IMPLEMENTING E-SOURCING APPLICATION AS AN INNOVATIVE TOOL FOR THE E-PUBLIC PROCUREMENT DEVELOPMENT IN HELLAS
CHARALAMPOS SILAMIANOS
MSc Management in Construction
THESIS
IMPLEMENTING E-SOURCING APPLICATION AS AN INNOVATIVE TOOL FOR THE E-PUBLIC PROCUREMENT DEVELOPMENT IN HELLAS
Dissertation submitted as part requirement for the Degree of Master of Management in Construction
By CHARALAMPOS SILAMIANOS
SUPERVISORS PANTELIS VLACHOPOULOS VASILIA PEPPA
TEI PIRAEUS – KINGSTON UNIVERSITY SEPTEMBER 2006
© 2006 Charalampos E. Silamianos ALL RIGHTS RESERVED
Abstract Information and Communication Technologies recent improvements provide an opportunity to Governments to be more accessible and remove existing administrative and commercial barriers across global community market. Electronic Public Procurement is one of the key areas where these new technologies can improve and simplify the way of sourcing of the governments purchases. In European Union this trend was consolidated in 2004 with the admission of the new legislative framework for the use of electronic means in public procurement by the Council and European Parliament. Considerable initiatives and progress have been implemented in this field by European Union Member States, using innovating e-sourcing techniques. On the contrary in Hellas, the uptake on electronic Public Procurement is not being monitored or implemented on a regularly basis. Hence the research effort of this paper will be focused in the effective implementation of the e-Public Procurement initiatives in Hellas with the use of innovative e-sourcing application. In order to reach the goal of the research effort a multiple case study report based on a suggestive number of European Union Member States best practice in e-Public Procurement will be presented. A comparative analysis and evaluation of the research effort will give the appropriate findings to Author for the submission of a realistic proposal comprising organizational and technical solutions for the e-Public Procurement development in Hellas.
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Acnowledgements I would like to thank my supervisors, Mr. Pantelis Vlahopoulos and Miss Vasilia Peppa for their valuable assistance, enthusiastic support, tender guidance and encouragement in the elaboration of this dissertation. I would like also to thank the rest of my research colleagues in this Postgraduate program for creating an educational, enjoyable, and challenging atmosphere. I am especially grateful for the support of my parents, my brother and my girlfriend Dimitra. I cannot express how important their dedication and love have been throughout my life.
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List of Figures Figure 2.1: The value chain of e-Public Sector Procurement………………………..9 Figure 2.2: UK Public Sector e-Sourcing managed service………………………...10 Figure 2.3: Total PP in 2002 in billion € (EU15)………………………………...…15 Figure 2.4: Estimated total value of PP published in the OJEU………………...….16 Figure 2.5: E-Public Procurement lifecycle…………………………...……………21 Figure 3.1: The Main Phases of the Research Structure………...………………….28 Figure 6.1: Conceptual Model for the New National ePP Strategy in Hellas…...….60 Figure 6.2: New Organizational Structure for the ePP implementation……...…….62 Figure 6.3: Individual Contracts: Open Procedure....……………………..………..66 Figure 6.4: Activity Diagram of Open Procedure using e-Sourcing techniques…...67
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List of Tables Table 2.1: Estimated annual savings on purchasing price and administrative costs for buyers (based on 2002 figures for EU15) of introducing e-tendering………………17 Table 2.2: Procurement phases covered by the identified procurement systems…...21 Table 5.1: Public authorities responsible for implementing e-public procurement...49 Table 5.2: National Strategies on e-Public Procurement…………………………...51 Table 5.3: Levels included in the National Strategy on e-Public Procurement…….52 Table 5.4: European Union Reviewed Countries Legal Framework Progress……..53 Table 5.5: The use of e-Sourcing tools in the reviewed Member States Public Procurement portals…………………………………………………………………55 Table 5.6: E-Public Procurement of Works, Services and Supplies………………..56 Table 5.7: Level of use of electronic means for different types of purchases………58
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Table of Contents ABSTRACT.................................................................................................................. i ACNOWLEDGEMENTS............................................................................................ ii LIST OF FIGURES .................................................................................................... iii LIST OF TABLES...................................................................................................... iv TABLE OF CONTENTS............................................................................................. v CHAPTER 1 – INTRODUCTION 1.1. Background........................................................................................................... 1 1.2. Justification........................................................................................................... 2 1.3. Research Problem ................................................................................................. 3 1.4. Methodology & Objectives................................................................................... 3 1.5. Outline of the Thesis............................................................................................. 5 CHAPTER 2 – LITERATURE REVIEW 2.1. Introduction........................................................................................................... 6 2.2. Definitions ............................................................................................................ 7 2.2.1. What is Procurement?........................................................................................ 7 2.2.2. What is Electronic Procurement? ...................................................................... 7 2.2.3. What is Electronic Public Procurement? ........................................................... 8 2.3. E-Public Procurement Tools................................................................................. 8 2.3.1. What is e-Sourcing?......................................................................................... 10 2.3.1.1. E-Notification................................................................................................ 10 2.3.1.2. E -Publication ............................................................................................... 11 2.3.1.3. Electronic Tendering (e-Tendering) ............................................................. 11 2.3.1.4. Electronic evaluation (e-Evaluation)............................................................ 11 2.3.1.5. Electronic Auction (e-Auction) ..................................................................... 12 2.3.1.6. Electronic Collaboration (E-Collaboration) ................................................ 12 2.3.1.7. Electronic Contract Management (E-Contract Management) ..................... 12 2.3.2. E-sourcing Implementation.............................................................................. 12 2.3.3. Supplier information databases........................................................................ 13 2.3.4. Benefits of e-Sourcing ..................................................................................... 14 2.4. E-Public Procurement in Europe. ....................................................................... 15 2.4.1. The total value of Public Procurement ............................................................ 15
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2.4.1.1. Publication of public procurement electronically ........................................ 15 2.4.1.2. Types of Procurement ................................................................................... 16 2.4.1.3. e-Public Procurement estimated savings...................................................... 17 2.4.2. Legal Environment .......................................................................................... 17 2.4.2.1. The present public procurement directives................................................... 17 2.4.2.2. The new directives ........................................................................................ 18 2.4.2.3. Digital Signatures ......................................................................................... 19 2.4.2.4. Preconditions and specific requirements...................................................... 20 2.4.3. The main phases of the e-public procurement cycle........................................ 21 2.4.4. Electronic Procurement Systems ..................................................................... 22 CHAPTER 3 – RESEARCH METHODOLOGY 3.1 Introduction.......................................................................................................... 24 3.2 Research Strategies .............................................................................................. 25 3.3 The Practical and Research Problem ................................................................... 26 3.4 Data Collection Method....................................................................................... 27 3.5 Methodology Structure ........................................................................................ 28 3.5.1. Gathered Data & Findings ............................................................................... 28 3.5.1.1. Institutional Framework ............................................................................... 29 3.5.1.2. National Strategy .......................................................................................... 29 3.5.1.3. Legal Framework.......................................................................................... 29 3.5.1.4. Current Usage of e-Public Procurement ...................................................... 29 3.5.2. Data & Findings Analysis................................................................................ 29 3.5.3. Proposal for the Hellenic Implementation ....................................................... 30 CHAPTER 4 – GATHERED DATA & FINDINGS 4.1. Germany.............................................................................................................. 31 4.1.1. Institutional Framework................................................................................... 31 4.1.2. National Strategy ............................................................................................. 31 4.1.3. Legal Framework............................................................................................. 32 4.1.4. Current usage of e-Public Procurement ........................................................... 33 4.1.4.1. Level of use for different types of purchases................................................. 33 4.1.4.2. Phases of e-Sourcing .................................................................................... 34 4.2. United Kingdom ................................................................................................. 34 4.2.1. Institutional Framework................................................................................... 34 4.2.2. National Strategy ............................................................................................. 35
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4.2.3. Legal Framework............................................................................................. 35 4.2.4. Current usage of e-Public Procurement ........................................................... 36 4.2.4.1. Level of use for different types of purchases................................................. 37 4.2.4.2. Phases of e-Sourcing .................................................................................... 37 4.3. France.................................................................................................................. 37 4.3.1. Institutional Framework................................................................................... 37 4.3.2. National Strategy ............................................................................................. 38 4.3.3. Legal Framework............................................................................................. 39 4.3.4. Current usage of e-Public Procurement ........................................................... 39 4.3.4.1. Level of use for different types of purchases................................................. 39 4.3.4.2. Phases of e-Sourcing .................................................................................... 40 4.4. Ireland ................................................................................................................. 40 4.4.1. Institutional Framework................................................................................... 40 4.4.2. National Strategy ............................................................................................. 40 4.4.3. Legal Framework............................................................................................. 42 4.4.4. Current usage of e-Public Procurement ........................................................... 42 4.4.4.1. Level of use for different types of purchases................................................. 43 4.4.4.2. Phases of e-Sourcing .................................................................................... 43 4.5. Hellas .................................................................................................................. 44 4.5.1. Institutional Framework................................................................................... 44 4.5.2. National Strategy ............................................................................................. 44 4.5.3. Legal Framework............................................................................................. 46 4.5.4. Current usage of e-Public Procurement ........................................................... 47 4.5.4.1. Level of use for different types of purchases................................................. 47 4.5.4.2. Phases of e-Sourcing .................................................................................... 47 CHAPTER 5 – DATA & FINDINGS ANALYSIS 5.1. Introduction......................................................................................................... 48 5.2. Institutional Framework Findings ...................................................................... 48 5.3. National Strategy Findings ................................................................................. 50 5.4. Legal Framework Findings................................................................................. 52 5.4. Current Usage of e-Public Procurement Findings .............................................. 54 CHAPTER 6 – PROPOSAL FOR THE HELLENIC IMPLEMENTATION 6.1. EPP in Hellas: A mountain to climb or Mission Impossible? ............................ 59 6.2. Legal Framework................................................................................................ 61
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6.3. Organizational & Management Structure ........................................................... 62 6.3.1. National Policy Unit ........................................................................................ 63 6.3.2. National Operations Unit ................................................................................. 63 6.3.3. Sector e-Public Procurement Units.................................................................. 64 6.3.4. National Procurement Advisory Board............................................................ 65 6.3.5. National Procurement Managers’ Forum ........................................................ 65 6.4. e-Sourcing innovating Techniques ..................................................................... 65 6.5. Human Resources and Knowledge ..................................................................... 68 6.6. High hopes for the Uptake of e-Sourcing in Hellas............................................ 69 CHAPTER 7 – CONCLUSIONS APPENDIX 1 – EU Thresholds................................................................................. 74 APPENDIX 2 – Outcomes & Impacts from Paper based to e-Tendering ................. 75 APPENDIX 3 – PP published in th OJEU................................................................. 76 APPENDIX 4 – Different ePP processes requirements............................................. 77 APPENDIX 5 – Representatives and Experts ........................................................... 78 APPENDIX 6 – Estimated Cost & Benefits of e-Sourcing phases ........................... 79 REFERENCES .......................................................................................................... 80
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Chapter 1 – Introduction 1.1. Background The global community is changing rapidly. The continuous improvement of information and communication technology affects the world market. The days of pushing paper are swiftly drawing to a close in the world of procurement for both the private and public sector. As e-business transforms the market for works, services and supplies globally, it is redefining the way companies and governments manage their supply chains(1). Recent improvements in Internet technology connectivity provide an opportunity to make sourcing for works, services and supplies and more transparent and efficient. When used for public procurement, information technology can be utilized as a mean to achieve the main principles of perfect competition, namely, access to information, no barriers to entry, and a large number of participants in market exchange. In this paper, we argue that the electronic sourcing, particularly in the public domain, is an effective policy to establish the fundamentals of market economy and hence increase country’s productivity, remove domestic barriers to international trade, and improve efficiency(2). E-Sourcing is also being increasingly adopted by organisations in the European Union that want to deliver sourcing efficiencies, increase savings and ensure consistency with policy and best practice in an increasingly competitive economy. In the Public Sector e-Sourcing is the strategic element and innovative tool for Public Organizations Suppliers which establishes, manages and monitors contracts of the epublic procurement life-cycle with the use of web-based collaborative technology. This innovative tool including requirements definition, tendering, evaluation, negotiation, award and contract management is designed to deliver value for money solutions to the public sector of Works, Services and Supplies, helping to improve efficiency by reducing tender cycle times, improve the quality of sourcing decisions through better informed evaluation and decision making, reduce risk, improve
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visibility and governance of sourcing activity, provide clear and easily accessible audit trails, facilitate collaboration between buying organizations, reduce sourcing costs, improve supplier performance and ensure compliance with the new European Union Public Procurement Directives, procedures and best practice. E-Sourcing tools are being used in initial or advanced stage by several Member States in European Union - but not yet in Hellas - in the frames of the European Commission Action Plan of e-Public Procurement.
1.2. Justification The e-Europe Action Plans 2002(3) and 2005(4) have set ambitious goals concerning the "Government online: electronic access to public services", requiring efforts by public administrations at all levels to exploit new technologies. The realisation of these goals will make information as accessible as possible and will improve services and interaction with citizens and businesses. One of the primary objectives of e-Europe is to enable the use of electronic procurement (e-Procurement) across Europe, creating common principles and technical suggestions for all Member States. These principles and suggestions will facilitate an operational environment where public administrations can achieve better results through fairer and more effective competitions, while suppliers will be enabled to compete in an open and transparent framework, which ensures equal treatment and non-discrimination. The Internal Market Strategy sets out the relatively ambitious targets by 2006, to carry out a significant part of public procurement on an electronic basis and by 2010, to ensure that Electronic Public Procurement has been generalised to meet the Lisbon objectives. The new consolidated Directive(5) sets out the procedural rules for the use of electronic means in Public Works, Services and Supplies. The new legislation entered into force on 20 April 2004. The new procurement directives of the European Union introduce detailed provisions on the use of electronic means in the
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procurement process and new procurement processes based on the use of electronic means. Member States are required to implement the new legal framework by 31 January 2006, but slippages cannot be excluded.
