1. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 1 Introducing Electronic Procurement Processes Sören Lennartsson Public Procurement Seminar Valletta, 26 January 2006

2. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 2 New Procurement Directives l Recognition of eProcurement (implementation mandatory) “Electronic means”, “in writing”, etc Rules for communication, tools, devices l Provisions for new electronic purchasing techniques (implementation optional) Dynamic purchasing system (not a procedure!) Electronic auction (a process, not a procedure!) l General provisions that may support eProcurement (implementation optional) Framework agreement Central purchasing body

3. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 3 New Procurement Directives l eProcurement – to be used at the discretion of the contracting entities l The general principles of equal treatment, non-discrimination and transparency apply l Specifically, tools for eProcurement shall Be generally available Be interoperable with products in general use Conform to security and access requirements l Electronic auctions can be used as basis for award of contracts l eCatalogues may be used although mentioned only in the preamble

4. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 4 Dynamic Purchasing System Summarised description : l A new, completely electronic system l In the framework of open procedure only l Open throughout its validity to any admissible tenderer l For commonly made purchases the characteristics of which are generally available in the market l Limited in duration (max 4 years) l With the purpose to create an open pool of potential tenderers and to increase competition through the use of electronic facilities

5. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 5 Dynamic Purchasing System Includes 2 steps : - Step 1 l Publication of a contract notice to announce the system l Submission of indicative tenders, which may be improved at any time - Step 2 l Publication of a simplified notice (invitation) l After at least 15 days, final invitation to submit a tender addressed to all economic operators admitted to the system

6. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 6 Electronic Auction Summarised description : l A new process allowing for repetitive bidding l Within the framework of the existing procedures l Applicable when contract specifications may be established with precision l Using e-devices for the submission of certain elements of the tenders (new prices / quantifiable values) l Automatic electronic evaluation (through a mathematical formula) for the ranking of tenderers

7. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 7 Electronic Auction Takes place in two steps : - Step1 : l Publication of a contract notice to announce the intention to hold an auction l use of an existing awarding procedure for the qualitative selection of participants l full initial evaluation of tenders - Step 2 : l Simultaneous invitation to the e-auction for the tenderers who have submitted admissible tenders l After at least 2 work days, e-auction takes place. A number of successive auctions phases possible l Award of the contract on the basis of the result of the auction

8. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 8 Outline of Procurement Steps l The traditional way of working may continue but with electronic messages replacing paper documents Some paper documents are easier to substitute Security focus on tenders, requests to participate l The time-limits may be shortened Follow up statistics Execute contract Award and dissem. Evalu- ation RFQ & Tenders Announce Specify Identify needs Notice Prior notice Invitation to tender Contract Notifications Delivery instruction Payment Request to participate Tender Contract Invoice Despatch advice

9. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 9 Notices and Tendering l Necessary transaction volumes and incentives for standardisation of formats can be reached through Central purchasing bodies Marketplace solutions l Some characteristics of current solutions Procurement process support/workflow (for the buyer) Organisation of tender document package –Largely textual/non-structured documents Services exist, for example –publication of notices (OJS eSender or manual form) –tender collection, including opening provisions Support for evaluation (even complex award criteria) Limited support to suppliers

10. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 10 Tendering Process Measures to consider l Define standard contract clauses l Standardise terminology l Standardise information / document structure elaborate on templates for calls elaborate on templates for tender l Standard forms

11. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 11 Repetitive Processes Frequent cycle Reporting Accou- nting Payment Invoice Goods receipt and control Confirm/ amend order Place order Catalogue updates Follow up statistics Execute contract Award and dissem. Evalu- ation RFQ & Tenders Announce Specify Identify needs Infrequent cycle Includes Framework agreements Dynamic purchasing systems

12. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 12 Repetitive Processes Example: Framework agreement (FW), decentralised buying Number of persons involved Number of instances Planning51 Framework agreement51 FW/price update210 Contracts based on FW1001000 Invoices1001000

13. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 13 Repetitive Processes l Some characteristics of current solutions High transaction frequency Only small variations in message format –Structured, standardised documents Integration of buyer’s and seller’s systems Automated process steps –Built-in transaction validation/control –Built-in authorisation/attestation mechanisms –Verification against framework agreement rules –Automatic attestation for payment possible

14. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 14 E-Catalogues l Does a price list/catalogue exist? Is it stable? Is it manageable? l The place of the price list/catalogue At the buyer’s, seller’s or third party’s site? Shopping portal vs. ”own” system Need for customised information? l How to control price list amendments? l How to normalise presentation? l Classification CPV is not enough Product classification and attribute codes needed

15. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 15 IDA e-Procurement l Based on the new legislative framework l To support the development of interoperable solutions l Developed functional requirements and guidelines for the technical implementation of electronic public procurement systems l Created learning demonstrators, simulating the public eProcurement functionality l It is hoped that IDABC eProcurement will continue the work. A cross-border project is proposed based on the UBL standard

16. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 16 To Consider l E- procurement requires a multi-disciplinary procurement units l An e-procurement study can be an important first measure l Consider how to involve all future users in the development process, in particular local authorities l What is the maturity level of IT Among buyers Among suppliers Suppliers of supporting IT services l Potential effects of framework agreement, dynamic purchasing systems, e ‑ auctions, central purchasing

17. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 17 Some Recommendations l Develop a national action plan l Plan for coexistence of traditional and electronic procurement l Plan for a step by step build-up and expansion of eProcurement l Include guiding and quality assuring tools from start l Begin with procurement areas that are easy to deal with electronically l Prepare good deployment strategies to engage the users of the system l Follow closely the European level developments on e-procurement, e.g. IDABC

18. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 18 Thank You! Questions and comments? Sören Lennartsson +46 31 232239, +46 733 307897 soren@ooidata.se