18 October 2010
Frequently asked questions: e-Procurement
What is e-Procurement?
E-procurement refers to the use of electronic communication and transaction processing by government institutions and other public sector organisations when buying supplies and services or tendering for public works.
Why are we publishing this Green Paper?
This consultation in the form of a Green Paper is addressed to Member States, central Ministries (for example, finance, budget); large procurement agencies and contracting authorities; providers of technology solutions, procurement specialists from the private and public sectors, representatives of trade associations and suppliers in general.
Its objective is to invite input and ideas on ways to:
Simplify and improve public procurement administration through ICT. Existing procurement rules or practices may need to be reviewed to permit a fuller exploitation of the benefits of e-Procurement;
Accelerate the transition to e-Procurement: despite the widely-recognised benefits (which include process, price and time savings), only a small part of public purchasing in Europe is conducted through electronic means.
Avoid a new generation of barriers to cross-border procurement, having their origins in different ICT solutions or e-Procurement processes.
Why now? Were there any other proposals in the past?
Directives 2004/18/EC and 2004/17/EC were intended to modernise and simplify public procurement procedures and recognised the on-going transition within Member States to e-Government in general. They introduced, for the first time, the possibility to use electronic means to conduct public procurement and also provided some new, modern, purchasing techniques. To facilitate and support the introduction of e-Procurement, the Commission also adopted the 2004 "Action Plan for the implementation of the legal framework for electronic public procurement".
The Commission has just completed an evaluation1 of the Action Plan, assessing its contribution to the advances made in the adoption of e-Procurement. The evaluation identifies outstanding challenges and issues which need to be resolved. The review is timely - there is still a window of opportunity to influence development and integration within the e-Procurement market, which has not yet reached a critical mass. However, the market is evolving, different national solutions are being developed and the window will not remain open for long.
What are the potential risks identified?
A number of challenges and weaknesses have been identified which prevent the wider take-up of e-Procurement and cross-border participation in on-line procurement. Looking to the future, the Commission must continue to act to minimise the risks of a decentralised, fragmented approach at EU level. Not switching to e-Procurement also means missing the opportunity to reduce the time taken to procure, make the process simpler and cheaper - benefits which are being realised by those who have already made the change.
What areas are currently under consideration?
The main areas where issues have been identified for further consideration are:
Overcoming inertia and fears on the part of contracting authorities and suppliers;
Lack of standards in e-Procurement processes;
No means to facilitate mutual recognition of national electronic solutions;
Onerous technical requirements, particularly for bidder authentication; and
Managing multi-speed transition to e-Procurement.
No actual measures have been identified as yet – the Green Paper suggests a range of proposals including possible legislative and policy change.
What are the benefits of e-procurement?
There is a small but growing body of evidence that e-Procurement can make the procurement process simpler, that contracts can be concluded more quickly and that process costs for both contracting authorities and suppliers can be lowered. Ultimately, for the tax payer, this should deliver better value for money. Some example of savings:
The Italian e-Procurement agency Intercent ER realised efficiency benefits of € 67.5 million and 45 man-years savings in 2008.
In the UK, the Office of Government Commerce site reported that it facilitated electronic sales of over £5 billion, delivering £732 million in savings.
e-Auctions are also delivering price reductions - generally by 10-20%, sometimes by more.
A recent Deutsche Bank study2 found that moving from paper based to digital invoicing could save the party receiving the invoice around €11.6 per transaction and the issuer around €6.9 per transaction.
Why is the take-up of e-Procurement still lagging behind expectations?
The introduction of e-Procurement requires extensive adaptation of existing procurement administration as well as the adoption of new ICT systems. This may deter purchasing bodies and procurement officers who may see little direct incentive to implement new solutions.
The challenge now is to share the lessons from existing success-stories and show public administrations that the technology exists and is being used successfully in many countries.
What can the Commission do to change the situation?
National and regional authorities must take the lead in developing and implementing e-Procurement programmes. A number of Member States and regions have acted as pioneers. Other public administrations are now following their example.
The Commission can support Member States and regional authorities by:
Adapting EU legal provisions that currently prevent implementation of e-Procurement;
Providing regulatory incentives to reward authorities that provide or use e-Procurement for procurement covered by EU legislation;
Encouraging alignment of on-line procurement models and ICT solutions to avoid access barriers;
Providing off-the-shelf solutions and support sharing of best practice.
Why is EU level action needed? Can Member States not do this on their own?
The Commission can add value by galvanising action, and developing a collective strategy to support the introduction of e-Procurement.
The way that existing EU legislation is interpreted or implemented may prevent Member States from making full use of the simplification potential of e-Procurement. Guidance, clarification or review of relevant EU provisions may help Member States in maximising the e-Procurement dividend. Appropriate adjustments to EU legislation may also give Member States new tools and incentives to promote e-Procurement at their level.
There is a danger that a purely bottom-up approach to the development of e-Procurement infrastructure will give rise to a new generation of technical or process barriers to cross-border procurement. e-Procurement systems and networks are built by national or regional authorities who don't always think about the need to make their systems open to businesses from other countries. The Green Paper outlines ideas for ensuring that the introduction of e-Procurement does not result in additional barriers to cross-border procurement. It is better to address these issues at an early stage, when e-Procurement is still developing.
What are the next steps?
Responses to the consultation should be received by 31 January 2011. The Commission is also organising an open hearing on 25 November 2010 in order to stimulate debate and gather views from a wide range of actors in the e-Procurement field. A synthesis of responses to the Green Paper will be published in 2011.
The responses to the Green Paper will serve as input when evaluating the case for EU level action and framing useful initiatives to support the development of e-procurement in all EU Member States. The Commission will then propose a White paper during 2011.
What is e-CERTIS?
E-CERTIS provides an on-line storehouse of the documents which are most frequently requested in the 27 Member States (like, for example, evidence of compliance with fiscal obligations or social security obligations or evidence of economic and financial standing). Inter alia, it allows users to quickly identify such documents and match them with their local equivalent. The use of e-CERTIS will help business operators to reduce costs and uncertainty due to the lack of knowledge about the various certificates requested by the various national contracting authorities.
Deutsche Bank Research paper "e-Invoicing Final steps of an efficient invoicing process" May 2010