1.3. Research Problem Although several initiatives and progress in this field have been adopted in European Union Member States using innovating techniques (e-sourcing), in Hellas currently, the uptake on electronic public procurement is not being monitored on a regularly basis(6). Therefore no corresponding information is available on the existing usage of electronic means in public procurement. In general the strategy for the introduction of operational electronic public procurement is an integrated part of the overall strategy on e-government and the development of the Information Society. The focus of the strategy is to obtain improved Information and Communication Technology skills in public and private sector, speeding up procedures, but only in the field of Public Administration services to the Hellene citizens. In this strategy there is a relevant initiative in a Ministry of the Central Government for the year of 2008 but only for the 30% of its Public Supplies needs. There is not a separate integrated strategy for the whole Central, Regional or Local Governments in the field of Public Works, Public Services as well as Public Supplies. Hence the research effort of this thesis will be focused in the effective implementation of the e-Public Procurement initiatives in Hellas with the use of innovative e-sourcing application.
1.4. Methodology & Objectives In order to reach the goal of the research effort the methodology of this thesis will be based firstly in a multiple case study between European Union Member States including Hellas. In this multiple case study Author will present the current environment on e-Public Procurement initiatives in each of the selected European Union Member States. The
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environment will be including the Institutional Framework, the National Strategy, and the Legal Framework and of course the Current Usage of Information and Communication Technology techniques relating with e-Public Procurement initiatives. A comparative analysis evaluation of the gathered data of the research effort will follow, in order to help author to submit the appropriate proposal to suggesting realistic solutions for the e-Public Procurement progress in Hellas and expecting the following objectives of this effort:
To improve service levels to buyers, suppliers and users involved in public sector works and services.
To minimise the transaction costs associated with public works and services through standardisation, streamlining and automation of the procurement processes within, and where appropriate, across agencies and sectors.
To maximise value for money for Hellenic public sector expenditure by enhancing the buying power of the public sector.
To promote competition among suppliers.
To make effective use of human resources in the public procurement process.
To promote generally the philosophy and use of e-procedures in the wider economy.
To be progressive in the adoption of procurement related Information and Communication Technologies.
The required key changes in order to achieve the objectives of the proposal are:
The alignment of the national legislation of public works and services according to the new directives of European Union.
The establishment of appropriate organisation structures based on the European Union Member States best practice.
The establishment of a new framework for the management of procurement, with the necessary resources and skills to drive the implementation of new initiatives.
The introduction of e-Sourcing application as an effective and innovative epublic procurement practice.
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1.5. Outline of the Thesis The thesis consists of seven chapters. Chapter 2 is the Literature Review. It describes the setting of a framework comprising the key definitions of the Thesis, a detailed overview of e-Sourcing technology. It also describes the current environment of ePublic Procurement in Europe concerning the legal framework and related practices implementation. Chapter 3 is the Research Methodology which comprises a description of the alternative and selected research strategies and presents the methodology structure of the Thesis setting up the practical and research problem. Chapter 4 is the first part of methodology structure and comprises the Gathered Data & Findings of e-Public Procurement initiatives of each of the selected European Union Member States. In the Chapter 5 which is the second part of the methodology structure there is a comparative analysis of the previous chapter elements. Chapter 6 is the last and most important part of the methodology structure and Author wishes with the submitted proposal to resolve realistically the research problem of the Thesis. Finally Chapter 7 presents the Conclusions.
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Chapter 2 – Literature Review 2.1. Introduction The e-Europe Action Plans initiatives have made Government Online a European priority. Information and Communication Technologies can effectively make government more accessible and remove existing administrative and commercial barriers across the Union. Electronic Public Procurement is one of the key areas where these new technologies can improve and simplify the way government operates and help remove existing commercial obstacles. Electronic public procurement not only makes it easier for enterprises to identify contract opportunities for public works, services and supplies across borders, but can also save money and time for both businesses and administrations, decrease the potential risk of corruption and contribute to the strengthening of Europe’s competitiveness and economic growth(7). This is not surprising given the complexity of the issues involved: the correct implementation of the legal framework, development of operational electronic procurement systems that are in line with the new legislation, modernization of the operational environment, re-engineering of practices and streamlining of processes involved(8). Successful implementation of electronic public procurement will require considerable effort in the Member States in order to put all the pieces of the puzzle together and modernize the way procurement is conducted nationally and at regional level. In 2004, a legislative framework for the use of electronic means in public procurement was adopted by the Council and European Parliament. It sets the necessary legal guarantees for carrying procedures electronically in an open, transparent and non-discriminatory way across Europe and introduces the use of modern innovative public procurement techniques (e-sourcing) based on electronic means of communication. Coordination between all the actors involved is vital in order to ensure the successful conversion of traditional paper-based public procurement to electronic procedures.
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2.2. Definitions 2.2.1. What is Procurement? As Kalakota & Robinson(9) point out, purchasing refers to the specific activities associated with the buying process, whereas procurement is a broader term for all activities associated with obtaining goods and services from a supplier, including requisition, purchasing, transportation, warehousing and inbound receiving processes. 2.2.2. What is Electronic Procurement? E-procurement technology and other advanced technologies essentially are freeing procurement professionals, and the role of procurement is shifting from reducing costs to creating supply value for the company through an effective process where enterprises(10) can: 9 Reduce transaction costs; Improve process efficiency; Reduce or eliminate “maverick” buying; Increase contract compliance; Reduce cycle times; Save inventory costs Thus, electronic procurement (e-procurement) can be defined as: “The electronic integration and management of all procurement activities including purchase request, authorization, ordering, delivery and payment between a purchaser and a supplier.”(11) More specifically, e-Procurement(12) is the process of using the internet to: ⇒ Make decisions and form strategies regarding how and where works, services or
goods are obtained. This process is known as “e-sourcing”. ⇒ Purchase items at the user level from existing contracts. This process is known as
“e-purchasing”. ⇒ Receive, recognize and approve invoices for payment electronically or via a
Procurement Charge Card (“P-Card”).
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The first two elements, with or without the third, constitute e-Procurement. The broad term e-procurement covers a number of different methods of purchase and sale in terms of Information Technology systems, procedures and underlying technologies. 2.2.3. What is Electronic Public Procurement? Nowadays e-Public Procurement will be one of the most important areas in eGovernment, as it promises to deliver significant savings in terms of reduced cost of purchase and streamlined procurement processes. Both central and local governments are venturing initiatives to improve public procurement. Electronic public procurement is a tool for modernization of the public sector and realization of benefits both in administrations and businesses. E-Public Procurement enables procurement activities, including sourcing, ordering, commissioning, receipting and making payments for the whole spectrum of a Public Authority’s activities. The prime objective is to e-enable the management of the supply chain that can be achieved by stands alone, shared or integrated software tools. Modernization of the public sector is necessary in order to ensure future welfare for the citizens and shall contribute to achieving efficiency benefits(13) through: ⇒ Better procurement: Price benefits through increased loyalty to agreements
entered into and a better basis for entering into new agreements. ⇒ Simpler procurement: Less administration and less time used through more
efficient and more streamlined routines. ⇒ More effective procurement: Less errors and improved control through electronic
traceability.
2.3. E-Public Procurement Tools. Over the recent years a wide variety of e-procurement tools have been developed in order to help organizations source, contract and purchase more efficiently and effectively. The term e-procurement covers a vast number of different methods of purchase and sale in terms of IT-systems, procedures and underlying technologies.
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In order to make a distinction between the different methods of e-public procurement, these can be labeled e-tendering and e-auctions (for sourcing or esourcing) and e-purchasing and procurement cards (for buying) (14). Figure 2.1: The value chain of e-Public Sector Procurement
Source: UK Office of the Deputy Prime Minister – National e-procurement project
According to the above figure: ⇒ Sourcing is the process by which an authority identifies, selects, and manages its
contractors, consultants or suppliers. ⇒ Buying goods and services is the transactional process executed by many
members of the authority during the day to day delivery of services. ⇒ E-Procurement is a collective term for a range of technologies that can be used
to automate the internal and external processes associated with sourcing and buying(15). In the part that follows we will focus on e-sourcing solutions that e-enable sourcing. E-sourcing solutions are more compatible in the field of Public Works and Services. E-purchasing and procurement cards solutions which they e-enable buying are more compatible in the field of Public Supplies. The e-enabling of Public Supplies is not to the main objectives of this thesis.
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2.3.1. What is e-Sourcing? In general, Aberdeen(16) defines electronic sourcing (e-sourcing) as the use of Webbased applications, decision-support tools, and associated services used to identify, evaluate, negotiate, and configure purchases and supplier relationships that will effectively support supply chain and other business operations. E-sourcing primary goal is to efficiently determine the mix of suppliers, products, works and services that can deliver the lowest total cost solution while meeting business objectives. E-sourcing also provides a platform to help organizations enhance and institutionalize knowledge and proven sourcing methodologies across the enterprise. Figure 2.2: UK Public Sector e-Sourcing managed service
OGC – the UK Office of Government Commerce
In the Public Sector e-Sourcing is the strategic element and innovative tool which establishes, manages and monitors contracts of the e-public procurement life-cycle with the use of web-based collaborative technology(17). E-sourcing may include: 2.3.1.1. E-Notification The functionality of e-Notification provide information to suppliers about past, current and future tenders. The supplier can read the information online or download it. Notification functionalities can be integrated in cross-government and cross-sector portals to provide suppliers with an overview of all relevant public tenders.
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2.3.1.2. E -Publication The functionality of e-Publication makes tenders documents available online at a web-page. Tenders can be downloaded and returned by post, fax or e-mail. 2.3.1.3. Electronic Tendering (e-Tendering) Tendering is defined as the process of finding and selecting suppliers of public supplies, works or services. For tenders above the European Union thresholds (see Appendix 1), this is regulated by the European Union procurement directives. Thus, e-tendering is the use of electronic means throughout the tendering processes. This includes the exchange of all relevant information and documents in electronic format(18). E-Tendering enables suppliers in different geographic locations to be notified of an opportunity, to express an interest, to pre-qualify, to download tender documents and to submit a response. This promotes competition for the tender, and provides a process that is efficient for both institutions and suppliers and a selection process that is transparent to bidders. The tendering process should be efficient, cost effective and transparent. Before tendering the procurement processes of notification and publication have already been implemented and the process of submission of tender notices by a contracting authority follows:
e-Management of Receipts /Submission of Tenders
The simplest way to forward tenders is by e-mail, but this method does not provide the optimal security in the handling of tenders and ensuring tenders have been submitted by the right supplier. Thus, in this report management of receipt/ submission of tenders are a specific functionality aimed at receiving tenders, ensuring that no tenders are opened before a given deadline and identify suppliers. Ultimately, such systems can be based on a digital signature and a public key infrastructure. These systems can also include administration of questions from suppliers and answers from the awarding authority. 2.3.1.4. Electronic Evaluation (e-Evaluation) E-Evaluation allows evaluation panels to streamline processes for: ⇒ Developing and structuring assessment criteria, Conducting tender evaluation,
and Comparing tender responses(19).
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Elaboration of tenders (suppliers) and evaluation of tenders (buyers) can be very time-consuming. E-sourcing systems can support this process by enabling systematic assessment of tenders on various pre-selected criteria. Such systems can motivate a re-engineering of the entire work flow from elaborating tenders to award of contract, to make the process simpler. 2.3.1.5. Electronic Auction (e-Auction) In an electronic reverse auction (e-Auction) potential suppliers compete online and in ‘real time’, providing prices for services and goods (and less for works) under auction(20). Prices start at one level and gradually, throughout the course of the eAuction, reduce as suppliers offer improved terms in order to gain the contract. E-Auctions can be based on price alone or can be weighted to account for other criteria such as quality, delivery or service levels. E-Auctions may be based on securing the lowest price, or on most economically advantageous bid (price, payment terms, and supply schedules). Only those suppliers who have successfully prequalified (i.e. they have satisfied all tendering criteria such as quality processes, financial stability and environmental policies) should be invited to participate. 2.3.1.6. Electronic Collaboration (E-Collaboration) This tool(21) is provided via an extranet (a shared working environment) to enable geographically-dispersed groups to discuss and document-share during any part of the tendering process. 2.3.1.7. Electronic Contract Management (E-Contract Management) This is an online tool(22) that helps to establish, manage and monitor contracts including collating supplier bid histories including the value and number of contracts awarded. The tool will notify buyers (via email) when contracts are due for renewal and collates supplier performance information against contractually agreed criteria. 2.3.2. E-sourcing Implementation The e-Sourcing service(23) enables public sector organizations to improve electronically their e-Public Procurement procedures. E-Sourcing tools support strategic purchasing activity and therefore their primary users are professional
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procurement teams. For some tendering activity, e.g. evaluation, the procurement team is also likely to work with the relevant business team within the organization. Therefore, e-Evaluation and e-Collaboration tools may also have users within the relevant business units. Supplier representatives will have also access to e-Tendering tools. They may in some circumstances also have access to e-Collaboration and eContract Management tools. Implementing e-Sourcing can bring many benefits to both buying organizations and their suppliers: ⇒ Process efficiencies; Reduction in overhead costs; Reduced timescales from
identification of requirement to contract award are all achievable to both buyers and suppliers. Each of the e-Sourcing tools can be implemented separately or together depending on the individual requirements of the buying organization. 2.3.3. Supplier information databases Supplier information databases(24) are effectively ‘up to date’ online supplier profiles which contain standardized information about companies who regularly tender for contracts. The database is usually hosted by the tendering body or a group to whom the supplier belongs. Potential suppliers can register to join the database and, when accepted, then they provide a profile (which they can update) of core information such as: ⇒ Corporate Status; Financial Background; Quality Accreditations; Environmental
Policies; Health & safety; Employment and Security Policies. This information usually reflects the range of information required by tendering public sector bodies at the early ‘Expression of Interest’ or ‘Request for Information’ stage of a tender process. Tender evaluators are authorized to access each supplier’s information online. Hard copy submissions are not therefore required and both suppliers and buyers can complete this stage of the tender process with greater flexibility, at lower cost and in less time.
