E-Public Procurement in Europe : Public Management , Technologies and Processes of Change

Copyright 2013 selection and editorial material, Luis Valadares Tavares, individual chapters, the contributors

All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

Proceedings of the 1st European Conference on e-Public Procurement (ECPP)

Papers by Authors from 12 countries , Albania ,Belgium, Czech Republic, Finland, Hungary, Italy, Netherlands, Norway, Portugal, Spain, Turkey, United Kingdom, 5 Europ ean Electroni c Platforms and The European Commission

MAJOR SPONSORS

E-Public Procurement in Europe

Edited by Luis Valadares Tavares

2nd EUROPEAN CONFERENCE ON E-PUBLIC PROCUREMENT LISBON , 27 MAY 2014 www.opet.pt

Abstract

A new strategy for better Government and Public Administration as well as more sustainable and economic development implies more transparent, effective and efficient public contracting because the value of public contracts is a high percentage of GDP (about 19% in EU) and also because public markets can play a key role to promote innovation, employment, SMEs growth and a low carbon society. Electronic public procurement is being considered as a major driving force to modernize public procurement avoiding bureaucracy and less open markets, explaining why the new Directives on Public Procurement of the European Union are promoting its dissemination and mandatory adoption in a near future. This book includes major and revised contributions presented by experts from 13 countries on most recent developments of e-public procurement during the First European Conference on e-Public Procurement held in Barcelona, 20 March, 2013. This is the very first book covering key issues on advances of e-public procurement achieved during the last years giving special attention to: - The Process of Change to Achieve e-Public Procurement in Each Country - Better Technologies for e-Public Procurement - Methodological Issues in Public Procurement Furthermore, new perspectives about the markets of e-public procurement services provided by electronic platforms in EU during coming years are also discussed herein by key players as 13 European platforms participated in this first European conference.. Keywords Electronic public procurement; Public contracts; Electronic platforms; European directives; ICT services; Public Administration ; e Commerce

Contents

FOREWORD CONTRIBUTORS

7 10

PART I THE PROCESS OF CHANGE TO ACHIEVE E-PUBLIC PROCUREMENT IN EACH COUNTRY 12

1.Why e-public procurement? 2.An Essay on the Future of e-Public Procurement in Europe: 2015 2025 3.Mandatory e-submission in Flanders, transparency and enthusiasm: the big winners. 4.The Developments of e-Procurement in Turkey 13 33 41 48

5.Electronization Of Public Procurement In The Czech Republic Up To Date Development And Current Trends 55 6.The Evaluation Of Mandatory E-Public Procurement In Portugal: Perceptions And Results Of The National Survey (2010-2012) 63 7.Electronic Procurement In Albania 8.Ecosystem for an e-procurement european optimal transition 75 83

PART II BETTER TECHNOLOGIES FOR E-PUBLIC PROCUREMENT

1.Public Procurement Contracts: Transparency and Beyond. The case of the Portuguese National Public Procurement Portal: BASE.GOV.PT 2.e-PRIOR:Proposal for a new Directive and a Strategy for e-Procurement 3.ANO and the eProcurement Market :anoGov 4.Dynamic Purchasing Systems : Vortal 5.Saving time and money with eProcurement :CLOUDIA

89

90 102 112 118 133

6.PLYCA, the modular solution to integrally solve all stages of tendering and procurement electronically 140

PART III METHODOLOGICAL ISSUES IN PUBLIC PROCUREMENT

153

1.CEN Workshop on Business Interoperability Interfaces for public procurement in Europe 154 2.E-Procurement: A Challenge To Inertia With Cascading Benefits And Opportunities 3.A new model for the automatic evaluation of e-tendering 166 179

4.Sustainable E-Procurements Framework: Taking Stock Of Information Governance And Assurance Issues 195 5.An Architecture and Best Practices of e-Procurement in Cloud Computing 6.The potential of e-tendering data to improve post-award contract management 7.On e-negotiation processes for PPPs procurement 8.Does E-public procurement help understand the EU public procurement market? 210 225 235 244

Foreword
Here is the e-book containing the proceedings of the 1st European conference on E - Public Procurement that took place in Barcelona on 20th March 2013, in the premises of IQS, a prestigious Technology and Management School of the University Ramon Llull. Therefore the first question to be raised is: Why a new series of conferences on Electronic Public Procurement? The answer is easy and based on a threefold raison dtre: to contribute to the public interest, to the scientifically and technological progress, and to the sustainability of the important business of e-platforms: a) Contributing to the public interest because States in EU are spending more than 18% of GDP under public contracts but, unfortunately, significant waste, inefficiency and lack of transparency have been continuously reported: Public procurement should be improved as soon as possible! ; b) Contributing to the scientific and technologic progress because the wonderful world of web-based business has not yet been fully disseminated into the complex realm of public procurement procedures as many problems of accessibility , flexibility , security , and inter-operability making the best use of cloud computing have to be solved ; c) Contributing to the sustainable progress of e-platforms business which is based on a large number of SMEs devoted to innovative and secure services of e-public procurement striving for less fragmented and more sustainable development plans. Actually most epublic procurement goes through these platforms and without them, dissemination of epublic procurement would be completely impossible.

This is why this conference has a very specific and unique DNA: to bring together experts from different countries belonging to the multiple professional areas relevant for e-public procurement and concerning the wide range of disciplines required to improve e-public procurement. However, most of the conferences organized so far are single discipline oriented (Law, Economics, ICT, etc.) and this is why this initiative was bold and risky: Can we attract the whole range of professions and disciplines to present their perspectives on e-public procurement? Can we have a common language to facilitate a proficuous debate? Fortunately, such tradition was broken as the answer was positive, as it can be shown by the distribution of the professions and backgrounds of the 125 participants coming from 25 countries:

Distribution of Participants per Background

Distribution of Participants per Institution

This was possible because this conference was based on a quite open process of organization completely free of any restrictions and avoiding any governmental support or sponsoring to guarantee that this series of conferences is an independent initiative of European civil society. This interdisciplinary and inter-professionally approach allows developing the appropriate solutions to improve public procurement, avoiding the well known temptation of electing just one discipline as the key path to have better public procurement (usually, public law):

Management Sciences

Decision Sciences

Economics

Information and Linguistic Sciences

Public Law

Technology

Actually, there are strong evidences showing that all these scientific developments are essential to improve public procurement: Economic analysis because any contract requires a careful balance between public resources and expected benefits Management sciences because the whole process of public procurement, since initial contracting decision to contract execution, implies effective management and scheduling. Decision sciences because the specification of the attributes of the contract object and of the award decision model, are based on multi-criteria models.

Information and Linguistic sciences because the description and noticing for each contract requires appropriate taxonomics as well as key lexico solutions to improve communication and accessibility. Technology as e-procurement should be based on advanced web ICT developments and cloud computing Public law because procedures of public procurement should respect European and national codes

Another important key element of this conference is the active participation of 16 e- platforms operating in different European regions from the Scottish highlands, to the Russian plains or since the frozen Nordic forests to the warm Spanish beaches. Their presentations and decisions are an important contribution to this business and Im glad to know that a spillover of this conference is the establishment of the European Associations of e-platforms: EUROPLAT Luis Valadares Tavares

Contributors

mit Alsa is Public Procurement Expert at Public Procurement Authority of the Republic of Turkey , Turkey Teresa Amorim is Director of the Consultant and Technical Support Department of ANO, Sistemas de Informtica e Servios LDA , Portugal Amlcar Arantes is Assistant Professor of IST Technical, University of Lisbon, Portugal Kirsten Ferguson-Boucher is Programme Advisor Information Governance and Assurance at Aberystwyth University,UK. Pieter Breyne is Director in Technology Consulting and responsible fot the PwC Global eInvoicing and e-Archiving Network , Belgium Klodiana Cankja is General Director at the Public Procurement Agency in Albania and Lecturer at the Faculty of Economics, University of Tirana , Albania Manuel Cao is PLYCA Product Manager and PLYCA Strategy Manager in Nexus IT (an LBI group company , Madrid) , Spain Antnio Aguiar Costa is Assistant Professor of IST Technical, University of Lisbon,Portugal Kornelis Drijfhout is Team Leader eTendering task team at CEN/BII 2 Workshop and Information manager at Ministry of Economic Affairs , Netherlands Jos A. Antunes Ferreira is Associate Professor of IST Technical, University of Lisbon , Portugal Jostein Frmyr is General Manager at EdiSys Consulting AS, Norway Markku Jokiranta is COO of Cloudia and member of Advisory board for an e-Procurement measurement system conducted by IDC and Cap Gemini , Finland Sangeeta Khorana is Lecturer in Economics Aberystwyth University, UK. Pedro Leite is Software Developer and Team Leader within the Engineering Department of ANO, Sistemas de Informtica e Servios LDA , Portugal Pedro Maia is a Founding Member and Board Member of the Portuguese Public Markets Society , Portugal Bernardo Nicoletti is Professor of ICT Procurement at the Master in Procurement University of Tor Vergata ,Rome , Italy Joo Feio Pereira is Health Market Director in Vortal Connecting Business SA , Spain Maria Silvia Sabbatini is Attorney at law (Bar of Lawyers of Rome) , Italy Matej andor is Ph.D. Candidate, Department of Business and European Law, Faculty of International Relations, University of Economics, Prague , Czech Republic. Ricardo C. Ribeiro de Spnola is Senior Manager at CISED Consultores, Portugal. Johan Van Steelandt is Project manager e-procurement Flemish Adminstration , Belgium Giancarlo De Stefano is Senior Manager of the Strategic Project Area within the R& D Unit of Consip , Italy Tnde Tatrai is Assistant professor at the Department of the Institute Business Economics of Corvinus University of Budapest , Hungary

Luis Valadares Tavares is Full Professor Emeritus of IST Technical, University of Lisbon, President of OPET (Portuguese Observatory of Technology Foresight www.opet.pt) and President of APMEP (Portuguese Society of Portuguese Markets www.apmep.pt ) , Portugal

Part I The Process of Change to Achieve e-Public Procurement in Each Country

Why e-public procurement?

Luis Valadares Tavares

1 Public Procurement: why is it important?

Public procurement including acquisition or renting contracts, public investment, intermediate consumption and transfers to non-public institutions and covering goods, services and public works awarded by Public Administration contracting authorities and public firms has an average value of about 19% of GDP in European Union (Peppol, 2012) and it has been increasing during last years as it is shown by OECD estimating 18% for 2008 and ranging from just 14% for Italy to 26% for Netherlands (OECD, 2011). This average percentage is much higher than the average expenditure with salaries of civil servants (about 12%, see OECD, 2011) contrasting with the usual speech by most politicians considering such salaries as the main cause of public deficits. Therefore, public procurement has a key influence on public accounts but the impacts of public procurement are also quite important to pursue a strategy of development and growth because the public sector is a prevalent buyer in many regions and sectors. Actually, buying well by public sector can be a much more efficient and effective policy adopted by Governments to support firms rather than subsidizing them as it was pointed out by well known economists (e.g., W. Baumol, see Mueller, 1996) because the right processes of procurement can create the right incentives to have an effective and efficient market but subsidies tend to be a source of opportunities for corruption and for market distortions. This is why the Economics of Public are particularly important (See Piga and Treumer, 2013 a) Obviously, the paradigm of buying well is not an easy one and should be carefully discussed and studied. The purpose of this paper is contributing to this discussion and showing how epublic procurement can help to cope with such challenge. Fortunately, most of key topics implied by this discussion are object of papers presented in this 1st European Conference on e-Public Procurement and therefore, after normal references, a second bracket will be included referring to such presentation, if applicable.

2 Public Procurement: nature and diversity

It should be noted that public procurement covers three major components: A Contracts corresponding to gross fixed capital formation such as well known public investment projects (roads, schools, sewage systems, etc.). Recent estimates for OECD and EU members indicate the value of this component is around 5% GDP. B Contracts concerning the acquisition of goods and services required by public sector as inputs to carry out its activities implementing their production chains (energy, paper, transportation services, ICT, etc.).

13

L.Valadares Tavares This component is often labeled as goods and services for central public administration and otherwise as intermediate consumption. C Outsourcing contracts having as object the delivery of goods or services by the non-public sector. This component is usually labeled as transfers. For instance, in most countries, there is an wide range of institutions carrying out activities with public interest under such outsourcing contracts (provision of meals to poor citizens, health services, training and schooling, etc.). In Figure 1 (OECD, 2011) the relation between B and C is estimated showing that countries with a larger and wider public sector such as the Nordic countries have a lower C (C/B+C25%) but others more prone to outsource multiple activities can have C/B+C so high as 50, 60 or 70% (Portugal, France, Netherlands, Germany, Belgium, etc.).

Figure 1 Structure of general governmental acquisition expenditures

For instance, for Portugal our estimates concerning 2011 are A 7% GDP.

4% GDP; B

7% GDP; C

During last decade the growth of the value of public procurement is mainly due to the growth of C according to the paradigm of Contractualizing State, (See Vincent-Jones, 2006) as Governments tend to focus public administration role on core business activities and outsourcing other actions to non-public institutions. This is why, for instance, Netherlands has a very high value of public procurement because important sectors such Health are managed by non-public institutions under outsourcing contracts. The distribution of public procurement by goods, services and public works depends heavily on the level of development as it is shown by the interesting study of European Commission (GHK , 2010):

Why e-public procurement?

Figure 2 Distribution of contracts awarded by value by sector (CPV) (2008)

Also, the share of SMEs in the total value of contracts awarded after noticing through TED in EU varies greatly from State to State and has an average value of 34% according to (GHK, 2010):

Figure 3 Share of SMEs in the total value of contracts awarded, by Member State (total for 2006-2008)

15

L.Valadares Tavares

Figure 4 Public contracts awarded to companies located abroad (by total value of contracts)

Unfortunately, the principles of the Single Market established by Treaty of Lisbon have not yet increased cross-border procurement (GHK, 2010).

3 Public Procurement: complaints and woes

Unfortunately, public contracts have been subject to an wide range of criticisms and examples of buying not well are much more frequent than examples of good practices. Major criticisms are: A - Selection of contract objects without any rational justification in terms of estimated costs and benefits. Unfortunately, there are many examples ranging from unnecessary public works (too large public buildings, highways with low traffic, etc.) to redundant services or useless technological equipment (Medical devices, ICT, etc.). The need to justify any decision of public contracting with a Cost-Benefit analysis is now imposed by some Codes of Public Contracts such as in the case of France (Article 5 of the Code des Marchs Publiques, see Gouvernement Franais, 2013). B Deficient specifications of the contract objects without clarifying the necessary requirements and without an accurate formulation of the attributes subject to competition in terms of their descriptors, scoring function and trade-offs. The inappropriate use of taxonomies such as the CPV (See Leukel and Maniatopoulos, 2005) is also a major source of entropy (See Galinski, 2013). Actually, a recent study carried out for the

Why e-public procurement? European Commission (DG Market) shows that more than 20% of notices include errors of CPV (Attstrm et al, 2012). Models were proposed to avoid this shortcoming such as SIAPP (See Maia and Tavares, 2012) helping public contracting authorities to elicit their requirements and preferences, to specify the most appropriate multi-attribute evaluation models and to implement award criteria such as MEAT Most Economically Advantageous Tender as defined in (European Parliament and the Council, 2004). C Too long, too expensive and too bureaucratic processes Public procurement processes have to follow complex and strict codes imposing high levels of bureaucracy, including the presentation of multiple certificates, long delays and additional costs. Obviously, these effects are particularly harmful for SMEs (Small and Medium Size Entreprises). D Lack of openness of public markets This closeness can be due to: D1 lack of information about opportunities of public markets (absence of public competitions, lack of public notices, too many journals publishing notices, enigmatic notices, etc.) D2 too many restrictions concerning the qualification of candidates. For instance, requiring injustifying minimal revenues and numbers of staff. D3 too many barriers avoiding outside competitors coming from other cities, regions and countries. E Lack of Transparency of the process of decision making concerning the contract award This lack of transparency can be due to high levels of corruption and, or, low levels of competence, and can be expressed by: E1 Lack of clarity of the definition of the award criteria presented in the notice and procedure documents due to the vague expressions allowing wide and diverse interpretations by the jury after receiving (and opening!) the tenders. E2 Dubious applications by the jury of the award criteria to rank tenders, introducing subjective evaluations of each tender. F Adoption of the single criterion of minimal price contributing to the deterioration of the quality of products and services, to the extinction of more innovative and high quality firms and to the support of low level firms, probably based on countries with very low wages. This explains why the present EU Directives on Public Procurement allow the adoption of this criterion just in the special case of having fully specified the contract object. The author believes that this is never the case of a service due to its special and unforeseen nature.

17

L.Valadares Tavares Summing up, major shortcomings are summarized in Table 1.

Table 1 Public Procurement: Major Criticisms

4 Which paradigms for good public procurement?

The previous criticisms justify giving special attention to the study the paradigms to be pursued by any public or private procurement process: I Effectiveness Preparing contracts fulfilling real and justified needs II Efficiency Adopting procedures for contract formation requiring a short duration and low cost processes for procurers and for suppliers, avoiding unnecessary bureaucracies (self-declarations, crossborder firms passports, etc.) III Competitiveness The dissemination of information, the accessibility to the documents of the procedure and the easiness to submit a tender can increase significantly the number of competitors. IV Transparency Full access by Economic Operators (EOs) to fully specified award criteria before submitting the tenders and clear application of such criteria by the jury can achieve a high level of transparency. V High Value for money Muticriteria Contract Award (MEAT Most Economically Advantageous Tender) allows balancing costs and benefits to obtain high value for money.

Why e-public procurement? However, public procurement has to cope with three additional requirements besides these five perspectives: VI Equity, giving the same changes to any economic operator to respect the principles of freedom of movement or establishment and of equality of treatment. VII Legality, respecting the existing European directives and the national codes for public procurement. VIII Revision to respect revision rights of each candidate or competitor according to the legal frameworks. In the case of EU, there is an European framework (Public Procurement Directives, See European Parliament and the Council, 2004) and national laws to be respected, and in the case of US there is a general code (FAR, Federal Acquisition Regulation, See US Gov., 2013) plus additional codes and rules per State or even County. It should be noted that the paradigm of private procurement of large organizations are becoming closer than those of public procurement namely in terms of giving equal opportunities to local suppliers and following quite strict and detailed procurement codes. (car industry, food, suppliers, etc.). On the other hand, public procurement is attempting to achieve the virtues of private procurement namely about effectiveness and efficiency. Summing up, an interesting process of convergence between private and public procurement in most regions and sectors is being carried out. The presented paradigms for public procurement can avoid the criticisms, previously described as it is shown in Table 2.

19

L.Valadares Tavares

Table 2 Paradigms overcoming major criticisms

Why e-public procurement? It should be noted that the comparison between private and public procurement is not always favorable to private procurement as it is shown by a survey conducted by the European Commission covering 1500 EOs in EU and obtaining their opinions comparing public with private procurement (London Economics et al, 2011):

Table 3 Perceptions of EOs comparing public with private procurement

5 What is e-public procurement?

5.1 On the process of change The amazing development of ICT and, particularly, of worldwide web since the nineties is changing the way how society perceives reality, understands and acquires knowledge, communicates and develops social networks. These deep changes erase the traditional barriers between reality and virtual representations, between objects and perceptions, between private and public domains and, in each city, between Domus and gora (see EC, 2013). Obviously, how business is carried out is an excellent example of these changes and it should be noted that the new world of web based commerce has been anticipated by brilliant minds as it is the case of John McCarthy who was author of a first presentation on e-commerce or the important propositions about Electronic Markets Hypothesis (EMH) by (Malone et al, 1987) enhancing transparency, competitiveness and trust. Therefore, during last 15 years private procurement of major players has been intensively and extensively based on web systems (e-procurement) (See Heywood et al, 2001 and Boer et al, 2002) allowing continuous and dynamic flows of information and the implementation of new systems of sourcing and procurement such as the automatic multicriteria evaluation of bids, e-catalogues, e-auctions, dynamic purchasing systems, e-negotiations, e-reputation scoring, etc. (OGC, 2001). Unfortunately, public procurement has been much slower to cope with these challenges (Tonkin, 2003) perhaps due to the strong inertia (Bof and Previtalli, 2007) of public administrations very strongly based on the famous triangle:

21

L.Valadares Tavares

Figure 5 The classic triangle of public administration

quite adverse to the dissemination of e-public procurement. Fortunately, the substitution of paperwork and traditional mail by electronic documents and communication has been possible due to the conception, development and implementation of electronic platforms (e-platforms) allowing all procurement interactions presented in Figure 6

PBI Procurement Business Intelligence

Figure 6 The structural model of an e-platform

and the market of e-platforms has been growing based on providers of all e-services (Softwares as Service SaaS) required by e-public procurement it is well illustrated in this Conference by 13 important e-platforms operating in several EU countries (See Pereira, 2013; Cao, 2013a; Siderius, 2013, Nassari , 2013; Breyne, 2013; Smith, 2013; Amorim, 2013; Jokiranta, 2013; Kaggelides, 2013a; Prokop, 2013; Locci and Bondini, 2013; Stevenson, 2013; Zegre, 2013). However, the process of substituting paper based procurement by e-procurement is a complex process of change requiring a favorable eco-system (Cao, 2013b) including appropriate legal and regulamentory framework, political leaders of innovation and change, training programs to qualify staff of Public Contracting Authorities (PCAs) and EOs, easy and cheap services provided by e-providers, a culture of benchmarking and evaluation creating

Why e-public procurement? incentives to buy better. Several authors identified the key factors of success and major outcomes as it is illustrated in Figure 7 (by Vaidya et al, 2006).

Figure 7 Critical Success Factors

The dissemination of e-public procurement allows innovative approaches to networking and cooperation (see Costa and Tavares, 2012a) as well as the use of the cloud computing paradigm (Nicolletti, 2013) but the process of change is always complex and difficult as it is extensively discussed in this Conference for 12 different countries: Albany (Cankja, 2013); Belgium (Van Steelandt, 2013); Czech Republic (Sandor, 2013); Georgia (Urjumelashvili and Marghania, 2013); Greece (Kaggelides, 2013b); Hungary (Tatrai, 2013); Italy (Sabbatini, 2013); Portugal (Arantes et al, 2013); Poland (Kalinski, 2013); Spain (Cao, 2013b and Torregrosa, 2013); UK (Fergunson-Boucher and Khorana, 2013) and Turkey (Alsa, 2013). The adoption of e-Public Procurement as well as other e-Government developments can substitute labor for technological capital avoiding the well known law of public cost increase (Baumol cost disease) due to the lack of growth in public sector having to pay higher wages due to the increase of productivity in other sectors (Baumol, 1967). 5.2 On the stages of e-procurement The description of e-public procurement can be presented in terms of major process stages (See Tavares, 2011a). A. e-Noticing Public procurement implies the dissemination of opportunities offered by public contracting authorities (PCAs) opening competitive procedures. The e-notice is an electronic document containing key elements of such procedure and should be disseminated through the web and

23

L.Valadares Tavares the electronic channels. An interesting example for competitions at the European level is TED (See WWW.TED.EUROPA.EU). B. e-Invitation Several types of procedures like those concerning low value contracts (direct awarding or invitation based awarding) and restricted procedures include a stage inviting selected economic operators (EOs) to present a tender. E-invitation implies sending such invitations through an e-platform. C. e-Tendering EOs interested to profit from any public opportunity should be allowed to present a tender and e-tendering implies its preparation as an electronic document and digitally signed up, time stamped and submitted through an e-platform under strict secure and confidentiality condition. D. e-Evaluation Submitted and non-rejected tenders should be evaluated by the jury and such process should be based on appropriate software treating e-data extracted from tenders to obtain the description of each tender in terms of the attributes subject to competition and award criteria, to model partial and overall scoring and to rank alternative tenders. (Maia and Tavares, 2013; Siderius and Van Raaij, 2013; Costa and Tavares, 2012b). E-platforms should support all these tasks avoiding the frequent temptation of using the printer to come back to the paperwork framework. A stage of e-negotiation can be also quite important (See Spnola and Ferreira, 2013). E. e-Award and e-Contract The PCA should award the contract through the e-platform and the e-contract will be easily stored into an ERP extricating organization form endless and chaotic piles of paper contracts. F. e-Execution of the Contract Once the contract is awarded and signed, it should be executed through the e-platform performing the key tasks of e-ordering, e-monitoring and e-control, e-invoicing, e-payment and eventually, e-litigation (See Ferreira and Spnola, 2013; Tavares and Lima, 2013). G. e-Evaluation and e-Auditing The ex-post evaluation and auditing is an important task particularly in public procurement because the outcomes achieved through the allocation of public resources have to be explicitly determined. This explains the commitment of institutions like Portuguese Tribunal de Contas (equivalent to the UK National Audit Office) to pursue the full implementation of e-public procurement as most of their activities can be now easily carried out through the e-platforms.

6 Which contribution can be expected form e-public procurement?

The major issue of this conference and this paper can be now addressed: Considering the problems and complaints about public procurement and the features of epublic procurement how much can be expected from its dissemination to help the process of change to achieve better public procurement?.

Why e-public procurement? The proposed method is based on the assessment of the potential of e-public procurement to help meeting the presented paradigm. A Effectiveness Of course the appropriate selection of the contract object depends on the rationality and competence of the public contracting authority independently of using paperwork or electronic systems. B Efficiency The paperwork procurement processes are well known for their enormous amounts of printed information generating huge costs to produce them by the EOs and to treat them by the PCAs through lengthy procedures implying long months to carry out a simple open procedure. Obviously, e-public procurement can be of great help to overcome these problems also because avoids trips between EOs and the PCAs through the adoption of free downloads of procedure documents and free submission of tenders. This means that e-public procurement can help in terms of reducing costs and durations. Also, it can be useful to simplify required documents, certificates, etc. and so it can reduce the bureaucratic load. C Competitiveness The web dissemination of notices, the downloading of procedures documents and the esubmission can increase substantially the levels of competitiveness. Obviously, just e-noticing is not sufficient because if full access to procedures documents and tendering implies going back to traditional mail and paper submission as it happens now with many notices published by TED, competitiveness is not significantly improved. D Transparency Wide dissemination of notices can be achieved by e-public procurement through free web access and the explicit formulation of multicriteria evaluation of tenders can increase the transparency of tenders evaluation or even the automatic evaluation of tenders. Therefore, e-public procurement is a powerful instrument to increase accessibility to public markets opportunities and to increase transparency about the decision process supporting contract award. E Value for Money The tradeoff between several criteria describing the uses of public resources and the attributes describing the multiple benefits implies the adoption of mathematical models which can be easily built and used if applied to electronic data rather than to piles of paper reports. Therefore, e-public procurement can give a significant help to: Construct and communicate the model to apply MEAT; Apply such model to evaluate tenders.

F Equity The increased accessibility to relevant information and transparency of decision achieved by epublic procurement will necessarily imply increased equity. For instance, traditional paper

25

L.Valadares Tavares based procurement implies much greater costs for distant EOs and so e-procurement is a factor of equalization of opportunities. G and H Legality and Revision The respect for legality and revision rights depends on the ethics and competence of PCAs and so e-public procurement cannot improve such behavior if there is not the appropriate commitment of the Jury and of the Directive Board of the PCA. Summing up, e-public procurement can have quite a high impact on: efficiency, competitiveness, transparency, equity and value for money, offering an wide range of benefits as it is shown by (Sabbatini, 2013). Unfortunately and despite the strong advantages of e-public procurement and the high level of services offered by e-platforms already mentioned, as it is shown by (Breyne and Liljeno, 2013) the dissemination of e-public procurement has been rather incipient and patchy probably due to the complexity obstacles of the process of change involving an wide range of actors. The issue of interoperability becomes critical if e-public procurement will be disseminated. Cross-border and cross-sector and successful results will imply a clear understanding about its different dimensions namely: a) Multi-language lexicos of key concepts b) Semantics of processes, entities and actions c) Ontology of objects d) Information reference models e) Models of introduction and of retrieved of data The development of a pragmatic approach to achieve interoperability requires avoiding too complex and application-based solutions and to respect the continuous offer of new standards and new products by technologic markets. Furthermore, the development of integrated or interoperable networks will avoid fragmentation and help easy access and interactions to any PCA or EO (See Ciciriello, 2013; Roman, 2013; Nicolletti, 2013).

7 Evidences from Portugal

Portugal transposed European Directives 2004/17/CE and 2004/18/CE by approving the Code of Public Contracts (Dec-Lei 18/2008) after a long period of interdisciplinary work started on 2002 under the Government lead by Mr. Jos Manuel Barroso, now president of the European Commission (Tavares, 2008). This Code adopted innovative steps on: a) the adoption of quite well specified multicriteria models to evaluate tenders being their presentation included in the procedure documents; b) the dissemination by one single national portal (www.BASE.gov.pt, run by the National Regulator of Public Contracting, InCI, Rosa, 2013) publishing all contract notices, award decisions and execution notices concerning any public contracting authority (central, regional or local administrations as well as public institutes and public economic operators) .

