e-ProcurementBest practices in Public Procurement

Ashish BhatejaAshish Bhateja

Sr. Procurement SpecialistSr. Procurement Specialist

The World BankThe World Bank

Procurement can mean different Procurement can mean different

things to different peoplethings to different people

What is eWhat is e--ProcurementProcurement

• e-Procurement is the application of

technology to public procurement

• An e-Procurement implementation

strategy is a management and reform

program

• It applies to the acquisition of works,

goods and services

• Objectives include to improve efficiency

and management

What eWhat e--Procurement is NOTProcurement is NOT

• e-Procurement is not a software program

• e-Procurement is not centralization of

procurement

India experienceIndia experience

�� Early MoversEarly Movers

�� DGS&D, Indian RailwaysDGS&D, Indian Railways

�� Andhra PradeshAndhra Pradesh

�� ONGC, GAIL, BHELONGC, GAIL, BHEL

�� Increasing adoptionIncreasing adoption

�� All Central MinistriesAll Central Ministries

�� Karnataka, Rajasthan, Tamil Nadu, Orissa, Karnataka, Rajasthan, Tamil Nadu, Orissa,

Goa, Delhi, Goa, Delhi, ChattisgarhChattisgarh, HP, HP

e-Procurement is a mission mode project under eBharat project

funded by the World Bank

Begin goals are differentBegin goals are different

ECONOMIC DEVELOPMENTBusiness development

CompetitivenessTechnological Enablement

Market Access

ECONOMIC DEVELOPMENTBusiness development

CompetitivenessTechnological Enablement

Market Access

GOVERNANCETransparencyAccountability

IntegrityPublic Confidence

GOVERNANCETransparencyAccountability

IntegrityPublic Confidence

EFFECTIVENESSEfficiency

Informed ManagementValue-for-money

Quality Outcomes

EFFECTIVENESSEfficiency

Informed ManagementValue-for-money

Quality Outcomes

E-GPE-GP

International experienceInternational experience

Governance

Italy, Brazil,

Australia, Thailand,

India

Efficiency

United States, UK,

Germany

Economic

Growth

Hungary, Korea

Illustration: Illustration: GePSGePS, Korea, Korea

Public Organizations

(Buyers)

PPS Operation

Private Businesses(Suppliers)

Use

Certification-Related agencies

Ministry of Government

Administrationand

Home Affairs

Construction-related

Associations

Korea Financial Telecommu-

nications& Clearings

InstituteSuretyinsurance

Ministry of FinanceAnd Economy

Construction CALS

Linkage

Portal

Integrated

notice

Commercial products catalogue

Contracted productscatalogue

Goods classification

system

ee--Procurement systemProcurement system

ee--Procurement ASPProcurement ASP

Supplier supporting serviceSupplier supporting service

Unit contract systemUnit contract system

Linkage

User registration E-Guarantee

Supplier’s Performance

E-Payment

Documents distribution and outside linkage

Illustration: Illustration: GeBIZGeBIZ, Singapore, Singapore

Organs

of States

Statutory

Boards

Government

Procurement

Executives

Ministries

Workplace

Public Sector

IntranetInternet

Users Users

Partner Enterprise

InternetInternet

Local

Suppliers

Global

Suppliers

Other

MarketPlaces

GeBIZ

Fixed line,

Dial - up,

Broadband,

Wireless

etc.

•GeBIZ is an Integrated One-Stop Electronic Business Centre which

provides a convenient channel for Public Sector officers to interact with

their trading partners for procurement and revenue tender activities &

enables suppliers to trade with the entire Government

•Joint collaboration between Min of Finance, Defense Science & Tech

Agency and Infocomm Development Authority of Singapore

Dimensions of eDimensions of e--ProcurementProcurement

LeadershipLeadershipProcess

Re-engineering

Technology

Change

Management

TechnologyTechnology

�� Relates to technological standards and Relates to technological standards and

rulesrules

�� Benefits all stakeholdersBenefits all stakeholders

�� Transactional efficienciesTransactional efficiencies

�� Improved access & management of Improved access & management of

informationinformation

�� Easier document transmissionEasier document transmission

�� Standard processesStandard processes

Business Process ReBusiness Process Re--engineeringengineering

ee--GP is more a business initiative aimed at GP is more a business initiative aimed at procurement reforms rather than a procurement reforms rather than a technology implementation, leading to:technology implementation, leading to:

�� Simple, consistent, modern processesSimple, consistent, modern processes

�� Enhancing management and audit dataEnhancing management and audit data

�� Better supplier managementBetter supplier management

�� Efficiency, security and lesser need for Efficiency, security and lesser need for discretiondiscretion

�� Improved understanding through structured Improved understanding through structured training/ capacity building initiativestraining/ capacity building initiatives

Change managementChange management

Most critical dimension for success of eMost critical dimension for success of e--GP reformsGP reforms

�� Business leadershipBusiness leadership

�� Process dimensionsProcess dimensions

�� IT dimensionsIT dimensions

�� Institutional arrangementsInstitutional arrangements

�� Responsibility & AccountabilityResponsibility & Accountability

�� Training & capacity buildingTraining & capacity building

�� Stakeholder participationStakeholder participation

Elements of eElements of e--GP strategyGP strategy

Information

& Comm Technology

Business Process

Re-

engineering

Change

Management

Policy

Platform

Process

Where to start?Where to start?

Execution Securities

High Volume, Low Value

Tendering

Low Volume, High Value

Purchasing

Preparation Selection

ChinaCanadaJapanArgentina

BrazilArmeniaHungaryIndonesia

AustraliaBangladesh

There is No Single Starting PointThere is No Single Starting PointThere is No Single Starting Point

Scope of eScope of e--ProcurementProcurement

Supplier Supplier SelectionSelection

NotificationNotification

PublicationPublication

Procurement Procurement

NeedNeed

SubmissionSubmission

EvaluationEvaluation

FeedbackFeedback

MonitoringMonitoring

PaymentPayment

OrderingOrdering

UPSTREAMDOWNSTREAM

Sub Elements of eSub Elements of e--Procurement Procurement

processprocess

�� Government procurement processes Government procurement processes

require four different systems require four different systems

�� Contract DevelopmentContract Development

�� Tendering or Bidding,Tendering or Bidding,

�� Purchasing or Quoting, Purchasing or Quoting,

�� Contract Management or Execution Contract Management or Execution

e-Procurement Frameworkee--ProcurementProcurement FrameworkFrameworkPortal to e-Government Procurement

Public PurchasingPublic Purchasing Public TenderingPublic Tendering

Contracted Suppliers

Buyer Profiles

Search & request info

RFQ & Reverse Auctions

Shopping trolley requisition

Order approved / sent / accepted

Receipt of goods / services

Supplier invoice & payment

Supplier performance

Transaction reports

Buyer fees Supplier fees

Summary reports

Contract

Development

Contract

Development

Contract

Managem

ent

Contract

Managem

ent M

anagem

ent

Managem

ent

Form

atForm

atPlan

Plan

Single Supplier Registry

Single Buyer Registry

Drawings Online

Core O

nline C

ontract

Managem

ent

Goods &

Services

Constru

ction

Core T

ender D

evelopment

ETA

Program

Development

Project

Management

Tender advert,

lodge & award

Tender

Watch

FMIS

Data Warehouse & Reporting

Inventory

Government Contract Policy & Management

The functionality is complex (but not excessively so) and there is more than one possible starting point

Phased implementationPhased implementation

Phase 1 Information Service

Tender AdvertisingDocument Down-LoadsResults Disclosure

Bid QualificationBid Up-LoadsBid Processingetc

Phase 2 Contract Management

Contract Development

Phase 3a Catalogue Purchasing

Framework/Rate ContractsOnline TransactionsOnline Workflow

Phase 3b Online Bidding

Reverse Auctions

Phase 1 Information Service

Tender AdvertisingDocument Down-LoadsResults Disclosure

Bid QualificationBid Up-LoadsBid Processingetc

Phase 2 Contract Management

Contract Development

Phase 3a Catalogue Purchasing

Framework/Rate ContractsOnline TransactionsOnline Workflow

Phase 3b Online Bidding

Reverse Auctions

E-TenderingE-Tendering

E-Contract Management

E-Contract Management

E-PurchasingE-Purchasing

Typical Implementation ScheduleTypical Implementation ScheduleYear 2 Year 3Year 1

Central Site, TendersCentral Site, Tenders

Bid SubmissionsBid Submissions

Results & PlansResults & Plans

Auto Search Auto Search

`Online PaymentsOnline Payments

Analysis & Scoping Analysis & Scoping

`Standard Documentation & TemplatesStandard Documentation & Templates

`Policies, Reg & Guides Policies, Reg & Guides

`Bid Documentation & Plans Bid Documentation & Plans

`E-Contract Management - ConstructionE-Contract Management - Construction

`Goods & Services CataloguesGoods & Services Catalogues

Price Models

`Purchase Orders & InformationPurchase Orders & Information

`E-TransactionsE-Transactions

`Reverse AuctionsReverse Auctions

`Enabling Strategies – Infrastructure Enhancement, Business / Gov Connectivity & Awareness,