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2.3.4. Benefits of e-Sourcing There are many potential benefits to both buyers and suppliers of implementing eSourcing tools. These are primarily process savings, which allow an existing team of professional buyers to reduce the time spent on any one procurement exercise. First and foremost, the electronic notification of tenders will make it easier for suppliers to identify contract opportunities. This will in turn lead to increased competition and lower prices, i.e. because of an increased number of bidders for each tender, better price comparisons between suppliers, increased market transparency etc. Moreover, using electronic means in the procurement process will enable a number of process savings for buyers and suppliers and lower transaction costs. This will increase the motivation to participate in public procurement due to reduction of tender costs. It should be noted that the outcome and impact listed in the Appendix 2 are what is considered the main ones based on a screening on literature in the field. The Appendix 2 illustrates that increased uptake of e-public procurement can have a positive impact on the internal market in a number of areas.
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2.4. E-Public Procurement in Europe. 2.4.1. The total value of Public Procurement According to estimates, the total value of public procurement in the EU is about €1500 billion in 2002 or about 16% of the Union’s GDP(25). Figure 2.3: Total Public Procurement in 2002 in billion € (EU15)
Source: EU Commission, DG Internal Market Data
It should be noted that these figures include procurement both above and below the EU procurement thresholds including purchases of goods, services, works and public utilities (incl. defense). A number of key figures are worth highlighting:
The value of public procurement in Germany, UK, and France totals approximately 920 billion € or 61.3 % of the total public procurement in EU-15.
In the 1995 to 2002 period, public procurement increased by almost a third (31%), from 1,140 billion € in 1995 to 1,490 billion € in 2002.
In 2002, 106,346 invitations to tender and 58,513 contract award notices were published.
2.4.1.1. Publication of public procurement electronically Online publication of contract opportunities can improve fair and open competition enabling suppliers to reap the full benefits of the internal market.
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The amount published in the official journal increased over 250% (from 95 billion in 1995 to 243 billion in 2002). The share of public procurement published in the official journal (OJEU) /Tenders Electronic Daily (TED) as percentage of the total public procurement in EU-15 increased sharply from approximately 8% to 16%. Figure 2.4: Estimated total value of public procurement published in the Official Journal.
Source: EU Commission, DG Internal Market Data
If this development continues, the procurement published online in TED will reach approximately 25% of the total public procurement in 2010. 2.4.1.2. Types of Procurement A closer look at the goods, works and services procured by public institutions in Europe shows that the most important types of procurement, construction work, represent a value of approximately 81 billion € or 37% of the total public procurement in the EU. The top two categories (construction, technical and professional services,) represent approximately 104 billion € or 48% of the total public procurement in Europe. These sectors are therefore very important in order to reach the goal of generalized use of eprocurement (see Appendix 3).
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2.4.1.3. e-Public Procurement estimated savings The calculations below show that the potential savings seem to be considerable at the aggregate European level, even under a conservative estimate: Table 2.1: Estimated annual savings on purchasing price and administrative costs for buyers (based on 2002 figures for EU15) of introducing e-tendering
Source: EU Commission, DG Internal Market Data
Annual savings of introducing e-Tendering would be 19 million € on the purchasing price and administrative costs savings of 6.6 million €. Please note that savings of introducing e-Ordering are not included in these figures. It should, however, be noted that the figures should be considered a rough estimate, and especially the estimate for the savings on administrative costs is based on very few empirical data. 2.4.2. Legal Environment While European public procurement law and public procurement legislation in most EU member states did not defined any clear rules for electronic procurement in the past, the new consolidated Directive (Directive no. 2004/18/EC) and the new utilities Directive (Directive no. 2004/17/EC)(26) sets out the procedural rules for the use of electronic means in public procurement. The new legislation entered into force on 20 April 2004. 2.4.2.1. The present public procurement directives The former European Union procurement legislation consists of the 4 main directives on procurement of public supplies, public works, public services and public utilities:
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Public Supplies Directive 93/36/EC as amended by Directive 97/52/EC.
Public Works Directive 93/37/EC as amended by Directive 97/52/EC.
Public Services Directive 92/50/EC as amended by Directive 97/52/EC.
Public Utilities Directive 93/38/EC as amended by Directive 98/4/EC.
The directives do not contain specific provisions regarding the use of electronic means in the procurement process. The use of written communication is to some extent, however, seen as a prerequisite for the proper documentation of the procurement process. Also, several articles of the directives contain mandatory use of written
communication.
The
combination
of
mandatory
use
of
written
communication in some situations and the general documentation requirements makes it difficult to use communication by electronic means under the present directives, as it would be necessary to supplement any electronic communication with written communication in most cases(27). 2.4.2.2. The new directives The new procurement directives of the European Union have two main objectives: ⇒ The first is to simplify and clarify the existing Community Directives; ⇒ The second is to adapt them to the modern administrative needs in a changing
economic environment. The new directives focus on the tendering procedure and establish the legal framework from the publication of notices to the award of contracts. That also happens to the former directives. Aspects such as ordering, invoicing are subject to other pieces of community law (such as Directive 2000/31/EC on electronic commerce etc.). The new directives introduce detailed provisions on the use of electronic means in the procurement process and new procurement processes based on the use of electronic means (e-auctions and dynamic purchasing systems). The directives also introduce new rules on notification and time limits when using electronic means in the notification and tendering process.
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The use of electronic means for communication in the procurement process is built on the following principles:
The directives put the use of electronic means on a par with traditional means of communication and information exchange.
The directives only allow the use of electronic means for communication under the normal procedural guarantees of paper based procurement.
The use of electronic means for communication in the procurement process does not require the use of specific technologies, but only that the technology used as far as possible is compatible with the technologies used in other Member States.
The choice of electronic means for communication in the procurement process is left to the contracting authorities. The new directives make it clear that the contracting authorities can require the use of electronic communication for accessing documents and for submission of offers.
The regulation of the use of electronic means for communication in the procurement process is aimed at eliminating the legal barriers inherent to the use of different regulation on electronic means in the procurement process in the Member States. It is foreseen in the new directives and various studies that the use of electronic purchasing techniques will help to increase competition and streamline public purchasing, particularly in terms of the savings in time and money. 2.4.2.3. Digital Signatures The conclusion of electronic contracts is an important element in the new procurement directives. Recital 38 of the preamble of Directive 2004/18/EC EC on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts addresses the question of the interaction between the new procurement directives and the E-signature Directive. Directive 1999/93/EC on a Community framework for electronic signatures contains a basic law of electronic signatures. The directive was to be implemented in 2002. The purpose of the directive is “to facilitate the use of electronic signatures and to contribute to their legal recognition”. It establishes a legal framework for electronic
19
signatures and certain certification services in order to ensure the proper functioning of the internal market. The E-signature directive distinguishes between electronic signatures and advanced electronic signatures(28).
The electronic signature is defined as data in electronic form which are attached to or logically associated with other electronic data and which serve as a method of authentication.
The advanced digital signature is defined as an electronic signature which meets the following requirements:
⇒ It is uniquely linked to the signatory; It is capable of identifying the signatory;
It is created using means that the signatory can maintain under his sole control; It is linked to the data to which it relates in such a manner that any subsequent change of the data is detectable. 2.4.2.4. Preconditions and specific requirements The directives offer a framework for using electronic means in public procurement. The choices go from the use of one/way dispatch of information, simple e-mails to fully electronic procedures, including the use of electronic catalogues, the dynamic purchasing system and e-auctions. It is a precondition for the use of electronic procurement that the contracting authorities comply with the rules drawn up under the directives and the principles of equal treatment, non-discrimination and transparency. This means that electronic procurement offers the same procedural guarantees as the paper based procurement process. The Appendix 4 illustrates the basic requirements related to the use of different procurement processes. The directives require an electronic dispatch of tender notices to the central European Union electronic board (TED – Tenders Electronic Daily) according to the format and procedures accessible at the Information System for Public Procurement-SIMAP (Système D'Information pour les Marches Publics) internet site. In order to ensure these principles the use of electronic means for communication between the contracting authorities and the contactors shall meet some specific requirements.
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2.4.3. The main phases of the e-public procurement cycle According to an almost recent study(29) and for the purpose of simplicity in order to identify the most important procurement portals and e-marketplaces in the European Union Member States, the research identified 36 electronic public procurement system currently operating. The portals and e-marketplaces identified are all primarily focused on public sector institutions as buyers and private companies as suppliers. According to the following table the research mapped the main e-Sourcing and e-purchasing phases covered by the identified Electronic Public Procurement solutions. Table 2.2: Procurement phases covered by the identified procurement systems
The e-Sourcing phases (Table 2.2) most frequently included in the e-Public Procurement solutions were: Notification about tenders and Publication of tenders. E-sourcing procedures have been distinguished in four main phases in the procurement cycle (functionalities). These phases have already been analyzed previously in the (What is e-sourcing.) Figure 2.5: E-Public Procurement lifecycle
It is obvious that according to this research there is a significant loss for the esourcing phases like the Management of Receipts/Submission and Evaluation of Tenders. There is also significant loss for the e-purchasing procedures:
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E-Ordering usually requires the suppliers to submit an electronic catalogue, which one or several buyers are permitted to order from. Orders can then be placed and order confirmation can be returned electronically, and
E-Invoicing is a system which is used for electronic invoicing between companies or private suppliers and public buyers. E-invoice systems can be based on e-mail, browser-based systems or fully integrated systems. With the most advanced systems, the invoice is forwarded directly from the accounting system of the supplier to the accounting system of the buyer.
But it is noticeable that aspects such as e-ordering and e-invoicing are subject to other pieces of community law (such as Directive 2000/31/EC on electronic commerce etc.) and they are not include to the main objectives of this thesis: 2.4.4. Electronic Procurement Systems The procurement systems(30) covered by the new European Union legislative framework are classified under three different categories according to the previous part of this chapter. Electronic procedures of Public Procurement they support:
Repetitive Purchasing: systems that support procurement through Framework Agreements, e-Catalogues, or e-marketplaces resembling the Dynamic Purchasing System mechanism. Main attributes of such systems presented include among others the e-ordering workflows, the integration with legacy systems of suppliers, e-Invoicing, and e-Payments.
E-Auctions: systems that support e-Auctions, featuring the preparation of competition criteria, the definition of bid evaluation functions, the support for online bid submission, and the automated ranking of bids; and of course
Individual Contracts: systems that support the notification, the publication of tenders, the submission and receipt of tenders, and the evaluation and contract award phases of e-Public Procurement lifecycle, under the open, restricted, or negotiated procedures. In further details:
22
⇒ Open: all interested suppliers can participate in an open procedure
competition. ⇒ Restricted: all interested supplier can request to participate in a restricted
procedure competition. Only the ones invited by the contract authority may submit a tender. ⇒ Negotiated: the procedure whereby contracting authorities consult the
Economic Operators of their choice (three or more) to negotiate the terms of the contract. The negotiated procedure may be followed in exceptional circumstances, detailed in the European Union public procurement directives. Hence, we conclude that e-sourcing tools are better compatible in the e-Public Procurement fields of Public Works and Services, according to the above procedures of Individual Contracts.
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Chapter 3 – Research Methodology 3.1. Introduction. In the Literature Review chapter author presented the current environment of the Electronic Public Procurement initiatives in the European Union. In order this framework to be scrutable Author mentioned generally the e-Europe Action Plan initiatives specifying the key area of e-Public Procurement concerning:
The e-Public Procurement tools that are distinguished in what they are implemented for Public Works and Services (e-sourcing) and what they are implemented for Public Supplies (e- purchasing), explaining the benefits of their use.
Statistics according to estimates of the total value and type of public procurement in the European Union.
The current legal environment and the expectations of the new Public Procurement Directives implementation, including the digital signatures initiatives for the security of the new innovative electronic systems.
The main e-Sourcing phases of e-Public Procurement initiatives that are implemented by the Member States according to a recent relevant study that became from the European Commission, and
The procurement systems (mainly Individual Contracts) used by the Member States according to the new Public Procurement Directives especially in the field of Public Works and Services.
Findings of the Literature Review chapter are very important for the Author’s research strategy, in order to reach the goal of the practical and research problem of this thesis.
