E-Tendering Innovations For Buyers. CPP SCM 2007 Symposium

Transcription

1 E-Tendering Innovations For Buyers CPP SCM 2007 Symposium October 2007

2 Agenda -Tendering Developments -International Tendering Experiences -Tendering Tools and Techniques -Conclusion 2 E-Tendering Innovations for Buyers

3 Tendering Developments 3 E-Tendering Innovations for Buyers

4 Tendering e-tendering can be described as the electronic publishing, communicating, accessing and receiving of all tender related information and documentation via the internet, thereby replacing the traditional paper based tender processes. The goal of tendering is to acquire goods and/or services from suppliers that best meet requirements Significant exchange of information occurs between parties during the tendering process Accuracy and efficiency of documentation is critical Electronic exchange of information speeds up the process, reduces errors and cost 4 E-Tendering Innovations for Buyers

5 Tendering Developments As more and more organizations realize the benefits of e-tendering, new features have been introduced. It can be beneficial to consider historical developments and supplier and buyer experiences from other buyers. Initially, tendering processes were paper based Early electronic systems were tied to dedicated networks and closed communities The growth of the internet facilitated meeting transparency requirements Electronic tendering systems were introduced in Canada in the 1990s As electronic tendering matures more and more tendering functions are being integrated with the procurement process 5 E-Tendering Innovations for Buyers

6 Recent Developments 2000s New functionality to support specific commodity procurement - Virtual Plans Rooms to facilitate construction procurement - Increased integration with procurement processes - Electronic Bid Submission - Integration with ERP and other cataloguing systems - Support for Reverse Auctions - Qualified Tendering - International growth and adoption of e-tendering practices 6 E-Tendering Innovations for Buyers

7 International Tendering Experiences 7 E-Tendering Innovations for Buyers

8 International Growth Public jurisdictions and private organizations throughout the world have improved the efficiency and transparency of their procurement processes through e-tendering - Various world bodies, including the WTO, the UN and IMF recognize the value of e-tendering and are working together to develop guidelines for its implementation - The World Bank ties its funding to transparency in procurement - The Organization for Economic Co-Operation and Development (OECD) is made up of representatives from 30 countries. OECD recommendations include: - Procurement should be viewed as core function of the organization - Procurement should be integrated with processes - Procurement should be supported by policy oversight 8 E-Tendering Innovations for Buyers

9 The Philippines: Case Study The Government of the Philippines has had tremendous success with the implementation of an e-tendering service recognizing benefits in expense reduction and improved transparency -Implemented by MERX in Faced many internal challenges common to other jurisdictions - Limited familiarity with new technology - Inconsistent processes - Reluctance to adopt new processes - Pilot focused on value of providing basic functions - Search and notification features - Electronic documents only 9 E-Tendering Innovations for Buyers

10 Philippines E-Tendering 10 E-Tendering Innovations for Buyers

11 Buyer Growth BUYERS BUYERS / / / / / / / / / / / / / / / / / / / / / / / /08 11 E-Tendering Innovations for Buyers

12 Posting Growth NEW NOTICES PER MONTH New Notices Posted / / / / / / / / / / / / / / / / / / / / / / /05 OPPS_PER_MTH 12 E-Tendering Innovations for Buyers

13 Supplier Growth SUPPLIERS / / / / / / / / / / / / / / / / / / / / / / / /07 SUPPLIERS 13 E-Tendering Innovations for Buyers

14 Savings Savings Commodities and Services 53% Various drugs/medicines 43% Equipment for electrification projects 42% Printing of letterheads 33% IT equipment & supply & construction material 25% Supplies/Material and Services 19% Construction suppliers, IT equipment 17% Electrical/mechanical Supplies 15% Various office supplies/equipment 15% Office supplies/materials 11% Vehicles & Supplies/materials The Government of the Philippines realized significant savings by implementing e-tendering 14 E-Tendering Innovations for Buyers

15 International Tendering Systems Australia - One of the early successful adopters of e-tendering - Reverse Auctions used for some procurement - Less successful with expanded functionality of QGEM Marketplace EP4C Initiative - Challenges with take up and low level or transactions - Expected savings tied to cataloguing and payment process not realized Denmark -ETHICS Electronic Tender Handling, Information and Communications System - Implemented in Double the amount of tenders were released using the same level of staffing 15 E-Tendering Innovations for Buyers

16 International Tendering Systems United Kingdom - Early adopters of new tendering functionality - ELTON Electronic Tendering Online Suffolk County Council - Support for Electronic Bid Submission via with reference PIN - Tendertrust - BIPS - Support for smartcard authentication - Failed due to issues with complex processes, requirement for local software, and supplier reluctance to use multiple systems - Large range of buyer value added services 16 E-Tendering Innovations for Buyers

