

Additionally, the PPS plans to establish an objective performance evaluation basis for pilot-purchased innovative products by introducing new measurement indicators for improving public services in public institutions and activating product reviews after pilot use, and provide benefits such as expanding opportunities to use innovative products to institutions with excellent performance management.

Above all, this year, the PPS plans to engage in strategic pilot purchases prioritizing innovative products that have significant effects on improving public services, products related to government priority projects requiring strategic support, and innovative products in new growth fields such as intelligent transportation systems and mobility.

Lee Jong-wook, Administrator of the PPS, said, “The pilot purchase project for innovative products is a useful public procurement strategy to catch two rabbits: improving public services and driving innovative growth,” and added, “The PPS will strategically utilize the pilot purchase project to actively implement policy goals and support the growth of innovative companies.”