Public eProcurement explained

The term Public eProcurement ("electronic procurement" in the public sector) refers, in Singapore, Ukraine, Europe and Canada, to the use of electronic means in conducting a public procurement procedure for the purchase of goods, works or services.

eProcurement compared to normal procurement allows greater transparency, better competition and easier communication for all parties.

Benefits of public eProcurement

Benefits of Public eProcurement can differ from benefits of electronic purchasing in private sector. Governments objective is not only cost efficiency but also obtaining the best value-for-money because of a high impact of public procurement on the market and the society. Commonly discussed benefits of the eProcurement in the public sector are as follows:

• Transaction costs reduction – Electronic automation of processes is supposed to replace various phases of procurement processed manually. It can significantly reduce wage costs, printing costs and make communication much easier for both contractor and supplier.^[1] There have been various studies estimating these cost savings. Potential administrative cost savings estimates are between 58 – 70% in IT purchases.^[2]
• Barriers to entry reduction – Electronic auction is a significant factor increasing the probability that the tender will be awarded to a SME company.^[3] It is also a significant factor increasing amount of offers in the tender.^[4] These aspects might be caused by smaller requirements of electronic tenders on the companies' capacity.^[5]
• Corruption control – eProcurement is considered to be suitable tool to prevent corruption as it can make tender process easier to monitor. Electronic tools are also believed to reduce amount of mistakes or errors made by humans involved.

Phases

The term of the Electronic Public Procurement can be defined as the usage of e-Government platform over the electronic resources (Internet and Web-based applications) to conduct transactions for purchasing the products and services from suppliers to authority's buyers.

The following sub-phases of the electronic public procurement process could be identified:

• eSourcing: Preparatory activities conducted by the contracting authority/entity to collect and reuse information for the preparation of a call; potential bidders may be contacted, if admitted by the legal rules, by electronic means to provide quotations or manifest interest.
• eNoticing: Advertisement of calls for tenders through the publication of appropriate contract notices in electronic format in the relevant Official Journal (national/EU); electronic access to tender documents and specifications as well as additional related documents are provided in a non-discriminatory way.
• eAccess: Electronic access to tender documents and specifications as well support to economic operators for the preparation of an offer, e.g. clarifications, questions and answers.
• eSubmission: Submission of offers in electronic format to the contracting authority/entity, which is able to receive, accept and process it in compliance with the legal requirements.
• eTendering: The union of the eAccess and eSubmission phases.
• eAwarding: Opening and evaluation of the electronic tenders received, and award of the contract to the best offer in terms of the lowest price or economically most advantageous bid.
• eContract: Conclusion, enactment and monitoring of a contract / agreement through electronic means between the contracting authority/entity and the winning tenderer.
• eOrders: Preparation and issuing of an electronic order by the contracting authority/entity and its acceptance by the contractor.
• eOrder Status: Preparation and delivery of status information against the eOrder.
• eInvoicing: Preparation and delivery of an invoice in electronic format.
• ePayment: Electronic payment of the ordered goods, services or works.

eInvoicing

eInvoicing allows an invoice to be sent and received by the customer electronically.eInvoicing is currently defined in multiple ways. A simple search finds 3 simple variations: “an invoice issued, received and processed electronically”, “an invoice sent by electronic means to the recipient”, and “an invoice received by the customer electronically”. Driving a single strategy requires a single definition; a common language. The best definition should be customer-centric. The same common language divides the tiers of eInvoicing based on cash management impacts.

• Tier 3 reduces delivery time (e.g. email delivery of pdf versions of invoices)
• Tier 2 reduces delivery time and digitizes the data for easier management by customers (e.g. electronic files (XML, EDI, flat, etc.) which match the sellers sales invoice)
• Tier 1 reduces delivery time, digitizes data and reduces reconciliation time (e.g. electronic files (xml, edi, flat, etc.) which match the customers purchase order, or web invoicing solutions).

