1. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU How to get more money for those it’s really all about? Seminar jointly arranged by the Ministry of Finance of Turkey and OECD/Sigma The new public procurement procedures and instruments The Danish system on framework agreements, centralised and coordinated purchasing Presentation by Mr. Søren Jakobsen, CEO, SKI A/S Ankara, Turkey, 5-6 February 2008

2. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU The Danish system on framework agreements, centralised and coordinated purchasing Agenda l A few facts about the company SKI l The company’s new strategy l The future strategy of SKI SKI – the interactive company … Our vision for a “Centre for Public Procurement” Thoughts on competence development

3. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU A few facts about the company SKI The company is situated at the harbour front in Copenhagen Limited company established in 1994 Business model A percentage (typically 1%) of turnover on contracts from vendors Field of activity Contributing to greater efficiency in the area of public purchasing by establishing and maintaining attractive framework agreements Number of employees: app. 60 Number of framework agreements: app. 50 Owners Ministry of Finance (55%) KL, the National Association of Local Authorities (45%)

4. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU A few facts about the company SKI Present activities l Framework contracts (on large ’standardized’ procurement areas) l Advise on public procurement (tools for estimating procurement volume, data collection and handling, choice of supplier and solutions, procurement policy and strategy, green procurement, etc.) l Building of qualifications (user and networking groups, courses, seminars and conferences, training programs for vendors sales staff) l Publications and communication (guides, best practices, articles, PR, advice and aid regarding internal communication) l Tools (electronic tendering system, mini-tenders, e-auctions) l E-commerce initiatives (customer-related price lists, advice on implementation of e-commerce) l Assistance from external consultants (advise on what and how to buy, spend analysis, etc.)

5. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU A few facts about the company. SKI’s turnover broken down by customer segments. +18% +26% +17% +19% -9% Central government Municipalities Semi-public companies Regions (mill. DKK.) MA 50% 28% 11% +20% 9.400 m.DKK (=1.250 m.Euro)

6. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU IT Energy Tele & data communication Travel Food Furniture Office stationary and books Vehicles Equip. for research & science Misc. electronics & hand tools Kitchen equipment Misc. A few facts about the company. SKI’s turnover broken down by main product categories

7. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU A few facts about the company SKI’s focus on products and services Potential turnover Level of Standardization Large High Small Low SKI’s focus in 2003 SKI’s focus in 2006 IT-standard hardware IT-standard software Tele and data communication Vehicles Food Travel services Office stationary Electricity Gas IT- and management consultancy services Open Source Printed matters IT for education Building and construction Roadwork Cleaning Craftsman services Hospital articles Medicine Eldercare Special software Special hardware Ambulance-service & patient transport Business process services Clothing Window-cleaning Lawyer- and accountant- service Handicap aid Cleaning articles White goods Financial services Newspapers/ magazines Advertising Office machines 8 billion DKK 4 billion DKK 132 billion DKK Furniture Fuel Hospital equipment IT-outsourcing Scanning of construction drawings Mail and parcels IT-outsourcing: -Mainframe & Midrange -Distributed environment & application handling Engineering services Courses & conferences Hearing aid Catering services Guard services SKI’s focus in 2009 Temporary workers

8. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU SKI’s new strategy Background l The goals of the current strategy from 2002 are accomplished. l The Danish State has established their own procurement programme. l A major restructuring of the Danish public sector – fewer but larger local governments – took effect on January 1, 2007 l Local procurement networks have been established.

9. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU SKI’s new strategy Overview What is new in SKI’s strategy? 1. Creating a foundation for further gains from procurement by pooling and co-ordinating procurement volume and a closer involvement in the customer's procurement. 2. Strengthened focus on local government. 3. Improved documentation of savings both by product group and by customer. 4. More dynamic financing of SKI’s activities 5. Partnerships with the leading and interested customers 6. Easier use of SKI’s framework contracts through further development of the contracts’ content, connection and accessibility. 7. Strengthened activation of suppliers. Local as well as international. 8. ”Packaging” of framework contracts, services and communication so that SKI is able to offer coherent solutions and meet the customers’ political agenda, and thereby secure managerial impact and support. 9. Securing a more qualified procurement debate through documentation and presentation of facts. 10. Investment in renewal.

10. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU SKI’s new strategy Mission SKI creates documented increased returns of scale in public procurement by pooling volume, qualifications and system development for the benefit of SKI’s customers. Through close cooperation with customers and suppliers SKI secures attractive framework contracts. SKI’s framework contracts make it easy for the public sector to purchase the needed solutions, products and services in the cheapest possible way while showing environmental, energy and social responsibility. SKI’s earnings must make investments in new procurement initiatives possible. Initiatives that must be prioritised in a commercial way.

11. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU SKI’s new strategy Vision SKI strives to be a central player, that makes public procurement more effective and develops it. SKI strives to inspire and support public organizations and their purchasing agents in achieving gains through efficient procurement and help promote an effective public administration. Based on openness, equality and qualifications SKI strives to be the natural and inspiring focus point for all players involved in public procurement. SKI must therefore be an innovative, effective and challenging workplace, that is able to attract and develop the best employees.

12. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU SKI’s new strategy Goals l Growth SKI’s turnover must increase to 13 billion DKK by 2012 The turnover from the municipalities must increase to 50% by 2012. Growth and new initiatives must be self financed. The average return before tax in the years 2008 to 2012 must be 1 million DKK per year. l Trust For each tender the coordinated turnover must be at least 25%. For each tender a documentation of savings that is accepted by customers must be made. During 2008 a minimum of 5 partnerships between customers and SKI must be established, and the number must grow by 2 each of the following years. l Qualifications There must exist a plan for competence development for each employee. Change of staff (employee initiated) must not exceed 10% per year.

13. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU 1. Attractive framework agreements 1. Attractive framework agreements 2. A new order of priority between customers 3.Cooperation 4.A new order of priority between contract areas 5.An attractive and professional workplace 6.A synergy with the suppliers 7.Electronic purchasing 8.Main issues Product and market insight Coordinated volume Intensification of competition between suppliers, including foreign Improved documentation of prices and savings Prioritized and organised sales force A concept for partnerships with key customers and local procurement networks Development of SKI’s financial model Customer groups Experience groups Centre for public procurement Owners and political support Prioritising contracts Focus on most saleable contracts Focus on use of existing contracts instead of establishing new contracts The health area Further development of models for tendering Standardisation like The Danish Ministry of Finance Regional sub-contracts Helping with customers’ individual and sector specific tenders Attracting and developing the employees Internal knowledge sharing and exchange of qualifications Tight project planning Strengthened financial control Involvement of the suppliers’ sales organizations Supplier follow-up Coherent IT strategy E-catalogues E-auctions, mini tenders and dynamic purchasing systems Easy access to relevant information CRM-service Environment Energy Social clauses SMEs Why? How? Priority SKI’s new strategy. Relationship between vision, sub- strategies and specific actionplans - SKI strives to be a central player, that makes public procurement more effective and develops it. - SKI strives to inspire and support public organizations and their purchasing agents in achieving gains through efficient procurement and help promote an effective public administration. - Based on openness, equality and qualifications SKI strives to be the natural and inspiring focus point for all players involved in public procurement. - SKI must therefore be an innovative, effective and challenging workplace, that is able to attract and develop the best employees.

14. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU SKI’s new strategy The 8 dimensions of priority Coherent solutions Dialogue Easy does it One to many Knowledge and documentation We Business Increased use of existing initiatives All initiatives must be evaluated on the following scales: Isolated solutions Monologue Do it yourself One to one Feelings and beliefs I ”Window-dressing” Launching of new initiatives

15. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU III. Coordinated volume l The customers commit themselves to buy a specific amount from a specific supplier on the framework contract. The supplier gives an extra discount. Sub-strategies and specific actionplans Attractive framework contracts Committed and coordinated volume Today In the future Time TenderingBuying Before the tender The customer chooses one of the suppliers on the framework contract The customer offers full supplier independence amongst the suppliers on the framework contract I. Commitment to using the contract l Customers, typically from the customer group, commit themselves to use one of the suppliers on the framework contract when it is established. This is noted in the material presented in the tender process. II. Coordinated volume l The customers commit themselves to buy a specific amount from a specific supplier on the framework contract. The supplier gives an extra discount. III. Lowest daily price l A customer obtains the price for the day from a specific supplier on the framework contract for a specific product. l SKI obtains support from other customers. IV. E-auction / Mini-tender l The customers obtain a price for a specific product/service with a specific volume and period of time. (Until now only used in connection to the Danish state’s procurement programme and SKI’s contract in regard to canteen service) I. Commitment to using the contract l Customers, typically from the customer group, commit themselves to use one of the suppliers on the framework contract for all procure- ment within the contract’s coverage. II. Commitment to using a standard assortment from one supplier l Customers commit themselves to use a pre-defined assortment of products/services from only one specific supplier. The supplier is chosen by the customer group, V. E-auction / Mini-tender l The customers obtain a price for a specific product/service with a specific volume and period of time. l SKI coordinates and obtains support from other customers. l If the mini-tenders are complex external consultant services can be involved. IV. Lowest daily price l A customer obtains the price for the day from a specific supplier on the framework contract for a specific product. l SKI obtains support from other customers. Yearly bonus to the customers when the agreed volume has been reached +0,05% 0,10% +0,15%

16. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU The future strategy of SKI Primary focus points 1st wave2nd wave 3rd wave Market orientation Revitalisation of the organisation Processes and systems Building up of competences A deepening and broadening of partnerships Knowledge sharing & value- based leadership 20052007

17. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU The future strategy of SKI SKI – the interactive company. SKI the interactive company Externally Internally Value-adding Productivity Talented colleagues Supporting technologies Unique organisation Good management CRM ETHICS ERP Electronic archives Partnerships Structural frame Building Culture Values Knowledge- sharing Growth Simplification Prioritising Management training Attractive work-place Competence -building Recruiting Job appraisal interviews Curiosity Social competence

18. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU The future strategy of SKI SKI’s vision: ”Centre for Public Procurement” l Aims: Openness Cooperation –internally and externally Flexibility Proximity to customers, suppliers and cooperating partners Vision: SKI wants to be the natural and inspiring focus point for all persons and organisations involved in public procurement – in an attractive building. l The elements of the concept Other organisations are invited to become tenants Project facilities Seminar and conference facilities Showroom facilities Service for visitors

19. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Sub-strategies and specific action-plans An attractive and professional workplace Why is competence development so important to SKI? l Customers’ expectations l Customers' professionalization l Customers ”deposit” their success at SKI l Own ambitions regarding market orientation, dialogue with top management and sale of solutions (instead of products/services) l Rising demands on competencies as a result of diminishing savings from procurement l The right customer-solutions can only be found through close collaboration between organisations Demands on competencies Competence development Start of previous strategy in 2002 Today Time l SKI has been through a fantastic turn-around… l The competencies of management and employees are fully utilized l More and more new projects and activities reveals the need for competence development

20. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Thank you for your attention! Comments and questions …