E-Procurement

The Italian national e-procurement system Annalisa De Paoli Consip Spa

eProcurement

The Italian Public Procurement Context

2

• Population: ca 60 mln

• PA employees: 3.400.000

• Contracting Authorities: 32.000

• Overall n. contracts: ca. 1500K (85%

below EU threshold)

• ca. €90 bln expenditure on G&S in 2013

• Ministries: 15

• ca. 20 Central Governing Bodies

• Regions: 20

• Municipalities: 8.101

• School system: 94 Univ. >10.000 Schools

• Health Sector: >300

ITALY

LOCAL PA

CENTRAL PA

INDUSTRY

• > 4.000.000 Enterprises: 98%

SMEs

Public Spending Optimization through

EPROCUREMENT

eProcurement

Local procurement bodies and eProcurement tools

3

• In Italy there are territorial purchasing bodies; some of them have developed e-Procurement tools on their own. The most important ones are:

The National Purchasing body (MEF/Consip platform)

eProcurement

Consip – Main activities

Implementation of the Programme for the

rationalization of public spending on G&S

CENTRAL PROCUREMENT

1

Support to individual administrations

VERTICAL PROCUREMENT

2

Respond to specific tasks assigned by law such as the

Digital Administration OTHER AREAS

3

eProcurement

Financial Act 2000 and eProcurement

Financial Act 2000 (law n.488 – Dec. 23, 1999 art. 26) laid down the foundations for the rationalization of public spending on goods and services:

• Consip received ISO 9001:2008 certification for ‘Conception, design, development and

implementation of acquisition initiatives for goods and services as the national central

purchasing body: frame contracts and e-marketplace’

Introducing innovative procurement tools and models aimed at public spending

rationalization, enhancing simplification, transparency and competition

MEF entitled Consip to

carry out the

implementation of the

Programme

Eprocurement for

Public

Administrations as a

Programm’s key

success factor

The Programme is part of a

bigger government project,

the e-Government plan,

aiming at implementing the

technological innovation

and digitalization process

within the Italian public

administration

eProcurement

Consip – a comprehensive eproc system

LEGAL OBLIGATIONS

Framework Contracts MEPA

Mandatory for Central PA

Mandatory for Local PA

below/above OJEU to use

Consip or Regional CPB

Mandatory for Health to use

Consip or Regional CPB

Framework Agreements

Mandatory for Central

PA

Mandatory for Local PA

below OJEU threshold

Above/Below OJEU Threshold

Below OJEU

threshold

Mandatory for Health to use Consip or Regional CPB electronic platforms

DPS

Above/Below OJEU

MARKET MAKER CA

Mandatory for Central PA

Consip as a CPB plays two different roles: CA and Market Maker

eProcurement

Framwork Agreements

Framework contracts

Kinds of FA

•1 supplier •Complete (all terms

fixed)

•Several suppliers •Complete (all terms fixed)

•1 supplier •Incomplete (not all terms laid down)

•Several suppliers •Incomplete (not all terms laid down) •2-stage: competition shall be reopened

A FA is “an agreement between one or more contracting authorities and one or more economic operators, the purpose of which is to establish the terms governing contracts to be awarded during a given period”

Where a FA is concluded with only one economic operator and all the terms of the contracts are laid down in the FA (“complete” FA), specific contracts can be awarded

eProcurement

Framework Contracts

The duration of the single

contract between P.A. and

supplier

Maximum allowed quantities

and good/service

characteristics

The main good or service

awarded

Framework contract duration

Supplier-side reference

point

Framework Contracts are awarded – through Consip – by the Ministry of Economy and Finance after either a traditional paper-based tender or an on-line economic and technical evaluation. Both these procedures allow the Public Administration to purchase goods and services while offering suppliers an opportunity to satisfy public demand, guaranteeing competition and transparency.

Each framework contract has certain parameters that are intrinsic to its structure:

Framework

contracts

Order data for central

Datawarehouse

Shipping or delivery

terms and conditions

eProcurement

Framework Contracts – the model

Fornitori Fornitori Consip Suppliers

Fornitori Fornitori PP.AA.

Payments

Delivery

On-line

Frame contracts

Contracts Reporting

Needs Feedback Monitoring Tools

Public Procurement Model

eProcurement

Framework Contracts – the - process simplification

Reduction of administrative procedures for both the P.A. (an order in a “click”) and the supplier side

The process for the purchase of goods and services

Consip’s activities

Demand analysis

Supplier Selection

Order

Litigation Contract award

Contract and Tender

documents

Goods services delivery

Payment

This purchasing tool is tailored to the provisioning of standardized goods and services and, through demand aggregation, allows for significant scale savings both in terms of processes and product costs

eProcurement

Framework Contracts – the phases

Open consultation with relevant market Demand analysis and market analysis Opportunity identification and Feasibility Study deliverable Economic design of the tender Procurement strategy deliverable