Legislation, HR.Policy, etcetera

Value Added ServicesValue Added Services

Contract Contract

EE--ManagementManagement

Low Value, High VolumeLow Value, High Volume

ProcurementProcurement

(E(E--PURCHASING)PURCHASING)

High Value, Low VolumeHigh Value, Low Volume

ProcurementProcurement

(E(E--TENDERS)TENDERS)

Governments Governments BusinessBusiness

Contract DevelopmentContract Development

Web Based Contract Web Based Contract

ManagementManagement

Government Electronic Government Electronic

MarketMarket

RegistriesRegistries

CataloguesCatalogues

Electronic Tender LodgementElectronic Tender Lodgement

Email AlertsEmail Alerts

Queries & AdviceQueries & Advice

Tender AdvertisingTender Advertising

Policies & LegislationPolicies & Legislation

Departments

Department A

Department B

Department C

Department D

Department E

Department F

Department G

e-Procurement Strategyee--Procurement StrategyProcurement Strategy

Businesses

Business A

Business B

Business C

Business D

Business E

Business F

Business G

Departments

Department A

Department B

Department C

Department D

Department E

Department F

Department G

ee--Procurement Separate PortalsProcurement Separate Portals

Businesses

Business A

Business B

Business C

Business D

Business E

Business F

Business G

E-GP Portals

www.Version A

www.Version B

www.Version C

www.Version D

www.Version E

www.Version F

www.Version G

High set up & maintenance

cost

High set up & High set up &

maintenance maintenance

costcost

Finance management

centric

Finance Finance

management management

centriccentric

Legacy Systems

Legacy Legacy

SystemsSystems

Open standards

based

Open Open

standards standards

basedbased

Market centricMarket centricMarket centric

Web systemsWeb systemsWeb systems

Existing Existing

Banking Banking

InfrastructureInfrastructure

FIN

AN

CIA

L S

YS

TE

MS

FIN

AN

CIA

L S

YS

TE

MS

FIN

AN

CIA

L S

YS

TE

MS

E-P

RO

CU

RE

ME

NT

EE-- P

RO

CU

RE

ME

NT

PR

OC

UR

EM

EN

T

Financial IntegrationFinancial IntegrationFinancial Integration

Purchasing / Purchasing /

Commerce Commerce

CardsCards

Process mapping

Must havesMust haves

• Vision and leadership

• Have a strategy with objectives

• Small Business friendly

• Management not technology

• Get right expertise

• Needs vs. vendor driven (don’t listen to vendors

until you know more about your needs than they do)

Must havesMust haves

• International standards based

• Small steps not big bang

• Education & training are essential

• Understand full scope including workflows, data captures, etc

• Customize departmental needs around common core architecture

What works (and what doesnWhat works (and what doesn’’t)t)Success Markers

Fail Markers

• Multiple sites

• Devolved strategy

• Technology driven

• IT implementation

• Closed standards / closed access

• Vendor driven

• Multiple sites

• Devolved strategy

• Technology driven

• IT implementation

• Closed standards / closed access

• Vendor driven

• Central site

• Leadership strategy

• Objectives driven

• Procurement reforms

implementation

• International standards /

open access

• Needs driven

• Central site

• Leadership strategy

• Objectives driven

• Procurement reforms

implementation

• International standards /

open access

• Needs driven

ee--GP is a journeyGP is a journey

Further referencesFurther references

�� MDB eMDB e--GP guidelinesGP guidelines

www.mdbwww.mdb--egp.orgegp.org

Illustration: Time SavingsIllustration: Time Savings

3 hours185 hoursTotal

0.5 hour8 hoursContract preparation and other documents

1 hour40 hoursEvaluation and what-if scenarios on 18.000

records

1 hour125 hoursData capturing – 10 fields per record at avg. 5

characters per field at 0.5 second per character

for 2.000 items and 9 suppliers

0.5 hour12 hoursPreparation of tender

1.4 Mb disk

space

4.500 pages500 A4 pages mailed to 9 suppliers

Web-basedPaper-basedActivity

Source: Intenda Ltd., Pretoria, South Africa, 2003