Why e-public procurement? c) the adoption of e-public procurement for any open or restricted competitive procedure. The adoption of e-public procurement is based on a market of private firms previously certified and offering e-procurement services (e-platforms). Mandatory e-public procurement was implemented since 1 November 2009 and so more than full 3 years of experience were completed and surveyed through a National Survey carried out every year by OPET / APMEP under contract with InCI (See Arantes et al, 2013) and EOs covered by the surveys. The samples of PCAs and EOs include an wide spectrum of institutions and of EOs firms:

Table 4 Distribution of PCAs

Table 5 Distribution of Firms

The major criteria for impact assessment follow the previous discussions: I. Efficiency: I1. Time I2. Cost I3. Bureaucracy II. Competitiveness III. Transparency IV. Value for Money

27

L.Valadares Tavares A more thorough analysis is presented in (Arantes et al , 2013) but the obtained results on 2012 for each criterion indicating the percentual difference between the number of answers in favor and those against can be summarized:

Table 6 Evidences from Portugal

Confirming the perception of a positive impact due to e-public procurement excepting on cost for EOs. Micro and small firms are particularly enthusiastic about transparency and competitiveness because much wider opportunities of public markets are now open. The negative balance for EOs about costs is due to an increase of costs generated by EOs (esignatures, time-stamps, etc.). If the first three criteria are aggregated under the label Transactional easiness, the following group is obtained showing how transparency, competitiveness and value for money rank ahead of easiness.

Figure 6 Perception of e-Public Procurement

These results are consistent with the average increase of the number of tenders per procedure of about three times, the reduction of the number of litigation cases and the national savings due to the increased competitiveness between 10 and 14% (Tavares, 2012) but in some specific cases like hospitals (Tavares, 2011b) savings can be higher than 25%.

Why e-public procurement? Obviously, the tools offered by e-platforms have an incredible potential as it is so clearly illustrated by the 12 service providers contributing to this Conference but, unfortunately, mastering new instruments is always a long and painful process requiring not just training but also leadership to manage difficult changes. Therefore, vast and significant improvements can be envisaged in a near future if such paradigms of change and innovations will be pursued in the future. Present policies of European Union can also contribute to such evolution and they are discussed in another paper of this conference.

29

L.Valadares Tavares

8 General List of References

.Attstrm et al, 2012, Final Report: Review of the Functioning of the CPV Codes / Systems, Ramboll / 3ME, Markt/2011/111/C, Dec. 2012. .Baumol. W.J., 1967, Welfare Economics and the Theory of the State, 2 ed., Cambridge University Press. .Boer, L., J. Harink and G. Heijboer, 2002, A conceptual model for assessing the impact of electronic procurement, European Journal of Purchasing e Supply Management, 8, 25-33. .Bof, F. and Pietro Previtali, 2007, Organizational Pre-Conditions for e-Procurement in Governments: the Italian Experience in the Public Health Care Sector, The Electronic Journal of e-Government, Vol. 5, 1, 1-10, (www.ejeg.com). .Costa, A. Aguiar and L. Valadares Tavares, 2012a, Social E-Business and the Sattelite Network Model: Innovative Concepts to Improve Collaboration in Construction, Automation in Construction, Vol. 22, 387-397. .Costa, A. Aguiar and L. Valadares Tavares, 2012b, Advanced Multicriteria Models to Promote Quality and Reputation in Public Construction e-Market Places, accepted by Automation in Construction. .EC, 2013, The Onlife Manifesto: Being Human in a Hyperconnected Era, European Commission. .European Parliament and the Council, 2004, Directive 2004/18/EC on the coordination of procedures for the award of public contracts, public supply contracts and public service contracts, EC, 2004. .GHK, 2010, Evaluation of SMEs access to public procurement in the EU, DG Entreprise and Industry. .Gouvernement Franais, 2013, Code des Marchs Publiques, Legifrance, in www.legifrance.gouv.pt .Heywood, J.B., M. Barton and C. Heywood, 2001, E-Procurement: A Guide to Successful E-Procurement Implementation, Financial Times / Prentice Hall. .Leukel, J. and G. Maniatopolous, 2005, A comparative analysis of product classification in Public vs Private e-procurement, the Electronic Journal of e-Government, Vol.3, 4, 201-202. .London Economics, Ecorys and PWC, 2011, Public Procurement in Europe: Cost and Effectiveness, EC, Bruxelles .Maia, P. and L. Valadares Tavares, 2012, OPTIONCARDS: An interactive approach to elicitat qualifications and award criteria weight in Piga, G. and S. Treumer, 2012, eds., The Applied Law and economics of Public Procurement, Routledge. .Malone, T.W., J. Yates and R.I. Benjamin, 1987, Electronic Markets and Electronic Hierarchies, ACM Communications, 30:6, 484-497. .Mueller, Dennis, C., 1996, Public Choice II, Cambridge University Press, Cambridge. .OECD, 2011, Government at a Glance, OECD, Paris .OGC, 2001, Government Online e-Procurement Strategy, OGC, London. .Peppol, 2012, Peppol Final Report, Peppol Agency for Public Management and e-Government (DIFI), Oslo. .Piga, G. and S. Treumer, 2012, eds., The Applied Law and Economics of Public Procurement, Routledge. .Tavares, L.V., 2008, A Gesto das Aquisies Pblicas (Public Procurement), OPET, Lisbon, 4th ed. .Tavares, L.V., 2011a, Public eTendering in the European Union, European Vortal Academy, Vortal. .Tavares, L.V., 2011b, Innovacin en la Contratacin Pblica en el Sector Sanitario: Como Proporcionar un Presupuesto Inferior en uno de los Hospitales ms Importantes de Portugal?, IESE, Univ. Navarra, n 2 41-1-037. .Tavares, L.V., 2012, A Strategy to reduce public expenditure based on e-tendering and Procurement Business Intelligence: the Case of Portugal, European Vortal Academy, Lisbon.

Why e-public procurement?

.Tonkin, C., 2003, "E-Procurement in the Public Sector : Story, Myth and Legend", The Policy Institute, Trinity College, Dublin. .US Government, 2013, Federal Acquisition Regulation, in www.acquisition.gov .Vaidya, K., A.S.M. Sajeev and G. Callender, 2006, Critical Factors that Influence e-Procurement Implementation Success in the Public Sector, Journal of Public Procurement, 6, n 1 & 3, 70-99. .Vincent-Jones, Peter, 2006, The New Public Contracting Regulation. Responsiveness Relationality, Oxford University Press, Oxford.

9 List of References based on the Presented Papers at the 1st European Conference on e-Public Procurement
.Alsa, Umit, 2013, The Development of e-Public Procurement in Turkey. .Amorim, T., 2013, The Perspectives of ANOGOV. .Arantes, A., A.A. Costa and L. V. Tavares, 2013, The Evaluation of Mandatory e-Public Procurement in Portugal: Perception and Results of the National Survey. .Bondini, L., 2013, The Perspectives of I-FABER. .Breyne, P., 2013, The Perspectives of ePRIOR. .Breyne, P., and Kelly Liljemo, 2013, E-Procurement Golden Book of Good Practices: a collection of Good Practices for Implementing or Improving e-Procurement Solutions in Europe .Cankja, K., 2013, Electronic Procurement in Albania. .Cao, M., 2013a, The Perspectives of NEXUS. .Cao, M., 2013b, The Ecosystem for an Optimal Transition to e-Procurement. .Ciciriello, C., 2013, Open Peppol. .Fergusson-Boucher, K. and S. Khorama, 2013, Sustainable E-Procurement Framework: Taking Stock of Information Governance and Assurance Issues. .Ferreira, J.A. and Ricardo Spnola, 2013, The Potential of e-Tendering Data to Improve Post-Award Contract Management. .Galinski, C., 2013, Mapping Product Classification for Public and Private Procurement. .Jokiranta, M. 2013, The Perspectives of CLOUDIA. .Kaggelides, K., 2013a, The Perspectives of GNOMON. .Kaggelides, K., 2013b, The Development of e-Public Procurement for Health in Greece. .Kalinski, P., 2013, The Development of e-Public Procurement in Poland .Maia, P. and L. V. Tavares, 2013, A New Model for the Automatic Evaluation of e-Tendering .Nassari, S., 2013, The Perspectives of PIXELWARE. .Nicolletti, B., 2013, A Model and Best Practices of e-Procurement in Cloud Computing. .Pereira, J., 2013, The Perspectives of VORTAL. .Prokop, C., 2013, The Perspectives of VERGABE24. .Roman, A. V., 2013, Linking Cost Savings to Platform Integration .Rosa, I., 2013, The Perspectives of InCI: Portal Base. .Sabbatini, M. Silvia, 2013, E-Procurement: A Challenge to Inertia with Cascading Benefits and Opportunities.

31

L.Valadares Tavares
.Sandor, M., 2013, Electronization of Public Procurement in the Czech Republic Up to Date Developments and Current Trends. .Siderius, J., 2013, The Perspectives of NEGOMETRIX. .Siderius, J. and Erik Van Raaij, 2013, Considerations for Saas e-Tendering platforms to Calculate the Economically Most Advantageous Tender .Smith, S., 2013, The Perspectives of BIP-SOLUTIONS. .Spnola, R. And J. Antunes Ferreira, 2013, On e-Negotiation Processes for PPPs Procurement .Stevenson, G., 2013, The Perspectives of NEXTENDERS. .Tavares, L.V. and I. Lima, 2013, A New Electronic System for Alternative Dispute Resolution (e-ADR): The case of the customer ombudsman of EDP (Portugal) .Tatrai, T., 2013, Does e-Public Procurement Help Understand the EU Public Procurement Market. .Torregrosa, E., 2013, Open Procurement: Towards the Inclusion of SMEs into the Pan-European Public Sector Market. .Urjumelashvili, T. and D. Marghania, 2013, Description of Public Procurement Reform in Georgia. .Van Steelandt, J., 2013, Transparency and Enthusiasm: the big winners after one year of Mandatory ESubmission in Flanders. .Zegre, M., 2013, The Perspectives of SAPHETY.

An Essay on the Future of e-Public Procurement in Europe: 2015 2025

Luis Valadares Tavares

1 Introduction
The features and impacts of e-public procurement are discussed in this first European Conference on e-Public Procurement bringing together, for the very first time, the contributions achieved in 17 different countries and by 13 e-platforms to be discussed by participants from 25 countries. Therefore, a foresight perspective about the future (2015 2025) should be proposed for discussion in terms of aspiration, woes, evidences and requirements inferred from European policies, technologic innovation and business prospects. Such future will be constructed as a function of scenarios defined by the answers to be given to 5 major key drivers: A How mandatory and early will be the targets for e-public procurement established by European policies, namely the new Directives on Public Procurement? B How strong will be the commitment of Governments to adopt e-public procurement and to extract its full potential? C How rapid will be the development of national and global portals allowing easy and free access to notices and procedure documents concerning public contracts with value not just above but also below thresholds? D How much progress will be achieved by e-platforms to help Public Contracting Authorities (PCAs) and Economic Operators (EOs) to profit easily and cheaply from their services? E How much effective advances will be implemented in terms of cross-border and cross platforms interoperability?

2 On the impacts of European policies

The European institutions develop their activities according to the Treaty of Lisbon and this treaty does not include any provision to allow setting up an equal code of public procurement for all 27 Member States (since July 2013, 28 Member States, as Croatia is joining EU) but just for common rules concerning important contracts in order that the principles of the Single Market will be also applied to public markets, namely the principles of equality of treatment and freedom of movement and of establishment (See European Parliament and the Council, 2004). Under these assumptions, the institutions of European Union have been actively designing and promoting policies quite favorable to the dissemination of e-public procurement, namely: a) The general policy guidelines EU2020 (EC, 2010, a) oriented to achieve higher levels of smart and sustainable growth, innovation, low carbon society, digital markets and support to SMEs;

33

L. Valadares Tavares b) Digital Agenda setting up the goals for the Single Digital Market (EC, 2011, a) c) The Green Paper on expanding e-procurement in the EU (EC, 2010, b) d) The evaluation of the action plan for electronic public procurement (EC, 2010, c) e) The proposed new Directives setting up ambitious targets for mandatory e-public procurement above thresholds (EC, 2011, b). Probably these Directives will be approved this year and they will have to be transposed until 2015 explaining why this foresight exercise will be developed for the horizon 2015 2025. This means that the new Directives on Public Procurement following the proposal of the European Commission will have a direct impact on the adoption of e-public procurement but just above thresholds. Nonetheless, the author believe that such adoption will have an important traction effect on most contracts and therefore the deadlines of these Directives will have a paramount importance on European e-public procurement. Key deadlines may be so ambitious as: 1. Mandatory adoption of e-noticing: when the Directives will be transposed by each Member State (before 2013 + 2 years) 2. Mandatory adoption of e-public procurement including e-tendering by Central Purchasing Bodies (CPBs): when the Directives will be transposed by each member State (before 2013 + 2 years) 3. Mandatory adoption of e-public procurement including e-tendering by any PCA: not later than 30 months after transposition Thus, two major scenarios can be envisaged:

Table 1

3 On the Commitment of Governments and PCAs

There are strong evidences about the positive impacts of e-public procurement on Governments and Public Administrations budgets as well as decisional transparency but will they be committed to adopt it? On 2005, the informal meeting of the Council of Ministers of EC, hosted by A. Blair in Manchester, approved the Manchester Declaration will ambitious targets soon forgotten and hardly implemented (Council of Ministers, 2005). During these 8 years, what has changed? Are there reasons to be more optimistic despite such a lack of interest? Actually, presentations of this Conference show clearly that the situation changed but with a striking level of variance: A few European governments adopted mandatory e-public procurement

An Essay on the Future of e-Public Procurement in Europe: 2015 2025 Nordic countries are early adopters of e-invoicing but have low penetration for etendering Central Purchasing Bodies are growing exponentially across Europe and most of them adopt e-public procurement despite a few paper based examples. Several regions, sectors and clusters of PCAs provide excellent examples of innovation and adoption of e-public procurement but such examples are hardly replicated in other cases. For instance, the advanced and very early example of Pas Vasco in Spain was not replicated or disseminated.

Summing up, a fragmented and heterogeneous landscape suggests an Europe without general and strong policies on such important topic. Will be next decade a period of variance reduction also due to the European Directives or just keeping patchy trends? Thus, these two scenarios can be formulated.

Table 2

4 Accessibility
The very first condition to open up public markets and to adopt e-public procurement is implementing web-based noticing and access to procedure documents. So far, notices of procedures above thresholds are published by TED (www.ted.europa.eu) and they are easily accessible but, unfortunately, in some cases, the access to procedure documents is not yet allowed through an e-platform or website. Such access is vital for EOs, namely SMEs deciding to tender or not because key information such as award criteria require access to procedure documents. There are no doubts about the promising and positive evolution of TED in coming years. The full and easy e-access to notices and documents at a national or regional level will be a key step to disseminate e-public procurement and a most appropriate approach is setting up national or even global portals including all relevant data as it is the advanced case of BASE (Portuguese single portal posting all notices of any PCA. See www.BASE.gov.pt). Obviously, the proliferation of thousands of portals just increases the fragmentation and opacity of public markets.

35

L. Valadares Tavares Thus, 2 scenarios are considered:

Table 3

5 Services provisions
There are a few platforms developed by Governments but most of e-public procurement carried out in Europe is based on services provided by private e-platforms as those 13 firms participating in the conference and based on so different countries as Netherlands, Scotland, Spain, Finland, Greece, Portugal, Italy, Germany or United kingdom. What are the paths of innovation and of new menus which will be developed by these companies following key paradigms as cloud computing and using best of breed technologies? A major obstacle is the diversity of procurement procedures with different rules and constraints from region to region pushing the companies to offer taylor based and customized solutions coping with complex and diversified rules. An opposite drive will be to offer universal menus easily understood and avoiding such complexities. Actually, the commitment of Governments to modernize public procurement should imply also simplifying and standardizing procedures to reduce bureaucracy and to allow a more streamline offer of e-services. Obviously, this last line of evolution will facilitate the development of e-platforms as multistate operators providing services across Europe and reducing present fragmentation of this market. So, two major scenarios can be formulated

Table 4

6 Cross-border and cross-platform interoperability

Cross-border public procurement has been quite incipient since ever as it was previously discussed and therefore e-procurement cannot be blamed for such insufficient implementation of the european single market.

An Essay on the Future of e-Public Procurement in Europe: 2015 2025 However, the adoption of many different platforms implying specific registrations and compliance procedures is far from being a help to increase cross border flows. Several approaches can be pursued to improve interoperability such as the development of common standards based on a new and vast network of Access Points as it is the case of Peppol (Peppol, 2012) or the adoption of interfaces allowing the interoperability between platforms (Figure 1). Other European projects are also proposing other networks with other standards for crossborder communication, namely SPOCS (for services), epSOS (e-Health), STORK (e-Identity) and e-CODEX (e-Justice) and the European Commission will be striving to integrate all these results into a single solution.

Figure 1 A Model of interface X

Probably, all these approaches will be pursued but their success will be always a function of political determination to adopt or not cross-border procurement as a political and economic objective:

Table 5

37

L. Valadares Tavares

7 General Scenarios
The presented scenarios can be now summarized indicating by + (or -) a positive (or negative) evolution:

Table 6 Scenarios

including a connection graph between different scenarios and therefore the following tree can be constructed:

Figure 4 Scenario Tree

Obviously, Scenarios 1 and 8 are the most optimistic and pessimistic ones, respectively, but it should be also noted that: a) Scenarios 1; 2 and 5: 6 will correspond to significant national and regional growth of epublic procurement and business for e-platforms but just 1 and 5 will reduce present fragmentation. b) Alternatively, scenarios 3; 4 and 7; 8 will correspond to unavoidable stagnation c) Furthermore, scenarios 1, 3, 5 and 7 will correspond to a significant integration and simplification of the business models of e-platforms but demand on 5 and 7 is limited.

An Essay on the Future of e-Public Procurement in Europe: 2015 2025

Obviously, the likeliest scenarios are: Scenario 1: Positive european influence and national commitment and improvement of e-platforms services and markets Scenario 4; Positive european influence but national resistance and stagnation of e-platforms services and markets Scenario 5: European contradictory influences but national commitment and improvement of e-platforms services and markets Scenario 8: European contradictory influences as well as national resistance and stagnation of e-platforms services and markets Recent initiatives of the European Commission and discussions about the new Directives at the Council and at the European Parliament justify considering unlikely Scenarios 5 and 8 and so the remaining ones are scenarios 1 and 4. Probably, the behavior and the propensity to change will be quite different from State to State and so the next 20 years will bring an optimistic evolution for e-public procurement but at different speeds, from State to State and such evolution will imply tough challenges to eservices providers.

39

L. Valadares Tavares

8 References
.Council of Ministers, 2005, Manchester Declaration, 2005: By 2010, at least 50% of public procurement above threshold will be carried out electronically. .EC, 2010, a, Europe 2020: A strategy for Smart Sustainable and Inclusive Growth, COM (2010), 2020. .EC, 2010, b, Green Paper on Expanding the Use of e-Procurement in the EU, COM (2010), 571 final. .EC, 2010, c, Evaluation of the 2004 Action Plan for Electronic Public Procurement, SEC (2010), 1214 final. .EC, 2011, a, A Digital Agenda for Europe, EC, COM (2010) 245. .EC, 2011, b, Proposal for a Directive of the European Parliament and of the Council on Public Procurement, COM (2011), 896 final. .European Parliament and the Council, 2004, Directive 2004/18/EC on the Coordination of procedures for the award of public contracts, public supply contracts and public service contracts, EC, 2004.

Mandatory e-submission in Flanders, transparency and enthusiasm: the big winners.

Johan Van Steelandt

1 Introduction
Although Flanders, as the largest and economic strongest Belgian region, has a large number of competences in different policy areas, the legislation on public contracts remains a federal competence. However, that doesnt mean that the Flemish government and administration dont intend to play an active part in e-procurement. From the beginning, the European initiatives about e-procurement were intensively followed by the Flemish administration. Especially the opportunities for the economic operators and the efficiency for purchasing authorities are much appreciated by the Flemish policy makers. Flanders clearly understood that being successful in e-procurement wasnt compromised by the federal ownership of the legislation on public contracts. During the last years, the Belgian federal colleagues on e-procurement built effective applications for e-procurement. Even the lack of ownership of these applications couldnt compromise a successful policy. The vigorous decisions taken by the Flemish government and the great efforts of officials and representatives of the economic operators resulted in a very good practice of the Flemish eprocurement.

2 Analysis
The Flemish government took its decisions on e-procurement in a well-defined context. There was the strict budgetary context which made it impossible to build expensive IT-applications. There were the European and Belgian legal contexts on public contracts which allow that each purchasing authority decides for itself whether it should implement the electronic procedure or not. There was the complex landscape of the multiplicity of purchasing authorities: more than half of all Belgian public contracts werent launched by Belgian or regional administrations, but by local authorities. The last five years, the Flemish government took four decisions on e-procurement. In all these decisions four important elements were emphasized. The Flemish government decided to pursue strategic objectives, in a strict budgetary context, which resulted in advantages with great added value for both authorities and enterprises. To reach this objective, setting up cooperation with other partners was desirable. Four decisions From 2008 till 2013, the Flemish government took four decisions on e-procurement. Initially, in 2008, a general action plan was set up. The last decision evaluated the first year of esubmission which was made mandatory for purchasing authorities and for all economic operators. There was no discussion between political parties: everybody agreed that the advantages for both enterprises and authorities were much greater than the efforts and costs.

41

Johan Van Steelandt with strategic objectives, The Flemish authorities preferred to set up strategic objectives which were very ambitious too. If we had to make the great effort to explain to everybody, both authorities and economic operators, how to use an electronic procedure, we cant accept a low use of the applications.Furthermore, the use of both procedures electronic and paper together in one public contract means an increased inefficiency for the purchasing authority. The Flemish government made e-submission mandatory on the first of January 2012. The managers of the Flemish administration preferred to monitor this program by a well-defined set of indicators, which could be integrated in a BI system. in a strict budgetary context, Due to the availability of the e-procurement applications of the Belgian federal government, the costs for this Flemish e-procurement policy were very low. which created advantages with added value, For each official who rejected the use of the electronic procedure, there were two enthusiastic colleagues who were in favor. Most of them saw the opportunity to say goodbye to a lot of paperwork, with, often a lack of transparency, and welcomed the increase of efficiency. On the side of the purchasing authorities, e-procurement created great expectations on the increase of transparency and efficiency. There was skepticism on the announced increase of the number of tenders due to e-procurement. There was the promise by policy makers to the purchasing officials that the inefficient transmission period with two procedures in one public contract would be limited. On the side of the economic operators there was the well appreciated increasing of the availability of the announcements. (Due to the single portal platform in Belgium, the availability of announcements has always been a solid argument.) Also, the transparency created by the electronic procedure was a great advantage for the economic operators. There were great expectations on the reduction of the administrative burdens. There was and still is a great concern to the confusing situation that the use of the electronic procedure might be too variable by contracts and by authority. Therefore, the European initiative for the proposal on a new directive on public contracts, with mandatory e-submission, will be very important. which were realized by setting up a strong cooperation with many partners The Flemish e-procurement authorities set up several agreements on cooperation with other partners. First of all and very important is the agreement with the federal level on the use of the e-procurement applications. The agreement contains service level agreements on the availability of the platforms. The Flemish administration is informed by means of monthly reports on this availability. These agreements describe the support, the procedures for change requests and the joint communication. Agreements were made also with the Flemish Agency for Enterprises and with the Agency for Internal Affairs (local authorities).The Belgian and Flemish e-procurement authorities set up a cooperation with (16) private organizations for training.

Mandatory e-Submission in Flanders

3 Results
On the output side, the Flemish e-procurement is followed up by three indicators. The public contracts for which e-tendering is allowed or required

The graph below (figure 1) shows to what extent the contracting authority allows or requires the use of the electronic procedure. It shows whether the contracting authority is ready to start using e-tendering. The diagram displays the quantitative development of published public contracts that allow electronic submission of tenders (as compared to the total of public contracts falling under the obligation of publication).

Figure 1: public contracts where the electronic procedure is possible. (2012)

Electronic tenders / total number of tenders per month

This graph below (figure 2) shows the number of electronically received tenders expressed as a percentage of the total number of received tenders for public procurements that were subject to an electronic tender opening session. The diagram shows the development per month expressed as a percentage. The link 'detailed figures' allows for looking up specific figures for a certain policy area or entity. The graph indicates the extent to which the business community is ready for electronic submission of their tenders.

43

Johan Van Steelandt

Figure 2: the number of electronically received tenders, (as a percentage of the total number of received tenders) 2012.

Tenders per public procurement

The graph (figure 3) shows the number of tenders per public contract per month. The development in the number of tenders per public contract provides information about whether the ease of access to public contracts is increasing or decreasing for tenderers. The graph shows absolute figures.

Figure 3: the number of tenders per public contract per month (2012).

Mandatory e-Submission in Flanders When we look at the impact indicators, we can mention the measurement of the reduction of the administrative burdens for the economic operators. For the purchasing authorities also figures on the increasing efficiency of the procedure are available.

Figure 4: The reduction of the administrative burdens for enterprises due to the use of the electronic announcement platform.

Figure 5: The reduction of the administrative burdens due to the use of the e-submission platform.

We can conclude that the reduction of the administrative burdens due to the electronic procedures for e-notification and e-submission are overwhelming (figure 4 and figure 5). There is also an important reduction of the procedure costs for the purchasing authorities. It results in an increasing efficiency.

45

Johan Van Steelandt

Figure 6: Reduction of the procedure costs for the purchasing authority due to the use of the electronic procurement platforms.

On the input side, we can mention the important efforts on training. During the last four years more than 2000 officials were trained intensively. For the enterprises in Flanders a road show has taken place, and during the last two years, a monthly information session has been organized. At this moment there remain two main problems using the electronic procedures on esubmission. The first problem is the bad habit that still too many enterprises are starting the electronic procedure too late. It means that sometimes too many transactions still had to be done in the last few minutes before the opening sessions. Each unavailability of the application, the digital signing service or the internet connection becomes than catastrophic. The second problem is that the available certificates for enterprises from abroad are not sufficiently promoted. Foreign enterprises need much more concrete information on these certificates and how to purchase them. Because of the increasing demand of the enterprises to follow the electronic procedure for all the purchasing authorities all over Belgium, the most important challenge remains, how to convince all local authorities to make e-submission mandatory as quickly as possible. This year, in Flanders several initiatives are set up to realize this objective.

4 Conclusions
E-submission became mandatory in Flanders on the first of January 2012. We conclude: 1. Mandatory e-submission is an overwhelming success: more than 90% of all tenders are submitted electronically. 2. E-submission creates several advantages. In Flanders there is no doubt that the considerate transparency is the most important advantage.

Mandatory e-Submission in Flanders 3. Both sides, enterprises and purchasing authorities, show a great deal enthusiasm for esubmission thanks to the reduction of the administrative burden and the increasing efficiency. 4. The success of e-submission is not only guaranteed by the legal framework, nor the ITapplications, but most of all, by the decisions of the management. 5. There are many challenges in the e-procurement program. Problems might be various and are situated on several levels. A strategic view and strategic objectives are needed to focus on the right direction. 6. Be realistic: e-procurement, nor e-submission, doesnt solve all problems on public contracts.

47

The Developments of e-Procurement in Turkey

mit Alsa

1 Introduction:
Public procurement is a big market in Turkey. According to the statistics of the Public Procurement Authority (PPA) - the agency responsible for regulating and supervising public procurement in Turkey - public procurement was approximately 94 billion Turkish Lira (approximately 40 billion) in 2012.1 This is more than seven percent of the national GDP.2 The PPA and the Turkish government foresaw the opportunities provided by information and communication technologies to render public services efficiently and effectively. In 2006, the government developed and enforced the Information Society Strategy (2006-2010). An electronic environment for public procurement was identified in this strategy as one of the targets for modernizing public administration, with a specific goal of 90 percent of public procurement procedures carried out electronically. The PPA was selected as the responsible agency to achieve this target.3 In November 2008, the Public Procurement Law (PPL) was amended to implement and regulate e-Procurement. This amendment established the PPA as the responsible authority for the establishment and management of EKAP. In 2009, the e-Government advisory group of the Prime Ministers Office determined 11 high-priority e-Government projects, which included eProcurement along with others, such as the electronic searching of judicial records by individuals, online applications to get environmental impact assessment reports and online appointments to public hospitals belonging to the Ministry of Health. In the 2009 and 2010 annual government programs, which specify economic and social targets of government for the year, the development of an electronic public procurement system4 and the operation and extension of the applications provided within EKAP5 were assigned as responsibilities of the PPA, respectively. With clear government support, the PPA began the technical and administrative work towards the design, development, testing and establishment of EKAP in May 2009. In February 2010, EKAP was opened to register contracting entities and economic operators. At this stage only the registration process was handled in EKAP. The 1.0 version of EKAP was launched in September 2010. Through this version, contracting entities could prepare and publish tender documents and notices online, and make records of procurement procedures such as tenderers, tender prices, and contract award information. In December 2010, the 1.1 version of EKAP made it possible to make inquiries from the databases of related government agencies for qualifications of economic operators, such as tax debts and social security premiums due. In March 2011, the 1.2 version of EKAP made it possible to submit and evaluate the tenders through EKAP in the pilot sector of medical devices. These procedures are all regulated by two main PPA regulations: Electronic Procurement Application Regulation dated 25/02/2011 and Communique No. 1 on the use of the Electronic Public Procurement Platform dated 17/12/2010. In this paper I will give detailed information about the functionalities provided for contracting entities and economic operators in EKAP to magnify the current status of eprocurement in Turkey that includes all improvements in the system since March 2011. Then, I will provide some information about measured benefits and effects of EKAP in the Turkish

48

mit Alsa public procurement system. Finally, I will focus on our planned future developments to enhance functionalities provided by EKAP.