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3.2. Research Strategies There are four traditional research strategies, Experiment: measuring the effects of manipulating on variable on another variable. Typical features: selection of samples of individuals from known populations; allocation of samples to experimental conditions; introduction of planned change on one or more variables; measurement on a small number of variables; control of other variables; usually involves hypothesis testing. Survey: collection of information in standardized forms from groups of people. Typical features: selection of samples of individuals from known populations; collection of relatively small amounts of data in standardized form from each individual; usually employs questionnaire or structured interview(31). Case study: development of detailed, intensive knowledge about a single ‘case’ or of a small number of related ‘cases’(32). Typical features: selection of a single case (or a small number of related cases) of a situation, individual or group of interest or concern; study of the case in its context; collection of information via a range of data collection techniques including observation, interview and documentary analysis. Review: the aim of a review is to reassess research that has been undertaken in a topic in order to provide a coherent picture or to modify theory in the light of new data. Periodic reviews of research in a particular topic are necessary(33) because of the process whereby scientific discovery proceeds by infrequent paradigm shifts that establish a new theoretical basis for a subject. It is important to note that the three traditional research strategies do not provide a logical partitioning covering all possible forms of enquiry. They are more of recognition of the camps into which enquirers or researchers have tended to put themselves, signaling their preferences for certain ways of working. It may well be that some hybrid strategy(34) falling somewhere between these ‘ideal types’ is appropriate for a study.
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3.3. The Practical and Research Problem Currently, the uptake on electronic public procurement is not being monitored on a regularly basis in Hellas. Hence, there is no information available on the existing usage of electronic means in public procurement. According to this ascertainment which is based on an almost recent study of European Commission (Introduction Chapter) the research effort of this Thesis will be focused in: 9 The effective implementation of the e-Public Procurement initiatives in Hellas with the use of innovative e-sourcing application. In order to reach the goal of the research effort a multiple case study report based on a suggestive number of European Union Member States best practice in e-Public Procurement will be presented. A comparative analysis and evaluation of the research effort will give the appropriate findings to Author for the submission of a realistic proposal comprising organizational and technical solutions for the e-Public Procurement development in Hellas. The philosophy of the multiple case study report concerning the suggestive number of European Union Member States is based on the elements of the literature review chapter (Fig. 2.3, p10). Hence, the selected reviewed Member States for the evaluation of the e-public procurement initiatives will be German, France, United Kingdom, Ireland and Hellas as well. Germany, United Kingdom and France will be selected as the most developed countries in the European Union. The value of public procurement in Germany, United Kingdom, and France totals approximately 920 billion € or 61.3 % of the total public procurement in EU-15 according to European Commission, Directorate General Internal Market Data of 2002. Moreover, an almost recent study(35) has pointed that, these countries, particularly United Kingdom, demonstrated important progress in the Public Sector electronic procedures implementation.
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Ireland was selected because it is a developing country as Hellas with very high growth rates. Another reason is that the value of Irish public procurement is almost the same with Hellas’s. According to these elements this selection is very critical in order to propose realistic solutions taking in consideration the progress of e-public procurement in the Irish Public Sector. Finally, it is essential including Hellas, to have the chance to locate precisely the current general environment of the e-government initiatives in this country, concerning the progress - if exists - in the field of electronic public procurement.
3.4. Data Collection Method The methodology data collection method will be based on:
Bibliographic sources of the European Union legislative framework in the field of electronic Public Procurement.
European Union related internet portals sources related to the subject like SIMAP (Système D'Information pour les Marches Publics), OJEU (Official Journal of European Union), IDABC (Interoperable Delivery of European e-Government Services to public Administrations, Business and Citizens).
Scientific journals and technical information internet portals.
A range of information from responsible organizations related with the identification and promotion of best practices in e-business for the electronic public procurement initiatives in Europe.
Desk research of official documents, Strategy papers in European Union Member States. Reports and analyses of e-public procurement at country level and at European level and of the forthcoming European public procurement directives.
Communication via e-mail with experts in member states and representatives of governmental institutions responsible for or involved in public procurement and the development of e-public procurement in the country.
In this regard it should be noted that the study attempts to include use and experiences of e-public procurement systems at all levels of government in the member states (national, regional, local), but does not uncover the vast total number
27
of existing e-public procurement systems and primarily looks at the situation in a member state seen from the perspective of the central level (due to the fact that the main data sources are key documents prepared at the national central and governmental level).
3.5. Methodology Structure The Methodology Structure is distinguished in three main Chapters: 3.5.1. Gathered Data & Findings In this chapter, to check the attending changes of public procurement policy in the selected European Union Member States, it has been structured a model based on the assembling gathered data and findings of the experiences of each State. Five sections contain the presentations of the current status for e-public procurement in each of the selected European Union Member States: Figure 3.1: The Main Phases of the Research Structure
There have been identified four certain lines of research, as explained in the above figure in order to define a significant picture of each national system in the field of e-Public Procurement.
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This scheme is composed with the same structure and includes descriptions of the: 3.5.1.1. Institutional Framework It involves the organizations and institutions responsible for implementing e-Public Procurement concerning the relevant public policy, the legal aspects, the technical solutions, as well as the bodies responsible for appeals regarding e-Public Procurement procedures in each Member State. 3.5.1.2. National Strategy It involves the national strategies and objectives for the e-Government initiatives of each Member State especially in the field of e-Public Procurement. It sets also the levels of Government included in this strategy and the allocated resources, if relevant information is available. 3.5.1.3. Legal Framework This line of research intends to give a general overview of the domestic legislation of Member States which is already in force in the field of e-Public Procurement and that being prepared for the compliance with the new European Union Directives and the compliance with the European Legislation of Digital Signatures for the security of the new electronic innovative procedures. 3.5.1.4. Current Usage of e-Public Procurement Finally, this part examines the e-Public Procurement in use into the Member States participating in the project by illustrating their various types of purchases (works, services, and supplies), and their procedures of contracts concerning the usage of esourcing tools in the phases of e-Public Procurement. 3.5.2. Data & Findings Analysis This chapter contains a comparative analysis across the selected European Union Member States which presents main findings of the research and in which the main issues concerning the current status for e-public procurement in the European Union Member States are analyzed. The purpose of the comparative analysis is to provide an overview across the European Union Member States that will give input to the
29
subsequent phase of the study concerning the e-Public Procurement implementation proposal in Hellas. The comparative analysis includes a compilation and presentation of findings and each main section is accompanied by a short concluding analysis and an assessment of the most important perspectives and implications. 3.5.3. Proposal for the Hellenic Implementation In this chapter author will try to present a realistic proposal for the implementation of e-Public Procurement initiatives in Hellas based on the analysis of gathered data and findings of the previous chapters. The required key changes in order to achieve the objectives of the proposal are:
The alignment of the national legislation of public works and services according to the new directives of European Union.
The establishment of appropriate organisation structures based on the European Union Member States best practice.
The establishment of a new framework for the management of procurement, with the necessary resources and skills to drive the implementation of new initiatives.
The introduction of e-Sourcing application as an effective and innovative epublic procurement practice.
Having said that, the emerging information technologies will provide the opportunity for the Hellenic government to transform itself and the way it provides services to citizens. Doing so would not only cut the cost and improve the quality of government, it would improve the trust citizens have in their government. Moreover, users of government services will benefit by permanent access to higher quality services. Most importantly, the relationship between Hellenic government and citizens can evolve from its traditional hierarchical and arms-length one to a more reciprocal one where citizens are genuine stakeholders in their government.
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Chapter 4 – Gathered Data & findings 4.1. Germany 4.1.1. Institutional Framework The responsible institutions for the public procurement policy in the era of German e-Public Procurement are the Ministry of Economics and Labor(36) and the Ministry of the Interior(37). The Ministry of Economics and Labor is also the responsible institution for legal aspects and the Ministry of the Interior for technical solutions. The Central Procurement institution is the Procurement Office of the Federal Ministry of the Interior(38) (Beschaffungsamt) which
manages purchases for 26
different federal authorities, foundations and research institutions. It runs a pilot project called “Öffentlicher Einkauf Online” (Public Purchasing Online). The project sets out a path for electronic procurement. It is possible to transfer the offers electronically(39). 4.1.2. National Strategy In Germany Electronic public procurement is highly prioritized. E-public procurement initiatives are part of an overall strategy to develop the information society and create e-government(40). In September 2000 the initiative “Bund Online 2005” that also include e-Public Procurement was started by Federal Chancellor Gerhard Schröder. More than 100 individual authorities and departments of the Federal Administration were taking part in the project. To overcome the heterogeneous IT-landscape of Germany, the relevant players have agreed on a joint e-government strategy in June 2003 (“Deutschland-Online”). The aim of the joint “Deutschland-Online” e-government strategy is to develop integrated electronic services on all administrative levels as well as to create the standards and infrastructures which are necessary. In addition to this strategy, the government in autumn 2003 decided on the program
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of action Information Society Germany 2006. The objective of this procurementfocused program is to have a Federal Government's contract-awarding procedure exclusively via a secure e-tendering system in line with legal requirements by the end of 2005. The levels of government involved include only Central Government. The Overall objectives of the above initiatives are:
Achieve greater efficiency and transparency, and cut costs in the tendering cycle.
Develop integrated electronic services on all administrative levels and create standards and infrastructures.
Secure e-tendering system by the end of 2005.
Public sector strives to be the pioneer in the field of e-business in Germany.
At state level, the public authorities allocate approximately 4.5 million € per year to introduce operational electronic public procurement 4.1.3. Legal Framework The field of e-Public Procurement is regulated by the following national legislation(41):
Ordinance on the Award of Public Contracts. (Section 15 governing the electronic submission of bids for supplies and for services above the European Union thresholds).
Code for the Award and Contracting of Public Works. (Section 21: rules on electronic bidding for public works; various individual stipulations).
Code for Awarding Public Services Contracts. (Section 21: rules on electronic bidding for services contracts below the EU threshold).
Civil Code. (Sections 126, 126a, 127: rules on the equivalence of the written form of declaration of intent prescribed by law and contract with the electronic form in the form of the qualified electronic signature).
Germany has not transposed the Directives 2004/18/EC and 2004/17/EC into German law. Because of the election in 2005, Germany was not able to fulfill these obligations. Nevertheless, the German Ministry of Economics and Technology
32
published for each Directive separately a circular letter. This circular letters explain the procurement rules. Responsible persons of Ministries and public administrations should consider these explanations when they publish a tender that contains threshold values that are above the threshold values mentioned in the EC Directives. The process of adopting the Directive 2004/18/EC and 2004/17/EC into German law is still ongoing(42). The new public procurement directives, including their provisions concerning eprocurement, are due to be implemented in German law by the end of 2006. Advanced qualified electronic signature has been introduced. The storage of data is already regulated by national legislation. With the new directives, Germany expects to provide that contracting authorities may use electronic auctions (with the possible exception of works contracts) and dynamic purchasing systems. 4.1.4. Current usage of e-Public Procurement Monitoring of the up-take and progress of e-public procurement is carried out on an annual basis by a questionnaire to a Working Committee of all government departments (see Appendix 5). The following aspects are watched: Transaction costs and the effect on prices. The resources allocated by public authorities to introducing operational public procurement are also monitored at national level. Other aspects which should be considered in the future are: Number of electronic transaction, e-public procurement’s share of total public procurement volume, types of purchases, speeding up of procurement procedures, SME participation and number of bidders. 4.1.4.1. Level of use for different types of purchases The level of use of e-Public procurement in Germany according to the type of purchases is as follows:
Public Works, to a low extend
Public Services, to a low extend
Public Supplies, to some extend
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4.1.4.2. Phases of e-Sourcing The status for automating sourcing phases in Germany is as follows:
Notification about tender, to a large extent
Publication of tender, to a large extent
Management of receipt/submission of tenders, to a large extent
Evaluation of tenders to a low extend
4.2. United Kingdom 4.2.1. Institutional Framework The responsible institutions in the field of e-public procurement are:
The Office of Government Commerce (OGC)(43) that is an independent Office of the Treasury reporting to the Chief Secretary. It is responsible for the e-public procurement policy and legal aspects and also the central procurement institution.
The Improvement and Development Agency (IDeA)(44) is the responsible institution for technical solutions. It was established by and for regional and local government in April 1999. The mission is to support self-sustaining improvement from within local government. The IDeA has given local authorities in England and Wales the means to enhance traditional methods of procurement, through IDeA marketplace.
Concerning the type of coordination between different institutions e-public procurement is organized as a mixture of a centralized and decentralized approach:
There is a central public procurement body, OGC Buying Solutions(45). It arranges framework contracts, which can be used by all public authorities in UK. However, the individual public authority is free to arrange individual framework agreements.
Procurement (selection of suppliers) is a responsibility of the individual public authority.
