E-Procurement Systems

Presenter: Cornelia K. Sabiiti

|Public Procurement and Disposal of Public Assets Authority | 28 February 2017|

Presentation Outline

• Concept of e-Procurement

• Challenges of the Manual Procurement System

• Benefits of e-Procurement

• Trends in Government to Business (G2B) Transactions

• Key features of electronic tendering

• Empowering Communities and Bidders

• Performance Management

• Critical Success Factors

Concept of e-procurement

‘E-Government Procurement (E-GP) is the collaborative use ofInformation and communications Technologies by governmentagencies and other actors of procurement community in conductingactivities of Government Procurement Process Cycle for theacquisition of goods, works, and services and contract managementensuring good governance in the public procurement (Shakya, 2008).

Objective is improved efficiency, cost savings and better governancethrough better information management resulting in stronger PublicFinancial Management systems

Challenges of the manual Procurement Process

• Inefficiency – Process is cumbersome with large volume of paperwork with limited storage space, uncoordinated purchases

• Poor Accountability – High compliance cost, out dated marketintelligence, non reliable data which affects audit trail andperformance measurement.

• Low Value for Money - High transaction costs both on the part ofthe service providers and Government. These ultimately result inhigher costs to the end user.

• Limited Transparency and Fairness - High risk of corruption, manycomplaints, limited competition, geographical inequality

• Poor Contract Management - Low absorption of funds anddelayed payments to suppliers which affects the prices quoted.

Challenges of the manual Procurement Process

Benefits of e-procurement: Efficiency

Reduction of the procurement cycle time due to the automation ofcertain phases.

Easier access to market and tender opportunities through equitablegeographical treatment - Bids can be submitted anytime and fromanywhere to meet the bid submission deadline

Effective resource planning due to comprehensive procurementinformation that improves financial planning and budgeting

Timely payments to suppliers using electronic payment of invoices.This leads to better control of cash flow & efficient contractmanagement which can lead to lower price quotations

Standardization - e-procurement is majorly template-driven whichmakes all transactions standardized and trackable. In addition,there are reduced errors in process and documentation for buyers.

Benefits: Value for Money

Transactional benefits: The Organization for Economic Cooperation and Development (OECD) estimates savings from e-procurement to be of 5-8 % of the procurement value. This is achievable through consolidation of tenders/framework agreements.

Competitive prices, because larger markets are made accessibledue to automation of many procurement processes includingsupplier selection which increases market access and competitionamongst bidders.

Savings made due to more efficient internal administrativeprocesses, reduction in archival and storage costs, paperconsumption thus providing environmental and financial benefits.

Reduced transactional costs on bidders which translate into lowerprices quoted.

Benefits: Accountability & Transparency

Public Procurement is the government activity most vulnerable towaste, fraud and corruption.

E-Procurement strengthens Accountability by enhancingtransparency and improves access to management information.

Tender documentation and outcomes of the procedures areautomatically posted online and available to all.

Increased chances of winning in contracts because of reduction in"non-responsiveness" through automated compliance validationand “predictability” of the evaluation process.

Improves confidentiality, integrity and authenticity of transactionsbetween the procurement entities and the suppliers.

Data collected supports mandatory reporting, audit andaccountability requirements

Indicators for Impact Assessment - Uganda

No Factor E-Procurement Impact indicators

1. Prices Reduced 5-8%

2. Procurement Cycle time Reduced 25-75% for complexReduced 80-90% simple

3. Transparency / Illicit practices

Reduction in cases reported

5. Audit capacity 100% for all parts of the cycle

6. SME business development Online business enablement

7. Inventory value Reduced 70%

Trends in G2B Transactions

• Business Model – Ownership, Operation & Support

Govt owned & operated,

Govt owned and privately operated

Public Private Partnership.

Depends on devt of ICT sector, information security & systemscontrols, vendor management & lock-in, political commitment

• Revenue Model – Fees collected from system operations

Bidder registration, Bidding document purchase & Administrativereview fees.