2 EKAP Functionalities Provided for Contracting Entities:

Most of the functionalities provided by EKAP are developed for and used by contracting entities, since they are administrators of a tender procedure from definition of needs to awarding of the contract except preparation of tenders by economic operators. Contracting entities users have to log into the system in order to use each function. These functionalities are listed in the table below with brief information about each:

Functionality Post-award Phase

Preparation and Recording of Business Experience Certificates

Brief Information
According to the Public Procurement Contracts Law (PPCL), successful contractors who fulfill their contracts are entitled to get a business experience certificate prepared in accordance with standard forms required by the PPA. These certificates are prepared by contracting entities on EKAP and can be confirmed if the contractor uses that certificate in another tender to show its experience in a similar work. According to the PPCL, total value of a contract may be increased up to 20% or decreased by order of the contracting entity. In addition, nominal contract value may change due to inflation or increases in minimum wage. This functionality is used to get records of these contractual changes. Due to a variety of reasons such as bankruptcy of the contractor or misdeeds of the contractor during fulfillment of the contract, the contract may be annulled by the contracting entity. This functionality is used to get records of contract annulments along with reasons. According to the PPCL, a contract may be transferred to another contractor by approval of the contracting entity, but this contractor can not transfer/deliver another contract for three years. This functionality is used to get such records and confirm that the contractor is not in the black list of contract transfers.
6

Recording of Additional/Deducted Works and Price Differences

Recording of Contract Annulments

Recording of Contract Transfers and Confirmation of Contractors

Table 1: EKAP Functionalities for Contracting Entities

As can be understood from Table 1, nearly all of the pre-award procedures and post-award procedures are either conducted or recorded on EKAP. The picture below shows a screenshot from the tender document preparation module.

49

The Developments of e-Procurement in Turkey

Picture 1: A screenshot from EKAP Tender Document Preparation Module

With addition of e-tender preparation, e-submission and e-evaluation modules in a very near future on EKAP, nearly full procurement cycle will be digitalized for contracting entities.

3 EKAP Functionalities Provided for Economic Operators:

Even though, most functionalities of EKAP are oriented towards contracting entities, economic operators who are registered in EKAP also take advantage of EKAP functionalities in the EKAP Economic Operator pages. These functionalities are listed in the table below with brief information about each:

Functionality
Tender Notification Service

Brief Information
Economic operators who are registered in EKAP are entitled to select economic sectors of their interest and whenever there is a tender notice in the selected sector, they are notified via e-mail about that tender. Economic operators who are registered in EKAP have their own agendas on EKAP and add tenders of interest into their agenda. This functionality is harmonized with agenda applications of Microsoft Outlook, G-mail and Yahoo-Mail. Economic operators who are registered in EKAP can acquire tender documents free of charge by downloading them with their e-signatures or msignatures. Thus they decrease costs of participating in a tender, since they dont have to visit the contracting entity and pay for acquiring printed copies of tender documents. Economic operators who are registered in EKAP can make detailed searches of tender documents

Tender Agenda

Online Tender Document Acquisition via esignatures or mobile e-signatures.

Tender and Tender Notice Search Mechanisms

mit Alsa
and tender notices according to various criteria such as the name of the contracting entity or sector of the procurement. Complaint and Board Decision Search Mechanisms All economic operators without regard to registration in EKAP can search for status of their complaint appeals to the PPA and learn about the decision of the PPA a day after the decision is made. Even though notifications via EKAP is obligatory only for tenders that are fully electronic, current version of EKAP presents contracting entities an application to notify economic operators at various stages of a tender. Some of them are notifications of addendums to tender documents and contract award decisions.
7

Notifications from Economic Operators

Contracting

Entities

to

Table 2: EKAP Functionalities for Economic Operators :

The functionalities described in Table 2 already serve well for economic operators especially in terms of being alert about tender opportunities and acquisition of tender documents. The picture below shows a screenshot from the tender document downloading module.

Picture 2: A screenshot from EKAP Tender Document Downloading Module

With addition of e-tender preparation, e-submission and e-evaluation modules in a very near future on EKAP, economic operators will have the opportunity to prepare their tenders without any need to visit contracting entities and get rid of red tape associated with collecting so many different participation and qualification related documents.

4 Benefits and Effects of EKAP after 2.5 Years:

After the establishment and launching of EKAP, a strong data base of information about public procurement started to accumulate. Such big data made it possible to measure benefits and effects of functionalities provided by EKAP. The picture shown below gives a summary of benefits provided for contracting entities:

51

The Developments of e-Procurement in Turkey

Picture 3: Benefits of EKAP for Contracting Entities

As can be understood from Picture 3 above, the biggest source of savings for contracting entities is coming from improved competition and decreasing contract prices taking the estimated cost as a basis. Competition effect is more stark in 2012 as the number of tenders submitted (5,1) in tenders where there is at least one tenderer who downloaded the tender document via e-signature, is twice the number of tenders (2,6) where no tenderer downloaded the tender document using e-signature on EKAP. There are significant benefits as well for economic operators who are registered in EKAP. The picture shown below gives a summary of benefits provided for economic operators:

Picture 4: Benefits of EKAP for Registered Economic Operators

As can be figured out in Picture 4, most of the benefits that accrue for economic operators are due to downloading of tender documents using e-signatures/m-signatures free of charge on EKAP instead of visiting contracting entities site and paying for printed documents.

mit Alsa

5 Conclusion:
The development of EKAP is a continuous process. Nearly every month the system is renewed for correction of any mistakes and addition of new modules. Some of the studies that are carried out can be summarized as follows: The PPA is planning to add functionality in EKAP that will allow contracting entities to carry out call-off stages of frameworks totally electronically including preparation, submission and evaluation of tenders. Following the progress in the call-off stages of framework agreements where the process will be carried out electronically, tenders for goods with open procedure will be carried out electronically on EKAP. The reason for selecting goods is because the regulation allows e-procurement only for goods right now, except call-off stages of framework agreements and lower level of need to include qualification related documents in tenders for goods. The PPA intends to study on digitalization of procurement items in a way similar to European Article Number (EAN) bar codes. By this way, same or similar items bought by different agencies will be easily compared in terms of price, quantity and other aspects. In other words, apples will be compared with apples. If a specific public entity buys a certain good at an abnormally higher price than another entity, it will be kept responsible and asked for explanation. The PPA is planning to increase the number of government agencies that have linkage with EKAP to inquire qualification related information about economic operators. Some of them are Turkish Standards Institute for quality certificates and Ministry of Justice for criminal records of owners/managers of economic operators.

It is obvious that through continuous improvement in the system, EKAP will make procurement procedures much easier and smoother for all users. A vigorous team at the PPA, including the author of this paper, works hard to make all planned developments available on EKAP, as soon as possible.

53

The Developments of e-Procurement in Turkey

Notes
1.Public Procurement Authority, Public Procurement Monitoring Report, 2012, March 2013, http://www.kik.gov.tr/ihale_istatistikleri-45-1.html 2.Turkish Statistics Institution, Expenditures on GDP at Current Prices, 2012, April 2013, http://www.tuik.gov.tr/VeriBilgi.do?alt_id=57 3.State Planning Organization, Information Society Strategy (2006-2010), July 2006, Ankara, Turkey. 4.State Planning Organization, Annual Government Program of the Year 2009, October 2008, Ankara, Turkey. 5.State Planning Organization, Annual Government Program of the Year 2010, October 2009, Ankara, Turkey. 6.Public Procurement Authority, 2011 Annual Report, pp. 54-64, April 2012, Ankara, TURKEY available at http://www.kik.gov.tr/kurum_faaliyet_raporlari-25-1.html 7.Ibid. 8.Ministry of Development, Citizen Oriented Public Services-Current Situation Report, pp. 24-25, May 2013 Ankara, TURKEY available at www.bilgitoplumustratejisi.org/tr/node/mevcut_durum_raporu 9.Ibid and Press Release by the PPA, 3 billion TL Savings by EKAP, 12 March 2013, available at http://www.kik.gov.tr/Duyuru/105/ekap_ile_uc_milyar_liralik_tasarruf.html

References
.Ministry of Development, Citizen Oriented Public Services-Current Situation Report, pp. 24-25, May 2013 Ankara, TURKEY available at www.bilgitoplumustratejisi.org/tr/node/mevcut_durum_raporu .State Planning Organization, Information Society Strategy (2006-2010), July 2006, Ankara, TURKEY. .State Planning Organization, Annual Government Program of the Year 2009, October 2008, Ankara, TURKEY. .State Planning Organization, Annual Government Program of the Year 2010, October 2009, Ankara, TURKEY. .Turkish Public Procurement Authority, Public Procurement Monitoring Report, 2012, March 2013, available at http://www.kik.gov.tr/ihale_istatistikleri-45-1.html .Turkish Public Procurement Authority, 2011 Annual Report, pp. 54-64, April 2012, Ankara, TURKEY. .Turkish Public Procurement Authority, 3 billion TL Savings by EKAP, 12 March 2013, available at http://www.kik.gov.tr/Duyuru/105/ekap_ile_uc_milyar_liralik_tasarruf.html .Turkish Statistics Institution, Expenditures on GDP at Current Prices, 2011, 2 April 2012, http://www.tuik.gov.tr/VeriBilgi.do?alt_id=57

Electronization Of Public Procurement In The Czech Republic Up To Date Development And Current Trends
Matej andor

1 Introduction
The electronization of public procurement in the Czech Republic still constitutes a new phenomenon. Until the Act No. 137/2006 Coll., on Public Contracts (hereinafter referred to as APC) become effective in 2007, electronic award of public contracts in the Czech Republic was basically impossible. Even though the previous legal regulation did not prohibit electronic award of public contracts, given the procedures governing public procurement it was possible to implement only a limited number of steps electronically, such as an electronic notification. Starting from 2007, the electronization of awarding public contracts has experienced major changes. The most significant amendment concerning the obligation to apply electronic means in the award procedure was implemented as of mid-2012. At that point of time the obligation was introduced to use exclusively electronic means for awarding public contracts for selected groups of contracting entities, with certain commodities and for public contracts not exceeding a specific value, by means of e-markets. This fact offers a good opportunity to assess the state of electronization of public procurement in the Czech Republic, including a discussion of the very objectives of implementing electronic award procedure, their assessment and the evaluation of the current state of electronization as well as that of the objectives of electronic public procurement in the future. This coincides with the subject matter of this paper. This paper has been divided into three parts. The first one deals with the electronization of public procurement, the second one addresses the current state of electronization of public contracts as well as the strategy for electronic public procurement in the future. The last part of the paper contains a separate discussion of the e-markets.

2 Development Of Electronic Public Procurement In The Czech Republic

Electronic public procurement can be defined as awarding public contracts in a procedure where some or all the steps of the tender procedure, i.e. its preparation, its progress and completion, are implemented by electronic means or using electronic tools. In terms of public procurement, the contracting entity may choose out of three different forms of implementing the award procedure, including the traditional paper award of public contracts. The first option consists in implementing the award procedure by traditional means, i.e. without using electronic tools and electronic means. The second option of the contracting entity is to implement the entire procedure electronically, i.e. making all the steps by using exclusively electronic tools and means. The last option enables the contracting entity to implement only selected steps of the procedure by electronic means while retaining the traditional form for the remainder of the steps. There is a number of reasons for opting for electronic public procurement rather than the traditional award of public contracts. The first reason consists in the availability of information

55

Matej andor on implementing an award procedure to a much wider public of economic operators. Another reason is linked to the possibility of implementing the award procedure more promptly, given the swifter means of electronic communication. The third reason lies in a greater transparency with respect to the possibility of recording all the electronic prints while performing certain steps in the award procedure and contributes to a better possibility of public scrutiny when documents are posted online. Last but not least, the electronic public procurement constitutes a possibility for the economic operators to participate in an on-line competition in winning a public contract, which also enables the contracting entity to obtain better conditions for implementing such a contract. All these and other reasons account for a more transparent award of public contracts within a shorter period of time and for a lower price compared to the traditional way of awarding public contracts. The legal regulation of electronic public procurement in the Czech Republic is governed by the APC and stems from EU rules in this field. The APC has put electronic public procurement on an equal footing with the traditional award of public contracts. Also, the Act has introduced and defined some new instruments, such a dynamic purchasing system, electronic auction, electronic means and electronic tools. The legal force of the APC in the Czech Republic was preceded by the adoption in 2006 of a National Plan for the Introduction of Electronic Public Procurement over the Period between 2006 and 2010 (hereinafter referred to as National Plan 2006-2010). This Plan stipulated general and more specific objectives of introducing electronic public procurement in the Czech Republic, as well as its individual tasks and procedures aiming at reaching those goals and providing for an annual evaluation of the accomplished state and updating the set tasks. The National Plan 2006 - 2010 focused on implementing four key objectives: accelerating the process of introducing electronic tools; making sure that contracting entities will be able to award 100 per cent of their public contracts electronically; reaching the stage where 50 per cent of all public contracts including the purchases made under the exclusions from the APC will be awarded electronically; and reaching a state, where a total of 25 per cent of contracting entities shall award public contracts electronically.( PORTAL-VZ.CZ 2012a) From todays point of view it is obvious that the stipulated objectives have been far too optimistic. Yet, there is no doubt that in the period of operation of the National Plan 20062010 a significant progress has been reached in introducing electronic public procurement in the field of legislation and methodology. However, the practical use of electronic award of public contracts by both, the contracting entities, and economic operators, was as we can see from the statistical data below significantly distant from the originally stipulated objectives. In the period of operation of the National Plan 2006-2010 the most important contribution to introducing electronic public procurement consists in the adoption and subsequent amendment of the APC. On the other hand, the sole adoption of the APC did not make it possible in terms of legislation to implement certain steps of the award procedure electronically, such as the proof of meeting qualification criteria by means of original documents. Also, ambiguities concerning electronic contracting persisted. Further accomplishments of the National Plan 2006-2010 contributing to introducing electronic public procurement entail in particular launching an electronic portal on public procurement, drafting methodological procedures and provision implementing the APC, promoting voluntary electronic markets for implementing small scale public contracts and proposing the new National Infrastructure for Electronic Award of Public Contracts, abbreviated in Czech as NIPEZ.

Electronization of Public Procurement in the Czech Republic An overview of available statistical data has served the purpose of evaluating the development of introducing electronic public procurement between 2006 and 2011. The following information follows from these statistical data. Between 2006 and 2011 the public contracts market in the Czech Republic accounted for 13 per cent of GNP in 2001 and this percentage rose to 16.4 per cent of GNP in 2006, in absolute value representing CZK 474 billion ( EUR 18.96 billion) in 2007 and rising to CZK 594 billion (EUR 23.76 billion) in 2010. These amounts cover public contracts awarded by all contracting authorities and entities, including public contracts awarded pursuant to the APC, public contracts awarded by way of exclusions, and small scale public contracts.(andor 2012, pp.4156) The small scale public contracts amounted approximately to 35 per cent of all public contracts. In 2009 this corresponded to CZK 234 billion (EUR 9.36 billion) out of CZK 634 billion (EUR 25.36 billion), which constitutes 37 per cent of all public contracts in that year. (andor 2012, pp.41-56) The use of electronic auction in the discussed period has been recorded with 0.1 per cent of award procedures in 2006, rising to 2.3 per cent of award procedures in 2011 and in case of sector contracting entities the number of award procedures with use of electronic auction accounted for 1.5 per cent of award procedures per year in the discussed period. (andor 2012, pp.41-56) The use of e-market which was absolutely voluntary in the discussed period accounted for 9166 award procedures in 2006 and rose to 13044 award procedures in 2011, which represents in terms of volume CZK 0.9 billion (EUR 36 million) per year in 2006 rising to CZK 1.8 billion (EUR 72 million) per year in 2009, and up to CZK 1.3 billion (EUR 52 million) in 2011. (andor 2012, pp.41-56) A survey carried out by the Ministry for Regional Development (hereinafter referred to as MRD) in 2009 shows that only 18 per cent of contracting entities made use of electronic support when awarding public contracts and only 32 per cent of contracting entities planned to introduce some electronic support into the award procedure in the short term or in the medium term. Half of the contracting entities did not use any electronic tools at all nor did they plan to employ them. According to the said survey only 3 per cent of contracting entities pursued fully electronic award procedures. (andor 2012, pp.41-56) To evaluate the development of introducing electronic public procurement between 2006 and 2011, also using the reproduced statistical data, we can conclude that the National Plan 2006-2010 helped create legislative and methodological environment for electronic award of public contracts and the state of play in the field of electronic public procurement was significantly better in 2010 compared to 2006. On the other hand, compared to one of the main objectives, that of 25 per cent of contracting entities using electronic award of public contracts reaching the real value of 3 per cent in 2009, and comparing to the second main objective, that of 50 per cent of public contracts awarded electronically and accounting for a real value of some units of per cent in 2011, it is obvious that the National Plan stayed a long way from meeting these goals. One of the main reasons for failing to meet the original objectives is believed to be an insufficient infrastructure for electronic public procurement, while according to the MRD this shortcoming shall be eliminated by implementing the NIPEZ projects (PORTAL-VZ.CZ 2012c). Apart from this, more reasons can be identified: the lack of a legal obligation to use electronic public procurement at least with some types of public contracts, and an unsatisfactory almost an invisible media support and insufficient advantages of electronic public procurement compared to the traditional way of awarding public contracts.

57

Matej andor

3 The Current State Of Introducing Electronic Public Procurement And Future Targets
In January 2011 the Strategy for Introducing Electronic Public Procurement over the Period 2011-2015 (hereinafter referred to the 2011-2015 Strategy) was adopted as a follow-up to the National Plan 2006-2010. This strategy constitutes a new source document for introducing electronic public procurement in the Czech Republic. The 2011-2015 Strategy is based on what was achieved under the National Plan 2006 -2010 and aims at expanding electronic public procurement into common use. The main objective of the 2011 - 2015 Strategy is the definition of a basic strategic framework for introducing modern information and communication technologies into the award procedures. The two main targets of the 2011 - 2015 Strategy are as follows. First, 100 per cent of contracting entities will have electronic tools at their disposal which enable them to implement the entire life cycle of a public contract. And second, CZK 50 billion (EUR 2 billion) will be saved per year while awarding public contracts. (PORTAL-VZ.CZ 2012b ) The 2011-2015 Strategy stipulates partial tasks aimed at achieving these two key objectives and further developing the introduction of electronic public procurement. These partial tasks include the following: 100 per cent of information concerning the public contract shall be published electronically, at least 60 per cent of the total number of public contracts shall provide tender documentation electronically and tenders shall be admitted only in electronic form, at least 20 per cent of the total number of public contracts shall use an automated method of evaluation, at least 30 % of the total number of public contracts shall use electronic auction, at least 20 per cent of contacts shall be concluded electronically, and at least 50 per cent of orders and invoices concerning public contracts shall be drafted and transmitted electronically. (PORTAL-VZ.CZ 2012b ) The stipulated objectives, particularly the partial tasks, can be once again assessed as very ambitious, given the real state on which the strategy has been based. On the other hand, the point of departure for reaching these targets is considerably better than that of 2006. Another significant change concerning the introduction of electronic public procurement occurred in mid-2012. As of 1 July 2012 the obligation was introduced for certain contracting authorities, for selected commodities and contracts not exceeding a specific value, to award these public contracts electronically, by means of electronic markets. This is the very first time that the law stipulates not only the option, but the obligation of electronic public procurement for certain groups of public contracts. At present, the legal framework for electronic public procurement has been stipulated as follows: There is a legislative basis for electronic public procurement, there are methodological guidelines and implementing provisions, there are also some commercial tools available. Also, selected electronic elements of awarding public contracts have been used by most contracting entities, for instance for publishing the contract notice. The implementation of the award procedure as a whole by electronic means is still exceptional in practice, but the gradual introduction of the obligation to implement certain tasks electronically is being extensively applied. This includes, for example, publishing information on the profile of the contracting entity, which means that each single contracting entity must provide its electronic profile, either its own or that of a third party, where information and data stipulated by the APC have to be published. In terms of infrastructure, the basis of electronic award of public contracts is the NIPEZ The National Infrastructure for Electronic Award of Public Contracts, which is subdivided into NEN (see below) and the e-market. Apart from NEN and the e-market, NIPEZ also encompasses

Electronization of Public Procurement in the Czech Republic Tenders electronic daily - CZ and an interface connecting it to other systems of public administration such as the commodity code list, systems of e-government, or TED. The main objective of NIPEZ is to achieve financial savings by introducing electronic award of public contracts by reducing the prices of the purchased goods and lowering the transaction costs. NEN standing for the National Electronic Tool constitutes a subsystem of NIPEZ. It represents infrastructure which, once completed, will be able to support in a complex way all categories of public contracts and contracting entities. NEN should enable a complete implementation of public contracts electronically, starting from the initiation of the award procedure and ending with its completion, including the implementation of electronic auctions, e-catalogues or automated evaluation methods. It will also enable to interconnect the internal systems of economic operators and contracting entities, for example of the tabling service, and will provide with an interface with other systems of e-government in the Czech Republic. The operation of NEN shall be launched on 1 January 2014.

4 E-Market
E-market constitutes the second subsystem of NIPEZ. E-markets are information systems enabling electronic award of public contracts in case of small scale public contracts, in case of below-the-threshold public contracts and in case of framework agreements. In terms of its definition, the e-market is an electronic tool under Article 149 paragraph 2 of the APC and as an e-market of the public administration it is kept on the list of electronic markets as an electronic market of the public administration. The main objective of the subsystem of e-markets consists in savings and in enhancing the efficiency of using public funds. Some of the partial contributions of e-markets include: the reduction of financial costs associated with a public contract, better opportunities for competition, and the possibility of an online competition to obtain a public contract. Besides that, e-market shall also lead to reducing transaction costs for both contracting entities and economic operators, due to the fact that the basic services of the e-market will be provided free of charge for the contracting entity and their costs will be borne by the MRD. Further advantages comprise simple access to information on the public contract as it will be published online; speeding up of the evaluation of tenders thanks to their automated evaluation; greater transparency and more simple records and data processing on the public contract. Finally, the e-market shall provide room for a prompt encounter between the demand and the offer. As of 1 July 2012, the use of e-market has been obligatory for selected groups of contracting entities when awarding small scale public contracts, under-the-threshold public contracts and contracts based on framework agreements for certain commodities, with the exceptions stated below. The use of the e-market is voluntary for the remainder of the contracting entities, and for the rest of the commodities, whereby the option to use e-market is available for public contracts whose value exceeds CZK 5000 (EUR 200). In terms of mandatory or voluntary participation of contracting entities, the use of e-market is mandatory for the authorities of the central state administration and for bodies subordinated to them. The authorities of the central state administration are obliged to introduce demands for all mandatory commodities by means of e-market and the subordinated bodies shall do the same for such an amount of mandatory commodities, which in absolute terms constitute at least 50 per cent of all their funds for mandatory commodities per year. In terms of funding, this obligation refers to all mandatory contracting entities for public contracts exceeding the value of CZK 50 000 (EUR 2000). In case of contracts not exceeding this value, their implementation by means of e-markets has remained voluntary.

59

Matej andor The stipulation of mandatory commodities for the purpose of their award by means of emarkets has been governed by the Government Decree No. 451/2011, in which these commodities have been defined with CPV codes and NIPEZ code lists. The mandatory commodities include in particular: fuels, office machines and IT, logistics, security services, furniture and equipment of offices, training, safety and cleaning services. On the contrary, mandatory commodities exclude non-standard subjects of a contract, i.e. a contract which is more difficult to define, such as a contract entailing the creation of intellectual property. Nowadays, licenses to operate e-markets have been awarded to five e-markets: Tendermarket, Gemin, VortalGOV, esk trh (Czech Market) and Centrumvz, based on an agreement concluded with the MRD. This number of e-markets is final for the forthcoming five years. The contracting entity may choose which of the e-markets it will use, and it may use one or more e-markets. The MRD pays for the transactions made in the framework of the basic services of e-markets to their operators and they are free of charge for both contracting entities and economic operators. Apart from the basic services operators may offer extra services. These are not paid for by the MRD, but directly by the contracting entities or economic operators. In terms of the different types of award procedure, the electronic market shall be applied when the above conditions have been met to small scale public contracts, under-the-threshold public contracts awarded in a simplified below-the-threshold procedure and to public contracts awarded on the basis of a framework agreement with more tenderers pursuant to Article 92 paragraph 3 of the APC. For small scale public contracts the use of e-market is mandatory once the above conditions have been met only if their value exceeds CZK 50 000 (EUR 2000) and voluntary if their value exceeds CZK 5 000 (EUR 200). Public contracts not exceeding this value may be awarded via the e-market only in the framework of extra services of the e-market. As part of the award procedure for small scale public contracts by means of e-markets it is possible to use both electronic auction and mini-tenders, no matter what the value of the small scale tender is. In justified cases, and if the value of the public contract does not exceed the amount of CZK 100 000 (EUR 4000), it is possible to use direct award. A closed invitation to submit tenders to selected economic operators is possible only in justified cases when the value of the public contract falls within the limit between CZK 100 000 (EUR 4000) and CZK 500 000 (EUR 20 000) in case of supplies and services and if the value does not exceed CZK 1 500 000 (EUR 60 000) in case of works. Finally, an open invitation to submit tenders may be used for public contracts with a value ranging from CZK 500 000 (EUR 20 000) to CZK 1 000 000 (EUR 40 000) in case of supplies and services and ranging from CZK 1 500 000 (EUR 60 000) to CZK 3 000 000 (EUR 120 000) in case of works. For public contracts awarded in simplified under-the-threshold procedure or on the basis of a framework agreement as described above, it is possible to use mini-tender for framework agreements and within the simplified under-the-threshold procedure the very implementation of this type of award procedure or a direct award in justified cases. At present, the system of e-markets has registered a few hundred contracting entities, a few thousand economic operators and the number of public contracts implemented via the emarket is continuously rising. So far, statistic data is only available for the first three months of the operation of the e-markets (July through September 2012). For this period, almost 3900 award procedures have been implemented by means of e-markets, out of which 70 percent concerned supplies, 27 percent services and the remainder accounted for works (MMR.CZ, 2013).

Electronization of Public Procurement in the Czech Republic

5 Results And Conclusions

The first seven years of introducing electronic public procurement in the Czech Republic, i.e. the time span between 2006 and 2012, have shown that providing legislative and methodological environment only for the possible electronic award of public contracts proved to be insufficient. Without creating the necessary infrastructure and in combination with the voluntary principle of using the electronic award of public contracts in most cases, it was impossible to reach the volume of using electronic public procurement foreseen by the National Plan 2006 - 2010. However, the progress reached in introducing electronic public procurement in the discussed period is not insignificant. First, we can mention the amendment of the attributes of electronic award of public contracts in the APC, the drafting of implementing provisions and methodological guidelines, the launching of the portal on public contracts, providing support to electronic markets and approving the National Infrastructure for Electronic Infrastructure Award of Public Contracts, abbreviated in Czech as NIPEZ. Also, in terms of statistics, this period has witnessed an increase in the use of the individual parts of electronic award of public contracts compared to the point of departure. This, however, has occurred on a much lower scale than foreseen by the original target. The year 2012 constituted a significant change with respect to introducing electronic public procurement. The introduction of the obligation to use electronic market stipulated as of 1 July 2012 for selected groups of contracting entities and for certain commodities in case of small scale public contracts, simplified under-the-threshold procedures and contacts resulting from some framework agreements constitutes a recipe for a swift introduction of electronic public procurement. Extending the obligation of mandatory electronic public contracts to those which now follow a voluntary regime to use e-market requires the creation of a sufficient electronic infrastructure.