17 Tendering Tools and Techniques 17 E-Tendering Innovations for Buyers

18 Tools and Techniques Most e-tendering sites include basic features to process and distribute tender notices and supporting documentation: - Search and Alert functions for suppliers to locate opportunities - Notice Creation functions to create notices and associate documents - Ordering functions to obtain the documents and amendments - Audit and tracking functions to support monitoring and follow up More sophisticated systems include additional features to further benefit both the buyer and supplier communities: - Virtual Plans - Qualified Tendering - Electronic Bid Submission - Reverse Auctions 18 E-Tendering Innovations for Buyers

19 Virtual Plans Room Construction procurement involves additional challenges. Tender documentation can be costly to produce and distribute. Virtual plans room functionality allows for the electronic distribution of plans and specifications -Virtual Plans room functionality helps facilitate access to drawings and specifications -Suppliers can save time by accessing information online -Sub-trades can view pertinent information without having to order complete plan sets -Buyers can be more efficient not having to deal with amendment and distribution issues -Unlike physical plans rooms: - Electronic plans are available as soon as issued - Plan takers and amendments are tracked to reduce the risk of noncompliant bids due to missing information 19 E-Tendering Innovations for Buyers

20 Virtual Plans Room Features Key features include: Ability to track distribution of electronic plans and specs Capability to identify and download drawings Support for hierarchy of drawings to better organize information Descriptive file names to facilitate finding information Preview / order concept for better buyer tracking Batch submission of files for more efficient processing of files Support for ordering paper copies to ensure equitable access 20 E-Tendering Innovations for Buyers

21 Electronic Plans and Specifications Screens From 21 E-Tendering Innovations for Buyers

22 Virtual Plans Room Challenges Perception of unfair practice if some suppliers not able to take advantage of receiving documents electronically Varied bandwidth availability can impact download times Printing challenges at remote locations Observations Adoption of Virtual Plans is growing within the industry Subtrades slower to take up use of electronic distribution than anticipated Ability to order paper copies is useful Local industry considerations need to be taken into account (i.e. role of Construction and Trade Associations) The UK Office of Government Commerce working together with suppliers noted the cost of preparing, copying and distributing construction tender documents was reduced by as much as 90% using electronic distribution 22 E-Tendering Innovations for Buyers

23 Qualified Tendering Qualified Tendering is typically a two or more stage bidding process in which potential suppliers expressing an interest in bidding are evaluated first. A list of qualified suppliers is then drawn up from the evaluation exercise for the sole purpose of inviting bids. -Also referred to as Dynamic Purchasing, Select Tendering, Pre-registered Tendering and Invited Tendering -Qualified tendering can be used to support the creation and use of Master Vendor lists, Vendor of Record lists, Standing Offers and Standing Arrangements 23 E-Tendering Innovations for Buyers

24 Qualified Tendering Process -Initial opportunity notice typically open to the public -Supplier arrangement opportunities open for extended period -Notice and supporting documentation provides qualification details -Supplier can submit proposal to join any time during the open period -Notification of admittance or rejection sent out -Call up notice published with specific requirements -Qualified suppliers invited to respond -Proposals evaluated on published award criteria 24 E-Tendering Innovations for Buyers

25 Qualified Tendering Advantages Better proposals from qualified suppliers Use of forms speeds up evaluation Less work evaluating proposals from non qualified vendors Less risk of non-compliant proposals Disadvantages Time required to identify suppliers Work to keep suppliers up to date Two cycles may be required to complete tendering 25 E-Tendering Innovations for Buyers

26 Electronic Bid Submission Electronic Bid Submission is the electronic transfer of proposal bid data between a potential supplier and contracting authority. The Electronic Bid Submission system includes safeguards to the ensure the security and authenticity of the material being transferred. - Typically used for the submission of completed buyer forms and supporting documentation - Legislation provides for electronic documents having the same binding effect as traditional contracts Ontario Electronic Commerce Act Canada Personal Information Protection and Electronic Documents Act Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures 26 E-Tendering Innovations for Buyers

27 Electronic Bid Submission Process 1. Tender prepared and posted authorized buyer given secure access for document retrieval once opportunity closes 2. Deadline and procedures for EBS clearly identified 3. Prospective bidders register, are authenticated, then given secure access key 4. Documents obtained bidder downloads tender documents and/or forms 5. Bidders may undergo prequalification process 6. Proposal response documents and/or forms submitted through EBS 7. System logs receipt and sends confirmation updates supported if done prior to closing 8. Submitted documents stored in a secure fashion with high level of security 9. Bids open by authorized buyer only after closing 10.Full audit trail of all actions maintained 27 E-Tendering Innovations for Buyers