Penalties and fees from value added services.

Revenue can be based on % of contract, fixed fee per transaction,period or activity.

Trends in G2B Transactions

• Acquisition Model – Three industry practices -

I. Local Development and Implementation: Engagement of localdevelopers through outsourcing development & implementationbut ownership of the system remains with the government

II. Customized Off-the-Shelf: An e-Procurement application whichcould be configured or customized, and modules which are notavailable could be custom developed. This is cost effective anduses experience gained from other jurisdictions.

III. Government to Government Support: The software system isprovided free of cost, from another Government. The recipientthen does customization, configuration, localization, and othertechnical support with its own resources.

Trends in G2B Transactions

• Implementation Model

Phased rollout model

Phased module activation model.

Parallel bidding System (use of both manual and electronic forms)

• Integration / Interface between PMIS & IFMS

Budget management and Planning

Contract Commitments

Progress and final payments

Performance assessment

Reporting and analysis

Key features of an e-Procurement System

Procurement Portal,

Procurement Planning Chart of Accounts

Supplier Register- IFMS

Buyer Register IFMS

E-Bidding system,

E-Purchasing, e-framework Agreements & e- Auction

E-Payments system - IFMS

PMIS IFMS

Workflow Management

Contract Management

Inventory Management

Help Desk

Electronic tendering

Empowering communities & bidders

1. Timely resource planning and Capacity enhancement targeting forthe upcoming contracts, as the bidders have access to AnnualProcurement Plans (APP), and access all government procurementopportunities with transparent information on procurements

2. Using the disseminated data CSOs can monitor procurements andcontract performance and link the budget process to servicedelivery.

3. Buy local policies can be easily enforced and monitored topromote local products and technologies.

4. Using the accessible data, communities are expanding theirnegotiating power and to accurately require the Govt to justify,reduce or increase expenses on specific areas

Performance Management

E-Procurement also provides more significant and timelyprocurement information that creates the potential for regularanalysis and reporting for many stakeholders on different aspects.

The supply market analysis can be used to develop effectivestrategies in the context of national planning.

The PMIS provides intelligence on spending patterns, inventory,performance, compliance and enables strengthening of control,oversight, efficiency and planning capabilities as well ascompetition.

Data analysis on key indicators and tracking of trends and keybehavioral patterns

Performance Management

The procurement activities in the e-procurement system arecoded against the Common Procurement Vocabulary (CPV). TheCPV codes are harmonized with the budget classificationcodes/Chart of Accounts to ease linkage of procurements tobudgets at the Treasury and tracking procurements from planningto payments.

Real-time reports can be generated ranging from number oftenders, total payments, procurement methods, number & typeof registered suppliers, nationality of suppliers, most frequentprocurement categories of contracts awarded, top procuringentities, top suppliers, running contracts, completed contracts,rating/performance of the provider, complaints handled etc

Critical Success Factors Have a National Strategy, Political Commitment and sponsorship

Define objectives and outcomes - focus on demonstrable benefitse.g. cost savings, efficiency measures and improved governance

Have the right Legislation, Institutional Arrangements andGovernance Structures.

Adoption of an appropriate Business model for the ownership,implementation and support and an acquisition model thatoptimises existing synergies.

Strong inter-agency coordination mechanism with involvementof non-state actors such as business community and civil society

Software and Data Ownership to allow Government rights tomodify, update and control its own e-procurement system

Critical Success Factors Understand nature of procurement system, re-engineer the

processes and ensure seamless integration with existing systems

Install effective PMU into the driver’s seat who know more thanthe Vendors (ignore beauty parades).

Have inbuilt risk based monitoring system based on pre-identifiedrisk triggers to strengthen compliance monitoring

Understanding implementation risks – divided ownership of theprogramme, apprehension towards change, limitedinteroperability etc

Change Management and Training are essential to provide aholistic framework to manage the necessary skills and changes inthe functional, technical, organizational or regulatory aspects.

THANK YOU FOR YOUR ATTENTION

Q&A