61

Matej andor

References
.Act No. 137/2006 Coll., on Public Contracts .MMR.CZ, 2013. Statistiky vyuvn etri. [online, 14. 2. 2013]. Available at:http://www.mmr.cz/getmedia/ef011c18-0468-4e51-8442-e2a4ed086b5f/Podrobne-vysledkystatistik.pdf .PORTAL-VZ.CZ, 2012a. Nrodn pln zaveden elektronickho zadvn veejnch zakzek pro obdob let 2006 2010 [online, 12. 9. 2012]. Available at: http://www.portalvz.cz/CMSPages/GetFile.aspx?guid=e5ef5f3f-7af4-4c4b-8271-54561ad32745 .PORTAL-VZ.CZ 2012b. Strategie elektronizace zadvn veejnch zakzek pro obdob let 2011 a 2015 [online, 12. 9. 2012]. Available at: http://www.portal-vz.cz/Elektronicke-zadavani-verejnychzakazek/Strategie-elektronizace-zadavani-VZ-2011---2015 .PORTAL-VZ.CZ 2012c. Zprva o plnn Nrodnho plnu zaveden elektronickho zadvn veejnch zakzek pro obdob let 2006 2010 za rok 2010 [online, 12. 9. 2012]. Available at:http://www.portalvz.cz/CMSPages/GetFile.aspx?guid=150c14ae-7097-4249-ac25-db43c9dc54a3 .ANDOR, Matej, 2012. Elektronizace veejnch zakzek dosavadn vvoj a aktuln otzky. Veejn zakzky a PPP projekty, vol. 6, issue. 4, pp. 4156. ISSN 1803-9553, ISBN 978-80-260-2206-0

The Evaluation Of Mandatory E-Public Procurement In Portugal: Perceptions And Results Of The National Survey (2010-2012)
Amlcar Arantes , Antnio Aguiar Costa and Luis Valadares Tavares

1 Introduction
In terms of improving communication, collaboration and process efficiency and enhancing performance-based approaches to projects and processes (Commission, 2010c, Commission, 2010a), the Information and Communication Technologies (ICT) emerge as strategic instruments. The advantages of ICT are already recognized and Europe has demonstrated steady improvement in terms of the availability of online services (Commission, 2009). In this scenario, the introduction of ICT in public procurement processes is an issue of the utmost importance, with e-public procurement being considered a significant contribution towards an efficient, transparent and less bureaucratic society that has positive impacts on buyer-supplier relationships (Johnson, 2011, Narasimhan and Das, 2001, Ellram and Zsidisin, 2002). Grounded on e-public procurement benefits, the Manchester Declaration (2005) stated that by 2010 all public administrations across Europe would have the capability of carrying out 100% of their procurement electronically and at least 50% of public procurement above the EU public procurement threshold would be carried out electronically. However, in 2010 the EU Member States were still far from those availability targets established in the Manchester Declaration (Commission, 2010a). The one exception to this low rate of use was Portugal (Commission, 2010b), where public procurement has been fully electronic since November 1st 2009 for any open, restricted or negotiated process, which makes the country the first to be able to assess the impacts of mandatory e-public procurement. Presently, e-submission is fully available in Portugal, Cyprus, Ireland, Malta, Belgium, Austria, United Kingdom and Sweden, although it is mandatory only in the first six of those member states (Cattaneo, 2012). In the literature one can find several works on e-public procurement implementation and impact assessment (Croom and Brandon-Jones, 2007;, Croom and Brandon-Jones, 2005; Vaidya et al., 2006; Johnson, 2011; McConnell et al., 2010). However, published works appraising the dynamics of convergence in e-public procurement and the change in perceptions as to the impacts of e-procurement are unknown. Hence, in order to study these issues, two national surveys were conducted focusing on the impacts of e-public procurement, including both public contracting authorities (PCAs) and private contractors (PCs). The first survey took place in 2010, one year after e-procurement became fully mandatory, and the second survey was conducted in 2012. Bearing in mind the e-public procurement dynamics of convergence and change, the research questions that are the particular focus of this paper are the following: does the perception of e-procurement impacts differ between PCAs and PCs? And do the perceptions change over time? The answers to these questions contribute to expanding the knowledge on e-public procurement and highlighting the dynamics of impact perception in PCAs and PCs.

63

A.Arantes et al.

2 Overview of e-public Procurement

Considering that public procurement accounts for more than 17% of GDP in the EU (Commission, 2010d), substantial gains can be achieved by increasing procurement efficiency. The potential gains in efficiency are all the higher because most public contracts are complex, costly, have low transparency and value and are recognized as being bureaucratic and rigid processes, requiring frequent renegotiation and proactive conflict management (Spiller, 2008, Tavares, 2008). In this scenario, e-procurement emerges in the public sector with the aim of reducing complexity and improving competitiveness and transparency (Duyshart et al., 2003; Johnson, 2011; Croom and Brandon-Jones, 2007; Croom and Brandon-Jones, 2005). Puschmann and Alt (2005) demonstrated in a benchmark study that the benefits of eprocurement are, mainly, gains in efficiency and effectiveness and evidenced the following best practices: reduction or elimination of authorization stages; regulation of exceptions to a limited degree at the beginning; elimination of paper; integration of suppliers in the entire process chain; and consideration of the complete process from searching for articles to invoicing. These best practices envisage the elimination of the difficulties faced in traditional procurement and promote more integrated and straightforward approaches that are more efficient and performance-based, focusing on a wider range of procurement subjects, considering strategic perspectives and giving the contract a central role (Collins, 1999, VincentJones, 2006). The execution of contracts becomes easier and more rigorous in this integrated and paperless context, since all relevant information is accessible through the electronic platform, and more attention can be directed to non-operational issues (Vaidya et al., 2006). 2.1 The Portuguese Public Contracts Code The Portuguese Public Contract Code (PCC), Decree-Law 18/2008, transposed the relevant European Union directives to the Portuguese legal system (Commission, 2004). The law was passed with various objectives (Mateus et al., 2010), such as full adoption of e-procurement; broad flexibility of procedures to award contracts, including new options, such as reverse auctions, dynamic acquisitions systems and framework agreements; and availability to any bidder of the full specification of the multi-criteria model for evaluating tenders before having to present its tender. Under the PCC all actors are obliged to interact and communicate through the internet, use certified e-procurement platforms and authenticate processes using recognized digital signatures. These demands introduced significant changes to the collaboration and working procedures between PCAs and PCs. However, a transition period, during which both paper-based and electronic-based procurement could be used, was established for the period between the entry into force of the Decree-Law (July 30th 2008) and the mandatory use of e-procurement (November 1st 2009). Portugal has a decentralized approach to e-procurement platforms, in contrast to several countries across Europe where e-procurement implementation models relies on the mandatory use of a single national platform (Commission, 2009; Assar and Boughzala, 2008). The PCAs may select the most suitable platform from a set of eight electronic platforms certified by a Supervisory Board offering general and differentiated services (InCI, 2012) and PCs must be registered and use the various platforms at the same time. In the decentralized approach, the e-procurement platform market is regulated and each member must comply with strict security and safety requirements (Betts et al., 2006; Polemi and Papastergiou, 2006). It is expected that the existence of several platforms increases competition and stimulates the development of more capable solutions, integrating business processes, promoting green procurement, boosting collaboration and enhancing electronic supply chain management.

The Evaluation of Mandatory e-Public Procurement in Portugal

2.2 e-Public Procurement Impacts

The implementation of e-public procurement can result in a reduction of more than 3% of public expenditure for the same output (Duyshart et al., 2003; Commission, 2010b) and can enhance transparency, accountability and integrity in public procurement (Armstrong, 2005). There are studies published that show the importance of e-public procurement and its benefits (McConnell et al., 2010; Croom and Brandon-Jones, 2007; Croom and Brandon-Jones, 2005; Vaidya et al., 2006). Croom and Brandon-Jones (2005) identified as the main issues in eprocurement implementation: impact on cost efficiency; impact on the form and nature of supplier transaction; e-procurement system implementation, broader IT infrastructure issues; and the behavioral and relational impact of e-procurement. They concluded that a significant motivation for e-procurement adoption were the economic benefits, and also emphasized the importance of the organizational commitment and support and evidenced training as a key factor influencing the uptake of internet purchasing tools. These findings were based on a study on e-procurement implementation across a set of UK public sector organizations. Another study published by the same authors in 2007 (Croom and Brandon-Jones, 2007), based on nine UK public sector organizations and focusing on system specification, implementation management, changes to organizational characteristics, changes in total acquisition costs, and changes to governance structures, found that the e-procurement effect is broadly applicable and that many of the benefits proclaimed in the literature can indeed be realized. Once again, evidence of the impact on costs was identified. In order to analyze the impacts of e-procurement, one must take into account that eprocurement platforms induce changes in markets; and these changes must be factored into the discussion. Indeed, e-procurement instruments reduce search and coordination costs, providing detailed price and product information, which induces improved transparency and pushes markets, especially price-based markets such as commodity markets, towards the idea of a market where buyers are fully informed about seller prices at no cost (Bakos, 1997). This situation may lead to an increase on the number of suppliers in procurement procedures and may lead suppliers to a competitive price-taking equilibrium, improving buyers benefits and reducing sellers power (Bakos, 1997; Riggins et al., 1994; Wang and Seidmann, 1995). Consequently, degradation in the supply quality (delays, less customer support, etc.) may occur, due to strong price competition. For instance, as Mithas et al. (2002) argue, buyers face a considerable dilemma when switching from their existing supply chain relationships to emarkets, as the change can harm existing social connections and prejudice future purchasing. Therefore, although at first glance the use of e-procurement seems to promote endless expansion of e-markets, a more detailed analysis may show that in complex and diversified markets the strong competition promoted by electronic instruments may lead to abandonment by users (Costa and Tavares, 2013). Moreover, a more profound understanding of e-procurement may show that suppliers are the more vulnerable party in a dematerialized context and, therefore, may require special attention. The major objective of this paper is to contribute to the literature in the field of e-public procurement, bearing in mind the key issues discussed, namely: major e-procurement impacts (cost, transparency, duration, competition, bureaucracy, value for money) and the dynamics of e-procurement over time, paying special attention to the perception of private contractors.

3 Research Method
In order to assess and understand the impacts of e-public procurement and its dynamics over time, two surveys of PCAs and PCs were conducted. The first survey was conducted in 2010,

65

A.Arantes et al. one year after mandatory e-procurement (imposed by the new PCC); and the second in 2012. These two surveys, which were conducted at different stages of e-procurement implementation maturity, allow for a broader understanding of the Portuguese experience and impacts of e-public procurement. 3.1 The Questionnaire The questionnaire used in both surveys was cross-sectional and the data collection was webbased. In designing the questionnaire, great care was taken to ensure consistent meaning for all respondents, to prevent ambiguity and inadequate wording and to improve the validity of responses (Fowler, 2009). Furthermore, the questionnaire was prepared based on recommendations from existing studies (Vaidya et al., 2006; Croom and Brandon-Jones, 2007) and several interviews with PCAs and PCs involving senior management personnel with eprocurement experience. Subsequently, a group of questions (Table 1) was developed in alignment with the research questions formulated, thus safeguarding methodological consistency (Saunders et al., 2009). To increase the survey response rate, this process was conducted with the aim of minimizing the number of questions while still ensuring collection of the necessary data.
Survey questions - Impacts of e-procurement Does e-procurement have an impact on procurement costs? Does e-procurement have an impact on procedure duration? Does e-procurement have an impact on competition? Does e-procurement have an impact on transparency? Does e-procurement have an impact on bureaucracy? Does e-procurement have an impact on average total value of proposals?
Table 1 Survey questions

In relation to the impacts of e-procurement, the questions designed to assess the respondents perception used a three-point Likert scale (1 = Negative impact, 2 = No change; and 3 = Positive impact), as the interviews prior to the questionnaire design revealed the respondents hesitation in detailing their judgment using more than three levels. Moreover, we are of the opinion that a three-point Likert scale is adequate for the purpose of the study. 3.2 Questionnaire Test And Administration The preliminary questionnaire and the cover message were first tested by the authors colleagues involved in supply chain and procurement research. Subsequently, further tests were carried out in a limited and controlled set of PCAs and PCs. These tests allowed for fine tuning of the questionnaire, ensuring its effectiveness in collecting information and eliminating misunderstandings or ambiguities. The PCAs and PCs that received the questionnaire belonged to a set of entities provided by the InCI (Institute for Construction and Real State). InCI is the public entity responsible for the management of the Public Contracts Portal (PCP), which aggregates all information on public contracts. As all public acquisitions must be mandatorily registered in the PCP, as laid out in

The Evaluation of Mandatory e-Public Procurement in Portugal the PCC, it can be assumed that the set of entities coincides with the universe of entities using e-procurement. In total the survey was distributed electronically to 2900 PCAs and 2000 PCs in 2010 and 2012.

4 Results And Discussion

The research consisted essentially of the analysis of the impacts of e-public procurement on PCAs and PCs, comparing its perceptions in terms of means. The analysis was conducted for each type of entity for 2010 and 2012, allowing for comparison of the results by entity and by year. This approach made it possible to achieve a deeper understanding of the perceptions of the e-procurement impacts over time. The statistical analyses were carried out using the statistical package for social sciences (SPSS) and consisted of testing the null hypothesis that the mean values of the perceptions of the impacts are equal, when comparing them by type of entity and year. The following procedure was adopted: the T-student test was used to test the No change value of the overall means; the Levene F test of homogeneity was used to check if the variances in the dependent variables are similar; if the Levene F statistic had significance, then a T-student analysis assuming equal variance was undertaken; if the Levene F statistic had no significance, which means that the variances in the dependent variables were not similar, then a T-student analysis not assuming equal variance was used; In all the tests, it was considered that statistical significance is achieved when the pvalues are less than = 0.05 (Forza, 2002).

This procedure made it possible, with statistical significance, to clarify whether or not the opinions were the same on the various topics addressed in this study. 4.1 General Information The questionnaire survey was sent by e-mail to 2900 PCAs and 2000 PCs in both 2010 and 2012. With a view to increasing the number of responses, the questionnaire and the cover message were sent several times. Table 2 presents the characterization of the respondents. Since the number of respondents is always higher than 44 (Forza, 2002), we can say that there are enough responses to ensure statistical inferences with a statistical power () of 0.8 at a significance level () of 0.05,

67

A.Arantes et al.

Table 2 Survey respondent distribution

As shown in Table 2, the survey response rates are low, which is common in e-mail surveys (Sax et al., 2003). In this particular case, this phenomenon may have been aggravated by the fact that these surveys are being carried out every year beginning in 2009, thus potential respondents may become more unwilling to cooperate over time. The reduced response rate may lead to nonresponse bias (Kypri et al., 2004), though, in the present case, this phenomenon may be residual because the distribution of the type of entities in the sample is similar to its distribution in the population (Costa et al., 2013). 4.2 Impacts Of E-Public Procurement In terms of e-public procurement impacts, the analysis centered on the hypotheses considered at the beginning of the research, which focused on the different perception of PCAs and PCs within a determined year and overtime. Accordingly, in the following sections special attention will be paid to the results of 2010 and 2012 and the respective comparison will be discussed. 4.2.1 Perceptions Of The Impacts In 2010 Looking at the PCAs perception in particular (Table 3), one must point out that only for Competition, Transparency and Average total value of proposals has the impact of eprocurement been felt, and in all cases it has been positive. Turning to the PCs perception, one must say that e-public procurement had a wider impact, as only the perception as to Procedure duration did not change. As was the case for PCAs, in all cases where change was registered the impact was positive. Comparing both types of entities, the T-student analysis (Table 3) shows that the PCAs and PCs had a significantly different perception in terms of Costs, Competition and Bureaucracy and in all these cases PCs have a more positive perception. Overall, we can say that e-public procurement had a positive impact on PCAs and PCs, and the impact perceptions were higher in the case of the PCs. It is interesting to note that in both cases the most positive impact perception occurred for Transparency. 4.2.2 Perceptions Of The Impacts In 2012 In 2012 the PCAs considered that positive impacts were introduced by e-procurement in the same dimensions as in 2010 (Competition, Transparency and Average total value of proposals), plus the Cost dimension (Error! Reference source not found.). On the other hand, in relation to the PCs perception it is relevant to note that the impacts are diminished in terms of the dimensions that have felt a change, as as impact has been

The Evaluation of Mandatory e-Public Procurement in Portugal noticed only for Competition, Transparency, Bureaucracy and Average total value of proposals. As the data shows, PCAs and PCs had a significantly different perception in terms of Costs and Bureaucracy, with a better perception by PCAs in the first dimension and by PCs in the latter. So, in 2012, there is no prevalent positive perception by either types of entity, as was the case in 2010. Overall, e-public procurement had a positive impact on PCAs and PCs and in both cases the impact on Transparency was the most positive, as was already the case in 2010. 4.2.3 The Dynamics Of Change When we compare the evolution of the perception by each type of respondent overtime, it is possible to verify that for PCAs there was a significant change only in terms of the perception about competition, which has improved positively (Error! Reference source not found.).In the case of the PCs, the only change verified was in terms of Costs, which decreased (Table 6).Thus, a distinct behavior can be observed in PCAs and PCs. While the perception by PCAs has been improved, the perception by PCs has decreased. However, analyzing the results in terms of the average global impacts (which have been calculated as the average of all impacts by type of entity for each year) (Table 7), it is possible to conclude that the perceptions of PCAs did not change significantly from 2010 to 2012, which is not the case for PCs. So, as the date shows, the global perception of e-public procurement impacts by PCs has decreased over time and converged towards the average global impact as perceived by PCAs, as confirmed by the similar figures obtained for 2012.
*values given on a three-point Likert scale (a score greater than 2 indicates a positive impact) **T-student test for means (test value = 2)

Average* Impacts 2010PCAs vs PCs

T-student Sig.**

Independent samples T-test Equal Equal variances variances not assumed assumed (Sig.). (Sig.). 0.004 0.920 0.006 0.214 0.000 0.921

PCAs

PCs

Overall

PCAs

PCs

Costs Procedure duration Competition Transparency Bureaucracy Average total value of proposals

2.08 2.09 2.14 2.64 1.94 2.25

2.40 2.08 2.44 2.52 2.42 2.26

2.16 2.09 2.22 2.61 2.06 2.25

0.158 0.173 0.013 0.000 0.347 0.000

0.000 0.488 0.000 0.000 0.000 0.005

Table 3 - Impacts comparison in 2010 between PCAs and PCs

69

A.Arantes et al.
*values given on a three-point Likert scale (a score greater than 2 indicates a positive impact) **T-student test for means (test value = 2)

Average* Impacts 2012PCAs vs PCs

T-student Sig.**

Independent samples T-test Equal Equal variances variances not assumed assumed (Sig.). (Sig.). 0.004 0.462 0.789 0.162 0.046 0.954

PCAs

PCs

Overall

PCAs

PCs

Costs Procedure duration Competition Transparency Bureaucracy Average total value of proposals

2.18 2.08 2.36 2.58 1.98 2.29

1.85 2.17 2.39 2.45 2.24 2.28

2.06 2.11 2.37 2.53 2.08 2.28

0.009 0.288 0.000 0.000 0.841 0.000

0.105 0.064 0.000 0.000 0.014 0.001

Table 4 Impacts comparison in 2012 between PCAs and PCs

*values given on a three-point Likert scale (a score greater than 2 indicates a positive impact) **T-student test for means (test value = 2)

Average* PCAs - Impacts 2010 2012 Overall

Independent samples Ttest Equal variances assumed (Sig.). 0.220 0.932 0.011 0.306 0.655 0.591 Equal variances not assumed (Sig.).

Costs Procedure duration Competition Transparency Bureaucracy Average total value of proposals

2.08 2.09 2.14 2.64 1.94 2.25

2.18 2.08 2.36 2.58 1.98 2.29

2.12 2.09 2.23 2.62 1.96 2.26

Table 5 - Impacts of e-public procurement PCAs

The Evaluation of Mandatory e-Public Procurement in Portugal

*values given on a three-point Likert scale (a score greater than 2 indicates a positive impact) **T-student test for means (test value = 2)

Average* PCs - Impacts 2010 2012 Overall

Independent samples Ttest Equal variances assumed (Sig.). 0.000 0.510 0.649 0.511 0.208 0.848 Equal variances not assumed (Sig.).

Costs Procedure duration Competition Transparency Bureaucracy Average total value of proposals

2.40 2.08 2.44 2.52 2.42 2.26

1.85 2.17 2.39 2.45 2.24 2.28

2.12 2.13 2.42 2.48 2.33 2.27

Table 6 Impacts of e-public procurement PCs

Mean 2010 PCA PC T-student Sig. 2.19 2.36 0.012 2012 2.24 2.23 0.806

T-student Sig. 0.323 0.049

Table 7 Average global impact by type of entity and by year

5 Conclusions
Significant changes have been introduced in the public sector in the last few years, particularly in terms of the dematerialization of services. Electronic instruments are already in use today to support and improve diverse government services. Among the existing e-government solutions, e-procurement is one of the most relevant, primarily because of its positive impacts on public expenditure and process efficiency. Portugal was the first case of mandatory adoption of e-procurement for all open, restricted and negotiated processes in Europe.Thus,it is an interesting case for conducting a detailed study of the impacts of e-public procurement. To this end, surveys were carried out in two different years, making it possible to understand the major impacts of e-procurement on PCAs and PCs. Bearing in mind the e-public procurement dynamics of convergence and change, how the perception of e-procurement impacts differ between PCAs and PCs was analyzed and also how those perceptions change over time. Some of the major results of the survey analysis are particularly noteworthy: 1- In the first year of full e-public procurement implementation, the PCs had a more positive opinion as to the perception of the e-procurement impacts;

71

A.Arantes et al. 2- Over time this difference vanished, with a reduction in the perception of the impacts of e-procurement by PCs; 3- Over time the perceptions of PCAs and PCs became similar; 4- The average global results were positive for PCAs and PCs in both years, although the perception has changed negatively for PCs. As a conclusion one can say that, as already mentioned, PCs are the most vulnerable to electronic market dynamics, since electronic markets increase competition and may lead to excessive price-based competition, which may be prejudicial to PCs. As the results show, there was a decrease in the perception of impacts for PCs, mostly due to a less positive perspective in terms of costs, which may be caused by a recent increase in the cost of time stamps introduced by e-procurement service providers and the increase in competition, leading to a decreased supplier margins per tender submitted. A major conclusion is that the higher costs of e-procurement for PCs resulted in a less positive view of e-public procurement, showing that, as expected, PCs are the most susceptible to changes introduced by e-public procurement service providers. This situation highlights the importance of a proactive regulation of electronic markets, which should bear in mind the dynamics of electronic markets and the vulnerability of PCs. In reality, the PCC establishes that suppliers should not have to pay for e-procurement services, though e-procurement service providers are making platform users pay for timestamps costs, which may be harmful to the electronic market dynamics. In any case it is important to emphasize that e-public procurement had a general positive impact on PCAs and PCs and in both cases resulted in a high perception of transparency increase in public purchasing processes. In terms of further development, it will be interesting to conduct a subsequent survey in order to analyze the consequence of the dynamics of convergence identified, particularly if the perception of impacts by PCs will continue on its downward trend. A major limitation of this research is the type of survey chosen. It was an electronic survey, distributed by e-mail, which usually results in low response rates. No incentive and no follow up has been considered, however the answers obtained were distributed according to the population distribution (in terms of administrative levels), which may indicate that the nonresponse bias is to some extent limited.

6 Acknowledgments
The authors would like to thank the Portuguese Technology and Engineering Observatory (OPET) and the Portuguese Public Markets Association (APMEP), which carried out the national surveys on the impacts of e-procurement under contract with InCI (Institute for Construction and Real Estate).

The Evaluation of Mandatory e-Public Procurement in Portugal

References
.ARMSTRONG, E. 2005. Integrity, Transparency and Accountability in Public Administration: Recent
Trends, Regional and International Developments and Emerging Issues. United Nations. .ASSAR, S. & BOUGHZALA, I. 2008. Empirical evaluation of public e-procurement platforms in France. International Journal of Value Chain Management, 2, 30-42. .BAKOS, J. Y. 1997. Reducing Buyer Search Costs: Implications for Electronic Marketplaces. Management Science, 43, 1676-1692. .BETTS, M., BLACK, P., CHRISTENSEN, S., DAWSON, E., DU, R., DUNCAN, W., FOO, E. & GONZLEZ, J. 2006. Towards secure and legal e-tendering. ITcon, 11, 89-102. .CATTANEO, G. 2012. Study on e-procurement measurement and benchmarking: The e-procurement landscape in the EU. European Conference on e-Procurement. Brussels. . COLLINS, H. 1999. Regulating Contracts, New York, Oxford University Press. .COMMISSION, E. 2004. A report on the functioning of public procurement markets in the EU: benefits from the application of EU directives and challenges for the future. Available: http://ec.europa.eu/internal_market/publicprocurement/docs/public-proc-market-finalreport_en.pdf. .COMMISSION, E. 2009. Smarter, Faster, Better eGovernment, 8th Benchmark Measurement. In: COMMISSION, E. (ed.). European Commission. .COMMISSION, E. 2010a. Europes Digital Competitiveness Report 2010. Brussels. .COMMISSION, E. 2010b. Green Paper on expanding the use of e-procurement in the EU. Brussels: European Commission. .COMMISSION, E. 2010c. ICT and e-Business for an Innovative and Sustainable Economy, 7 Synthesis Report of the Sectoral e-Business Watch. Brussels. .COMMISSION, E. 2010d. Public Procurement Indicators 2008. In: DG, I. M. (ed.). Brussels, Belgium. .COSTA, A. A., ARANTES, A. & TAVARES, L. V. 2013. Evidence of the impacts of public e-procurement: the Portuguese experience. Journal of Purchasing and Supply Management, Under review. .COSTA, A. A. & TAVARES, L. V. 2013. Advanced multicriteria models to promote quality and reputation in public construction e-marketplaces. Automation in Construction, 30, 205-215. .CROOM, S. & BRANDON-JONES, A. 2007. Impact of e-procurement: Experiences from implementation in the UK public sector. Journal of Purchasing and Supply Management, 13, 294-303. .CROOM, S. R. & BRANDON-JONES, A. 2005. Key Issues in E-procurement: Procurement Implementation and Operation in the Public Sector. Journal of Public Procurement, 5, 367-387. . DECLARATION, M. 2005. Ministerial Declaration approved unanimously on 24 November 2005. Manchester. . DUYSHART, B., MOHAMED, S., HAMPSON, K. D. & WALKER, D. H. T. 2003. Enabling Improved Business Relationships How Information Technology Makes a Difference. In: WALKER, D. & HAMPSON, K. (eds.) Procurement Strategies: A Relationship-based Approach. UK: Blackwell Publishing. .ELLRAM, L. M. & ZSIDISIN, G. A. 2002. Factors that drive purchasing and supply management's use of information technology. Engineering Management, IEEE Transactions on, 49, 269-281. .FORZA, C. 2002. Survey research in operations management: a process-based perspective. International Journal of Operations & Production Management, 22, 152-194. .FOWLER, F. J. 2009. Survey Research Methods, California, Sage Publications. .INCI, I. O. C. A. R. E. 2012. Base: Contratos Pblicos Online (Base: Public Contracts Online) [Online]. http://www.base.gov.pt. [Accessed 13/03/2012.
th

73

A.Arantes et al.
. JOHNSON, M. 2011. Public sector e-procurement: a study of benefits from e-markets in the local government sector. International Journal of Services Technology and Management, 16, 1-27. .KYPRI, K., STEPHENSON, S. & LANGLEY, J. 2004. Assessment of Nonresponse Bias in an Internet Survey of Alcohol Use. Alcoholism: Clinical and Experimental Research, 28, 630-634. .MATEUS, R., FERREIRA, J. A. & CARREIRA, J. 2010. Full disclosure of tender evaluation models: Background and application in Portuguese public procurement. Journal of Purchasing and Supply Management, 16, 206-215. .MCCONNELL, D. J., DOHERTY, N. F. & ELLIS-CHADWICK, F. Exploring the uptake and application of electronic procurement to central and local government. Research Challenges in Information Science (RCIS), 2010 Fourth International Conference on, 19-21 May 2010 2010. 453-462. .MITHAS, S., JONES, J. & MITCHELL, W. Non-contractible Factors as Determinants of Electronic Market Adoption. International Conference on Information Systems, 2002 Barcelona. 1-5. .NARASIMHAN, R. & DAS, A. 2001. The impact of purchasing integration and practices on manufacturing performance. Journal of Operations Management, 19, 593-609. .POLEMI, D. & PAPASTERGIOU, S. 2006. A Secure e-Ordering Web Service .Project E-Society: Building Bricks. In: SUOMI, R., CABRAL, R., HAMPE, J., HEIKKIL, A., JRVELINEN, J. & KOSKIVAARA, E. (eds.). Springer Boston. .PUSCHMANN, T. & ALT, R. 2005. Successful use of e-procurement in supply chains. Supply Chain Management: An International Journal, 10, 122-133. .RIGGINS, F. J., KRIEBEL, C. H. & MUKHOPADHYAY, T. 1994. The growth of interorganizational systems in the presence of network externalities. Manage. Sci., 40, 984-998. .SAUNDERS, M., LEWIS, P. & THORNHILL, A. 2009. Research methods for business students, UK, Financial Times/Prentice Hall. .SAX, L. J., GILMARTIN, S. K. & BRYANT, A. N. 2003. Assessing Response Rates and Nonresponse Bias in Web and Paper Surveys. Research in Higher Education, 44, 409-432. .SPILLER, P. T. 2008. An Institutional Theory of Public Contracts: Regulatory Implications. Working paper. .TAVARES, L. V. 2008. A Gesto das Aquisies Pblicas: Guia de Aplicao do Cdigo dos Contratos Pblicos Decreto-Lei 18/2008 Empreitadas, Bens e Servios (Management of public purchasing: guidelines for the application of the new Public Procurement Code - Decree-Law 18/2008), Lisboa, Portugal, OPET Observatrio de Prospectiva da Engenharia e da Tecnologia, Lisboa. .VAIDYA, K., SAJEEV, A. M. & CALLENDAR, G. 2006. Critical Factors that Influence E-Procurement Implementation Success in the Public Sector. Journal of Public Procurement, 6, 70-99. .VINCENT-JONES, P. 2006. The New Public Contracting: Regulation, Responsiveness, Relationality, Oxford, Oxford Univesity Press. .WANG, E. T. G. & SEIDMANN, A. 1995. Electronic Data Interchange: Competitive Externalities and Strategic Implementation Policies. Management Science, 41, 401-418.

Electronic Procurement In Albania

Klodiana Cankja

1 Introduction
This paper presents the Albanian case in structuring and implementing electronic procurement. This is an example to share with other countries wishing to implement electronic platforms in public procurement. Big problems with transparency in public procurement forced us to implement electronic platform. The process was relatively fast and a government decision obliged all contracting authorities in Albania to use electronic platform for public procurement. Problems of corruption, strictly related with lack of transparency, led our government to electronic means and solutions. Since 2006 the policy of Government of Albania is focused on electronic communication. A Millennium Challenge Threshold Agreement Program for Albania, managed by USAID, took care to design 3 platforms at the same time, the electronic platform for public procurement, the electronic platform for tax and electronic platform for business registration. Each component of this program had a leader and the one for procurement was Public Procurement Agency.