28 Sample Bid Agreement Submit a Response for RFB-VT Please read the form below. Make a selection of whether or not your company is taking exception to any provisions within this solicitation, then select "Send Pricing" at the bottom of the page to continue. The undersigned Bidder hereby commits to the Metropolitan Water District of Southern California for The Network to perform the work as described in the documents listed below at the prices named in this response to RFB-VT-12345; agrees that this bid is a valid and binding offer that will form a contract upon acceptance; and certifies that its has satisfied itself as to the nature, location and conditions of the word and examined all documents listed below and agrees to all provisions and requirements of the contract: Without exception. With the exceptions as explained in the General Comments box of this bid. Bidder understands that by taking these exceptions this bid may be rendered nonresponsive. Details of all line items additional Info The Bidders further certifies that it has not, either directly or indirectly, entered into any agreement, participated in any collusion, or otherwise taken any action in the restraint of free competitive bidding in connection with this Bid; agrees to submit and sign this Bid electronically and that entry of the signature PIN below is Bidder's valid, authorized, and binding signature; and certifies that it has completed all required attachments. Bidder represents and warrants that the person signing this Bid is an authorized agent who has fulfilled all requirements to possess actual authority to bind Bidder to each and every term, condition, article and obligation of this Bid and any resultant Contract. Under penalty of perjury of the laws of the State of California, I declare that the forgoing is true and correct. Digital Signature (PIN#): From Attachments to Your Response: Would you like to attach one or more supporting documents with your response? Yes No 28 E-Tendering Innovations for Buyers

29 Implementation Considerations Supplier authentication process Electronic signature technique (not a signature) Legal equivalent of signature Digitized signature Special password Support for proposal updates prior to closing Secure storage of submitted files No ability to open bids prior to closing 29 E-Tendering Innovations for Buyers

30 Electronic Bid Submission Advantages Lower preparation cost and greater consistency Shorter turnaround time Easier to modify or withdraw bids anytime prior to closing Virtual elimination of errors when used with forms Ability to automatically eliminate noncompliant bids giving bidders an opportunity to make corrections No disadvantage to geographical location of suppliers Improved audit trail to support dispute resolution Disadvantages Time to upload package can be lengthy Risk of computer or network malfunction can impact bid submission Need for computer literacy and/or training Some uncertainty and reluctance with supplier community The Georgia DOT implemented online electronic bidding and has seen the level of Internet bid submission rates rise steadily 30 E-Tendering Innovations for Buyers

31 Reverse Auctions Online, real-time dynamic auction between a buying organization and suppliers who compete against each other to win a contract by submitting successively lower priced bids during a scheduled time period. - Controversial approach used to lower costs - Instant ranking approach can be used to consider criteria other than price - Reverse auctions typically used only where specifications can be determined with precision - Secure interactive system required to support Reverse Auctions 31 E-Tendering Innovations for Buyers

32 Preparation for Reverse Auctions Prior to opportunity posting: Establish effective criteria to pre-qualify suppliers Procurement requirements accurately specified A competitive supplier base & key suppliers are willing to participate Availability of intelligence on past transactions within the market Once conditions confirmed, notices published with process details: Auction scope and evaluation criteria Event and timing Rules for participation Valid bid increments Technical requirements for participation Auction held once proposals received and other award criteria have been evaluated 32 E-Tendering Innovations for Buyers

33 Operation of Reverse Auctions Qualified bidders contacted in advance to confirm participation i.e. 2 days Operation of auction overseen by contract authority bids collected electronically without intervention ranked automatically and bidders informed simultaneously number of bidders can be identified invalid bid notified immediately with explanation Auction closed according to predefined rules no new bids in set time bid time period ended 33 E-Tendering Innovations for Buyers

34 Reverse Auctions Advantages Potential to reduce acquisition costs Supports rapid procurement of products Disadvantages Higher level of training/support required to ensure participants know the process Emphasis on price and low margins leaves little room for innovation Risk of influencing the market to position vendor or disadvantage competitor The most qualified vendors may choose not to participate Hard to maintain quality Political considerations SME business is not supportive 34 E-Tendering Innovations for Buyers

35 Conclusion 35 E-Tendering Innovations for Buyers

36 Summary Most procurement departments are under pressure to reduce costs while maintaining procurement timeliness and quality. Inconsistent procurement policy can result in negative consequences: a. Cancellation of project(s) b. Cost overruns and delays c. Staff dissatisfaction d. Litigation e. All of the above Procurement policy must be insightful and reflect the needs of your organization. After policy is established selecting the right tendering tools and techniques through careful analysis and pilot programs can help meet your procurement challenges. 36 E-Tendering Innovations for Buyers

37 CPPC Forum 2005 Thank you 37 E-Tendering Innovations October for Buyers 4, 2005