Tender documentation deliverable

Authority opinion acquisition

Tender documentation publication

Framework Contract signing

Tracking of orders issued and remaining product/service availability

Contract unit/quantity/ time extension (if necessary)

Supplier selection and contract award

Framework Contract management

Service level inspection

Surveys analysis

Complaint analysis

Corrective measures

Support to administrations during purchasing phases

Feasibility study and definition of procurement strategy

Service level monitoring

Multistakeholder

decision process

• Account Management • Legal Department • Sourcing • Research Unit (R&D) • Strategic Marketing •Supply Monitoring Unit •GPP

eProcurement

Framework Contracts – the advantages

The main advantages for the Public Administration entities that order:

The simplification or the purchasing process, with a drastic reduction of both costs and procurement time (no legal tender to perform) and greater transparency

Real competition between suppliers favored by the collaboration

of the Authorities

Reduction of Legal Costs tied to procedure litigation, which are payed for

by Consip

Better supply quality, whether product or service

Greater expense control through purchasing reports, even if

done by non-centrally located offices

The possibility to free up resources dedicated to the procurement process

and direct them to other activities

The opportunity to contribute to a “green public procurement” project

eProcurement

Consip’s Framework Contracts - 2013 results

• Consip’s framework contracts’ turn over in 2013 corresponds to about 2.5 billion euro

• Consip managed 54 framework contracts

• The most important framework contracts, in terms of total expenditure in €, are

electricity, fuel and heat, facility management, meal vouchers

• Contracts num. > 83.000

• Active buyers > 15.000

eProcurement

Framework Agreements – «incomplete FA»

Kinds of FA

Framework contracts

•1 supplier •Complete (all terms

fixed)

•Several suppliers •Complete (all terms fixed)

•1 supplier •Incomplete (not all terms laid down)

•Several suppliers •Incomplete (not all terms laid down) •2-stage: competition shall be reopened

• Where a FA is concluded with several economic operators and not all the terms of the contracts are laid down in the FA (“incomplete” FA), specific contracts can be awarded by the CAs by reopening competition “on the basis of the same and, if necessary, more precisely formulated terms, and, where appropriate, other terms referred to in the specifications of the framework agreement”.

• Nevertheless, “When awarding contracts based on a framework agreement, the parties may under no circumstances make substantial amendments to the terms laid down in that framework agreement”.

• Supply contracts (specific contracts, SC) based on FAs are concluded between a single CA and a single supplier.

eProcurement

Framework Agreements – Why may it be a more suitable tool

An incomplete FA concluded with several economic operators looks like an useful tool since:

makes several brands available

is able to meet heterogeneous preferences by providing the CAs with different solutions

leaves the CAs with more autonomy and flexibility, as it allows CAs to specify and personalise

awarding criteria and choose among different solutions

Allows the CAs to contract personalized additional services

Furthermore, it may offer to the CAs even more advantages with respect to an autonomously-

managed tender process:

may be managed through an e-platform

induces process savings in term of time and effort

reduces litigation risks for the CAs, as many of them are born and managed at central level

(Consip)

sets prices and condition even for future supplies (important in the quite frequent cases

where upgrades are needed), so easing repeated purchases

eProcurement

Framework Agreements – Main cons

Main drawbacks:

• Require reopening of competition higher process cost

• Overall, reduced competition potentially higher purchase prices

• Reduced number of competitors interacting repeatedly risk of collusion

• Some suppliers’ strategic behavior can distort the expected competition

Need careful and accurate design

eProcurement

Framework Agreements – An accurate desing

The main elements to be taken in account for a careful and accurate design:

– Duration and total amount of the Framework Agreement – Terms of the contract defined in the 1st stage/2nd stage – Number of lots – Minimum technical/economical requirements – Number of the winners of the first stage – Autonomy of the CAs about awarding criteria

Effects of different design aspects:

flexibility process savings

(for the CAs)

1st stage

competition

2nd stage

competition

Complete contract

Higher (exogenous) n

eProcurement

Framework Agreements – An accurate desing

• One “specific italian” type of Framework Agreement is the incomplete Framework Agreement (4th type) awarded by Consip with the aim to award, at the end of the II phase again by Consip, a National Framework Contract

• The process is the same, but the result is a Consip’s Framework Contract:

Tender documentation development and publication

Supplier selection and framework agreement award

Feasibility study and definition of procurement strategy

I PHASE - FA

Competition re-opened

Supplier selection

II PHASE - FC Consip

’s FC

• The main advantage is a more efficient and quick awarding of the Framework Contracts, especially in the following situations:

Most standard products/services Most frequent Framework Contracts Framework Contracts with lots that end in different times

eProcurement

Consip’s Framework Agreements - ongoing

Area Framework Agreements Status

Goods and Services TRAVEL & ACCOMODATION 1 AND 2 AWARDED/

PUBLISHED

Hardware, Software and ICT Services SERVER BLADE 2 AND 3 AWARDED/

PUBLISHED

Hardware, Software and ICT Services DESKTOP OUTSOURCING 1 AND 2 AWARDED/

PUBLISHED

Hardware, Software and ICT Services PRINT & COPYING MANAGEMENT AWARDED

Hardware, Software and ICT Services SYSTEM MANAGEMENT SERVICES AWARDED

TLC Services CONTACT CENTER - OUTSOURCING AWARDED

Hardware, Software and ICT Services APPLICATION SERVICES PUBLISHED

Hardware, Software and ICT Services SERVICES FOR OPEN SOURCE SERVER OPERATING SYSTEMS PUBLISHED

Healthcare DYALISIS PUBLISHED

Healthcare RADIOLOGY MACHINE PUBLISHED

eProcurement

Choosing the appropriate class

Multiple suppliers

Incomplete

Supply side

Demand

side

Heterogeneous

demand

Concentrated

Standardized

Fragmented

Specialized

Homogeneous

demand

Multiple suppliers

Complete

1 supplier

Incomplete

Framework Agreements

Simple contractsSimple contractsSimple contractsSimple contracts

Framework Contracts1 supplier

Complete

High effort

for POs

Low effort

for POsFlexibility

Centralization

• Choosing the appropriate class of Framework Agreements:

No safe and sound recipe: Consip identify the appropriate class of Framework Agreements, case by case through market analysis (buy and supply side)

eProcurement

DPS – Dynamic purchasing system

Definition of Dynamic Purchasing System:

is a completely electronic process for making commonly used purchases, the characteristics of which, as generally available on the market, meet the

requirements of the contracting authority, which is limited in duration and open throughout its validity to any economic

operator which satisfies the selection criteria and has submitted an indicative tender that complies with the specification

art 1.6 - EU Directive 18/2004

Regulatory framework

+ art 33 - EU Directive 18/2004

eProcurement

DPS – Dynamic purchasing system

The Italian Regulatory framework

The Italian law framework completely implemented the text of Directive 18/2004 in the "Regolamento di esecuzione ed attuazione del Codice dei contratti pubblici relativi a lavori, servizi e forniture“ - Regulations for the execution and implementation of the Code of public contracts for works, services and supplies. Particulary, the Italian framework defines: each contracting authorities can implement a Dynamic Purchasing system the Ministry of Economy and Finance is allowed to set up a DPS through Consip SpA available to all public administration

Consip has set up the following DPS: SDAPA Farmaci: on medical products SDAPA ICT: hardware and software and ICT services SDAPA Antisettici e disinfettanti: antiseptic and disinfectant products SDAPA Derrate: food products and disposable materials for catering service SDAPA ausili tecnici per persone disabili: assistive products for persons with

disability

eProcurement

DPS – Dynamic purchasing system

DPS set up by Consip

The DPS is a two-phase-process. The duration and characteristics are set up in the institution phase

Single product

category

PHASE 1

Consip

Contracting

Authority

application to the DPS

DPS definition and

activation 1

2

applications and renewal management

and 2nd phase setting up 3

simplified contract notice

creation / publication

4

tender formulation

and submission

5

simplified call

contract award 6

PHASE 2

Process

DSP creation

simplified

contract notice

simplified contract notice

Simplified contract notice

simplified

contract notice

Economic

Operators

eProcurement

International Experiences

• The strengthening of international partnerships, through the exchange and sharing of experiences with European and extra-European institutions, allows Consip to compare and verify the quality and innovation of the services it provides, to acquire and elaborate innovative ideas and stimuli and to engage in a closer cooperation with similar international entities.

• One of the main international activities carried out is the Participation in

European projects aimed at developing and disseminating eProcurement, foremost among them Peppol (Pan-European Public Procurement On-Line), an initiative that was launched in May 2008 within the framework of the European Program for Innovation and Competition (CIP)

• Starting from 1st September 2012 was formed the OpenPEPPOL Association, a non-profit organization based in Brussels, composed of public and private members of the Peppol community who assumed the responsibility to spread in Europe specifications and services developed within the project (www.peppol.eu)

eProcurement

Consip multi-tool eProcurement system

Optimization of price/quality ratio for goods and services

Simplification and transparency in procurement procedures

Autonomy in the choice of the product and the supplier (MEPA or FA)

HR requalification

Diffusion and sharing of methodologies and experiences

Cooperation with economic operators and suppliers associations

Eprocurement training desks

Challenges for PA

Spending control and cutting

Process simplification

Innovation

Change management

Alignment to EU law and regulations

Territorial development

Broadening potential market

Easier access to public procurement market

Higher transparency levels and respect of existing rules

Time and cost reduction for tender participation

Encouragement of aggregations and consortia to participate to big

tenders

Strengthening of relationship with public administrations

Supplier training desks

Value generation

Globalization

Competitiveness

Innovation

Red tape simplification

Challenges for suppliers

Benefits for PA

Benefits for Enterprises

CONSIP AS AN OPPORTUNITY FOR EPROCUREMENT