2 Methods
In this paper is adopted the method of descriptive case study, which seeks to show the sequence of events that led to the current stage of electronic platform. I attempted to highlight the successes, difficulties and lessons learned from Albanian case.

3 Analysis
It is important that whenever presented any change to remember the situation that made it necessary. For that reason I think that an overview of the procurement system in Albania until 2008 is needful. Albania came from a long period of dictatorship where could not be discussed for any development of market economy. As a country with a very brutal dictatorship, its transition period was long and difficult. The very first law on public procurement was approved in 1995. This law, which was based on UNCITRAL model, ran into several amendments, but remained in force until 1 January 2007, when was entered into force a new law. Law no.9643, date 20.11.2006, On Public Procurement. Such new law was drafted with the support of an EU funded Project, and it was a first attempt to approximate the Albanian law with the relevant European Directives. End of this assistance coincided with the start of the Millennium Challenge Threshold Agreement Program for Albania, managed by USAID, and in the prepared draft law were included some provisions

75

K.Cankja that regulated the electronic procurement, since one of the assistances elements was the development of an electronic platform. PPA was responsible for providing the complaints review mechanism, for public procurement, and from 1800 complaints per year, in about 50% of them, by the economic operators (EO) was raised the issue of having troubles in receiving tender documents from the concerned contracting authority, obstacles from the contracting authority or competitive company for physically submitting the offer, or problems created by the authority on the content of their bidding documents. Steps that economic operator passed within an institution until the submission of bid were as follows: After being informed, by the Public Procurement Bulletin, for the public procurement procedure, the EO was presented to the CA. Archive office finance office procurement office archive prepared the bid and was physically presented to the CA. Thus, in all these steps, the EO was somewhere stumbled in submitting his bid, but it was practically impossible for him to prove that. Such concerns, which arrived to PPA through complaints in writing or via telephone calls, were all presented to the Council of Ministers. After discussions to find solution to this phenomenon that seriously threatened the transparency, fair competition, the effective use of funds, and with the main concern of the corruption factor, was concluded that the only solution in this regard was the publication of tender documents at the website of the PPA. The mentioned documents were made available free of charge and everyone had the right to have them. So, Albania, since July 2006, had begun applying elements of e-procurement, as an obligation that derived from a decision of the Council of Ministers. Contracting authorities (CAs) sent the full tender documentation in paper and electronic copies, and the Public Procurement Agency (PPA), after compared, published them in electronic form. Definitely it was a considering workload for the staff of the Agency, but in this way was solved a massive problem in communication of contracting authorities with companies. That gave solution to the problem of making available to economic operators the tender documents, but again remained the phenomenon for economic operators to be physically presented for submission of their bids. There have been cases reported by the media at that time how the EO offered money to one another, in exchange for non-submitting their bid. The fact that publication of tender documents in electronic form did reduce complaints, increased the optimism of all into that public procurement in electronic form was the right way to follow. Work on designing the electronic platform began in 2007 under the MCC program, with which the PPA staff did closely collaborate regarding the legal aspect (in order to make a correct reflection of the procurement legislation in the platform) and the technical one. After many tests, the first pilot phase was made in late 2007 in a procurement procedure for the purchase of electricity, carried out by the Albanian Power Corporation. During this first test, according to the legal requirements, written communication was the one which scored, but in parallel the parties in the process communicated as well through the electronic platform.

Electronic Procurement in Albania Then, in 2008, were selected eight contracting authorities, which were institutions that procured the most public funds during a budget year, and which throughout the year piloted electronic procurement. Another reason why these institutions were selected was that they had the capacity to conduct procedures electronically. 2008 was the year of a concrete testing for the electronic procurement platform, when were evidenced and taken measures to solve the problems encountered during the application of the electronic platform, and were organized trainings for the CAs and the business community, the latest mainly through the American Chamber of Commerce. The e-procurement platform was set up with the assistance of the Millennium Challenge Threshold Agreement Program for Albania, managed by USAID. It enables the submission of offers and their evaluation by electronic means, but the goal of MCC program was 2% of procurement procedures done through electronic means, and this was achieved by the end of 2008, at the same time the end of project. Meanwhile, by the PPA conducted a study on the capacities of all the CAs all over the country about their possibility of applying the electronic platform. Although the Council of Ministers Decision on the obligation of contracting authorities to conduct 100% electronic procurement was issued in early 2009 (Decision no.45, date 21 of January 2009), Public Procurement Agency has taken advanced measures for the application of the platform by all CAs all over the country, by organizing trainings with their representatives and at the same time, in collaboration with the Ministry of Interior, were created some offices by regions or prefectures, which had all the facilities for the implementation of procurements in electronic way by those CAs which had no capacity for the application of the e-platform through their offices. At the same time the PPA took the necessary measures to increase the hardware equipments and to further improve the system, aimed the facilitation of platforms use. The results on using the electronic procurement platform are evident and measurable, since the costs of contracting authorities and economic operators were reduced and the complaints of economic operators for non being provided with the tender documents were eliminated. Likewise, were eliminated the complaints of EOs on their impediment to participate in tender procedures and other problems in this regard. Otherwise, said in figures, with the application of electronic procurement, the total number of complaints was reduced by 50%. Everyone may arise the question why Albania with 100% electronic procurement? How easy it was for us? Referring to the above, it is easy to conclude that the major problems in public procurement led to such solution, even in a relatively short time. On the other hand, I do think that, for Albania, resulted relatively easier the process of involvement of all the CAs in an electronic platform, for some reasons, as follows: The organization of state. Albanian state is unitary and indivisible state (Albanian Constitution, art.1) Advantage to this situation was also a government initiative on the digital age, aimed at extending internet connections in all schools of the country. I think that these two initiatives of the government, at the same time, helped each other, but also the institutions, especially the smaller ones and those being away from the main residential centers, developed conditions for electronic communication.

77

K.Cankja The legislation on the organization and functioning of local government do not exclude local units from the application of the same law on public procurement. Albanian procurement legislation is stricter than the relevant directives, by obliging the CAs to conduct procurement procedures for every contract exceeding EUR 3000. The other advantage consisted in the solution given to the platform and its usage. Albania chose to create a platform with hardware equipments installed at the PPA premises. Thus, it was not necessary for the CAs to made any investment in this regard, and for accessing the platform was enough a computer and an internet connection. Currently, Albania uses electronic procurement, which is a web based application supporting the automation of contracting authorities tendering activities of the Albanian Government.

All the process of public procurement is carried out in transparent manner in the Public Procurement Agency website (https://www.app.gov.al). Both, national and foreign economic operators (EOs) can easily access the system and submit their offers electronically. Thus, all the information on the public procurement procedures is included in a webpage, without being necessary for the economic operators to access different sources of information. Every investment in the electronic platform is covered by the state budget and its users access and use it for free. Perhaps such solution seems expensive for a modest budget as that of Albania, compared to more developed countries, but if decided otherwise, and the parties would have to make any payment, their resistance to use the system would increase and I think that would not have the success it really had at the very first beginning. Mainly, in the platform is communicated based on the upload-download. This approach did result easier to use by the CAs and the EOs.

Whether the EOs would have to use a more complicated platform for submitting information or the documentation needed for qualification, would have resulted very difficult and problematic. I would bring a fact at this point: during the first months of 100% electronic procurement application, it is true that the complaints for being provided with the tender documents were eliminated, but a different category of complaints appeared, those concerning the difficulties that economic operators had in using the electronic platform. This affected the number of complaints again. This increase was definitely the result of increased competition, as well. Notwithstanding that were conducted trainings with the businesses, or with the Chambers of Commerce, and the PPA issued guidelines explaining in detail the use of electronic platform, still had problems. I am of the opinion that it has to do with the fact that when was declared, during 2008, that all procurements would conduct in electronic form, despite awareness of businesses and contracting authorities, they thought that such a thing would not happen and perhaps it was just an utopic idea. The EOs offer remains secret until the opening of bids, and no one can access it. Since continuous task, for PPA, is to further improve the platform and its functionalities, during 2012 was realized the encryption of economic offer. With such solution, the EO itself cannot access its economic offer after uploading it in the system. If they want to change it before the defined date and time of the bids opening, they should conduct

Electronic Procurement in Albania the necessary actions in order to upload another offer. This increases the security of EOs, avoids problems that may arise from their own negligence, but also increase their trust in the platform. Other facility created for the EOs is the communication of the electronic procurement platform with the electronic platform of the National Registration Center (NRC). Thanks to the fact that both platforms were established at the same period, it was made possible to import data for EOs registered in the NRC, being automatically registered in the electronic platform for public procurement. This way we didnt had any flux at the begging for the registration of Eos. The foreign EOs may register by themselves at the webpage, the same as if would open a user account (e-mail) everywhere, free of charge, and without being necessary to be present in Albania. The ease of the systems use, by the parties, is also increased if mentioned that electronic signature is not the classical one, through an electronic certificate, which would make more expensive and difficult the use of platform, especially for the foreign EOs, but a simple access of an account of every EO in this system.

The companies that used the platform during 2008 had not difficulties. Through a monitoring made by the American Chamber of Commerce, in September 2010, to the use, by the business, of the electronic platform, overall business assessment for the platform implementation was positive, even much more positive from what the PPA thought, taking into account that any innovation, irrespective of how much positive it may be usually is not welcomed.The same survey was conducted for the CAs, whose opinions were positive, as well. The systems hardware is located at the PPA premises, whiles a recovery system and the back-up is located at the premises of the National Agency for the Information Technology. In parallel with these systems, a server called black box, is located at the premises of the Council of Ministers. In this server is registered every action performed in the system, serving as trace if would be any contest for illegal intervention in the system. Year of 2013 is the fifth year of using the electronic platform, and there has been no claim, until now, for any illegal intervention in the system. Taking into account the benefits from using the platform, during 2012 was issued the decision on its obligatory use for the concessions procedures, as well. Furthermore, the electronic system currently enables the electronic performance of concessions procedures (on-line publication of documents of concession procedure and the electronic submission of offers). In the beginnings of 2013, Council of Ministers made compulsory the use of electronic platform as well for the small value procurements. The big picture looks beautiful, but for sure PPA faced a lot of difficulties during the design and the implementation of the electronic platform and would mention as below: During the design of platform lack of collaboration between IT experts and lawyers was noted. This made us loose some time, because we had to turn back and redesign some functionalities in the system. The system was designed in English and took time to translate and adopt terminology in Albanian.

79

K.Cankja Lack of staff and experience in PPA. When the MCC project was preparing the platform only one IT person was working for PPA. The total number of PPA staff was 23 and they were taking care for everything such legislation, monitoring, complaints, publishing public notices bulletin, training, etc., but PPA didnt had knowledge in electronic procurement. PPA trained almost all contracting authorities, (1454 persons trained out of 1700 CAs) but PPA couldnt do too much for Eos (only 277 trained). PPA didnt had sufficient public outreach, and this, combined with lack of trainings for EOs caused lack of trust in the e-procurement at the beginning. Eos wanted to be present at the opening of the offers and they uploaded their offers at the last moment, thinking that somebody could access it. Every time less EOs are present in the opening of offers. Short time in implementing 100% electronic procurement. Because the goal of the project was 2% electronic procurement they didnt plan any recovery system and PPA thought to leave it for a next phase. Some air conditioner problems caused the crash of the system and data was lost, during the first year of implementing the platform.

PPA fixed those problems during the first year, for sure supported by government. It is worth mentioning that concerning the procurement process, the procedure is conducted in the system until the contract signature. Both, the complaint system and the contract execution are not carried out in the platform, but through the classical written form.

4 Results
Advantages of using e-procurement system are evident. Both economic operators and contracting authorities feel more comfortable using the platform for their procurement procedures. Some of the systems main advantages include: Higher transparency

All tender related notices are published at the PPAs web page. All the tender offers are secured in the system, until the moment of their opening. Also, all the actions in the system leave identifiable traces so that they can serve for audit purposes in the future. Transparency remains the strongest point of this system. The past history gives the clear picture on how many problems we had with the transparency in public procurement. By implementing the platform, every procedure is published; every document and any related request is made public. Companies do not pay for such documentation and are free to submit an offer in the system, without being required to appear in person in the contracting authority. The role of electronic platform application does also increase if we see that since its beginnings we can provide statistics, which was impossible before or when achieved to be produced any statistics, they were not accurate. It is important now that also the media has access to such information. If before it could provide information only with the consent of the concerning CA, which was not always easy, now at any moment can access the PPA webpage, and not only that, but can use the option of transforming the data into excel format, by producing, at the same time, statistics. It was noticed that media regularly accesses such information, commenting it in the press.

Electronic Procurement in Albania Despite the measures taken, it was noted that, although the CAs could have reported in the PPA for technical impossibilities to conduct electronic procurement, having available the premises with the necessary facilities in the prefectures, they did not access such premises, but took immediate measures for capacities increasing in their institutions. This led to a better internet connection at every corner of the country. Avoidance of corruption

This system ensures lower corruption, because economic operators are not in contact with each other, and also lowers their possibility to contact with CA staff. Avoidance of direct communication between economic operators and representatives of the CAs is an important element that has eluded and has reduced corruption in public procurement. The CA does not have information about the companies interested to take part in competition, but also the EOs do not have such information about each other. The system was designed in such a form that if economic operators have questions for the contracting authority, questions related to tender documents, they can submit them through the system, but without being identified. They simply show up in the account of the CA as EO1, EO2, etc. Costs reduction

E-procurement reduces the costs of realizing tender procedures, because it eliminates the paper form, all the relevant paper documents and the bureaucracies that exist with the paper form procurement system. Contracting authority does not have to dedicate people to sale and multiply tender documents, spends no paper, printer ink, etc., for their reproduction. The same occurs also for the economic operators, since they do not spend time and human resources to be physically at the CAs premises, to buy the tender documents, submit their bids, etc. Likewise, a company known in the field of Information Technology affirms that application of the electronic platform did decrease its costs of participation in procedures, as converted to the work time of at least 2 dedicated employees to be physically presented to the CA for buying the tender documents, any clarifications on those and later for submitting the bid. Another improvement in terms of costs for the economic operators stands in the fact that the same prepared document, whether is legally valid for more than one procurement procedure, can be subsequently submitted in more than one procedure, reducing so the costs for reproduction and notarization. According to statistical data, provided by USAID at the end of their project, the costs of tender procedures were lowered around 15%. Higher competition

As a result of increasing the transparency and creating equal opportunities to participate in tender procedures, has been significantly increased the number of participants to such procedures. Thus number is increasing every year, including the foreign economic operators. During 2012, in the electronic procurement system were registered 371 new economic operators, of whom, 82 are foreign ones. Currently, the total number of registered economic operators, domestic and foreign ones, is 109 742. In 2012, number of successful procedures is 4418. The total number of submitted bids by the economic operators is 22886, which shows

81

K.Cankja that the bids average is about 5.2 bids for a tender procedure. Currently, the total number of users from the CAs is 18196. The system of e-procurement did highly increase the competition among economic operators, and this is noticed in the growth of their participation in tender procedures from an average of 2 EOs participating to 7.2 EOs during the first year. Not simply the number of participants, but also the fact that EOs do not have information on which companies will appear in competition, reducing the possibilities of preliminary agreements, makes them prepare a competitive bid, as more as possible, and consequently to save funds from the state budget. Making the difference between the limit fund and the value of the winning offer, it results, the last years, a saving of 12-15 % on average.

5 Conclusions
Definitely E-procurement was a great challenge. The acknowledgment of the e-procurement system for both parties, contracting authorities and economic operators, became an indispensable need, in order to fulfill procurement procedures. As results from the above said, the electronic procurement challenges and the innovations it brought in improvement of the overall procurement system are considerable, tangible and measurable. Its impact on improving the overall procurement system was not considered when the design and application of the platform begun. The obtained results did exceed the expectations. One of main lessons learned during this initiative and its implementation is that without a consensus and decisiveness from the political leadership in order to apply this electronic system, it would be difficult to overcome the difficulties of a country with a non-developed infrastructure. Likewise, the application of electronic procurement would not be successful without the good will and commitment of the business community and for sure PPA staff. Very important for the implementation of the system to be successful is that the entire system should be designed in order to reflect in all its functionalities, the respective legislation framework in place. Some further improvements to the electronic procurement system, that will be in the focus of the Albanian Government and Public Procurement Agency include: Implementation of the Framework Agreement modules in the system; Designing in the system of the e-auction; performing electronically the first phase of the auctions procedures (in the meaning of selling from the Contracting Authorities). Next challenge remains the improvement of the platforms functionalities, in order to make it more and more user friendly, but also the communications of this platform with other electronic platforms in the country, which will eliminate information EOs need to provide in tender procedures. The e-procurement solved a lot of problems and not all of them, but Albanian procurement system looks totally different after applying the e-platform in public procurement procedures and concessions. For all this reform, PPA was accorded the second place winner Improving transparency, accountability and responsiveness in the public service category. The certificate was given to PPA in recognition of the contribution towards improving the effectiveness, efficiency and quality of public service, by United Nations, on 23 June 2010 in Barcelona.

Ecosystem for an e-procurement european optimal transition

Manuel Cao

1 Introduction
If we define transition as the time between two states: the state of the problem and the state of the solution, we can understand that in the transition activities and resources should be optimally oriented to get this final state, with less time, with less cost, and with high competition. The state of the solution is one in which public procurement can be made in any administration by any economic operator all over the Europe, in an affordable manner and using tools that allow continuous improvement, at an affordable cost. From where we are today is not easy to reach the state of the solution as described in the previous paragraph. What has happened then? What have been the main barriers and what has been missing for not achieving the objectives that the European Commission has proposed over and over again? Accountable people doing plans, have had all the resources needed, and especially with direction and the knowledge required to implement the solution that could achieve the goals? Does implemented needed rewards for those agents involved in the proposed solution? Anyone take notice about what to do regarding these repeated and continued failures?

2 Defining the Challenge of the transition

The transition to e-procurement is not a technological challenge. Transition has and needs a lot of technology, it is a transition enabled by technology, but it represents a social innovation and thus becomes an adaptive challenge. In the book "The practice of adaptive leadership. The tools and tactics for changing your organization and the world "authors R. Heifetz, A. Grashow and M. Linsky - 2012 - it says that groups tend to avoid adaptive challenges because they involve an individual change unavoidable to achieve the goal. This is not what happens in the technical challenges. The following table is a summary of the differences between technical challenges and adaptive challenges.

Activity Technical Challenge Adaptative Challenge Learning and implement new knowledge Apply previous knowledge

Accountability Stablished authority

People involved in

83

Manuel Cao

In addition, public procurement has a volume that represents 20% of European GDP and is regulated by laws that seek to regulate the spirit of concurrency, transparency and equal treatment, along with the subsidiarity and proportionality required of all public proceedings. Nevertheless there have been major advances for the transition. These elements are: - Standards: CEN BII phase I and II. - Interoperability: PEPPOL project - E-Certis: table harmonization of legal requirements for traders. - Green Paper generalization of eProcurement in 2011 - Green Paper on the modernization of public procurement in 2012 - Strategy for the transition to e-procurement with 15 points following relevant: 1.New Legal Framework (Q4-2012). 2.Harmonisation of technical requirements, through interoperability standards and tools. 3.Legal framework for electronic identification (Q2-2012). 4. Expert Group Report with Recommendations in electronic tendering (Q1-2013). 5. Report on good practices in e-procurement "Golden Book" (Q2-2013). 6. Making PEPPOL Sustainable (Q2-2012). 7. Finance the needed infrastructure for e-procurement "Connecting Europe" (20142015). 8. Structural Funds for the dissemination of public procurement (2014-2020), 9. Dissemination strategy with powerful comunications 10. EProcurement Annual Conference (Q2-2012). 11. Electronic systems for the analysis of procurement (Q2-2013). 12. Publication of annual report abour electronic procurement adoption (Q2-2013). 13. The European Commission will implement electronic procurement (Q2-2015). 14. Components of the solution of the European Commission in Open Source. 15. International dialogues for universal e-procurement.

3 The benefits of the solution .

The benefit of the solution has been published repeatedly by those projects that have a certain volume. Reports from Portugal are very notable. The benefit is to get a leverage of productivity and competitiveness at a European level to obtain direct results over 20% of European GDP. The savings, efficiency, effectiveness, transparency are benefits that should be subject to the benefit of using the volume of procurement resources to foster public policies. This leverage of productivity is only possible with the electronic format. The data and options to manage structured information in real time which aobtained results over 20% of GDP are the basis of this leverage of productivity and

Ecosystem for an e-procurement european optimal transition competitiveness that Europe needs. Public procurement is not the only element of this leverage, but it's definitely a basic element of it.

4 I can not alone. No one can.

In the latter report of the Golden Book on e-procurement, that the European Commission has asked there are 360 platforms, performed under public and private initiatives, which of course are not interoperable with each other and getting partial benefits but encourage technological segmentation. We have to add that all this platforms are the anti-lever general productivity. They are against the gaol of a single market of public procuremn. Once again this shows that isolated initiatives can be good to know the general problems but not to offer a comprehensive solution. And we need solutions to the global. No single solution. Interoperable solutions that evolve to offer competing operators and administrations standard formulas for interaction with common elements: The steering wheel on the left, right foot for the accelerator, the brake on the center and right hand for marches. With the british permission of course. But this time we need general interfaces that allows the process of autonomy and competence needed by agents that will not be increased because there is more than one way to make a signature, an electronic document electronic bidding, or electronic invoices. They can be several standards but there must be only one interface. I know there are a lot of diversity, but diversity can not be because of user interfaces that leave us in ignorance again and again. I return to the example of cars. The automotive industry is anything but uniform. The user interface is universal in any car. That is the way. Once the road have been stablished for interoperability and standards and common interfaces, we can try to design the needed ecosystem to put all that up and reach through the transition period the proposed solution: the single market of interoperable pan-European and affordable eProcurement.

5 The ecosystem
At this point we might define the ecosystem to achieve the optimal transition and then we will make special mention of communities of practice as an element that can be a tool for accelerating the adoption of electronic public procurement. To set the list we firstly establish three categories of ecosystem elements whose existence is considered essential to produce the faster adoption of electronic procurement. The ecosystem has three categories: Technical and Legal elements, tools and proven technology available and affordable, without taking risks, and ready to use. Technical and legal elements. Virtual tools for Learning. (Learning by doing). Elements for people to achieve autonomy and competence. Communities of practice to accelerate innovation, the social side of innovation. Social elements.

85

Manuel Cao The list of elements can be as follow: Technical elements: Pan-European Public Procurement Network, interoperable and affordable (PEPPOL). This network with its Transport Infraestructure Architecture is the element that articulates the necessary connectivity . Standards for e-procurement (CEN BII) These standards require a mature period. These are those that enable the community dialogue in the electronic relationship between contracting authorities and economic operators. This relationship is described in two basic phases: pre and post award. Information systems in the Contracting Authorities. These information systems must be interoperable in the relationships between contracting authorities and economic operators (like interface of cars) but they can have a lot of differences in the rest of thei functionalites. . Information systems on economic operators. They also need information systems that establish dialogues with contracting authorities in a standarized way. Adoption of the delivery of services and solutions in the form of Cloud computing (private or public) to remove technology barriers and build infrastructure for complex applications that little public administrations are not ready technically neither have the budget to install the needed infrastructure in their own houses.

Elements of learning (learning by doing): Elements that achieve fast and affordable digital autonomy and give competencies to all actors involved (officers, employees). This is a communication and training plan for all stakeholders understanding the process of digitization of the economy and therefore the necessary process of digitization of public procurement. In this regard special mention must be made to achieve the necessary awareness for the professionalization of public procurement. Living labs for contracting authorities and economic operators in procurement. These are the tools that today's technology can allow us to understand the complexity on the public procurement process and the electronic format in this process.

Communities of practice: Communities of practice. These communities enabled by technology can give to the people the opportunity to understand and use the technology for a better public procurement. And it gives to the people the chance of share knowledge and experience in almost real time. Without fear and empowering everyone.

6 Communities of practice
In this chapter we will make special mention on the communities of practice. These are the basis for the human factor, people can use them to achieve autonomy and competence required for the management of electronic format. Failure to achieve this autonomy and

Ecosystem for an e-procurement european optimal transition competence in electronic format reduce self-confidence for the optimal transition to eprocurement. People must run and enable the transition. Information systems, standards, networks are useless without the people. If people do not use the systems nothing happens. And people do not use them if they dont know how to use them, if they are not autonomous, if they are not competent and especially if they do not understand why, what and how they need to achieve that necessary autonomy and competence. The elements of a community of practice are: - Web 2.0 tools that allows the existence of cross-community can be used between different organizations but the maximum benefit of a community of practice is achieved internally in an organization that is transitioning and is able to understand the whys whys and hows of fomrma jointly and establishing honest and transparent dialogue with all concerned. It is a tool that enables the inclusion of all people who love and understand the transition. - Dynamizer, a key person o group o persons that have to lead and energize the transition by promoting dialogue, exchange of experiences, sharing problems and supporting individual and collective acquisition of knowledge. - Members who are part of the community voluntarily. Because organizations have a mission that people are willing to comply. - Reputation, It is necessary to recognize the individual merits of each of the members of the community, There are communities of practice that incorporate learning tools. And in this case the combination of the communities of practice, and learning by doing elements may be the factors that can facilitate the rapid adoption of e-procurement. Especially when these communities of practice are developed inside of an organization that is in an e-procuremente implementation project.

7 A community of practice
The community of public procurment in Spain can be a good example of this kind of comunities (http://www.contratacionpublicacp.com/) A community with more than 1500 people interested in public procurement that share common legal, technical and organizational problems. A community that can generate interest groups and has been a body of knowledge in a Wiki (the wikicontratacin) A community that is preparing webinars and online courses to accelerate the acquisition of autonomy and responsibility to the community members A community that can generate implementation groups in government and share experiences A community that can form implementation groups to use all the tools of Web 2.0 and encouraging faster adoption of e-procurement.

87

Manuel Cao A community that can add access to living labs to generate learning by doing on simulation tools for providers.

All these points accelerate the adoption of procurement because they make an inclusive process where the protagonists are the people.

8 A final thought
Innovation must be social or it wont be innovation. To make innovation the new methods or tools or process must be adopted by a number of practitioners enough to generate traction in the process of change and organizational transformation. Organizations have a much larger difficulty to innovate than individuals. Decision making in organizations can help in the technical challenges but innovation challenges involve adaptive challenge and then individual efforts are needed for everyone in the group. It is necessary an ecosystem that must have elements in the three dimensions mentioned: Technical and legal elements, tools and technology available. The technical and legal innovation. Communities of practice that enable and accelerate adoption. The social side of innovation Learning tools (learning by doing) that provide autonomy and competence to individuals who otherwise oppose a resistance, as demonstrated in the adaptive challenges. The individual part of innovation. If we look at the list of the elements of the ecosystem, probably we will realize that the legal and technical elements are already present, and we have to try to put in place the communities of practices and the learning by doing tools.

Part II Better Technologies for e-Public Procurement

89

Public Procurement Contracts: Transparency and Beyond. The case of the Portuguese National Public Procurement Portal: BASE.GOV.PT

Isabel da Rosa and Pedro Maia

1 The Portuguese public procurement regime
EU regulations on public procurement aim at improving EU policy towards the creation of a free market. The EU belief is that the elimination of trade barriers can make an important contribution to economic growth. The EU has adopted directives on public procurement (Directives 2004/18/EC and 2004/17/EC) that regulate the procurement procedures for major contracts (BOVIS, 2006). The directives are concerned merely with the creation of an internal market for public procurement and are based on the Treaty provisions related to the single market. The directives are not intended to provide a general framework for implementing other objectives such as ensuring best value for taxpayers money, preventing corruption, or ensuring transparency and accountability (ARROWSMITH, 2005). This, like most other aspects of procurement policy, remains a matter for Member States. To achieve these objectives, many Member States have their own requirements for contracts bellow the Directives thresholds. The Portuguese Public Contracts Code (PCC) was approved by Decree-Law 18/2008. The PCC transposed the EU procurement directives and set down, in many ways, a similar framework for contracts bellow the Directives thresholds (ALMEIDA, & FAUSTINO, 2009). The PCC, regulates public procurement contracts, including supplies, services, works, works concession and; services concessions. All entities labelled contracting authorities by the EU directives are subjected to the PPC, including central government; regional and local authorities; bodies governed by public law (regardless of their public or private nature); and utilities. However, the PPC went further and brought about a major shift in the Portuguese public procurement setting. The Portuguese legislator used its relative freedom to regulate contracts below the Directives thresholds and set innovative and bold public procurement model to foster non-discrimination, competition, transparency and accountability in public procurement contracting (Tavares, 2009). Two of the most significant characteristics of the model were: The shift to the e-procurement paradigm; and The establishment of the Public Contracts Portal BASE. The adopted model introduced major impacts on the public procurement lifecycle, changing workflows, processes and outputs of contracting authorities and economic operators.