34
The
total
procurement
through
national
framework
contracts
(OGCbuyingsolutions) is approximately 16 million pounds (0.1% of central government procurement). Figures for regional and local level are unknown. 4.2.2. National Strategy The overall e-procurement vision of the UK government is that all central civil government purchasing transactions should be able to be transmitted securely over the Internet between government and suppliers using interoperable systems based on open standards. On the national political agenda, the introduction of operational epublic procurement has a high priority. This reflects a recent increase of priority to this area driven by focus on more efficient procurement procedures. In October 2002(46), the OGC Supervisory Board approved a strategy for the adoption of electronic procurement by central civil Government i.e. departments, agencies and non-departmental public bodies but not including wider public sector bodies such as Defense, National Health Service, local authorities and devolved parliaments. The strategy focuses on how web-enabled tools and techniques can deliver significant value for money improvements to Government’s commercial relationships. This strategy follows extensive research into how e-Procurement can bring added value to departments’ procurement activity. The research included e-pilots and e-tendering projects. The overriding aim of the ‘‘e-Procurement Strategy for central civil Government’’ is to help improve the commercial relationship between departments and suppliers using electronic tools to add value and improve efficiency. The challenge for the public sector is to deliver: streamlined processes to reduce both supplier and buyer costs; management information to enable more informed negotiations; and greater control and audit ability of procurement spend. 4.2.3. Legal Framework The new European Union Public Procurement directives came into force and regulated by the English legislation in the 31st January 2006(47). The following areas (before the new European Union Public Procurement directives
35
implementation) of use of electronic means in the public procurement process had already been regulated by national legislation: rules applicable to communication, storage of data and use of specific procedures, e.g. e-auctions. United Kingdom intends with the implementation of the new European Union directives relating to electronic auctions and dynamic purchasing systems, to allow Contracting Authorities to make use of them. Electronic auctions are expected to be used in particular even in Public Works. Buyer profiles to publish tender-related information on a ‘buyer profile’ are being used by Contracting Authorities in United Kingdom. Digital signatures are an accepted method of authentication under the terms of the European Union Directive. However, because software would be needed to generate the digital signature at the supplier end and validate it at the recipient end, without other controls and some other audit trail the digital signature for OGC does not necessarily prove a relative document authenticity. 4.2.4. Current usage of e-Public Procurement Today e-Procurement is seen as a key enabler to achieving greater public sector efficiency, which is high on the government’s agenda and was the goal behind Sir Peter Gershon’s review of the public sector, Releasing Resources to the Front Line (the ‘Efficiency Review’)4 published in July 2004 and commissioned by the Prime Minister(48). “The public sector is one of the biggest purchasers of works, goods and services in the economy. In 2003-04, the public sector spent over £100bn purchasing, for example, utilities, ICT systems and services, as well as professional services, temporary labor, construction, social housing, social care, and environmental services.” Sir Peter Gershon, Releasing Resources to the Front Line, July 2004 The Efficiency Review identified that the UK public sector spends over £100bn a year in goods and services. Furthermore, it set a target of more than £20bn of efficiency savings for delivery by 2007/8. The aim is to release this money for
36
improved delivery of frontline services to the public. Approximately one third of the savings, some £6-7bn, is expected to come from improved procurement, principally through more efficient processes and improved contracts. 4.2.4.1. Level of use for different types of purchases The level of use (see Appendix 5) of e-Public procurement in United Kingdom according to the type of purchases is as follows:
Public Works, to some extend
Public Services, to some extend
Public Supplies, to a large extend
4.2.4.2. Phases of e-Sourcing The status for automating sourcing phases in United Kingdom is as follows:
Notification about tender, to a large extent
Publication of tender, to a large extent
Management of receipt/submission of tenders, to a large extend
Evaluation of tenders, to some extent
4.3. France 4.3.1. Institutional Framework The responsibility for the e-Public Procurement activities in France are shared between mainly two government bodies:
The Agency for the Development of Electronic Administration(49) (Agence pour le Développement de l’Administration Électronique – ADAE), under the direct authority of the Prime Minister, which has drafted the electronic administration strategy and action plan (ADELE). This Agency is also the responsible institution for the technical solutions of the French e-Public Procurement.
The Ministry of Economy, Finance and Industry which is the responsible institution for the e-public procurement policy and legal aspects(50).
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The Central Procurement institutions is the Union de Groupements d’Achats Publics (UGAP) (51) which local, regional and national authorities can make use of, will allow bidders to submit tenders electronically through State solution. 4.3.2. National Strategy E-public procurement enjoys medium priority in France as it is not promoted by a minister, but is the fruit of cooperation between several ministries(52). The e-public procurement strategy of the French government is therefore twofold: It forms part of the e-government and information society initiatives made public at large scale, but is also part of efforts to generally modernize the national public procurement system. There is no separate strategy for e-public procurement.
The governmental modernization plan “Administration électronique 2004/2007” (ADELE), launched in February 2004 by the Prime Minister. The project is one of 140 measures which are part of the plan.
Reforms of the Public Procurement Act (Code des marchés publics) in 2001 and 2004. This law includes the objective that all public entities have to accept electronic bids by 1 January 2005, whereas enterprises are free to use electronic means or paper. No obligation for businesses is introduced by the reforms.
The main objectives of the above initiatives are:
To publish all calls for tenders electronically by 2010.
The reengineering of process and training in order to professionalize the buyer function
The introduction of e-sourcing by 2006.
Approximately 2 million € has been allocated for the introduction of operational electronic procurement at national level. The Ministry of Defense has allocated approximately 4 million € over the last 3 – 4 years. In 2005, 1 million € is earmarked for using on an inter-ministerial platform. Central, regional and local governments are included in the strategies for procurement. Also public enterprises are covered by the initiatives.
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4.3.3. Legal Framework The current version of the French Public Procurement Code was adopted on 8 January 2004. Its article 56 provides for the “dematerialization” of public procurement procedures. It states that all calls for tender documentation can be communicated to bidders in electronic format and that public administrations have an obligation to accept bids submitted electronically as of 1 January 2005. Electronic signatures are currently in force. Beyond these existing regulations, the new Code des marchés publics 2006, that fully implements the new European Union Directives on Public Procurement (2004/17/EC and 2004/18/EC), is already published in the French Government Official Journal (August 3, 2006) and will come into force in the 1st September 2006(53). 4.3.4. Current usage of e-Public Procurement The Ministry of Defense(54) has introduced e-public procurement on a wide scale, assessing in particular, the number of electronic transactions, the speeding-up of procurement procedures, transaction costs and e-procurement’s share of the total public procurement volume. The reduction of costs for companies should also be included in the assessment. The Ministry of Equipment has also obtained interesting results reducing publishing costs. No assessment is as yet planned for the inter-ministerial platform, but there will probably be a regular monitoring of activities. France expects that the introduction of e-public procurement will significantly lower transaction costs and prices through increased competition and reduction of the cost of public procurement for administration and businesses etc. 4.3.4.1. Level of use for different types of purchases The level of use (see Appendix 5) of e-Public procurement in France according to the type of purchases is as follows:
Public Works, to a low extend
Public Services, to a low extend
Public Supplies, to a low extend
39
4.3.4.2. Phases of e-Sourcing The status for automating procurement sourcing phases in France is as follows:
Notification about tender, to some extent
Publication of tender, to some extent
Management of receipt/submission of tenders, (not automated, expected to be the next 2 years)
Evaluation of tenders (not automated, expected to be the next 2 years).
4.4. Ireland 4.4.1. Institutional Framework The main institution is The Department of Finance, National Public Procurement Policy Unit(55). It is responsible for policy formulation, the legal framework, and the technical solutions. There are also some other institutions concerning the technical solutions for e-public procurement:
Local Government Computer Services Board. It is a public sector organization closely aligned with local government in Ireland. Its main task is to provide local authorities with the best solutions to meet all their information and communication technology needs.
Information Communication Technology bodies within the Health Sector.
The Central procurement institution is the Government Supplies Agency and Office of Public Works. Other important organization is the Information Society Commission. The type of coordination between different institutions is that the selection of suppliers is typically a responsibility of the individual public institution. Some coordination exists in parts of the health sector and in third level educational institutions. 4.4.2. National Strategy In April 2002 the Department of Finance launched “A Strategy for Implementation of E Procurement across the Irish Public Sector”(56). The National Public Procurement Policy Unit was established within the Department of Finance and has commenced implementation of the strategy. Existing resources from within the Irish
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public sector have been engaged for the implementation of this strategy. This strategy emphasized the need for procurement management reform, and points out four aspects to implementation of e-public procurement in Ireland. These are: Capacity building: organizational capacity to strategically manage procurement effort in order to maximize measurable savings and benefits; Training and education developing for public sector staff through targeted procurement training and education to sustain measurable improvements in procurement performance; Aggregation: reducing costs by leveraging public sector demand in certain markets; and lastly E-sourcing systems: improving efficiency through the use of cost effective technologies in support of various aspects of procurement. The strategy contains a number of key targets to be achieved by the end of 2007. These include:
Unit cost reductions of 2.5% of total expenditure on supplies and services and works (repairs and maintenance), arising from reductions in off-contract procurement and aggregation of procurement across agencies;
Average transaction costs reductions of 5% for supplies services and works (repair and maintenance) as a result of standardization, streamlining and automation;
Unit cost reductions of 0.5% of total expenditure on capital works arising from savings in professional fees resulting from efficiency gains in the tender process and contract administration;
Transaction cost related reductions of 0.25% in overall expenditure on capital works as a result of public sector administrative cost savings;
90% of tender competitions (above European Union thresholds) carried out electronically;
80% of payments carried out electronically;
10% of all expenditures on supplies and services supported by electronic catalogue and ordering facilities.
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All levels of government included in the national strategies on e-Public Procurement. Projects are planned for development of a separate e-procurement strategy for local and sector level. The resources allocated by public authorities to introduce operational public procurement amounts to 4 million € per year at state level for the implementation of the national strategy, of which 2.5 million € are allocated for capital and 1.5 million € for administration. Some sectoral projects are funded by other sources. 4.4.3. Legal Framework The new European Union Public Procurement directives came into force and regulated by the Irish legislation in the 22nd June 2006 (SI No 329 of 2006)(57). The following areas (before the new European Union Public Procurement directives implementation) of use of electronic means in the public procurement process had already been regulated by national legislation: rules applicable to communication, and storage of data. With the new EU directives it is expected that the Irish the government will provide that Contracting Authorities may use electronic auctions and dynamic purchasing systems and that these will be generally available. Buyer profiles to publish tenderrelated information on a ‘buyer profile’ are expected to be used by Contracting Authorities in Ireland. It is also expected that Ireland will introduce national standards for the electronic ex-change of data in the public procurement process. Like in United Kingdom the digital signatures for the Irish authorities are an accepted method of authentication under the terms of the EU Directive. However, without other controls and some other audit trail it does not necessarily prove a relative document authenticity. 4.4.4. Current usage of e-Public Procurement The total non-payroll procurement spending in the non commercial public sector in Ireland is in the region of 9 billion € per annum of which Central government is responsible for approximately 2.4 billion € of procurement, education 1.4 billion €, health 1.9 billion €, and local authorities 3.1 billion € (2001 figures).
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Monitoring of the uptake and progress of e-procurement is monitored regularly focusing on the number of users of the e-Tenders website(58) and the extent of its usage: Users of the e-tenders website will be pleased to learn that 95.2% of Ireland's OJEU notices are now submitted electronically (via e-Sender) to the European Journal. This figure is up from 88% last March (2006). This is still the second highest rate in Europe but we're very close to Finland who has the highest percentage with 95.6%. The average percentage across the EU is 57.4% so we are well ahead of EU targets and, as using the e-tenders website to create notices guarantees e-sender status, we look forward to reaching 100% in the near future. (21st June 2006) 4.4.4.1. Level of use for different types of purchases The level of use (see Appendix 5) of e-Public procurement in Ireland according to the type of purchases is as follows:
Public Works, to a large extend
Public Services, to a large extend
Public Supplies, to a large extend
4.4.4.2. Phases of e-Sourcing The status for automating sourcing phases in Ireland is as follows:
Notification about tender, to a large extent
Publication of tender, to a large extent
Management of receipt/submission of tenders, to some extent
Evaluation of tenders, to some extend
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4.5. Hellas 4.5.1. Institutional Framework The main institution is The General Secretariat of Commerce which belongs to the Ministry of Development(59). It is responsible the legal framework, and the technical solutions of e-Public Procurement policy formulation but only in the sector of Public Supplies. There are also some other institutions concerning the general strategy of eGovernment for the Public Administration:
The Managing Authority of the Ministry of National Economy(60) which is responsible for the implementation of “Information Society” strategy.
The General Secretariat for Information Systems(61) of the Ministry of National Economy which provides financial services for the annual income submission of tax statement of the citizens.
4.5.2. National Strategy The Hellenic Government’s strategic approach to e-government(62) was laid down in the White Paper Hellas in the Information Society: Strategies and Actions, which was published in February 1999 and updated in 2002. The White Paper places great emphasis on raising the quality of public services in order to ensure social cohesion and contribute to economic objectives in terms of living standards. The Hellenic egovernment strategy advocates that electronic services should be characterized by ubiquity, uniqueness of reference (i.e. single point of service), de-materialization, quality and cost-effectiveness. E-services are seen as essential business infrastructures that should only be planned and deployed as such. Key methodological steps for developing and implementing them include: identifying critical areas of service; determining business priorities and critical success factors; identifying business partners and building consensus; determining the scope of a pilot application. With the aim of implementing the Information Society strategy in a coherent and integrated way, an Operational Programme for the Information Society (OPIS)(63) was adopted in 2000, which covers the period 2000-2006 and is supported by the European Union as part of the Community Support Framework. The OPIS is an
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innovative horizontal programme, cutting across government departments, which aims at implementing the essential features of the Hellenic Government’s Information Society White Paper as well as of the e-Europe Action Plan. The main objectives of this programme are as follows:
Improved quality of services to citizens and enterprises by public administrations at central, regional and local level.
Development of online applications, as well as use of Information and Communication Technologies (ICTs) to streamline and re-engineer procedures and communication within and amongst government departments, covering all of public administration and especially the fiscal area and finance, social insurance, justice, public tendering and procurement procedures, regional development and emergency services areas.
Support the creation of geographical and environmental mapping and management information systems, linking central to regional and local government.
Use of IT in order to promote and support a broader strategy for providing higher quality health and welfare services to all citizens, and for the reform of the management of the health sector and its budget.
Introduction of telematics applications in land, sea and air transport ("intelligent transport").