Enabling systems

To successfully conduct electronic procurement across borders, eProcurement systems rely on some “key-enablers”

• eSignature: Data in electronic form which are attached to or logically associated with other electronic data and which serve as a method of authentication with regard to this data.
• eIdentity: Dynamic collection of all attributes, in electronic format, related to a specific entity (citizen, enterprise, or object) which serve to ascertain a specific identity.
• eAttestations: (Virtual Company Dossier): set of certificates and attestations, in electronic format, to be provided by a supplier to prove compliance with the selection and exclusion criteria of a procurement procedure.
• eCatalogues: Electronic supplier catalogue prospect used to prepare and submit offers or parts of them.
• eArchiving: use of electronic means for long-term preservation of documents in digitalised format, ensuring that they can be easily retrieved without conversions.

In Practice

Portugal

Beginning in 2009 Portugal implemented mandatory use of electronic systems for public procurement.^[6] The government has continued to utilize more pilot programs to continue the implementation of the program in Portugal and to establish the e-procurement process until the contract is awarded in a public procurement deal.

Ukraine

In Ukraine the government established the Prozorro system in 2014. It was a major innovation for the government as they switched to a more transparent e-procurement system based on OpenProcurement platform.

Germany

In Germany, e-procurement solutions must be used for many public procurement procedures.^[7] The data generated by these solutions is rarely analyzed because of the "complexity of the technological environment, the need to improve visibility of procurement information and enhance systematic data collection".^[8] For instance, the Bundesrechnungshof admonished that the German Defense Ministry procured 84% of its goods and services outside of its designated e-procurement system in 2013.^[9]

Sources

• Most information on European public procurement can be found at the European Commission web site.
• Information about Public e-Procurement system in Ukraine - Prozorro

References

1. GURÍN, Martin. Elektronické zadávání veřejných zakázek: cesta ke transparentnosti a bezkorupčnosti?. Prague, 2017.Charles University in Prague, Faculty of Social Sciences, Institute of Sociological Studies.
2. Ronchi. Stefano. Brun. Alessandro. Golini. Ruggero. Fan. Xixi. June 2010. What is the value of an IT e-procurement system?. Journal of Purchasing and Supply Management. 16. 2. 131–140. 10.1016/j.pursup.2010.03.013.
3. Book: Study on SMEs access topublic procurement markets and aggregation of demand in the EU. 2014. [Publications Office]. Wagt, Maarten van der., Bas, Patrick de., Yagafarova, Anastasia., Vincze, Máté Péter., Strand, Ivar., Orderud, Pernille.. 9789279299247. [Luxembourg]. 1044669772.
4. POČAROVSKÁ, A. (2018) The Aspects of Collaborative Procurement: Centralization, Scope and Different Market Structures. Master thesis. Prague: Charles University in Prague, Faculty of Social Sciences, Institute of Economic Studies. Supervisor, 2017. 74 pages. PhDr. Mgr. Jana Guitiérrez Chvalkovská
5. Prucek, P. (2015). Barriers to entry in public procurement: Evidence from the Czech Republic. Bachelor thesis. Prague: Charles University in Prague, Faculty of Social Sciences, Institute of Economic Studies.
6. Web site: E-procurement in Portugal.
7. Web site: Solbach. Thomas. 7 February 2018. Die Chancen des Vergaberechts strategisch nutzen - Innovative Möglichkeiten nach dem neuen Vergaberecht. 3 January 2022. Kompetenzzentrum Innovative Beschaffung.
8. Book: OECD. Public Procurement in Germany: Strategic Dimensions for Well-being and Growth. 2019-08-26. OECD. 978-92-64-36548-3. OECD Public Governance Reviews. 133. en. 10.1787/1db30826-en . 166827276 .
9. Web site: Bundesrechnungshof. 2015. Bemerkung Nr. 6 zum Einzelplan 14 Bundesministerium der Verteidigung (BMVg). 3 January 2022. Bundesrechnungshof.