2 The Portuguese e-public procurement framework

The PCC makes a bold and comprehensive commitment to electronic procurement (Tavares, 2010). Following a transitional period of one year, the adoption of electronic procurement has been mandatory since 30 July 2008, which is in contrast with the less ambitious guidelines adopted by other Member States

90

Isabel da Rosa and Pedro Maia As a rule, all public procurement procedures in Portugal must be performed electronically. The PCC establishes a mandatory e-procurement rule: all contracting authority documents must be produced, published, notified and stored electronically; all economic operators must submit their applications, tenders, documents, questions, claims, etc., electronically; all communications between these two parties must be done electronically. Additionally, for all procedures with publication of notices, the contract formation phase must be run using a certified electronic platform, i.e. contracting authority documents must be published, notified and stored in an electronic platform; all economic operators must submit their applications, tenders, documents, questions, claims, etc., through an electronic platform.

Figure 1. The Portuguese e-Public Procurement Framework

The implementation of this model required the availability of electronic platforms and the Portuguese legislator opted for a market of electronic platform enablers (instead of a single public platform). DL 143-A/2008 of 25 July and Ordinance no. 701-G/2008 of 29 July (in force since1 January 2008) were published to regulate their activities and features. An electronic platform is defined as a technological system that is able to provide the mentioned communication features, which explains the proposed definition in DL 143-A/2008 of 25 July: a set of computer resources, services and applications that are necessary to the operation of electronic procedures prior to a public contract award, and constitute the underlying infrastructure for the conduct of the formation procedure of contracts (Article 2(2)). CEGER is the organisation for Information and Communication Technology of the Presidency of the Council of Ministers, certifies electronic platform in terms of electronic security. In May 2013 there were eight certified electronic platforms. The second pillar of the Portuguese e-public procurement model is the public procurement contracts portal: BASE. Portal BASE is a centralized data-base that contains extensive information about all public procurement contracts. The data-base is fed automatically by the DRE - electronic official journal (www.dre.pt), by the electronic platforms and by contracting authorities, depending on the phase and procedure type.

91

BASE.GOV.PT

3 BASE Portal.GOV.PT
In its unique view of the electronic model of the information system, the Public Contracts Code provides for the establishment of a Web portal to publicize the direct award of contracts, a fairly frequent type of public procurement procedure where suppliers can participate by invitation, as already mentioned. Besides promoting transparency in the conduction of these procedures, which in the past were only known to the participating entities, legislation also seeks to ensure their effectiveness, stating that the lack of publication of this type of procedures on the Portal shall prevent the corresponding contract from being paid. This fact is instrumental for data registration process, leading the contracting authorities to be more careful when complying with the procedures and making the Portal a citizen reference, as for the very first time the State disseminates this type of information concerning its internal operation. This transparency component in direct awards and the resulting State openness even with regard to its internal procedures represented a small revolution in peoples and organisations behavioural culture, having originated an exaggerated scrutiny of the data published on the Portal in the early days of its existence. Along with this fundamental aspect of the existence of the Portal there is another factor equally critical: the need for a single information repository for procurement procedures. Although this second factor is not as appealing and immediate as the other, it is, however, from the State point of view, a vitally important issue because thanks to this solution it was possible to create a database covering all procurement procedures under the Code as regards to its two components -the formation and the execution of contracts -thus enabling an integrated view of the lifecycle of information on public contracts. 3.1 What The Public Procurement Portal, as early named in the law and later called the BASE Portal, is a complex information system that automatically collects data, by means of Web services, from various sources and from the forms completed by contracting authorities at the reserved area. The system is composed by a database that centralizes in a single repository the information from the whole Portuguese public administration. It has a public access through www.base.gov.pt and a reserved access point for contracting authorities at the same link, enabling them to access their data either directly entered in or forwarded by an electronic platform. In its public component, the system comprises a specific subsystem for procedures related to works and public works, also provided for in legislation and called the Public Works Observatory. The data entered in the Portal are a valuable asset for the Portuguese public administration, because since August 2008 they already comprise an information record that can be analysed in many different ways, not only in the characterization of expenditure and its evolution within the different macroeconomic scenarios, but also as a valuable tool for monitoring the implementation of PCC and a privileged tool for carrying out forecast analyses, e.g. by type of expenditure.

Isabel da Rosa and Pedro Maia It could be said that the BASE Portal has had several major mile stones throughout its history. Moreover, it is essential to realize that it was not possible for the system to be previously studied, designed, tested and implemented. Under these circumstances, a unique context is being created because developments are continuous and the test is always in real time, in the sense that the legislator spirit is translated into a technological and practical version. Therefore, along with the continuous availability of new features, the following developments should be highlighted: the integration of the first notices of INCM in October2009, the interconnection of the first platforms in December 2009, the new architecture at the end of 2010, the development of the new solution during 2011, the Memorandum signed with the Troika in April 2011 imposing new features, the new public Portal (BASE2) in January 2012, the new Public Works Observatory at the end of May 2012, the new back-office in October 2012, etc. In January2012, with the availability of the new public Portal, there was a change of paradigm due to the disclosure of the information concerning all the contracts subject to the formation phase as provided for in the Code. This milestone has had a strong impact on society because the Portal is no longer dedicated exclusively to direct awards and now also publishes the contracts linked to the procedures provided for in Article 16 of PCC.

Figure 2. BASE Portal Time-Line

In March 2013 BASE Portal had: . More than 5400 registered contracting authorities; . More than 74300 economic operators. . 18.000 Million Euros in contract value registered. . 1071000 database records; . More than 3000 daily unique visitors to the public area. BASE Portal has revealed itself to be a powerful tool: . to foster accountability and transparency; . to foster competitions and innovation; . for procurement policy and public expenditure monitoring.

93

BASE.GOV.PT There is no doubt that the BASE Portal shapes the concept of accountability of the contracts concluded throughout the PCC existence. 3.2 Who Its architecture comprises a number of stakeholders playing a relevant role in the interaction with the system with special emphasis to electronic platforms performance in forwarding information concerning the transactions related to the contract formation phase. The fact that electronic public procurement in the contract formation phase is mandatory since the 1st November 2009 entailed the use of electronic platforms for all public procedures. In the case of direct awards, although the use of electronic platforms is not mandatory, their operation always requires the use of electronic means. The transactions developed on electronic platforms must be automatically forwarded to the BASE Portal through an interoperability system, a solution whose technological feasibility entailed the development of a number of Web services acting as a vehicle for the safe transmission of reported data. In Portugal eight certified platforms are qualified to operate on the public administration market, using Software as a Service (SaaS) as the functional model for services provision. The responsibility for certifying electronic platform providers lies with the Management Centre for the Government Electronic Network (CEGER), another key player within the system, as it is responsible for transmitting the certification process data to the BASE Portal. Only certified platforms fulfil the necessary conditions that qualify them to interoperate with the BASE Portal. The certification process focuses on the security issues necessary to ensure the soundness of electronic platforms so that they can carry out the procedures in a confidential and thorough manner. The Portuguese printing house and mint (Imprensa Nacional Casa da Moeda (INCM)) is a crucial stakeholder in the system, as it is responsible for two key issues: the authentication system and the automatic transmission of notices concerning public procurement procedures. Cooperation with that entity is particularly relevant in both cases. Firstly, because any further development of the system for the user authentication component became unnecessary, which made it possible to reduce efforts and put in place a good practice by reusing existing solutions. Secondly, it is also important not only because of the visibility of notices on a portal dedicated to public procurement but also because integration with INCM has a very strong impact on the database: the integration of public notices automatically generates the procedures. As far as the contracting authorities are concerned, it is their responsibility to ensure the registration and execution of contracts. This registration is made using the forms are available at the BASE reserved area, but there is also the intention to ensure the automatic transmission of this information in the future by developing Web services connected to the internal systems of each entity.

Isabel da Rosa and Pedro Maia

Figure 3. BASE Portal Information Model and Stakeholders

3.3 How BASE Portal keeps extensive information about most public procurement procedures and contracts. Some information is public and available on-line in real time, some information is stored and analysed for reporting and policy purposes. The model is very simple and twofold: For procedures by invitation (red arrows on Figure 4), all documents including, the invitation, contract object specifications/requirements and respective tenders have to be transacted by electronic channels (red arrows on Figure 4). While the use of electronic platforms is not mandatory for these procedures, many contracting authorities are opting for electronic platform services to manage procedures by invitation (yellow arrows on Figure 4). Independently of the means used, the publication of the contract information in the BASE Portal by the contracting authority is mandatory. This information includes details about the contacting authority, economic operator, contract value and description of the contracted object. An important aspect of the publication of this information about contracts whose formation was based on invitation rather than notices is that, according to the PCC the contract is null if the information is not published in BASE Portal. For procedures with publication of notices (yellow arrows) additional information is to be sent to Base Portal (yellow arrows on Figure 4). All notices are published in the electronic official journal DRE (www.dre.pt), managed by INCM, by registered contracting authorities. DRE sends a copy of the procedure to BASE Portal and registers the procedure into the database. From this moment on, contracting authorities (with the same login credentials used to access DRE) can manage the procedure and contract information in BASE Portal. There are different forms and fields depending on the phase, type of procedure and contract object type (goods, services, works).

95

BASE.GOV.PT Economic operators access notices on DRE, or on BASE Portal. AS mentioned before it is mandatory that all procedures with a notice will be run on a certified electronic platform. The electronic platform automatically feeds BASE Portal with information about the procedures and contracts of the client contracting authority.

Figure 4. The Portuguese e-Public Procurement Information Model

Hence, data arrives to BASE in two ways: a) Automatically: the notices coming from the electronic official journal, and the procedure sheets coming from the electronic platforms; and b) Manually: through registration in the reserved area, the on-line forms are filled by contracting authorities concerning the contracts formation and execution-.

Figure 5. Screen-shot of the contracting authority reserved area

Isabel da Rosa and Pedro Maia In both cases [ a) or b)] the access takes place in a safe manner, using safety certificates for electronic platforms and the authentication process at the INCM (DRE) for contracting authorities. There are two important aspects about the contracts information management: 1. The responsibility of the information is of the contracting authority only; 2. The information can be sent, managed, corrected and updated (only) by the contracting authority at any time. InCI manages BASE Portal - infrastructure and development - but not the information itself. However, InCI frequently helps contracting authorities with questions regarding information upload and on-line form filling and also, occasionally, may alert contracting authorities about some information that might be inaccurate or incoherent.

Figure 6. BASE POrtal Contracts Information Layers

Regarding public information, the access to procedures and contracts such as contracting authorities and economic operators identification, contract description and contract value, does not require any credentials or logins and can be accessed at http://www.base.gov.pt. The public area of the BASE Portal is its outward face and the tool designed to materialize transparency in public procurement. Since January 2012, with the availability of version 2 of the Portal, the system openly publicizes: (a)NOTICES on the opening of procedures and subsequent notices, if any; (b)CONTRACTS concluded following procedures by invitation (general regime), open procedures, restricted procedures, negotiation and competitive dialogue procedures, including for each contract: a. Contracting authority(ies); b. Economic operator(s); c. Contract description; d. Date;

97

BASE.GOV.PT e. Contract value. (c)ORDERS AND DELIBRATIONS that establish procurement priorities under the exceptional regime provided for in Decree-Law no. 34/2009 of 6 February; (d)CONTRACTUAL AMENDMENTS that constitute a value of more than 15% of the contract price; (e)ACCESSORY SANCTIONS applied in the context of Article 460 of the Public Contracts Code. This information can be accessed using the search option and in most cases searches can be made by using a combination of different parameters.

Figure 7. BASE Portal public area

Several additional features are also available providing statistics by type of contract and type of procedure, thus enabling the establishment of a number of benchmarks.

Isabel da Rosa and Pedro Maia

Figure 8. BASE Portal public area statistics

It is possible to find in the media many references to data published on the BASE Portal as well as on other tools such as the DADOS.GOV Portal, which contains the open format files publicized on the public component.

4 The Public Works Observatory: OOP.INCI.PT

The Public Contracts Code provides for the creation of the Public Works Observatory (PWO) Ordinance no. 701-I/2008 of 29 July -, which monitors the most relevant aspects of the execution of public works contracts. PWO is an information subsystem of the BASE Portal that ensures the organization of a data set, as well as the analysis and dissemination of the corresponding statistical data in the field of public works contracts. PWO is a relevant working tool for all those entities that develop studies and need various statistical data in the field of the public works market. PWO comprises an information search system allowing a quick access to data related to the contract formation phase, namely the invited tenderers (where appropriate), the applicants (where appropriate), the tenderers and the contractors. Moreover, in the contract execution phase, it is possible to know the actual status of each contract and the causes of diversion from its agreed objectives, in terms of deadlines and cost. All this information comes from the data entered in the BASE Portal by the contracting authorities, either during the contract formation phase, with the transmission of the Contracting Report, or during the contract execution phase, with the transmission of the Annual Summary Report(where appropriate) and the End of Works Report. The PWO is a valuable instrument for analysing the public works sector, providing important reports and helping with the conduct of public policies for the public works sector

99

BASE.GOV.PT

Figure 9. Public Works Observatory

5 Lessons learned
The principles of publicity, transparency and information availability are frequently mentioned in the context of public procurement. The public procurement Directives have provisions regarding these principles but in practice they wear out in the publication of notices, particularly in the Official Journal of the European Communities and Tenders Electronic Daily, for major contracts. Portugal took a step ahead and implemented a model that truly fosters transparency and accountability. The model is based on BASE, the Public Procurement Contracts Portal which contains information on all public procurement contracts and makes it available to the public. This means that it is possible to track how contracting authorities spend taxpayers money and how the market relates to the government in the procurement dimension. The implementation of such a model was technically challenging, including: the development of a complex data-base structure and interface to support all combinations of different contracting authorities, procurement procedures, contract types and parallel legal requirements, the development and implementation of web-services to communicate with the official journal DRE and with the electronic platforms, all in a setting of occasional legal changes. However, the biggest challenge was the contracting authorities adaptation to this change. BASE interfered with the procurement cycle and exposed the contacting character of each contracting authority and the economic relations between economic operators and contracting authorities. Since 2008, BASE has become a vital tool for the regulation of public contracts, particularly in the control of expenses and, although, real impacts are difficult to measure (OPET, 2010), BASE changed the way contracting authorities do their procurement and the way the market relates to them. With Base Portal, the Portuguese public procurement is, understandably, more transparent and accountable. And governments and economic operators have now information to better support their policy and market decisions.

Isabel da Rosa and Pedro Maia

6.References
.ALMEIDA, J. A. & FAUSTINO, P. B. 2009. Implementing national measures on public procurement under the EC directives: the portuguese experience. International Public Procurement Conference, 2009. .ARROWSMITH, S. 2005. The Law of Public and Utilities Procurement, Sweet & Maxwell. .ARROWSMITH, S. 2009. EC Regime on Public Procurement. In: THAI, K. V. (ed.) International Handbook of Public Procurement. New York: CRC Press. .BOVIS, C. 2006. EC Public Procurement: Case Law and Regulation. Oxford: Oxford University Press. .OPET, O. D. P. D. E. E. D. T. 2010. 2. Inqurito Nacional sobre Contratao Pblica Electrnica. INCI instituto Nacional da Construo e do Imobilirio. .TAVARES, L. V. 2009. A gesto das aquisies pblicas: guia de aplicao do cdigo dos contratos pblicos, OPET - Observatrio de Prospectiva da Engenharia e da Tecnologia. .TAVARES, L. V. 2010. White Paper: Public eTendering in the European Union: Trust in eVolution. EVA European Vortal Academy.

101

e-PRIOR:Proposal for a new Directive and a Strategy for eProcurement

Pieter Breyne

1 Introduction
In December 2011, the European Commission (Directorate General for the Internal Market and Services) proposed a new Directive on public procurement and in April 2012 they also published a Communication setting out a strategy to make the use of e-Procurement mandatory in the EU by mid-2016 (this deadline will likely shift towards 2017 depending on the feedback from the European Parliament or Council; the following deadlines may shift consequently). These proposals aim at modernizing public procurement in the European Union, through revision of Directive 2004/17/EC (procurement in the water, energy, transport and postal services sectors) and 2004/18/EC (public works, supply and service contracts), as well as the adoption of a directive on concessions, which were until now only partially regulated at European level. These legislative proposals to modernise European public procurement adopted by the European Commission in December 2011 (IP/11/1580) set forth a gradual yet ambitious transition towards e-Procurement in the EU through the following goals: Enforcing electronic means of communication for certain phases of the procurement process (electronic notification of Tender opportunities and electronic availability of Tender documents) by mid-2014 (at expected transposition of the revised Directive). European central purchasing bodies will also be required to move to full electronic means of communication, including electronic submission of bids by mid-2014. Enforcing electronic means of communication for all Contracting Authorities and all procurement procedures by mid-2016, which do not have a central purchasing body (two years after the expected transposition of the revised Directive). Adopting more detailed provisions to encourage interoperability and standardisation of e-Procurement processes.

The above-mentioned Communication on the strategy for e-Procurement also announces that the European Commission itself will move towards full e-Procurement by mid-2015 a full year ahead of the deadline for Member States and that the Commission will make its eProcurement solutions available to Member States, in order to help them respecting the envisaged deadlines.

2 Flanking measures
In order for the Member States to be able to comply with the legislation modernisation proposal for public procurement and e-Procurement, and in particular to assist them

102

Peter Breyne respecting the proposed deadlines for making e-Procurement mandatory, the European Commission has initiated a number of projects, the so-called flanking measures (figure 1).

Figure 1 - Flanking measures

There are four flanking measures: To help spreading good practices, a project named The e-Procurement Golden Book of Good Practice was launched and recently finalised. A collection of 24 good practices on e-Procurement are there to help e-Procurement platforms improving their solutions. To allow the consistent measurement of the uptake of e-Procurement in the EU, a set of e-Procurement Indicators are currently being developed. The e-Tendering Expert Group (e-TEG) has drafted recommendations supporting the implementation of e-Procurement platforms. Through leading by example, the European Commission wants to gain real-life experience with e-Procurement and to share this experience (lessons learnt, re-usable software components, specifications...). This is where e-PRIOR comes into play (Figure 2).

Figure 2 - Leading by example

103

e-PRIOR

3 e-PRIOR
e-PRIOR (Figure 3) is a service-oriented platform developed by the European Commission (Directorate General for Informatics - DIGIT) under the ISA programme aiming at providing interoperability solutions to public administrations. e-PRIOR today supports the electronic exchange of post-Award business documents (electronic invoices, orders, catalogues) with suppliers of the European Commission, by using web services or over the PEPPOL Network. As the participation of SMEs to e-Procurement (and public procurement in general) is high on the agenda of the European Commission, DIGIT has also developed a Supplier Portal to communicate through e-PRIOR. After having logged on with his ECAS credentials (the European Commission Authentication Service), an SME can create an electronic invoice by filling out a web form to create his invoice.

Figure 3 - e-PRIOR

As part of sharing lessons-learnt and e-Procurement experience with the EU Member States, the European Commission has made available an open-source version of e-PRIOR, named Open e-PRIOR and available on JOINUP, its online collaborative environment.

Figure 4 - e-PRIOR modules

Peter Breyne e-PRIOR supports today all post-Award phases (Figure 4): e-Request: for managing requests for quotations in the context of large framework contracts for professional services (CVs) or books. e-Catalogue: for receiving, reviewing, approving and updating electronic catalogues from economic operators, in the context of large framework contracts for goods and services e-Ordering: for sending electronic orders to economic operators, and for receiving their order confirmations e-Fulfilment: for managing the reception of goods e-Invoicing: for receiving electronic invoices and credit notes e-Payment: for giving the economic operator the opportunity to send payment reminders

In the pre-Award context, DIGIT is currently developing an e-Submission module, allowing economic operators to upload their tenders electronically to the European Commission. The eSubmission module builds further on TED (e-Notification) and the TED e-Tendering (e-Access) solution that has been implemented by the Publications Office. TED e-Tendering provides an extension to TED, allowing the EU Institutions to publish Call for Tender related documents and to provide answers to questions from potential Tenderers. The e-Evaluation and e-Awarding modules will be implemented in e-PRIOR in 2014. Figure 5 illustrates in three simple steps how it works.

Figure 5 - Key features

Step 1 An economic operator goes to TED (http://ted.europa.eu) to search available contract notices for interesting business opportunities. He doesnt need to register to search the notices. Only if he wants to personalise search profiles and receive email alerts based on his search profile he needs to register through an ECAS account, which only requires a limited set of registration data. The relevant contract notice includes a link to where tender specifications can be obtained or found electronically. When the contract authority is a European Institution, this link is hosted on the e-Access module of TED, named TED e-Tendering (http://etendering.ted.europa.eu). Step 2 On TED e-Tendering, the economic operator can view and download the tender specifications. Through different tabs, the following features are supported: Data: view a summary of the contract notices data

105

e-PRIOR Document Library: view or download all documents related to the call for tender (invitation to tender, tender specifications, model contracts, templates etc) Questions and Answers: ask questions and get answers by the contracting authority.

Step 3 Once he has decided to submit an offer (as a sole contractor or in a consortium) he can launch the e-PRIOR e-Submission module to start creating his tender. As a first step, he needs to fill in a series of forms to register Identification of the tenderer The lots he intends to participate in (if applicable) Information related to the exclusion criteria Information related to the selection criteria (technical and financial capacity)

The structure of the forms is based on the structure of contract notice and a tender template that was made available on TED e-Tendering. This information is stored in a tender.xml or tenderqualification.xml file. After having filled in the forms, the tenderer can also upload unstructured tender documents with any attachment (e.g. a description of a specific approach, or a product catalogue). The collection of the generated XML files and the attached unstructured documents make up the tender bundle. Once the tenderer considers his tender to be complete, he creates a tender preparation report, with a summary of the tender information and the hashes of the documents he wants to upload. He needs to sign this tender preparation report, by Printing this document, adding a blue-ink signature and scanning it. Signing the PDF document itself electronically.

In both cases, he adds the signed tender preparation report to the tender bundle. He can now finally submit the tender bundle. The e-Submission module will encrypt the tender bundle, using the encryption key that was made available on TED e-Tendering, and will submit the tender bundle towards the contract authority. Upon successful reception, the tenderer will receive Synchronously: An on-screen confirmation Asynchronously: An electronically signed tender receipt (XML) and a human readable representation (PDF) of it.

At the opening date, the contracting authoritys opening committee will open the available tenders by using the decryption key. This decryption key is only made available to the opening committee members at the opening date, and can only be accessed by the different opening committee members. A first release is foreseen in the beginning of 2013, supporting open procedures. In following phases, more modules will be developed, such as e-Awarding, e-Attestation or e-Catalogues, and more procedures will be supported gradually. By the end of 2015, e-PRIOR will be able to support the full public procurement process, including all pre-Award and post-Award phases.

Peter Breyne The newly developed pre-Award modules will also be made available to the Member States in open-source by adding them to Open e-PRIOR. Whenever possible, e-PRIOR will also try to re-use available components especially in the context of electronic catalogues and/or e-Attestation (such as PEPPOL solutions for eCatalogue and the Virtual Company Dossier). CEN/BII Similar to the approach in the post-Award, e-PRIOR will follow the CEN/BII specifications for e-Tendering, in particular for e-Submission and e-Qualification. The following CEN/BII profiles will be implemented: BII 11 Qualification BII 12 Tendering Simple

By following these profiles, CEN/BII will benefit from another real-life implementation and DIGIT will provide any user feedback or missing requirements (if any). By decoupling the e-Submission front-office and back-office and using a standardized interface between them, other bid clients or e-Procurement platforms should be supported in the mid-term future as well. The end-result would be an interoperable e-Procurement platform, where any economic operator across the world would be able to use the eProcurement platform of his choice to submit tenders electronically to the European Institutions or any other public administrations following the same specifications.

4 Compliance with the e-Procurement Golden Book of Good Practice

Figure 6 - The e-Procurement Golden Book of Good Practice

107

e-PRIOR The e-Procurement Golden Book of Good Practice (Figure 6) is a catalogue of good practices based on observations and lessons learnt from an in-depth assessment of 28 e-Procurement platforms in 18 European countries. The e-PRIOR team has taken the 24 practices of the Golden Book and its dos and donts and matched them against the features of e-PRIOR. The conclusion is that e-PRIOR can be considered compliant with the practices of the Golden Book. Some dos and donts have been added as features of modules that are still under analysis. An example of this exercise has been added: Golden Book Practice 15: Economic operators can choose to manually or electronically sign a submission report containing the hash value of each submitted document. Description: Platforms that apply this practice allow economic operators to choose between signing a submission report manually or electronically. The submission report always contains the hash value of each submitted document and is signed electronically by the platform. This way, it is possible to ensure integrity of content, non-repudiation and authenticity of origin of the submitted tenders. Giving economic operators the possibility to choose avoids the mandatory use of digital signatures. Additionally, instead of having to sign each document separately, the economic operator can sign them all in a single step. In e-PRIOR: this is OK, as the Tender Preparation Report can be signed on paper or electronically. Each practice comes with some practical dos and donts, and for practice 15 e-PRIOR is in line with all of them (Table 1).

Table 1 - Practice 15 DO'S and DON'TS

Peter Breyne This exercise has been performed for all 24 practices of the Golden Book and is available on request.

5 Recommendations of the e-Tendering Expert Group

Similar to what has been done for the Golden Book, e-PRIOR has been matched against all the recommendations of the e-TEG (Figure 7).

Figure 7 - e-Tendering Expert Group

Recommendation 8.6 of the e-TEG report: Digital Signature of the tender to provide legal value of signature and non-repudiation Description: To support the above process in the smoothest possible manner, platform managers should consider offering a signature and verification facility on their system based on DSS (Digital signature service), an open source software made available by the COM at: http://joinup.ec.europa.eu/software/sd-dss/release/20 e-PRIOR: This is OK, as e-PRIOR will use the DSS solution to electronically sign the Tender Preparation Report and Tender Receipt. For the validation of the electronic signatures, ESSI will be used (The in-house Electronic Signature Service Infrastructure of the European Commission). For the open-source version of e-PRIOR, the DSS solution will be used for both signing and validation, as the ESSI solution cannot be shared as open-source software. This exercise has been performed for all recommendations of the e-Tendering Expert Group and is available upon request. The e-PRIOR project team is also considering implementing the e-Procurement Indicators, the Measuring flanking measure (Figure 7), but is waiting for the final project results.

109

e-PRIOR

6 Results
The results of the e-PRIOR project are: Real-life experience with public e-Procurement inside the European Commission, which can be shared as lessons-learnt with the EU Member States Re-usable software components for public administrations to build their own eProcurement platforms Open standards (CEN/BII) being tested in a practical implementation Contribution to the update of e-Procurement in Europe in general and the implementation of the proposed e-Procurement regulation in specific

7 Conclusion
Through the e-PRIOR project, the European Commission aims at promoting the use of eProcurement in Europe and wants to help European public administrations with the implementation or enhancement of their e-Procurement solutions. This will contribute to the governments ability to have their e-Procurement solutions up and running before the deadline of 2017, when public e-Procurement will be made mandatory.

Peter Breyne

References
.e-PRIOR : http://ec.europa.eu/isa/actions/01-trusted-information-exchange/1-7action_en.htm ; https://joinup.ec.europa.eu/software/openeprior/home .TED : http://ted.europa.eu .TED e-Tendering :http://etendering.ted.europa.eu .ECAS The European Commission Authentication Service : https://ecas.ec.europa.eu/cas/ .A Strategy for e-Procurement http://ec.europa.eu/internal_market/publicprocurement/eprocurement/index_en.htm .The e-Tendering Expert Group reports :http://ec.europa.eu/internal_market/publicprocurement/eprocurement/conferences/index_en.htm .The e-Procurement Golden Book of Good Practice :http://www.pwcblogs.be/eProcGoldenBook/

111

ANO and the eProcurement Market :anoGov

Teresa Amorim and Pedro Leite

1 Company Presentation
ANO is a portuguese IT company, designing, developing and commercializing software solutions in Portugal, Brazil and Angola, since 1994. With 80% of the client spectrum from the public sector, in 2007 ANO had the opportunity to venture in a new market. In that year, ANO defined the e-Procurement market as strategic for its growing, considering the company was in a privileged position: it had the necessary knowledge on the technical complexity of the project, since it knew and already used most of the necessary technologies; it had the appropriated human resources to implement such a product; and finally, the necessary investment capacity for the project. Since its beginnings, ANO delivers quality value to its customers by successfully integrating people, business and technology, and with this project ANO aspired to nothing less. With this thriving quest-for-success, ANO had a surprisingly fast rise to the second position, within the Portuguese e-Procurement market and with ongoing projects in international markets.

Figure 1 ANOs Values

2 anoGov The Solution

anoGov uses the ScPL- Software for Public e-Procurement and Auctions that works in the anoCloud, granting the accurate fulfillment of the legal requirements as well as the integration in the existent solutions. When the customer has the ANO electronic documents management this integration is automatically assured. This allows the usage of existent functions such as: digital signature, centralized work agenda, among others.