The Hellenic approach to e-government can be characterized as centralized in terms of policy planning and programme management, with distributed implementation. All Ministries and regional governments have been requested to prepare actions plans for the Information Society, with a view to implement the OPIS priorities. In 12th July 2005 the Hellenic Government presented the draft of the Hellenic digital strategy for the period of 2006-2013, aimed at enabling a “digital leap” to improve productivity and quality of life by 2013. The draft will be submitted to consultations before a final proposal is submitted to the government for approval by the end of 2005. The proposed digital strategy includes more than 65 actions and is divided into two parts. The first part of the plan will be enacted by 2008, and the second one by
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2013. By 2008, the government will promote the development of electronic procurement, broadband connections, digital public services for citizens and businesses, and the use of electronic signatures. After 2008, the proposed strategy includes creating one-stop e-points to serve companies, re-organizing the public sector and incorporating new technologies into the education system. The digital strategy will involve possible public-private co-operations in e-government projects, and will include three key government-wide projects: the development of a national e-services portal “Hermes,” the implementation of a single authentication and transaction security system, and the development of a single interoperability system for public services. These projects will help reduce administrative burdens for businesses and improve people’s quality of life. 4.5.3. Legal Framework In Hellas there is no specific legislation concerning e-Public Procurement and there has been no such practice so far. Hellas is in the preparatory stage of developing the networking among public authorities and also, at a preliminary stage of studying awarding procedures by electronic means. There is some progress for the adoption of new legislation by the Ministry of Development, only for the sector of Public Supplies(64). The use of electronic means for communication in the public procurement process will be regulated by national legislation. The following aspects will be regulated: rules applicable to communication, storage of data, use of specific procedures e.g. eauctions; dynamic purchasing system; open, restricted and negotiated procedures; notification about tender; publication of tender; management of receipt/submission of tender; and ordering. Operational electronic procurement system does not exist in the public sector in Hellas yet. However, a system in compliance with the requirement of the forthcoming directives will be introduced shortly. Electronic signature has been introduced and is being used to a low extent. However, the use of electronic signature will be made mandatory to participate in public calls for competition.
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The directives are expected to be implemented late in 2006 but only in the sector of Public Supplies. There is no available information or project plan for the directives implementation for the sectors of Public Works and Services. 4.5.4. Current usage of e-Public Procurement Currently, the uptake on electronic public procurement is not being monitored on a regularly basis in Hellas. Hence, there is no information available on the existing usage of electronic means in public procurement(65). 4.5.4.1. Level of use for different types of purchases Information unavailable. 4.5.4.2. Phases of e-Sourcing Information unavailable.
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Chapter 5 – Data & Findings Analysis 5.1. Introduction In order to provide an overview and comparison of the overall approach to e-Public Procurement in the selected Member States the study uncovers the current state of play in each of the member states and in a cross-country perspective. The central parameters chosen for the description of the approaches of the member states were:
Institutional Framework.
National Strategy.
Legal Framework.
Current Usage of e-Public Procurement.
Although it is not possible to draw a clear cut line between those countries that have taken a very proactive approach and those that are still at the early stage of embarking, or have not yet embarked, on e-public procurement, the analysis does seek to identify to what extent the member states already have taken steps to promote a coherent approach to e-public procurement.
5.2. Institutional Framework Findings The following table contains an overall description of the main findings of the current situation in the member states with regard to the organizations and institutions responsible for implementing electronic Public Procurement. The table on the next pages provides an overview of the public institutions, responsible for and involved in public procurement policies, legal aspects and technical issues within each member state. In addition, the table provides an overview of the existence of central procurement institutions within each country. As the table shows, the general finding across the Member States is that the typical institutional set-up involves one or more departments at national, governmental level, responsible for implementation of overall policies as well as legal aspects. The findings also show that the same authorities are responsible for the overall e-Public Procurement policy and legal aspects.
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Table 5.1: Public authorities responsible for implementing e-public procurement
INSTITUTIONAL FRAMEWORK COUNTRY
PUBLIC PROCUREMENT POLICY
LEGAL ASPECTS
TECHNICAL SOLUTIONS
CENTRAL PROCUREMENT AUTHORITY Procurement Office of the Federal Ministry of the Interior
Ministry of Economics and GERMANY Labour. Ministry of the Interior.
Ministry of Economics and Labour
Ministry of Economics and Labour
UNITED Office of Government KINGDOM Commerce
Office of Government Commerce
Improvement and Development OGC Buying Solutions Agency
FRANCE
IRELAND
HELLAS
Ministry for Economy, Finance Ministry for Economy, Finance Ministry for Economy, Finance and and Industry. Industry. and Agency for the Development of Agency for the Development of Industry, Legal Department Electronic Administration. Electronic Administration.
Department of Finance
Ministry of Development
Union de Groupements d’Achats Publics (UGAP)
Department of Finance
Department of Finance Local Government Computer Services Board. Other ICT Bodies within the Health and Education sectors
Government Supplies Agency. Office of Public Works. Local Government Computer Services Board. Health Boards Executive.
Ministry of Development
General Secretariat for Information Systems of the Ministry of National Economy
No name available
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Hellas has not yet established a central procurement authority for the overall e-Public Procurement policy. The Hellenic Ministry of Development is only responsible for the e-Public Procurement policy in the sector of Public Supplies. In Germany, United Kingdom, France and Ireland the responsibilities within overall public procurement policies and legal aspects are typically assigned to the ministries of economic affairs. As an example, the Office for Government Commerce (OGC), which is an independent office of the Treasury in United Kingdom, is responsible for an integrated government procurement policy and strategy and for helping to coordinate the procurement of governmental departments and agencies. In addition, OGC has an important role representing the UK on procurement matters in Europe and the World Trade Organization, and in helping departments apply the rules in the UK. OGC also take the lead on the Government’s policy of achieving value for money in public procurement as well as giving advice and producing guidance.
5.3. National Strategy Findings The findings show that the majority of the Member States have developed a strategy for the introduction of operational e-Public Procurement, and that a majority of the member states have set an overall objective for the introduction of operational ePublic Procurement. The timeframe for the achievement of the objectives defined by the member states covers the period up until 2007, while one country (Hellas) have formulated an objective for the coming 2 years until 2008 and another country (France) goes as far as 2010. The table below summarizes the findings concerning strategy; objectives, resources committed or spent and the levels of government (national, regional, local) included in the national strategies for e-public procurement for each of the selected Member States.
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Table 5.2: National Strategies on e-Public Procurement
NATIONAL STRATEGIES COUNTRY
STRATEGY
OBJECTIVES
E-public procurement initiatives are part of an overall Achieve greater efficiency and transparency, and cut costs in the tendering cycle Develop integrated strategy to develop the information society and create eelectronic services on all administrative levels and create standards and infrastructures Secure eGERMANY Government - “BundOnline 2005” - Deutschlandsourcing system by the end of 2005 Online” - “Information Society Germany 2006”
ALLOCATED RESOURCES
GOVERNMENT LEVELS
At state level, the public authorities allocate approximately The strategies include central & regional EUR 4.5 million per year to in-troduce opera-tional governments electronic procurement
A specific e-procurement Strategy for Central Web-enabled tools and techniques shall deliver £ 250 million pounds of value for money improvement UNITED Civil Government from 2002 exists. It is composed by Resources have been spent but there is no information on to government’s commercial relationships during April 2003 – March 2006. KINGDOM several strategic documents/ the amount 50% of dealings should be capable of electronic delivery by 2005 and 100% by 2008. sites on www.ogc.gov.uk Approximately EUR 2 million has been allocated for the introduction of operational electronic procurement at national level. The Ministry of Defence has allocated approximately EUR 4 million over the last 3–4 years. In 2005, EUR 1 million is earmarked for using on an interministerial platform
Central, regional and local government are included
FRANCE
Project on e-public procurement is part of the governmental modernisation plan “Administration électronique 2004/2007” (ADELE). The overall strategy on electronic procurement also constitutes a part of the e-government and information society initiatives. There is no separate strategy for e-public procurement
IRELAND
Key targets to be achieved by the end of 2007 (described in the strategies): Unit cost reductions of 2.5% of total expenditure on supplies and services and works. Transaction Strategies on e-public procurement are integrated in a costs reduction of 5% for supply services and works. Unit cost reductions of 0.5% of total expenditure overall strategy on modernising Public Procurement. Approximately EUR 4 million on national level for on capital works. Transaction cost related reductions of 0.25% in overall expenditure on capital works. “Strategy for the Implementation of eProcurement in implementation of the national strategy. 90% of tender competitions (above EU thresholds) carried out electronically. 80% of payments the Irish Public Sector” (2001). Some projects funded by other sources. carried out electronically. 10% of all expenditures on supply and services supported by electronic “Modernising Public Procurement” (2003). catalogue and ordering facilities. Approximated financial benefits by 2007 are estimated at EUR 414 million and potentially up to EUR 1 billion, annually.
All levels of government included in the national strategies on epublic procurement Projects are planned for development of a separate eprocurement strategy for local and sector level
HELLAS
The strategy for the introduction of operational electronic public procurement is an integrated part of the overall strategy on e-government and the Introduce an operational epublic procurement system by the end of 2007. development of the information society. 30% of goods awarded from the Ministry of development will be awarded by electronic means by the Information unavailable The focus of the strategy is to obtain improved end of 2008. IT skills in public and private sector, speeding up procurement procedures, and to secure lower prices on public procures
Include central government
Main objective is to publish all calls for tenders electronically by 2010 (project: “100% Dematerialisation”). Introduction of e-sourcing by 2006
Central, regional and local government are included in the strategies for procurement. Also public enterprises are covered by the initiatives
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Based on the table 5.5 above, some observations across the selected European Union Member States may be highlighted:
First, the table shows that most countries consider the field of e-Public Procurement as an integral part of their e-government and information society strategies. Three countries (Germany, France, and Hellas) have integrated a strategy on e-Public Procurement into the national strategy on public procurement, while two countries, United Kingdom and Ireland, have chosen to formulate a separate independent strategy for the introduction of e-public procurement.
Second, in all selected countries where strategies for the introduction of e-public procurement exist, the strategy is aimed at the central, regional and local governmental level. In Hellas the strategy include only central government.
The table below summarizes which of the selected countries have included respectively the national, regional and local levels in their strategies. Table 5.3: Levels included in the National Strategy on e-Public Procurement CENTRAL GOVERNMENT
REGIONAL GOVERNMENT
LOCAL GOVERNMENT
GERMANY
GERMANY
UNITED KINGDOM
UNITED KINGDOM
UNITED KINGDOM
FRANCE
FRANCE
FRANCE
IRELAND
IRELAND
IRELAND
HELLAS
5.4. Legal Framework Findings The implementation of the directives raises questions in relation to the timely implementation of the directives, the impact of the implementation period and the correct implementation of the directives. The directives must be implemented within 21 months after coming into effect. This means that the Member States will need to complete the Implementation of the Directives before 31st January 2006. Although the new directives entered into force on 30 April 2004 the existing directives will only be repealed with effect from the expiry of the implementation period, the 31st January 2006.
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Table 5.4: European Union Reviewed Countries Legal Framework Progress
LEGAL FRAMEWORK COUNTRY GERMANY
UNITED KINGDOM
NEW DIRECTIVES ADOPTION SECURITY Not yet implemented. Because of the election in 2005, Germany was not able Advanced qualified electronic signature has been introduced to fulfill these obligations Digital signatures are an accepted method of authentication under the terms of the European Union Directive. However, because The new European Union Public Procurement directives came into force and software would be needed to generate the digital signature at the st supplier end and validate it at the recipient end, without other regulated by the English legislation in the 31 January 2006. controls and some other audit trail the digital signature for OGC does not necessarily prove a relative document authenticity
FRANCE
The new Code des marchés publics 2006, that fully implements the new European Union Directives on Public Procurement (2004/17/EC and Electronic signatures are currently in force 2004/18/EC), is already published in the French Government Official Journal (August 3, 2006) and will come into force in the 1st September 2006
IRELAND
Like in United Kingdom the digital signatures for the Irish authorities are an accepted method of authentication under the terms The new European Union Public Procurement directives came into force and of the EU Directive. However, without other controls and some other regulated by the Irish legislation in the 22nd June 2006 (SI No 329 of 2006). audit trail it does not necessarily prove a relative document authenticity.
HELLAS
Not yet implemented. There is some progress for the adoption of new legislation only for the sector of Public Supplies
Electronic signature has been introduced and is being used to a low extent.
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The table 5.4 above shows that the majority of the Member States have implemented the new directives concerning the new procurement procedures in the sectors of Public Works, Services and Supplies. In United Kingdom and Ireland the new directives are currently in force. In France the new relevant code is already published in the French Government Official Journal and came into Force in the 1st September 2006. The political instability of the past year in Germany, because of the National Elections, caused serious delays for the implementation of the new directives. The German Government expects to fulfil the new directives late this year, to be in time, concerning its new obligations. There is no available information for this implementation in Hellas. There is a consultation, currently in force, by the Ministry of Development, for the legislative alignment concerning the new directives, only for the sector of Public Supplies. Concerning the security of the electronic systems the findings show that among the reviewed Member States only Germany uses advanced qualified digital signature. France and Hellas have been introduced electronic signatures but not advanced ones. Finally United Kingdom and Ireland have the same point of view. Although these countries estimate that digital signature is an accepted method of authentication under the terms of the European Union Directive, without other controls and some other audit trail it does not necessarily prove a relative document authenticity.
