© 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

© 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

© 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

© 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

© 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

© 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

© 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

© 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

© 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

© 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

© 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

© 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 FW Invoices

© 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

© 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

© 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

© 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

© 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

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU. 18 Thank You! Questions and comments? Sören Lennartsson ,