112

T.Amorim and P.Leite 2.1 Features

2.2 anoCloud The anoGov e-Procurement platform is supplied through the anoCloud service, enabling the costumer to achieve the same results, with lower costs, and ensuring that the service is available worldwide, with no software pre-configuration needed. It truly is a cross-platform, multi-browser product. Providing the platform as cloud computing empowers the end user, by allowing a faster and cleaner implementation, without waiving any flexibility on the configuration or setup levels, and assuring 24x7 availability to the platform users. On the other hand, one of the current concerns regarding cloud computing - security - is assured to be at a maximum level. ANO is certified by the ISO 27001:2007 and implements the

113

anoGov norms standards and procedures in its products, which complies and certifies the companys commitment with data and user safety, in terms of access, storage and integrity within the platform. 2.3 e-Auctions The anoGov platform offers the possibility of calling an auction and the bids management system. This module enables buyers to achieve higher savings and allows sellers to progressively refine the proposals attributes, in order to the contracts execution plan requirements. The buyer can previously establish the base values of those requirements, and a mathematical calculus will determinate the evaluation of a specific seller, based on base value and the sellers input. 2.4 Integration The last decade imposed on the IT industry one word: integration, and the anoGov platform stands by that principle. The system offers a Web Service interface, allowing a bidirectional communication with other systems, like ERPs, logistics, stocks and even pharmaceutical management applications. Currently various systems already interact with the anoGov system via the web service gateway, maximizing the level of integration between the platform and the clients own internal applications. 2.5 e-Docs The e-Docs are electronic documents conceived as templates, where the specific data of a buyer or seller is injected, in order to automatically generate and present relevant documents throughout the procurement process. This template system allows the user to configure the eDocs and generate the documents with minimal human interaction. This feature of the anoGov platform allows the automatic generation of drafts of documents within the data context of a procedure, such as: Buyers related data; Procedure and batch related data; Stakeholders and actors related data (both internal and external);

With the flexible mechanism, it is possible, within the scope of a procedure, to automatically generate any one of the following documents with customizable data: Order requirements and request program; Reports from the analysis commissions; Contract models; Clarification requests; Official communications; Etc.

T.Amorim and P.Leite 2.6 E-Catalog The e-Catalog is an online instrument, facilitating the acquisition of goods and services through the e-Procurement platforms. The goal is to debureaucratize the acquisition procedure, making the procurement process more agile and more efficient, to all the sellers of those goods and services. Also, a more effective competition between them and a more transparent and control oriented procedure management is assured. These e-Catalogs offer up-to-date information on goods and services in the public procurements, and respective procedures. Also, an online comparation matrix helps the acquisition decision in terms of quality and value. 2.7 Markets With this product, ANO is established in the Portuguese and Brazilian markets, using its partners to answer the markets specifications and achieving a higher level of customer satisfaction.ANO has, registered in the anoGov platform, suppliers from almost all the 27 European countries, in a total of more than 10.000 suppliers. By doing so, ANO contributes, to the European integration of the suppliers chain, enabling any European enterprise to compete in any country with extremely low costs and without travelling needs to the costumer.

3 Anogov: A Market Case Of Success To Launch Worldwide

3.1 Our platform, your workflow The procedural workflows, needed within the procurement process, are adapted to the organizations needs, and the platform interface is defined according the clients Corporate Identity. All is adaptable: he colors, graphics and contents can be defined accordingly. The result is an online platform, well equipped for Public and Private e-Procurement, capable of aggregating different realities and with a quick, easy and agile setup. It enables the workflow of any e-Procurement business process making them according to the law, identifying steps, documents, procedures and actors, setting dates/time and deadlines to the steps and procedures according to the imposed regulations (connection with the national time institute). Thus, it is possible to define all the procedure phases, mandatory conditions of each one, which profiles can access certain data, change the procedure status, etc. It really aims to be a intuitive and parameterizable solution. 3.2 Why such a success? The capability of full customization of the procedure workflow, the intuitiveness and the increase in productivity to the end user are, among others, the key issues behind the success of the platform. But instead of numbers and impersonal data, next are the statements of some of the end users that acquired the solution and can give a more down to earth perspective (see annex I for more implementations):

115

anoGov 3.2.1 Prefeito de Trindade

Gerncio Figueiredo Silva Trindade Municipality We came to know the existence of ANO and its solutions when I was President of the consortium of the Serto Araripe Pernambucano Municipality, which have 350 thousand residents. We took a trip to Portugal, where we visited the Rio Ave consortium and to our content, we came to know the ANOs President which presented us with the companys solutions. I was immediately interested, and upon returning to Brazil, we made the efforts to implement such a system. () It was an immediate success and I truly recommend it to all the municipalities in Brazil, and even other countries. () It is the systems versatility and access from virtual any point in the global that truly conquered our users () This demonstration of agile e-Government is an example to all potential buyers and we thank ANOs dedication and commitment. From the technical support team to the consultants , from early on we knew we were in good hands. The success of this implementation will be an example for years to come . 3.2.2. Vila Nova de Famalico Dr. Paulo Cunha Vila Nova de Famalico Municipality We know that some social agents frequently offer some resistance when dealing with changes that current times require on us. () We cant forget that some of our collaborators were used to work on some procedures that were decades old. But early on there were two factors that contributed to making this resistance easy to deal with: the first was the intuitiveness of the system that made adaption almost a natural process; on the second hand the support from the consultant team from ANO, made any technical difficulties easy to managed and resolve. We are unanimous in saying that ANOs solution truly made the process so much easier. The experience we have, from this relationship is a bliss, we only have good aspects to focus on and we feel that ANO has been clearly capable of giving us the answers to the questions that the evolution of times have put on the municipalities.

4. Conclusion
The e-Procurement concept has revolutionized the purchase market. No question. Very quickly it revolutionized the procurement procedures, making it a more transparent, agile and simpler to use process. From buyers to sellers, all gained from this migration to the electronic era. At the front of this revolution stands the anoGov platform. The success was such that private entities are now implementing this system, and we hope we can go even further. Due to its characteristics, presented throughout this document, the anoGov system is the perfect solution to respond to this unique European platform model. Indeed, the anoGov platform is a case of success.

T.Amorim and P.Leite

References
Short list of the anoGov client references: Client REFER TELECOM - Railway telecommunications REFER - National Railway Network Oeiras Municipality, Portugal Project Implementation of an e-procurement platform anoGov. Implementation of an e-procurement platform anoGov. Implementation of an e-procurement platform anoGov. Inte-gration of e-procurement platform anoGov with ERP (GCP - Procurement Management) Implementation of an e-procurement platform anoGov. Implementation of an e-procurement platform anoGov. Inte-gration of e-procurement platform anoGov with ERP da Medidata. Implementation of an e-procurement platform anoGov. Implementation of an e-procurement platform anoGov. Implementation of a platform e-Gov. Project in dematerialization Prefeitura de Trindade. OTOC Ordem dos Tcnicos Oficiais de Contas, Portugal IHRU Instituto da Habitao e da Reabiliatao Urbana Implementation of an e-procurement platform anoGov. Implementation of an e-procurement platform anoGov. Integration of e-procurement platform anoGov with imple-mentation of Indra. Coimbra Central Hospital Alto Ave Central Hospital, EPE Implementation of an e-procurement platform anoGov. Implementation of an e-procurement platform anoGov. Inte-grao da plataforma eletrnica de contratao pblica ano-

Oeste Central Hospital, Portugal Leiria Municipalit , Portugal

Infarmed, Autoridade Nacional do Medicamento e Produtos de Sade I.P., Portugal Tribunal de Contas, Portugal Trindade Municipality, Per-nambuco-PE, Brasil

117

Dynamic Purchasing Systems : Vortal

Joo Feio Pereira

About VORTAL
VORTAL is a Portuguese IT company and leader in electronic platforms for eSourcing, eCommerce and eProcurement. Its mission is to help clients buy and sell better and achieve high levels of performance. With 12 years of existence, Vortal manages six electronic platforms targeted at different business sectors. Through markets segmented by business sector, it provides its users with business solutions that enable them to match supply and demand, thus creating perfect market conditions. It has more than 2,500 public entities and 40,000 companies networked and segmented by business sector, that promote their business activities with lower prospecting and recruitment costs, reduced administrative burden and total simplicity. Learn more at www.vortal.biz.

1 Introduction
This document aims to present the main features of the Dynamic Purchasing System, the methods by which it is created and managed, and a description of its benefits. It is targeted at all decision-making bodies that are considering the use of innovative procurement mechanisms. What is a dynamic purchasing system? It is an electronic multi-vendor system that enables contracts for purchase or lease repeated over time, for goods or services in current use and allows the entry of new competitors throughout its term of validity, the maximum duration of which is 4 years. Current use means "those whose technical specifications are fully standardised"1.

2 Phases of the Dynamic Purchasing System

The purchasing system includes three phases: establishment of the system, establishment of the list of competitors and the formation of the Contract1. The flow that feeds the three phases can be understood in graph 1 and is developed as follows:

118

Joo F. Pereira

Diagram 1 - Flow of dynamic purchasing system

a) System institution: The opening of the purchasing system starts with the publication of a notice in GR/OJEU2 and will remain open for a maximum of 4 years. Provided that the system is introduced by the deadline specified in the simplified notice, the interested parties may consult the procedure documents that are all available on the electronic platform used by the contracting authority, and may submit their initial and amended tenders on that platform. The deadline for acceptance or rejection of the tender is 15 days. An amended tender is any new tender that has been modified from the original. b) Establishment of competitors list: The conclusion of a contract under a dynamic purchasing system is subject to the publication of a simplified notice, where the deadline of not less than 15 days is indicated, in which suppliers must submit their initial or amended tenders for its acceptance in the system. At the end of this phase, the contracting authority sets the accepted competitors list in the system. c) Sending of invitation: After obtaining the list of accepted suppliers in the system, the contracting authority commences the procedure for formation of the contract, sending an invitation to all tenderers so they may submit their final tender versions. d) Evaluation of tenders: The procedure schedule disclosed at the time of establishment of the system will indicate the factors and sub-factors that identify the award criterion and the values of their respective weightings. However, the full submission of the evaluation model is not required. The invitation for the submission of final tenders must indicate the appropriate valuation model, if it is not included in the schedule.

119

VORTAL e) Electronic auction: The procedure may be completed with an electronic auction, but not with a negotiation process.

3. Procedure of the Dynamic Purchasing System

Illustration 1 - Procedure of the Dynamic Purchasing System

The procedure presented corresponds to the procedure specified by public Community procurement directives3, including as its own characteristics those resulting from the Portuguese Code of Administrative Procedure (19 Preliminary Report, 20 Prior Hearing and 21 Final Report). Note: See Annex III to access a detailed description of each phase.

Joo F. Pereira

4. Benefits
+ Competition Constitutes an "open purse" for suppliers and new competitors may be included over the operational lifetime of the system, thus contributing to improved innovation and continuous increase of competition. It also includes the electronic auction procedure. + Information Allow the creation and updating of catalogues of open and dynamic tenders. Invitation to members of the system to submit improved tenders as final tenders. + Speed Reduced purchasing times, since at all times it uses an updated list of relevant and available vendors, allowing a maximum of up to 15 days for the submission of initial or amended tenders and at least 5 days for receipt of final tenders. Additionally, it does not escape approval of expenses in the establishment phase that greatly reduces the difficulties resulting from changes in the availability of budgeted funds. + Efficiency There is no need to repeatedly request the suppliers submit the same information and to constantly evaluate them for each purchase. Opportunity to submit multiple tenders for the consideration of the contracting authority, by the deadline set for the system and to receive prompt feedback for each tender submitted. This drastically reduces the chance of rejection of a tender and thus minimises the risk of non-admission to the system. + Dynamism During the life of the system, the supplier may improve its tender so that on the date of submission of a final version, more favourable conditions are offered to the contracting authority. + Transparency Mandatory publication of all purchasing needs. + Development The current discussion in European Union institutions on the tenders presented by the European Commission on the new public procurement directives will enable to provision of the maintenance and improvement of this procedure, since resubmission of the initial tenders, or tenders amended from those that were already accepted and that wish to join the list of competitors, will be waived. Furthermore, everything indicates that its use will be widespread across the EU. For further clarification, compares the Dynamic Purchasing System with the Framework Agreement in Annex I of this publication.

5. Dynamic Purchasing System and VORTALnext>

The VORTALnext> platform was the first platform in the European Union to be equipped with the ability to manage a Dynamic Purchasing System. Currently, the new Vortal platform uses the procedure associated with the Dynamic Purchasing System, including all phases of the

121

VORTAL system and complying with all the legal requirements that support it. Below, the procedures is shown that is used to drive a DPS in the VORTALnext> platform. A. Dynamic Purchasing System Folder Overview

Illustration 2 - Display the file of a procedure relating to a dynamic purchasing system.

Key: 1. List of proposed suppliers, indicating their status (accepted, rejected or pending) 2. Purchase procedures under the Dynamic Purchasing System 3. Timeline with details of all the actions carried out in the Dynamic Purchasing System (publication, tenders received, tenders accepted and adjudicated)

Joo F. Pereira B. Folder of the Dynamic Purchasing System - Detail "Events associated with the procedure"

Illustration 3 - Management Screen of a Dynamic Purchasing System - "Events" detail

Key: 1. Chronological view of all events.

6 Use of DPS within the European Union

6.1. Savings and costs eProcurement generates significant savings. The Dynamic Purchasing Systems perform well in terms of4: -Attracting a large number of suppliers; -Effectiveness between border; -Significant reductions in costs, because of the continuous competitor dynamics (new tenders); -Constant updating of the offer by submitting new tenders, provided that they are considered relevant. Unlike in the case of the Framework Agreements, the solutions offered by suppliers never become obsolete. Records show that maintenance and management costs are high for contracting authorities but very low for the suppliers.

123

VORTAL 6.2. Legal adoption Currently, EU Member States are not obliged to transpose this procedure to their legal framework. However, their use is now confirmed in most countries. The sector in which the Dynamic Purchasing System is most widely used is healthcare. For more information on using the Dynamic Purchasing System within the EU, a case study may be found in Annex III relating to its use by the Central Purchasing Agency of Minfe in France.

Joo F. Pereira

Annex I
Differences between a dynamic purchasing system and a framework agreement

125

VORTAL

Annex II
Explanation of point 3. Procedure of the Dynamic Purchasing System: step by step 1. Needs and Rationale If the entity intends to conclude contracts for the purchase or lease of standard services or goods, the contracting authority may consider the establishment of a Dynamic Purchasing System in order to continuously obtain market prices and make improvements and savings. 2. Contracting decision The decision to establish a Dynamic Purchasing System marks the beginning of any public precontractual procedure and it is the responsibility of the body responsible for the decision to authorize the expenditure inherent to the contract to be concluded (that responsibility is conferred by the regime for public expenditure). The contracting decision need not be explicit, since there may be a decision authorizing the expenditure arising from the latter. 3. Decision of Choice of Procedure Following the decision to establish a Dynamic Purchasing System, or the decision to authorise expenditure or, alternatively, at the same time as one of these decisions, the body responsible for the contracting decision decides on the choice of procedure under the law. 4. Preparation of procedure documents The following information must be presented in the procedure documents: - The duration of the system (may not be more than 4 years) - Information on access by interested parties to the Dynamic Purchasing System, indicating the electronic equipment used and the methods and technical aspects for connecting to the system - Indication of method of presentation of tenders - The award criteria with factors, sub-factors and weighting coefficients may not require a model for evaluating tenders - The documents must be available until the system shutdown, for free, directly on the platform used by the contracting authority The procedure manual and tender documents are approved by the competent body for the contracting decision. This approval may be granted following the decision to choose the procedure or at the same time as it. Publication of announcement, establishment of system. The opening of the tender for the Dynamic Purchasing System is carried out using the tender notice (DG/OJEU). 5. Submission of initial indicative tenders The interested parties may submit the initial versions of the tender after the publication of the establishment of the system, by the deadline set for the purpose in the simplified notice provided.

Joo F. Pereira 6. Indicative evaluation of initial tenders Within 15 days of receipt of the initial version of the tender and each amendment thereto, the contracting authority shall notify the tenderer of its acceptance or rejection. Tenders are rejected in both the initial and amended versions, if their attributes, terms or conditions violate the specifications and if the contracting authority does not respond within 15 days, or does not proceed with notification after delivery of the initial or amended version. All the interested parties who submit an initial version of the tender or an amended version thereto that is not rejected are admitted to the system. 7. Decision of the call to tender Following the decision of the establishment of a system, it is subjected to the body responsible for the decision to contract the authorization for concluding contracts, under a system established for the purpose of publicizing the simplified notice. 8. Publication of simplified notice The invitation to tender for contracts based on such systems is via the simplified notice. 9. Submission of initial tenders or amendments to the initial tenders All the parties interested in accessing the system must submit their initial or modified versions of the tender at least 15 days from the date of dispatch of the simplified notice for publication. 10. Evaluation of tenders Within 15 days of receipt of the initial version of the tender and each amendment thereto, the contracting authority shall notify the tenderer of its acceptance or rejection. Tenders are rejected in both the initial and amended versions, if their attributes, terms or conditions violate the specifications and if the contracting authority does not respond within 15 days, or does not proceed with notification after delivery of the initial or amended version. All the interested parties are admitted to the system that submit an initial version of the tender or an amended version thereto that is not rejected. 11. Admission/Rejection of tenders In the 15 days following the submission of initial or amended tenders, the contracting authority decides on the acceptance/rejection of the tenders. If the decision is not announced within 15 days, the tenders submitted shall be considered as rejected. 12. Opening a competition for a new purchase After the deadline for tender submission stipulated in the simplified notice, the contracting authority draws up a list of tenderers admitted to the system and submits it to the body responsible for the contracting decision, as well as the amount of the expense inherent to the contract to be concluded.

127

VORTAL 13. Approval The amount of expenditure inherent to the contract to be awarded must be validated with the accounting department of the contracting authority in order to validate the availability of the budget of the respective authority for such expenditure, and the release of funds into reserve. 14. Invitation The procedure for formation of the contract to be awarded under a dynamic purchasing system starts with submission of the invitation to all tenderers whose initial versions were accepted, of an invitation to submit a final version of the tender for the contract to be concluded. The following are indicated in the invitation: 1) The deadline for submission of final versions of tenders, which may not be less than 5 days from the date of the invitation 2) The evaluation model proposed, if it were not mentioned in the procedure schedule 15. Submission of final versions of tenders The final versions of tenders must be submitted by the deadline set in the call to tender. After the deadline for submission of final tender versions to the procedure for formation of the contract to be awarded under a dynamic purchasing system, the evaluation of tenders and preparation and award of the possible phase of an electronic auction is carried out. 16. Evaluation of tenders The panel examines the tenders (for their exclusion) and evaluates the tenders (for their ranking, by applying the award criteria), and may seek their clarification. 17. Preliminary report After the analysis and evaluation of tenders, the panel shall finally issue a preliminary report, in which it must propose the ranking of the tenders. In the preliminary report, the panel must also finally propose exclusion of tenders. The preliminary report should also contain reference to the clarifications provided by competitors. 18. Prior hearing The panel sends a preliminary report to all competitors, establishing a period for them of not less than 5 days so they may comment in writing, under the right to a prior hearing. 19. Final report Thereafter, the panel shall issue a duly reasoned final report, in which it considers the observations made by competitors under the right to a prior hearing, maintaining or modifying the content and conclusions of the preliminary report. It may also propose the exclusion of tenders if it verifies, at this stage, that there is any reason for that exclusion.

Joo F. Pereira In the latter case, as well as the final report resulting in a change in the ranking of the tenders contained in the preliminary report, the panel proceeds with the new prior hearing, restricted to the relevant tenderers. 20. Award proposal The final report, along with the other documents that make up the process, is sent to the entity responsible for the contracting decision. 21. Award The entity responsible for the contracting decision decides on the approval of all proposals in the final report, for the purposes of the award. Along with the award decision, the body responsible for the contracting decision shall fix a reasonable period for the successful tenderer to submit the qualification documents due. 22. Qualification documents The successful tenderer must submit the qualification documents within the period stipulated in the notification of award. Under penalty of non-delivery, the award of the tender shall rank in 2nd place.

129

VORTAL

Annex III
Success story: Dynamic Purchasing System used by the Central Purchasing Agency of Minfe, France6 The process of the Dynamic Purchasing System (DPS), introduced in Article 78 of the Public Contracts Code of 2006, continues, in practice, to be quite unknown and little used by public awarding authorities. However, the Central Purchasing Agency (CPA) of the Ministry of Economy and Finance has experienced this process for the procurement of office supplies. The mid-term review of its experience, presented at the meeting of the Economic Observatory of Public Procurement (OEAP) of 10 March 2009, appears to be quite satisfactory. The DPS effectively provides a response to the key objectives set by the CPA, opening the competition to allow the largest possible number of operators to respond to tender notices, experiencing a complete dematerialization of the process. 1. DPS specifics Reserved for normal supply contracts, the DPS has some features in common with the processes of the framework agreement. The DPS is indeed a referencing system that can be used to pre-select operators on the basis of an indicative tender, before proceeding with the reopening of the competition to award one or more contracts designated 'specific'. By contrast, unlike the framework agreement that imposes a 'closed' referencing, the DPS is distinguished by its ability to refer new suppliers throughout the contract period. Thus, a tenderer can join the group of operators already selected, provided that it submits a tender tailored to the specifications and selection criteria specified in the tender notice relating to the Dynamic Purchasing System. The second unique feature of the DPS is its obligation to completely dematerialise the award procedure. 2. Use of reverse auctions in the context of a DPS The CPA wanted, on the other hand, to combine the DPS technique with the reverse auctions system (under Article 54 of the Public Contracts Code of 2006). These auctions, already experienced under previous contracts for the supply of office materials for the CPA, are called 'reversed' because the tender prices decrease and do not increase. A period passes that is predetermined by the administration, during which the candidates may bid and be informed in real time about the tenders made by its competitors (however without revealing the names of the tenderers). For the purchase of fixed computers and default monitors, the CPA resorted to single-criteria auctions. In this case, the candidate proposing the lowest price becomes the de facto cocontractor of the administration. However, the use of single-criteria auctions for the purchase of laptop computers has proved detrimental in the context of previous contracts, since it does not take into account the specificities of this type of product. Therefore, the CPA has used multi-criteria auctions for the purchase of laptop computers. This method of auction takes into account the autonomy, weight and technical quality of laptops to achieve a technical score that considers the tender launched in the auction in order to award the operator who offers the best price/quality ratio.

Joo F. Pereira 3. A very satisfactory legal and economic balance The use of DPS seems to have fully satisfied the fixed objectives. This type of engineering has significantly improved the competitive environment of the market, since eight operators may be selected and invited to tender for each specific competition (while only three operators could be under the previous competition). The dematerialisation of the procedure also simplified and accelerated its handling, given that the total duration of the award was 16 weeks. The specifics of this system (full dematerialisation and electronic auctions) did not cause any problems for the candidates who, by contrast, highlighted the overall simplification of processes and welcomed the effectiveness of changes. Results are equally compelling from an economic point of view, yet the gains do not appear directly associated with the use of the DPS. The leverage effect on prices, mainly due to the use of electronic auctions, enabled an overall reduction to be achieved of around 30% of the price at the end of the first auctions conducted under the DPS by the Central Procurement Agency. In Localtis3

131

VORTAL

Notes
1 A Art. 237 2, Code of Public Contracts. 2 Gazette/Official Journal of the European Union 3 Localtis.info provides online news and reports dedicated to local authorities in France.

Bibliography
. L. Valadares Tavares, 2009, The Management of Procurement: Application Guide of Public Contracts Code, OPET, 4th edition, . Vortal Academy, 2008, the Public Contracts Code, Vortal Academy . Directives 2004/17/EC and 2004/18/EC . eVA, 2010, Public eTendering in the European Union, eVA . PricewaterhouseCoopers (PwC), 2011, Public procurement in Europe - Cost and effectiveness, PwC, London Economics and Ecorys . Localtis.info, 2012

Saving time and money with eProcurement :CLOUDIA

Markku Jokiranta

Cloudia is a pioneer in the move towards fully electronic public procurement. With the help of Cloudias cloud-based electronic tendering platform, Cloudias clients are able to follow all of their procurement processes irrespective of the procurement type or procedure. The contracting authorities (buyers) use the platform for pre-award phases, awarding phase and some phases of post-award process, like informing the participants of decision taken on contract awards, and managing the life-cycle of contracts. Cloudia provides its customers with an electronic procurement platform that is very easy to adopt and has no set-up/installation requirements. Customers can go from their existing procurement processes to fully electronic versions in no time at all. The platform meets and exceeds the requirements mandated by the European Union public procurement directives and national legislation. Cloudias clients have achieved up to 80% cost-savings using Cloudia Procurement in their daily work. According to quote from one of Cloudias customers, they have managed to lower the cost of one tendering process to 1400 with the help of Cloudia platform. The customer processes all of their 210 award contracts per year with the platform. The average cost of one public purchase for contracting authority in Finland is 6500 .

Cloudia eProcurement (eProcurement platform)

The Cloudia Procurement system consists of several modules Cloudia Tendering Cloudia Contract Cloudia Auction Integrations with other systems (if required)

Different modules can be used either separately or together. However, the complete system provides customers with the best added-value in terms of ease of use and cost-savings in their process costs.

133

Markku Jokiranta

Cloudia as a company
Cloudia has focused its business on the public sector since 2009. Originally founded in 1997, the Finnish-based software company has been rapidly growing by offering an intelligent electronic tendering, contract life-cycle management and monitoring system to its customers. Cloudia provides an alternative to the usual procurement process, which in many cases still relies on email and documents that are repeatedly sent or uploaded between many people.Our mission is to help contracting authorities adopt a fully electronic procurement process. Cloudias procurement system is one of the leading platforms in Europe. Our core knowledge is based on understanding current procurement legislation, and understanding the expectations and requirements of the people making purchases on a daily basis. Our professional sales organisation can make any procurement process fully electronic within only a few days. Cloudia offer solutions that are based on current cloud technology and comply with the strictest data security criteria. Using the system, our customers combine procurement planning, managing, tendering, contract life-cycle follow-up, buying and monitoring in one logical process. With the help of Cloudia Procurement:

Contracting authorities can make their daily work much easier, achieve bigger costsavings and improve the over-all process. Our customers save 60% on average on their tendering costs when compared to a non-electronic process. Suppliers have fewer barriers to participating in public tenders because they can just follow the questions on the simple forms. There is no need to be an expert on procurement legislation. Economies benefit from huge cost-savings and far better services for people in the EU.

Cloudia is a market leader in eProcurement in Finland. Our offices in Finland are located in Helsinki and Joensuu. Cloudia is, through its strong but managed growth strategy, aiming to be the market leader in eProcurement in Scandinavia and other chosen markets. Cloudia is a part of an EU Commission-led public procurement development project that aims to create best practices for public procurement.

Cloudia

Why Cloudia?
Cloudia is an expert, and a pioneer, in the move towards electronic public procurement. The public sectors procurement processes differ greatly from the private sectors procurement processes, mainly due to procurement legislation and EU procurement directives that govern public sector procurement. In addition, the fundamental requirements of public sector procurement are different than those in the private sector.This is one of the main reasons why the procurement systems designed for the private sector are ill-suited for the public sector. This means that public sector procurement entities need a system designed from ground-up solely for them. The development of this system demands extensive technical expertise and in-depth knowledge of the public sectors procurement processes, requirements, and daily activities. Cloudia has this in-depth knowledge, as it has worked in close co-operation with procurement professionals for years. One of Cloudias key strengths has been its early adoption of a development process, in which we work in close co-operation with procurement professionals throughout the entire system development life-cycle. The systematic implementation of this development process continues to ensure a high quality, accurate, and responsive procurement system that is ready to comply with the ever-evolving requirements of our customers and the relevant legislation, both now and in the future. Cloudia procurement uses the latest high security cloud technology. Our product is developed in an agile manner. Following the latest agile software development methodologies, we can react quickly to changes in customer needs and/or legislation. Cloudias technology processes are audited by KPMG. 10 good reasons to choose Cloudia eProcurement Cloudia Procurement covers the entire procurement process, from tendering to contract lifecycle management, to monitoring of the process. 1. Cloudia Procurement meets the requirements mandated by EU and national legislation the platform has been developed in close co-operation with procurement professionals. 2. Cloudia co-operates with key people in the legislative field (both at the EU and national level) and responds quickly to changes in legislation. 3. The platform can be used for purchases of all sizes and for any procurement type and procedure. It is ideally suited for the purchasing of supplies, services, work, etc. 4. Automated and intelligent functions facilitate and speed up your daily workflow and routines leaving you time to focus on the purchasing itself instead of repeating the same tasks over and over again. 5. The guided and structured processes save you valuable work time. 6. Cloudia Procurement increases the internal co-operation between those responsible for procurement through telecommuting. 7. The system significantly reduces the barriers for a supplier to submit tenders resulting in more offers and better prices.

135

Markku Jokiranta 8. Thanks to the open application interfaces, integrations with existing and future systems are easy to create and maintain. 9. It is very easy to start using Cloudia Procurement there is no need for separate servers or long-term projects. The system can be deployed in one day!

Cloudia Tendering
With the help of Cloudia Tendering, the contracting entity (the purchaser) can process the entire procurement from beginning to end. This works for direct, national and EU-level purchases. It does not matter whether the purchase is small or big, or whether you are purchasing supplies, services or work. All procurement types and procedures are covered. eAuction is also available. Cloudia Tendering can result in 80% savings on your process costs:

Automated functions speed up your daily work and reduce the work-load of repetitive routines Controlled and defined workflows guide you through the process, eliminate a number of mistakes and make following the legislation much easier Dynamic criteria settings speed up the handling of tenders Advanced Co-operation options enable telecommuting and exchange of call for tenders even between the contracting authorities Dramatic decreases in the amount of printed paper documents meet the ecological goals set for procurement

Better quality, better prices how can this be done?