5.5. Current Usage of e-Public Procurement Findings The desk research has focused on identifying the most important procurement portals and e-marketplaces in the Member States. The portals and e-marketplaces identified are all primarily focused on public sector institutions as buyers and private companies as suppliers. The identified systems are listed in the tables below. These tables are not an exhaustive list of public procurement solutions in Europe, but rather a list of the most important, in terms of use and focus from government institutions.
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Table 5.5: The use of e-Sourcing tools in the reviewed Member States Public Procurement portals e-SOURCING PHASES currenltly in use COUNTRY
WEB PORTAL
DESCRIPTION
NOTIFICATION PUBLICATION SUBM/RECEIPT EVALUATION of Tenders of Tenders of Tenders of Tenders
GERMANY http://www.evergabe-online.de/
E-vergaberis an online database with call for tenders.
Yes
Yes
Yes
No
GERMANY www.ausschreibungs-abc.de.
Electronic public procurement platform with calls for tenders in public and private sector.
Yes
Yes
Yes
No
GERMANY http://www.vergabe.nrw.de
Regional e-public procurement portal for the region of Nordrhein-Westfalen
Yes
No
No
No
GERMANY www.had.de
Regional portal for notification and publication of tenders (Ausschreibungen) for the region of Hessen.
Yes
No
No
No
GERMANY http://www.ausschreibungen-brandenburg.de
Regional portal for notification and publication of tenders (Ausschreibungen) for the region of Brandenburg together with Berlin
Yes
No
No
No
GERMANY www.ausschreibungen.hamburg.de
Regional portal for notification and publication of tenders (Ausschreibungen) for the region of Der Freien und Hansestadt Hamburg.
Yes
Yes
Yes
Yes
GERMANY http://www.ausschreibungsanzeiger-thueringen.de
Regional portal for notification and publication of tenders (Ausschreibungen) for the region of Thüringen
Yes
No
No
No
UNITED www.OGCbuyingsolutions.gov.uk KINGDOM
Central government procurement portals with information and tools about electronic public procurement and framework agreements.
Yes
Yes
Yes
Yes
UNITED www.csarss.net KINGDOM
Regional e-public procurement portal. Firms and individuals can access potential public procurement business opportunities.
Yes
Yes
Yes
No
FRANCE
www.ixarm.com
E-market place for the French Ministry of Defence
Yes
Yes
No
No
FRANCE
http://marches-publics57.com
Regional e-public procurement portal with information on notices.
Yes
No
No
No
FRANCE
http://www.ugap.fr/
A central purchasing agency that local, regional and national au-thorities can make use of. Allows bidders submit tenders electronically and organises reversed auctions for paper suppliers.
Yes
Yes
No
No
IRELAND
www.etenders.gov.ie
National, central e-public procurement portal. Online notification of tenders above and below threshold value. Reference point for all public contracts.
Yes
Yes
Yes
Yes
IRELAND
www.tendersireland.com
Site where all of the procurement opportunities advertised by Cen-tral and Local Government in Ireland (North and South) are pub-lished.
Yes
Yes
Yes
No
HELLAS
Information unavailable.
Information unavailable.
_
_
_
_
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Table 5.6: E-Public Procurement of Works, Services and Supplies PUBLIC CONTRACTS of COUNTRY
WEB PORTAL
DESCRIPTION
WORKS SERVICES SUPLLIES
GERMANY
http://www.evergabe-online.de/
E-vergaberis an online database with call for tenders. From February 1st 2004 itris possible to transfer the offers electronically.
Yes
Yes
Yes
GERMANY
www.ausschreibungs-abc.de.
Electronic public procurement platform with calls for tenders in public and private sector.
Yes
Yes
Yes
GERMANY
http://www.vergabe.nrw.de
Regional e-public procurement portal for the region of Nordrhein-Westfalen
Yes
Yes
Yes
GERMANY
www.had.de
Regional portal for notification and publication of tenders (Ausschreibungen) for the region of Hessen.
Yes
Yes
Yes
GERMANY
http://www.ausschreibungen-brandenburg.de
Yes
Yes
Yes
GERMANY
www.ausschreibungen.hamburg.de
No
Yes
Yes
GERMANY
http://www.ausschreibungsanzeiger-thueringen.de
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
UNITED KINGDOM UNITED KINGDOM
www.OGCbuyingsolutions.gov.uk www.csarss.net
Regional portal for notification and publication of tenders (Ausschreibungen) for the region of Brandenburg together with Berlin Regional portal for notification and publication of tenders (Ausschreibungen) for the region of Der Freien und Hansestadt Hamburg. Regional portal for notification and publication of tenders (Ausschreibungen) for the region of Thüringen Central government procurement portals with information and tools about electronic public procurement and framework agreements. Regional e-public procurement portal. Firms and individuals can access potential public procurement business opportunities.
FRANCE
www.ixarm.com
E-market place for the French Ministry of Defence
No
No
Yes
FRANCE
http://marches-publics57.com
Regional e-public procurement portal with information on notices.
Yes
Yes
Yes
FRANCE
http://www.ugap.fr/
IRELAND
www.etenders.gov.ie
IRELAND
www.tendersireland.com
HELLAS
Information unavailable.
A central purchasing agency that local, regional and national au-thorities can make use of. Allows bidders submit tenders electronically and organises reversed auctions for paper suppliers. National, central e-public procurement portal. Online notification of tenders above and below threshold value. Reference point for all public contracts. Site where all of the procurement opportunities advertised by Cen-tral and Local Government in Ireland (North and South) are pub-lished.
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Information unavailable.
_
_
_
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More than half the systems, 8 of the 14 systems in operation, are nationwide portals covering a broad range of sectors and institutions. Six of the systems are regionally based:
Marches-publics (France)
www.had.de (Hessen/Germany)
www.ausschreibungen-brandenburg.de (Brandenburg/Germany)
www.ausschreibungen.hamburg.de (Hamburg/Germany)
www.ausschreibungsanzeiger-thueringen.de (Thueringen/Germany)
www.csarss.net (Northern Ireland/United Kingdom)
All of the reviewed countries, 4 of the 5, have already established electronic public procurement systems. In Hellas important portal or e-marketplace for public sector procurement has not been identified. As indicated in the table 5.5, the procurement phase most frequently included in the public procurement solutions is the “Notification about Tenders” which is covered by all reviewed systems.
“Publication of Tenders” and “Management of
Receipts/Submission of Tenders” are covered by seven of the reviewed systems, and “Evaluation of Tenders” is only covered by three: www.OGCbuyingspublicsolutions.gov.uk , (United Kingdom). www.etenders.gov.ie , (Ireland) www.ausschreibungen.hamburg.de , (Germany), This tendency is being explained concerning the costs and benefits related to the use of electronic means in the four e-sourcing phases. The costs and benefits involved are indicative and very much dependent on selected technology, level of back-end integration, organizational set-up etc (see Appendix 6). The initial phases are relatively easy to automate, as it essentially means that notification and publication is done via a website. These early phases are also the stages characterized by the lowest complexity and the lowest degree of integration to
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e.g. back-end systems and management systems. The flow of communication between demand side and the supply side is entirely one-way from the public authorities to the potential suppliers. E.g. most of these systems are more simple oneway communication database systems. It is technically more complicated to establish two way communicating systems and routines, which involves receipt /submission and evaluation of tenders. As indicated in the table 5.6 the electronic Procurement of Public Supplies is the most frequent procurement done by public authorities on the studied portals. To a slightly lower degree is the electronic Procurement of Public Services. The electronic Procurement of Public Works has the least frequency. The study also demonstrates that all of the portals are multifunctional, e.g. being used for purchases of two or more types of e-Public Procurement at the same time. Finally the table below shows the level of use of electronic means for different types of purchases according to the available information of the relative portals. Table 5.7: Level of use of electronic means for different types of purchases e-Public Procurement of COUNTRIES
WORKS
SERVICES
SUPPLIES
GERMANY
to a low extend
to a low extend
to some extend
UNITED KINGDOM
to some extend
to some extend
to a large extend
FRANCE
to a low extend
to a low extend
to a low extend
IRELAND
to some extend
to a large extend
to a large extend
HELLAS
not used
not used
not used
The table indicates that goods are the type of purchase where the use of electronic means is most extensive. Electronic procurement in the sectors of Public Works and Services has been more demonstrated in United Kingdom and Ireland.
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Chapter 6 – Proposal for the Hellenic Implementation 6.1. Electronic Public Procurement in Hellas: A mountain to climb or Mission Impossible? Last years in Hellas because of the bureaucracy and corruption extension the transformation of paper based procurement to electronic could be a complex operation which requires actions and decisions at many levels beyond the simple transposition of the new rules at national level. Organizational, technical and institutional issues should be addressed in order to re-engineer existing processes for tendering and purchasing so as to be able to exploit the available Information & Communication Technologies solutions and tools. Adoption of the European Union legal framework for the use of electronic means in the public procurement process is a first significant step in order to remove legal uncertainties and establish the required safeguards for an open, transparent and nondiscriminatory electronic public procurement environment in Hellas. The move from paper based to electronic procurement is not without risks. Incorrect application of the new European Union rules and discriminatory technical solutions and practices can deter businesses from embracing electronic public procurement and effectively fragment the Internal Market. Correct and timely implementation of the new provisions on electronic public procurement will determine Hellas rope’s capacity to keep the market open for public procurement conducted electronically and reaching a critical mass of users (buyers and suppliers). The use of electronic means must guarantee in practice that any business in Hellas with a PC and a broadband internet connection can participate in a public purchase conducted electronically. While there are natural variations between the European Union countries, and differences between the strengths and importance of these initiatives, the research findings analysis indicate that there is a generic conceptual model in the view of a new reviewed national strategy which may be applied as a framework for interpreting the processes and experiences in Hellas concerning the development of e-public procurement.
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This conceptual model is based on the open and transparent British and Irish exemplar that author presented in the previous chapters. Hence the New Hellenic National Strategy must be independent from the general strategy of the Information Society or Digital Strategy initiatives. In the New Hellenic National Strategy four interlinked drivers must be included as the figure 6.1 illustrates: Figure 6.1: Conceptual Model for the New National ePP Strategy in Hellas
The conceptual model drivers as Legal Framework, Organizational and Management Structure, Human Resources and Knowledge and e-Sourcing Innovative Techniques as well, are directly influencing the sourcing activities in contracting authorities and suppliers and will thus influence the uptake of eSourcing. Finally, the growth of the uptake of e-Sourcing will have a positive impact (see Appendix 2) on the internal market, i.e. through easier access to contract opportunities or lower transaction cost. The various elements in the model are described in the following:
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6.2. Legal Framework As pointed out by experts(66), legal framework is an important element of the macroenvironment for e-business and e-public procurement. There are several pieces of legislation that are relevant for the use of electronic public procurement. The new procurement directives are naturally the most important part of the relevant legislation, but other areas including the legislation on digital signatures are also relevant. The forthcoming transposition of new public procurement directives into the Hellenic legislation of Public Works and Technical Services must be adopted as early as possible by the Hellenic Government. Hence it will provide the fundamental framework for the evolution of e-public procurement above the threshold in the coming years. This transposition would be worthwhile with modernizing and simplifying the current legislation with less rules and regulations. It is noticeable because nowadays the Hellenic Legislation of Public Works and Technical Services include:
29 Laws;
10 Presidential Decrees, and
14 Ministerial orders.
As national or sectoral e-Public Procurement strategies are put in place, it is important the new legal obligations initiatives should discourage anti-competitive practices and aim to maximize competition in the market place. Hence:
The Hellenic legislation must be aligned with the publication of a new General Law of Public Procurement based absolutely on the new European Union Directive (2004/18/EC) which will replace the complicated current legal environment.
Moreover three Presidential Decrees could be enough for the correspondingly legal implementation procedure details of Public Works, Services and Supplies.
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The Hellenic Government should give support to proposed amendments of the new legislation relating to the use e-sourcing techniques. Suppliers should also be kept informed of developments in policies, practices and processes. In addition efforts should be made to accelerate the development of standards associated with the Advanced Electronic Signatures initiatives for the security of new innovating sourcing systems
6.3. Organizational & Management Structure New organizational structures are required at national, sectoral and sub-sectoral levels in order to spearhead the drive towards e-Public Procurement. An overview of the new organizational structures that author suggests is illustrated bellow:
Figure 6.2: New Organizational Structure for the ePP implementation
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6.3.1. National Policy Unit A new discrete, integrated, dedicated and properly resourced National Policy Unit should be established. Its role should be to define national procurement and e-Public Procurement policy, in consultation with the National Operations Unit and sectors (such as the adoption of best practice on Public Works agreed by the Forum for the Construction Industry), and facilitate, co-ordinate and oversee its implementation across the public sector. This National Policy Unit will belong to the Hellenic Ministry of Finance according to the corresponding Irish Model. The National Policy Unit will be tasked with certain aspects of e-Public Procurement policy:
Public Procurement Legislation and Regulation;
Procurement Guidelines; Setting national policy in relation to e-Public Procurement;
Monitoring national procurement performance and activity across the sectors;
Facilitating and co-coordinating the provision of funding for e-Public Procurement initiatives.
6.3.2. National Operations Unit The National Operations Unit should be established as an independent authority (like almost the correspondingly model of the independent authority-ASEP-of the Hellenic Ministry of Internal Affairs) and will incorporate representations from the sectors and will have the responsibility for the implementation of national e-procurement strategies and policies developed by the National Policy Unit. It should also be responsible for the approval of sector level initiatives in conjunction with the National Policy Unit. The key responsibilities and activities of the National Operations Unit will be the following:
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Setting Operational Strategy for all aspects of the e-Public Procurement functions (Public Works, Services and Supplies) of the sectors in alignment with National Policy;
Monitoring e-Public Procurement sector activities to ensure consistency of approach;
Providing e-Public Procurement, legal support to public sector buyers;
Providing and managing e-Public Procurement systems and facilities;
National performance reporting and management information;
Promotion of e-Public Procurement across the public sector;
Determining national portfolio strategies and managing those categories of procurement designated to be managed at national level.
