E-procurement – or how to save the rainforest and money?

Toni Saraiva is our Portugese / French / Scottish guest writer, now working in England for EISC, who help small firms in particular understand the wonders of EU procurement and how to bid for contracts.

A green paper was recently issued by the European Commission. An electronic paper and not green but normal plain white in colour, it is not even green in the sense of sustainable but touches upon the idea anyway. The green follows a white paper though and is followed by another green one… enough of trying to confuse you.

The EU wants your views and when that happens, a green paper appears. Procurement is a hot topic at EU level with 2 consecutive consultations, one on the modernisation of public procurement and one on E-procurement. The E-procurement one closed at the end of January but it is interesting to discuss it and await its results.

E-procurement is a very important topic in the EU. It has scope to improve efficiency in the way things are bought, and save money on administering the process by standardising and simplifying the process that procurers – and suppliers – are following.

In 2005 EU Ministers (the ministers from the various countries meeting during an EU get together) hoped that by 2010, 50% of Public Procurement above the EU threshold should be done electronically. And the result? Less than 5% in the more advanced players in Europe… An interesting exception being Portugal as it made it compulsory to use e-procurement since November 2009. We will hopefully report further on this in the future.

Why such a discrepancy between hopes and reality? We could invoke many reasons such as the lack of knowledge of procurers and companies on using electronic systems, not having the right infrastructure to welcome such systems, the technology was not available or not mature enough…

The sponsors to this website would be able to say whether the technology is now mature: the EU thinks so. The European Commission also feels there is a tiny window of opportunity to align the various technologies that sprung all over Europe, making sure that they support cross border tendering and do not deter anybody from bidding.

One of the possible other answers to the discrepancy is that electronic procurement does not necessarily mean cost saving on the procurement exercise. Hoping that a small district council will invest in an e-procurement system, as well as keep it running might be unrealistic. Then we might suggest  that this exercise be organised centrally. Buying Solutions in the UK is cited as an example as well as the Korean central platform called KONEPS.

Throughout Europe more and more public sector organisations are encouraging electronic bids, e-invoicing is developing and some countries like Denmark now only accept this in dealings between procurers and suppliers.

Have we passed the stage of “if” and are now waiting for “when” everybody will be doing e-procurement? I guess there should be a tender notice coming our way for “e-procurement system for Europe”, bids to be supplied in 3 copies by post…

Until next time…

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Voices (3)

  1. Final Furlong:

    Here’s an idea.

    Very simple.

    Given the amount of money that Government (broadest sense) invests in Bravo Solutions, largely because it was the ONLY supplier in the appropriate lot within Buying Solutions’ framework contract….

    ….why doesn’t Treasury simply purchase them outright, and then mandate the whole of public sector to use it. A single government-wide e-sourcing tool, single portal, one PQQ process, suppliers get trained once (as do buyers)…and Bravo no longer has to manage hundreds of contracts it has had to negotiate with multiple central and local government entities, subsequently building these costs into sales charges.

    Peter – you can send this idea to Mr Maude and co (and Bravo sponsors) if you wish. We’ll split the commission…

  2. Paul H:

    The EU ministers took such a simplistic view of e-Procurement and I dare say probably will continue to do so. The aim that 50% of public procurement above the threshold should be done electronically by 2010 was driven by a desire to automate the process and probably could have been achieved if every public sector body had bought an e-Sourcing tool, but they didn’t (or if they did, no-one thought to measure it!). This also demonstrates to my mind that EU ministers only thought about the process and one aspect of e-Procurement which has moved on so much since 2005. It’s almost un-recognisable from what it was. Even in 2005, eProcurement was always so much more than just electronic tendering, it encompasses P2P, electronic sourcing, Dynamic Purchasing Systems and increasingly things like apps, SAAS and other agile, category specific applications.

    There’s certainly no debate to be had about what e-Sourcing systems do as the market is mature, as are the products, so the really big question I would pose is ‘why haven’t e-Sourcing systems been universally adopted across the public sector?’ Is it because they’re too expensive? too complicated to use? User resistance? Or could it be that most Procurement Directors have no idea of their internal cost base and had difficulty building a business case to get the e-Sourcing tool in? The debate will no doubt carry on, EU ministers will scratch their chins again and then probably pronounce another aspirational target for e-Procurement uptake
    related to 2016!

  3. eSourcing Sensei:

    A very interesting article, and I for one believe it is paramount that any public sector spending uses the latest eSourcing technology platforms.
    True that as Toni mentions the use of an eSourcing system does not in itself guarantee savings. However I fail to see how it can be any worse than methodologies that rely on “old school” methodology.
    I think there is a step that is needed even before governments can utilise on line tendering. That is “Spend Analysis”.
    I wonder how much any government truly knows of the full extent of what it is spending, where the money is being spent and whether they are getting “value for money”.
    Any governement body that can truly understand this has a real fighting chance of penetrating difficult spend areas and delivering true and sustainable cost benefits to their various functions using eSourcing functionalities and ultimately to the man or woman on the street who funds such spend through taxation and other such payments.
    I look forward to reading more in these blog pages.

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