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 of Information and communications Technologies by government agencies and other actors of procurement community in conducting activities of Government Procurement Process Cycle for the acquisition of goods, works, and services and contract management ensuring good governance in the public procurement (Shakya, 2008). Objective is improved efficiency, cost savings and better governance through better information management resulting in stronger Public Financial Management systems
Challenges of the manual Procurement Process Inefficiency Process is cumbersome with large volume of paper work with limited storage space, uncoordinated purchases Poor Accountability High compliance cost, out dated market intelligence, non reliable data which affects audit trail and performance measurement. Low Value for Money - High transaction costs both on the part of the service providers and Government. These ultimately result in higher costs to the end user. Limited Transparency and Fairness - High risk of corruption, many complaints, limited competition, geographical inequality Poor Contract Management - Low absorption of funds and delayed 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 of certain phases. Easier access to market and tender opportunities through equitable geographical treatment - Bids can be submitted anytime and from anywhere to meet the bid submission deadline Effective resource planning due to comprehensive procurement information that improves financial planning and budgeting Timely payments to suppliers using electronic payment of invoices. This leads to better control of cash flow & efficient contract management which can lead to lower price quotations Standardization - e-procurement is majorly template-driven which makes 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 accessible due to automation of many procurement processes including supplier selection which increases market access and competition amongst bidders. Savings made due to more efficient internal administrative processes, reduction in archival and storage costs, paper consumption thus providing environmental and financial benefits. Reduced transactional costs on bidders which translate into lower prices quoted.
Benefits: Accountability & Transparency Public Procurement is the government activity most vulnerable to waste, fraud and corruption. E-Procurement strengthens Accountability by enhancing transparency and improves access to management information. Tender documentation and outcomes of the procedures are automatically posted online and available to all. Increased chances of winning in contracts because of reduction in "non-responsiveness" through automated compliance validation and predictability of the evaluation process. Improves confidentiality, integrity and authenticity of transactions between the procurement entities and the suppliers. Data collected supports mandatory reporting, audit and accountability 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 complex Reduced 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 & systems controls, vendor management & lock-in, political commitment Revenue Model Fees collected from system operations Bidder registration, Bidding document purchase & Administrative review 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 local developers through outsourcing development & implementation but ownership of the system remains with the government II. Customized Off-the-Shelf: An e-procurement application which could be configured or customized, and modules which are not available could be custom developed. This is cost effective and uses experience gained from other jurisdictions. III. Government to Government Support: The software system is provided free of cost, from another Government. The recipient then does customization, configuration, localization, and other technical 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 for the upcoming contracts, as the bidders have access to Annual Procurement Plans (APP), and access all government procurement opportunities with transparent information on procurements 2. Using the disseminated data CSOs can monitor procurements and contract performance and link the budget process to service delivery. 3. Buy local policies can be easily enforced and monitored to promote local products and technologies. 4. Using the accessible data, communities are expanding their negotiating 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 timely procurement information that creates the potential for regular analysis and reporting for many stakeholders on different aspects. The supply market analysis can be used to develop effective strategies 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 as competition. Data analysis on key indicators and tracking of trends and key behavioral patterns
Performance Management The procurement activities in the e-procurement system are coded against the Common Procurement Vocabulary (CPV). The CPV codes are harmonized with the budget classification codes/chart of Accounts to ease linkage of procurements to budgets at the Treasury and tracking procurements from planning to payments. Real-time reports can be generated ranging from number of tenders, total payments, procurement methods, number & type of registered suppliers, nationality of suppliers, most frequent procurement categories of contracts awarded, top procuring entities, 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 benefits e.g. cost savings, efficiency measures and improved governance Have the right Legislation, Institutional Arrangements and Governance Structures. Adoption of an appropriate Business model for the ownership, implementation and support and an acquisition model that optimises existing synergies. Strong inter-agency coordination mechanism with involvement of non-state actors such as business community and civil society Software and Data Ownership to allow Government rights to modify, 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 than the Vendors (ignore beauty parades). Have inbuilt risk based monitoring system based on pre-identified risk triggers to strengthen compliance monitoring Understanding implementation risks divided ownership of the programme, apprehension towards change, limited interoperability etc Change Management and Training are essential to provide a holistic framework to manage the necessary skills and changes in the functional, technical, organizational or regulatory aspects.
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