6.3.3. Sector e-Public Procurement Units In order for the national strategy to be implemented successfully, it must be driven through the sectors, i.e. Ministries of the Central Government Regional and Local Governments. Therefore it is recommended that Sector Procurement Units should be established for each sector. Their roles and responsibilities should be broadly similar to those of the National Operations Units to implement sector level strategies in alignment with the overall national e-Public Procurement strategy. Any new structures to be established should take account of existing procurement units and bodies where they exist (i.e. the Hellenic General Secretariat of Commerce which is responsible for the Public Supplies of the ministry of Development) and areas of potential overlap and duplication should be identified and resolved. Central government should be regarded as a discrete sector for this purpose, having many of the characteristics of a sector as outlined above. Without a sector focus, central government departments and agencies are unlikely to achieve the degree of co-operation required to exploit opportunities for improved e-Public Procurement.
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6.3.4. National Procurement Advisory Board A National Procurement Advisory Board is recommended to facilitate consultation between the National Policy Unit, the National Operations Unit and the sectors to ensure that their views are taken into consideration in the development and implementation of national procurement policy and strategy. 6.3.5. National Procurement Managers’ Forum A National Procurement Managers’ Forum is recommended to provide the opportunity for procurement managers in the sectors to come together periodically to share views, and to provide their inputs into national initiatives and policies.
6.4. e-Sourcing innovating Techniques A technology framework should be put in place in Hellenic Government to provide public sector buyers, suppliers and the general public with secure access to an integrated range of electronic Public Procurement systems of Works, Services and Supplies, using Internet technology. A national website is worthwhile as a gateway for users to access to e-Public Procurement
opportunities,
related
services
and
information
(i.e
www.esourcing.gov.gr) and will be under the responsibility of the National Operation Unit that author presented above. It is suggested that a national sourcing facility could be provided to support the secure transmission of tender documents between buyers and bidders. This facility could support the whole tendering process from tender document preparation through tender award to contract management for Public Works, Services, and Supplies. Therefore e-sourcing innovating techniques are essential for the e-Public Procurement development in Hellas. In the Literature Review Chapter Author presented the benefits of organizations using e-sourcing techniques. Currently, in Hellas the Open Procedure method of individual contracts in Construction Works and Technical Services is more often used by the relevant
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Hellenic Ministry. The following figure presents the suggested essential stages of the Open Procedure using internet Technology: Figure 6.3: Individual Contracts Open Procedure
Finally the figure 6.4 presents the open procedure, clearly displaying all activities that are being performed by the main actors (procurement officers, economic operators and an e-Sourcing system) in the different e-Sourcing phases: eNotification, e-Publication, e- Receipts/Submission of Tenders, and e-Evaluation. These phases are also clearly presented by Author in the Literature Review Chapter. Before the e-Notification and e-Publication phase there is a step which refers to the preparation of a virtual workspace in an e-Sourcing system where all information related to a specific call for tenders can be stored. In order to create and manage a Call for Tenders in an integrated e-Sourcing system, an isolated storage area is necessary where Notices, Contract Documents, Additional Documents, Tenders, etc. are safely kept. Furthermore, other information about the Call, like the associated persons involved, name of the specific Call for tenders, description, opening/closing dates, etc. are also stored in the Call for Tenders workspace.
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The activity diagram which follows, groups the phases and serializes all activities that needs to be performed in the whole sourcing process. Some tasks are subject to legislated time constraints that need to be respected by Contracting Authorities. Figure 6.4: Activity Diagram for the Open Procedure using e-Sourcing innovating techniques
To ensure that e-Sourcing is not creating new barriers to the internal market, interoperability is a very important and critical factor in a number of areas, including: across borders and between business-to-business and business-togovernment e-Sourcing systems.
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Regulation and standardization in the field are serious elements which are naturally determining for the level of interoperability. A widespread interoperability will increase e-Sourcing, whereas lack of interoperability will constitute a barrier. Security is also an important issue, as lack of trust in e-Sourcing security can represent a barrier to suppliers and buyers because some suppliers and buyers are concerned about using the Internet to transmit confidential information. Possible security flaws in transactions over the open internet will decrease confidence in eSourcing. Hence Advanced Digital Signatures must be adopted for the avoidance of market fragmentation.
6.5. Human Resources and Knowledge The human resources and knowledge factor refers to the availability of strategic and organizational capacity as well as technical Information Communication Technology skills at micro level (contracting authorities and companies). This constitutes an important driving force in the diffusion of e-public procurement in Hellas: Strategic capacity could include the e-business strategy and planning capability of public institutions to generate a market overview and select e-sourcing solution. Also the skill to assess compliance of e-public procurement systems with (future) regulation is important at the micro level. Organizational capacity is in many cases a question of organizational change readiness (i.e. the readiness of employees to employ new working processes, level of experience and trust in using electronic tools). Organizational capacity is also a question of having the knowledge and skills to re-engineer internal or external workflows to reap the full benefits from e-sourcing. Technical Information Communication Technology skills at micro level are often dependent on the level of experience and trust in use of electronic tools. While the majority of e-sourcing systems are actually fairly simple to use, some are more advanced. Thus, Information Communication Technology skills in general as well as specific skills related to the process of e-sourcing may be an essential factor to benefit from the advances of electronic procurement.
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In Hellas there is a lack of Information Technology competences among the employees. This will be a significant barrier for e-sourcing regarding the ability to understand technology and the ability to use the technology. The problem is more significant for Small and Medium Enterprises and in the latter stages of the esourcing process, where system integration internally and externally requires technical skills as well as redesign of internal business processes. The Hellenic ministry of education and employee affairs must be in co-operation with the National Policy Unit for the implementation of an appropriate educational training program relating with these Information and Communication Technology initiatives of ePublic Procurement.
6.6. High hopes for the Uptake of e-Sourcing in Hellas The realization of cost efficiencies is a key objective of the e-Sourcing initiatives. Cost is only one dimension against which sourcing performance should be measured. It is also expected that the introduction of e-Sourcing and the associated procurement process related changes will contribute to improved service levels for all parties (buyers, suppliers and users) engaged in public sector procurement. Co-operation across agencies and sectors is a very important issue. The organizational structures recommended in this strategy should facilitate and encourage this, but significant changes in behavior will also be required if cooperation is to be effective. The current public procurement environment in Hellas has identified inefficiencies in the processes of Public Works, Services and Supplies. E-Sourcing, through the provision of automated support for the transaction related elements of the sourcing process coupled with associated changes to the underlying business processes, affords the public sector the opportunity to realize efficiency gains through a reduction in the transaction costs associated with public procurement. Increase of the public sector buying power improves value for money. This leveraging of public sector’s buying power will result from sectors reducing the amount of non-contract purchasing, and from increased co-operation among sectors
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to combine their procurement requirements. The resulting increase in contract volumes can lead not only to a lowering of unit costs (through the realization of scale economies), but also to more favorable service and quality terms for sectors. E-Sourcing has a role to play in Competition and reliability of supply. Experience elsewhere suggests that e-Sourcing can help to promote competition in the supply base by increasing suppliers’ awareness of business opportunities through the electronic publication of tender opportunities and awards. E-Sourcing and associated supplier management practices can assist in developing reliable sources of supply by helping the buying agency to proactively manage its supply base. Through the standardization and streamlining of processes facilitated by both the automation and process changes associated with e-Sourcing, the required human resources may be reduced to support the transactional element of sourcing activities. These resources can then be concentrated on either the more strategic elements of the procurement process (e.g. strategic sourcing) or on the delivery of frontline services. It is important that the e-Sourcing initiative contributes to the overall competitiveness of the Hellenic economy by having a positive impact on the level of e-b adoption within the public sector supply base. The introduction of e-Sourcing in the public sector can contribute to improved recording, control and audit ability of public sector procurement by increasing, through automation, the ease with which information can be recorded and retrieved. Hellenic public sector is at the beginning stage in its use of Information Communication Technology. This must be a stimulus for both the Public and Enterprise sector, especially Small and Medium Enterprises, to adopt modern procurement technology and also to ensure the overall competitiveness of our economy through reduction in the costs within the public and private sector.
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Chapter 7. Conclusions Analysis of the background information of this study points to a various development of operational electronic public procurement systems in the selected reviewed Member States of European Union. The levels of sophistication and available functionalities vary enormously. This happens because no public e-Public Procurement system fully supports the new European Union Public Procurement Directives. The existing systems have been conceptualized, designed, and implemented prior to the establishment of the current European Union Public Procurement legislation. Despite their sophistication and advanced functionality, they do not fully operate according to the legislation. Hence, this is the challenge for the Hellenic Government. The successful implementation of the new directives will offer an opportunity to Hellas to cooperate in homogenizing their approaches to e-Public Procurement. To achieve this goal, the creation of a common conceptual view of the required procedures needs to be completed. The conceptual view will then be possible to be transposed to functional requirements and technical specifications, facilitating a solid basis for implementing systems fully compliant with the directives. Throughout the current study, public administrations confirmed the achievement of significant benefits from the implementation of e-Sourcing solution for both public and private sector participants. The organization of more transparent competitions and the creation of a more attractive procurement environment encourage suppliers to participate and compete for new business opportunities. The ongoing development of e-Sourcing systems is expected to offer new functionality, thus achieving additional savings. The continuous improvement in establishing generally available, secure and interoperable systems is expected to encourage more suppliers to participate in e-Public Procurement competitions.
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Therefore, early adoption of the new e-Public Procurement provisions is essential especially in Hellas to avoid barriers to and distortion of competition. It is also very important for the rapid development and the effective use of e-Public Procurement by economic operators. Hellas should deploy all efforts to comply with the Directives’ deadline. Cross-border coordination for this effort is necessary for establishing pan-European standards and common European Union approaches as well as in Hellas to e-Public Procurement.
Member
States
initiatives
can
assist
Hellas
to
reduce
implementation/ongoing costs on e-Sourcing, by sharing experiences and identifying solutions to common e-Sourcing issues because the erroneous or divergent interpretation of the new rules can create barriers and ultimately fragment to the Hellenic market. Diversity and incompatibility of technical solutions can render suppliers’ access to e-Sourcing systems impossible or discourage their participation because of additional difficulties or increased costs. The tools used in electronic public procurement systems are non-discriminatory, generally available and interoperable and by no means restrict economic operators’ access to the tendering procedure. This is very important because in Hellas the bureaucracy provoke extended corruption to all the levels of Hellenic Public Administration. Therefore electronic means offer more transparency as they allow for easy and timely dissemination of contract information and reduce opportunities and incentives for fraud. They can also improve the quality of government procurement management, including monitoring and decision-making. Hellenic Government must follows and works on interoperable solutions through dialogue between the different parties involved either at national or European level and trail developments in business-to-business (B2B) electronic commerce in order to avoid driving a wedge between private and public procurement markets. Greater efficiency will depend on the degree of automation in the field of public procurement as a whole. Electronic means in Hellas will offer new opportunities to streamline procedures and save suppliers time and money. Success depends on the degree of transformation of off-line practices to fully fledged online services. This requires rethinking the service provided and re-engineering the different processes.
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Hellenic enterprises expect e-sourcing to increase contract opportunities, facilitate cross border market access and make procurement procedures faster and cheaper. In the long run, computerizing public procurement practices will impact on the way in which national public purchasing practices are organized. Successful implementation of e-sourcing requires changing administrative practices, not only for the Public Sector but also for the suppliers of the Private Sector. The sooner such reforms are implemented, the better for Hellene citizens and Hellenic businesses.
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APPENDIX 1
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APPENDIX 2 Outcomes and the impacts of the transformation from paper based to e-tendering process
Source: Office of the Deputy Prime Minister in UK: “National e-Procurement Project”. Local eGov (2004)
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APPENDIX 3 Public procurement published in the official journal (EU15; 2002 figures)
Source: EU Commission, DG Internal Market Data
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APPENDIX 4 Different e-Public Procurement processes requirements
Source: Impact Assessment Action Plan on e-Public Procurement, EC (Dec 2004)
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APPENDIX 5 Information concerning the Current usage of e-Public Procurement especially in the Level of use for different types of purchases and in the Phases of e-Sourcing were taken from the relevant portals which included in the tables (5.5 & 5.6) of the Chapter 5 and also from the following list of the corresponding representatives and experts of the selected reviewed Member States via e-mail.
Countries
Representatives and Experts
Germany
Annet Arlt. federal Department for work and economics
Germany
Fr. Elschner. Federal procurement office
United Kingdom
Mike Killin. Assistant Director, E-Commerce Team, OGC Office of Government Commerce
United Kingdom
Peter Benneth. OGC – The Office of Government Commerce
France
Olivier Moreau. Représentant du Ministère de l’Economie, des Finances et de l’Industrie, Ministère de l'économie, des finances et de l'industrie
Ireland
Billy Noone. The Department of Finance Public Procurement Policy Unit
Hellas
Panagiotis Spatharis. Ministry of Development
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APPENDIX 6 Estimated cost and benefits of e-Sourcing phases
Source: Impact Assessment Action Plan on e-Public Procurement, EC (Dec 2004)
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