Procurement personnel are able to focus on planning purchases and criteria, instead of spending time repeating the same routines Easy e-submitting of tenders increases the number of offers because small and medium size enterprises do not have to spend time studying the legislation Cross-border offers increase competition With the help of dynamic criteria, purchasers can highlight relevant questions easily

Main features of Cloudia Tendering:

planning of procurement creation of request for quotation (RFQ) publishing of notices in local notice portals and / or to specific email addresses for suppliers, free-of-charge access to submit tenders via www.cloudiatender.com question / answer management guided workflows for suppliers when placing an offer guided workflows for suppliers when submitting tenders electronically (e-submission)

Cloudia pre-qualification of suppliers (automatically or manually) commenting tools in the evaluation phase automated evaluation chart (automated and/or manual scoring) contract awarding with electronic notification to the participants creation of the contract frame-agreement management mini-competitions archiving of all tender documents libraries for templates, criteria and texts on documents

Cloudia Contract With the help of Cloudia Contract, contracting authorities can manage the entire life-cycle of contracts in a centralised and comprehensive manner. Cloudia Contract is a seamless extension of Cloudia Tendering. All the data created in Cloudia Tendering can be used by Cloudia Contract. Cloudia Contract has been developed specifically for public sector needs, taking into account all of the legislative requirements of this sector. Cloudia Contract is an all-in-one tool to manage and rationalise contract life-cycles with the following features:

importing, creating and managing contracts contract templates, contract editor, text libraries versatile retrieval and search features advanced reclamation management contract life-cycle management from the beginning of the contract to the end (including optional terms and changes) follow-up functions to track the execution of contract terms automated alarms automated reports purchasing based on contracts telecommuting options (within the organisation)

Cloudia Auction (e-Auction) Cloudia Auction (e-Auction) is an electronic auction solution for contracting authorities. The auction itself is one of the existing procurement techniques (as are Framework agreements, Dynamic purchasing systems and Joint purchasing), but its popularity has increased greatly recently. Cloudia Auction plays a remarkable role when contracting authorities are looking for the most inexpensive prices for certain types of supplies. With Cloudia Auction, the prices can be 12% lower than the normal open tendering procedure!

137

Markku Jokiranta The main advantages of e-Auction are reductions in time, transaction costs and in bureaucracy.

Cloudia Auction has the following functions:

can be used in open, restricted, and negotiated procedures complete first-round tendering creating and submitting a call for auction suppliers are able to follow-up on the auction stages in their own supplier portal buyers have real-time access to monitor the competitions completion of auction according to the given settings and regulations automatic auction reports automated creation of contract awards, contract notices and the contracts themselves

Cloudia Auction is not a separate application, as it is integrated seamlessly with the Cloudia tendering solution. This enhances management of the entire process and opens up new ways to use qualitative criteria in auctioning. Cloudia Auction complies with the regulations set for public sector procurements.

Integrations
Due to the modular structure of the software, the different solutions or modules can be used separately, if needed. Open interfaces (SOA architecture) enable integrations with other systems and guarantee the compatibility that is vital for every customer.

Cloudias customers
Cloudias customers are all organisations that are obliged to follow public sector procurement legislation. It does not matter if the organisation is large or small, all organisations benefit from the Cloudia electronic procurement system. Cloudias customers include the following types of organisations:

cities, municipalities municipal federations joint purchasing organisations public utilities and companies hospital districts and hospitals communal educational organizations ministries and their departments governmental organisations counties universities and polytechnic institutions parishes

Cloudia power stations

Cloudias milestones
The official procurement system provider for the municipal sector in Finland Cloudia has been selected by KL-kuntahankinnat Oy (a procurement entity owned by the cities and municipalities of Finland) as the official procurement system provider for the municipal sector in Finland. This covers approximately 70% of all public sector entities in Finland, including municipalities, cities, municipal federations, public utilities and companies, hospital districts and hospitals, and parishes. Procurement system provider in the ECs Golden book of e-Procurement In 2012, Cloudia was selected to be part of the European Commissions Golden Book of eProcurement, which aims to create a best practices in procurement in Europe guide. A member of the E-procurement measurement advisory panel This panel was initiated by the European Commission and implemented by IDC and Capgemini to map and develop credible ways of measuring and analysing public sector procurement within the EU. The panel consists of 12 members from different organisations within the field of public procurement and governmental organisations all over the EU. Cloudia is proud to be a member.

Two key wishes to be fulfilled by the European Commission

1. One of the biggest challenges in public procurement field is how to manage several languages. From the platform suppliers point of view, already some simple things would help to tackle this problem. In Cloudia, we suggest that European commission should set up one public glossary, which consists the official public procurement terms in every language. This would help platform suppliers to translate the systems with the right terminology. Currently, there is no assistance found on this sector by the Commission. 2. Another challenge in the area of European public procurement is to understand how different states participate in system development. Currently they compete against private platforms, which distorts the competition.

139

PLYCA, the modular solution to integrally solve all stages of tendering and procurement electronically
Manuel Cao

1 Who We Are
We are nexus IT, a company in the sector of information technology specialized in developing and implementing solutions for the sectors of Public Administration and Healthcare. We provide a range of specialized services based on our own solutions, ranging from consulting and implementation to the support and maintenance services. We are operating in the Spanish market since 1997 and we have over 100 consultants and specialists in our solutions, while our offices are located in Madrid, we are located geographically close to our customers. Nexus IT is part of LBi International N.V. group, a global agency that focuses on marketing and technology, recently acquired by Publicis Groupe.

2 Challenge of the transition to e-procurement

The main challenge of the transition to e-procurement is not only to implement information technology. Organizational change is a process and a major innovation. And therefore, the challenge of transition must address given its true nature and its dimensions. In many situations transition to electronic format of procurement is defined as a technical challenge but, given its size, complexity, number of actors involved and the training and development of staff, it should be considered as an adaptive challenge. R. Heifetz, A. Grashow y M. Linsky, the authors of : Adaptive leadership practice: Tools and tactic to change your organization and the world, consider that groups tend to avoid adaptive challenges because they involve an unavoidable individual change to achieve the goal. This is the situation observed again and again in the transition to e-procurement.

Activity Technical Challenge Adaptive Challenge Apply previous knowledge Learning and implement new knowledge

Accountability Established authority People involved in

And therefore measures for change management, project management, accountability, strategy, organizational performance and human factors, should consider the kind of challenge in order to implement the best actions in a consistent way with the scenario posed by this transition.

140

Manuel Cao The transformation of procurement to electronic format implies a framework with an adaptive challenge for all actors involved in public procurement.

This transformation also has to have a legal basis for it to be carried out without any legal risk or technological transformation approach not based on legal standards that must be applied. The main legal provisions, in turn, have to be considered in two ways: The dimension of eGovernment. In this aspect it is necessary to know and adapt information systems to national laws (in Spain the law 11/2007 on Electronic Access of citizens to public services, with corresponding Schemas for Interoperability and Security) and European standards. In this last aspect we must fit in the European Interoperability Framework (European Interoperability Framework 2.0). The dimension of public procurement in electronic format that is governed by the law of contracts in the public sector as a national transposition from EU Directives of Procurement. Remember that today these policies are going to be modified to drive with specific legal constraints, the mandatory use of electronic public procurement. Most likely this will result in the mandatory electronic tender and electronic invoicing.

These rules and others involved in the business architecture posed e-procurement, have a decisive influence on the design of information systems should support the electronic government procurement.

3 The global model of e-procurement

Public procurement is a service return through which states return to society in the form of goods and services part of the collected taxes from this society. Through this service you get

141

PLYCA the goods and services necessary for the proper functioning of public services and also design and implement public policies to promote socio-economic trends such as social inclusion, environment and innovation. The following figure shows this return service that represent public procurement.

In modern societies the volume, complexity and expected outcomes, promote this service to be managed using the electronic format in all its functions so that they can get the expected results. The paper format is not able to convert resources used in procurement in a productive and competitive lever that this service can represent in modern societies. The global model must be represented by a business architecture that collects all procurement functions in the right and customized balance for each organization. Information systems that are designed to be compliant to the law that supports this service must also return and allow agents to use information systems to achieve the goals that society demands from them. Public procurement is classified as a return service which society can have the goods and services necessary to enable the development of private and social progress in exchange for the use of the resources gotten from taxes. Remember that European member states apply more less the 20 % of GDP to public procurement. To start the analysis of the global model and its associated business architecture we will begin identifying the four major functional areas of activity that should provide the information systems according to the two aspects of compliance and performance to meet organizational objectives. So we're talking about: Relationship: All actions that allow the value exchange between the contracting authorities and the economic operators. This functional area is the fundamental objective of the European Commission which has been divided into two different stages, following CEN BII standards, called pre-award and post-award phases: pre-award (publication, noticing e-submission, tendering, catalog generation) and post-award (orders, fulfillments, invoices and payment ). Processing: This functional area includes all actions, procedures and documents used to express decision making and the will of accountable civil servants and economic operators. All this processing must be recorded as a way of expressing all the processing and

Manuel Cao documents done by the administrative bodies and businesses procurements law. based on public

Exploitation: Allows reporting and basic and advanced statistics to exploit the structured data in electronic format with tools to distill the information and turn it into knowledge. This knowledge allows the assessment, monitoring and management of public policies designed from political level about procurement. Archiving: All the activities, procedures and documents that are carried out in a contract archiving electronically. It must be considered that the intended objectives of e-procurement are multiple. On one side are the objectives defined by the European Commission and in the other hand the objectives of each public administration that implements e-procurement. To summarize these objectives can be grouped as follows: European Commission: single market of interoperable pan-European and affordable e-procurement and affordable. Electronic Tendering and electronic invoicing just to start.

Public Administrations: those exposed to the European Commission and also some or all of the following: the efficiency, effectiveness, competition, economy, transparency, equal treatment, public policy implementation, productivity, competitiveness and aid to SMEs enterprises.

These objectives must be coordinated, in a coherent way but we must be aware too that there will always be taken into account adequately for implementation projects, so that collisions can occur between goals and may even result in the failure of the transition to electronic public procurement could be minimized. In the picture you can see schematically these functions and initial consideration. We can see that the interests of the European Commission and the contracting authorities are converging but they are not exactly coincident.

To understand the single market objective and necessary dimensions of interoperability and standards, as well as the current situation that has led the recently published Golden Book report and the report of experts on electronic tendering published by the European Commission, we must formulate the following proposal: The various procurement communities should be able to connect with each other. Any company connected to the network can connect to any administration and transact with it according to the standards that both support (invoice, offer, etc.).

143

PLYCA

Once analyzed the interoperability objectives to generate the single market we will show the public procurement functions, including the above that has to be raised to make a smooth transition to electronic format. Recall that public administrations have more objectives that ones declared by the European Commission. In the picture below are the core functions of public procurement, which must be implemented in a balanced way based on the combination of the stated objectives of the European Commission and each public administration.

Breaking down in greater detail these four procurement functions, we obtain a diagram of the following type:

Manuel Cao We are ready to convert these functional areas of business architecture in a system architecture that will give us a clear picture to achieve each of these functions always in relation to the requirements and needs of each Administration or Public Company. nexus IT, with the PLYCA product suite has translated this business architecture in a system architecture that solves the global model of procurement functions and allows the balance with the specific goals of each public administration ensuring the e-procurement transition.

The PLYCA product suite

PLYCA-Dossiers This is the main component of the Back-Office and is responsible for providing the necessary tools for the electronic management of procurement dossiers: Process Automation Document Management User management Electronic signature Communication system.

The functionality of PLYCA-Dossiers is completed through the following modules: PLYCA-Signature PLYCA-Signature provides, in a decoupled fashion, the functionality of the electronic signature and encryption required by the procurement platform. When the customer has their own signature platform PLYCA-Signature acts as a gateway between PLYCA and the platform. PLYCA-Signature is a module included in PLYCA-Dossiers. PLYCA-File PLYCA-File is a PLYCA-Dossier module allowing the export of electronic records to be sent to agencies/people not using the PLYCA-Dossiers system, ensuring at all times the integrity of the information contained. PLYCA-File is a module included in PLYCA-Dossiers. PLYCA-Visor Exports carried out with the PLYCA-File can be viewed with Windows Explorer as a single tool. But to access the more advanced features, such as verifying the integrity of the dossier or verifying the signatures, the PLYCA-Visor must be used. PLYCA-Visor is a module included in PLYCA-Dossiers. PLYCA-Connector PLYCA-Connector is a PLYCA-Dossier module that allows PLYCA-Dossiers to be integrated with external systems, general accounting and warehouse management. It is based on Web Services and XML messaging supported by UBL.

145

PLYCA PLYCA -Portal The Tender and Procurement Portal is a tool that allows non-government agencies, primarily businesses, to actively participate in defined procurement procedures. It covers the following functions: Contractor Profile for Publication Services Virtual Office for Procurement and Processing Services Portal Administration Services.

The functionality of PLYCA-Portal is complemented by the following modules: Registry-Interface This is the interface which through the Web Services enables the registration of incoming and outgoing documents submitted by those presenting tenders; those awarded the tender and contractors to be registered. Furthermore, if the register implemented in the organization does not have online Registry characteristics, the PLYCA Registry-Interface provides a solution with the generation of an electronic Acknowledgement signed by the electronic office. PLYCA-Notifications PLYCA-Notifications are part of the defined set of systems to ensure online notification. It provides a mechanism for communication by electronic means between citizens and the government, allowing notifications to be opened and controlled. PLYCA-Enterprises The PLYCA-Enterprise module is the solution component that allows the generation, transmission, exchange and signing of electronic documents, enabling among other things electronic tendering. It is a module that is downloaded and installed on the companys workstation. These modules are included in the PLYCA-Portal.

PLYCA-Catalogues
The PLYCA-Catalogues product allows the government agencies to have catalogues of published goods and services available and allows companies to submit their bids. This is an indispensable element for the implementation of Dynamic Acquisition Systems whose implementation would be necessary for the complete development of new procurement procedures set forth by the Community Directives for Procurement.

Manuel Cao

PLYCA-Datamart
Allows the periodical uploading of a de-normalised database repository, parallel to the PLYCADossier production database, which can be accessed by the reporting and "businessintelligence" tools available in the organization.

Electronic Auctions
The integration in the suite PLYCA of iSOCOs electronic auctions, introduces this type of award in all procedures currently used by the product (open, negotiated, restricted...), enabling this option also in the Dynamic Purchasing Systems with the reopening of bids.

147

PLYCA

4 How the PLYCA suite fits the business model of procurement

Once exposed the business architecture and systems architecture supported by the PLYCA product suite we will identify how we can achieve the business objectives with the PLYCA product suite in all its functions. Electronic Relationship The electronic relationship is represented by the following basic business functions: Publication of notices: PLYCA-Dossiers prepare the announced documents and submitt to the Portal that handles time stamping and ad management. The shipment consists of the following elements: announcement and electronic signatures. Electronic tendering: Traders are advised that there are announcements of their interest based on PLYCA-Portal alerts and they consult the documents associated with the tender: Announcement and Sheets. In case they are interested they can to download the electronic submission of tenders envelope using PLYCA-Enterprises to generate the supply, sign and guaranteeing confidentiality encrypted end to end. Submission of tenders. Once created and stored the bid PLYCA-Enterprises proceed to send it to the communication address incorporated itself on and received a receipt with the check number of PLYCA-Portal. Awarding. Reach the deadline for submission of tenders, and award mechanism named the table, proceed to opening envelopes and decryption through the private keys of each envelope with the request of private keys for at least two components of the awarding table. The envelopes are opened in the right sequence to ensure strict confidentiality of tenders: Administrative envelope, subjective criteria envelope, and finally objective criteria envelope.

Contract, Order, Invoice are transactions that have a similar flow following the standards CEN BII and PEPPOL network issues. Electronic processing -

Initial System Parametrization. We proceed to parameterize the system PLYCADossiers on the following aspects: Organization Documents Signatures File Integrations with other systems like Portal, Accounting and Contract Registry

Dossier preparation. It lists all the agents involved and complete all procedures and administrative documents electronically. Noticing and tendering preparation. Ads are generated, legal documents are
published and electronic envelopes for e-submission are prepared and sent to the procurement portal of the public administration.

Manuel Cao

Evaluation, Award, and Contract. Implementation and Incidences. Contract is executed and managed all issues that
may arise during the life of the contract according the laws that apply. Orders, delivery notes and invoices are received and handled with accounting systems based on existing integrations.

Termination of dossier. Upon termination of the contract and returned the final
guarantee, the completed dossier can be archived, leaving the reference and basic data in PLYCA-Dossiers.

Electronic Exploitation With the management of procurement dossiers in electronic format, structured data is generated in all dimensions that are relevant to analyze the business: budget management, execution of contracts, payments to contractors, competition, etc. Electronic exploitation is based on reports and basic statistics from the transactional system or advanced statistics and dashboards that can be generated from the datamart produced and maintained by the transactional system. All these data are extracted, transmitted, verified and organized, from transactional system to a datamart system that stores the data in a specific way that allows the right exploitation in each of the dimensions displayed. With the application of business intelligence tools and related implementation services, expenditure series, process and performance statistics and dashboards are available. Electronic Archiving Once the electronic dossiers are extinct, they are exported to external electronic archiving systems ensuring the completeness of the dossier and the preservation of electronic documents.

5 A customized solution to YOUR needs

At this point and having considered the legal and technological options, along with the type of transformation involved (adaptive challenge), it is appropriate to offer a suite of products and a catalog of services that can accommodate both the requirements of legal regulations (European Commission, the public procurement directives and national laws of public sector contracts and eGovernment, etc.), so that each Administration may design an architecture according to its technological, organizational needs, budgetary capabilities and technological maturity. For this specific goal we must clearly identify the type of scenario and the main objectives that each Administration wants to get. Based on these dimensions the PLYCA product suite offers the following configuration options tailored to the needs of each Administration:

149

PLYCA

PLYCA SUITE
Goals Files Portal Datamart Catalogues Outcomes Tendering and Procurement Procurement Tendering Product Services Product Services Product Services Product Services Eficiency Transparency SME Savings Mandatory
1 Few Services 2 Intensive Services

1 1 1 1 1

1 1 1 1 1

Central of Purchases Catalogues Tendering / Invoicing

From this table where you can see PLYCA suite components used in each of the possible basic configurations: procurement, tendering and catalogs, we can according to the main objectives proposed establish customized results. The possible results that can be achieved with the PLYCA product suite and services associated are very varied but we will simplify the results in the following: I. Basic e-procurement: procurement, tendering and invoicing in electronic format. II. Catalogs and Auctions: Contemplate basic e-procurement and additional modules to implement auctions, catalogues, dynamic purchasing systems and framework agreements in electronic format. III. Analysis of procurement. Starting at least with basic electronic contracting, it can be implemented with the usage of PLYCA-Datamart, dashboards and advanced statistics that enable the design, adjustment and monitoring of public policies through the procurement process. For example: social inclusion, environmental protection, innovation and employment. IV. Advanced e-procurement. Which gathers all PLYCA suite products and allows progress in the automation of the procurement process in the public organization, while measure results and start with the professionalization of the agents involved in public procurement to move the public procurement service from a legal administrative process to an economic tool with the capacity to implement public policies and provide a lever of productivity, competitiveness and social innovation.

Manuel Cao

6 PLYCA references
Secretaria de estado de la Seguridad Social - Central Government The PLYCA Project was defined as a global e-procurement project to manage records electronically and to tender electronically. As part of the project the PLYCA components have been integrated with every Social Security applications required, being necessary to approve very restricted tests related to Security, performance and usability. The number of potential users for the systems is about(1.500-2.000) in 54 delegations distributed along Spain. The organizations that take part of the Project are: Tesoreria General de la Seguridad Social, Insituto Nacional de la Seguridad Social, Instituto Social de la Marina y Gerencia informtica de la seguridad Social. They are using PLYCA-Portal in production since March 2011 to publish the Buyer profile. https://sede.seg-social.gob.es/Sede_1/Lanzadera/index.htm?URL=100. PLYCA-Portal is integrated with PLACE. They are using since beginning of July 2012 PLYCA-Dossiers to manage electronically the e-procurement records. The rest of functionalities of PLYCA-Portal to tender electronically will start in production based on the client priority.

Ayuntamiento de Madrid Local Administration More than 1.500 users using PLYCA-Dossiers. 4.846 e-procurement records managed in the period 2008-2011 with PLYCA-Dossiers. The purchases of printing goods in the city council are managed in a central way through a Catalog built with PLYCA-Catalogues. They are now in the phase to notify electronically to the providers from the purchases done. The client is ready to afford the electronic tender as soon as they consider they are ready for it (political decision not technical decision).

Gobierno de Canarias Autonomic Administration More than 400 users using PLYCA-Dossiers 2.509 e-procurement records managed in the period 2005-2011 with PLYCA-Dossiers. The purchases of computer goods in the autonomic government is managed in a central way through a Catalog built with the PLYCA-Catalogues. http://www.gobiernodecanarias.org/plycaPub/catalogo/index.jsp The contract record, the tenderers record and the classified companies record are built using the PLYCA platform. PLYCA-Portal the PLYCA component to tender electronically is installed and integrated with the horizontal electronic platform of Gobierno de Canarias to start in production when Gobierno the Canarias considers they are ready for it (political decision not technical decision).

151

PLYCA Other references are the following: Agencia de Sanidad Costa del Sol Cabildo de Fuerteventura Cabildo de Gran Canaria Empresa Municipal de Vivienda y Suelo de Madrid Ayuntamiento de Leganes Ayuntamiento de Viladecans Ayuntamiento de Burgos Diputacin de Tarragona Diputacin de Badajoz Instituto de Salud Carlos III Mutua Universal Universidad de la Laguna Universidad de Zaragoza

7 Conclusion
The transition involves an enormous transformation with a very high dose of innovation which will radically change the procurement process, results and its relationships. Consider all aspects of the transformation to know where the difficulties will appear and how to face them. nexus IT with the PLYCA product suite and the associated services has the capacity to generate balance results, listening and analyzing the real needs and interests of each public administration and organizing a transition with systems and organization over a customized scenario. We make the coexistence or both interests, the one of the European Commission and the interest of public administration that implements the e-procurement, encouraging the active involvement of all actors involved in public procurement.

Part III Methodological Issues in Public Procurement

153

CEN Workshop on Business Interoperability Interfaces for public procurement in Europe

Jostein Frmyr, Giancarlo De Stefano and Kornelis Drijfhout

1 Introduction
This paper is a short version of the Business Plan for the CEN WS/BII phase 3. The Business Plan has been published on the CEN web pages1 as well as the WS/BII web pages2 and is currently under public review. Comments are welcome till 20 March 2013. The Business Plan will be subject for approval at the kick-off meeting on 21 March 2013 in Barcelona. This paper starts with a background description of the need to standardize electronic procurement in Europe; the reason CEN WS/BII was initiated. Secondly the workshop scope and objectives are described. How does this workshop position itself in the standardization arena? The next chapter is dedicated to the workshop programme for the third phase. What are the proposed deliverables for this phase and how will this influence the future of eProcurement in Europe. Finally the necessary coordination with other initiatives is mentioned. The CEN WS/BII phase 3 will be open for participation by any interested organization. Direct participation from end users (private and public sector entities) is a key target.

2 Background
Over the last decade, electronic procurement has been developing rapidly throughout Europe. The public sector has played a crucial role in this, both before and after the Directives 2004/17 and 2004/18 gave a significant boost to its adoption. However, while in some the adoption of electronic tools got close to a 100% adoption, in most other cases the progress has taken shape under a number of national or regional initiatives, which up to now have had little, or no, coordination in terms of choices regarding standards, processes etc. Whilst this approach has generated some initial momentum in the uptake of e-Procurement, the situation has ended up being fragmented into a number of communities using similar concepts, standards and technologies, but still unable to seamlessly communicate with each other. This situation is a drawback to the scalability of the eProcurement adoption across Europe. Also in the post-award phases of the procurement processes, where the public and the private sector share basically the same processes (e.g. in the ordering, fulfilment and invoicing processes) the potential benefits of e-Procurement have not been fully exploited due to the lack of a large convergence on one or a few dominant standards. In the case of e-Invoicing, the new Directives 2010/45/EU amending the Directive 2006/112/EC on common system of valued added tax as regards the rules on invoicing, might facilitate the usage of e-Invoicing. The legislation has been taken into consideration in the work of CEN WS/BII. Efficient public procurement based on standards stands on the top of the European Agenda. The public sector with its big buying volume and its complex constraints offers a high economic potential to enhance speed and efficiency of European procurement. As it stands under

154

Kornelis et al. government control it offers a good chance to develop appropriate e-Procurement standards, which may be applied also in the private and industrial sector. It should also be recognized that in the private sector there are many e-Sales and e-Procurement solutions in parallel, that may be locally effective, but which often are not interoperable and seldom harmonised. Making them identical by one prescribed standard does not seem to be the best solution, as enterprises often act in competition and in different markets. Nevertheless offering standardized and automated solutions for common activities and requirements seem to be a good concept to enhance regularity, speed and flexibility and to reduce processing costs. Against this backdrop, the CEN Workshop on business interoperability interfaces for public procurement in Europe (CEN WS/BII) was established in May 2007 with the objective to provide a basic framework for technical interoperability in pan-European electronic transactions expressed as a set of technical specifications that cross-refer to relevant activities, and in particular are compatible with UN/CEFACT in order to ensure global interoperability. At the closing meeting of CEN WS/BII (phase 1) a CWA in five parts was approved for publication: - CWA 16073:20103, Business Interoperability Interfaces for Public procurement in Europe Part 0: Introduction Part 1: Profile overview Part 2: Convergence and gap analyses Part 3: Toolbox for technical interoperability Part 4: Evaluation guidelines for testing and piloting

The CWA 16073:2010 was developed to support interoperable public electronic procurement and business (e-Procurement and e-Business) solutions, as a concrete contribution in line with several EU policies and initiatives at the time the first Workshop was launched (Lisbon Agenda, eEurope 2005: An information society for all; Manchester Declaration; i2010 programme; Competitiveness and Innovation Framework Programme (CIP) 5; Action Plan for eProcurement). The same CWA also served as basis for relevant implementations targeting European stakeholders through initiatives such as the OpenPEPPOL and all the related initiatives in individual countries, the Open ePRIOR project as well as other projects that use the BII specifications as the basis for their e-Procurement solutions. Based on the successful adoption of the first CEN WS/BII results, and on inputs collected from several stakeholders, a second phase of the Workshop was launched in 2010, with the goals to provide technical support for adopters and implementers of the CEN WS/BII deliverables. To provide a forum for governance, life cycle management and further refinements of the CWA published by CEN WS/BII. Support coordination and harmonization amongst several parallel European initiatives addressing various aspects of e-Procurement. And further extend cooperation with the most relevant organisations developing standards to ensure that European requirements are catered for. During the lifetime of the Workshop, the use of CEN WS/BII deliverables spread throughout Europe: the PEPPOL project, ePRIOR, and several national e-Procurement initiatives (Norway, Denmark, Ireland, Sweden, Spain, Italy). Throughout its lifecycle, the second phase of the Workshop focused

155

Business Interoperability Interfaces por public procurement on capturing new (and refining the existing) business requirements. The Workshop also worked to express those requirements independent of any specific syntax, and - in order to make this result usable, to link the requirements to some of the most commonly used standards, binding them to the syntax of OASIS UBL and UN/CEFACT. The second CEN WS/BII was thus again giving a concrete answer to a number of EC policies and initiatives, such as the 2009 ICT Standardization Work Program, the e-Tendering Expert Group (eTEG) launched in 2011, the proposal for a new Public Procurement Directive and the new Invoicing Directive launched in 2012, the Multi stakeholder Forum on e-Invoicing started in 2011, the launch of a Road map for e-Invoicing in the Public Sector lunched in 2012, the identification of the notification information based on the last public procurement Regulation 842/2011.). Among these, the draft proposal for new Public Procurement Directives published in 2011 plays a key role. Naturally, as the text underwent its institutional negotiation process during the lifetime of the second Workshop, the CWA profiles could not be founded on the final version of the Directive; however, the proposal text was a good basis, especially for the new rules regarding e-Catalogues in the pre award phase By the end of second Workshop, the participants realised that activities are still necessary, in particular to strengthen the framework for Governance and Life Cycle management of the CEN WS/BII deliverables/elements. Enhancement of the current CEN WS/BII deliverables where needed as well as develop new deliverables when required in order to secure good quality and continued relevance in meeting market expectations and increase adoption through capacity building and communication. In the Reykjavik meeting of June 2012, the majority of the participants decided that a third Workshop should be established.

3 Workshop scope and objectives

3.1 Positioning Despite its focus on the government sector, the vision of the CEN WS/BII 3 is that all organizations independent of whether they are public or private and whatever their size and nationality - are enabled to conduct electronic business in an effective and efficient manner, significantly lowering costs for transaction processing. The Workshop mission is to spread and facilitate the use of e-Procurement standards by suppliers and buyers, and especially public administrations, by: supporting the convergence of commonly applied international e-Procurement standards; providing a general framework for the organizational and semantic levels of the electronic documents; identifying requirements (including legal) for tools supporting e-Procurement standards providing organizational support to ensure the governance and maintenance for those requirements.

This will be achieved by focusing on business requirements expressed in the European market and provide guidance to implementation projects on how relevant international standards

Kornelis et al. may be applied in order to meet those requirements. CEN WS/BII 3 aims at the strategic positioning with respect to Standard Development Organizations (SDOs) and implementation projects.

Figure 1 - Strategic positioning of the Workshop in the e-Procurement context

3.2 Objectives The CEN WS/BII 3 will continue the work initiated by CEN WS/BII, and further refined under CEN WS/BII 2, to support interoperable electronic procurement and business (e-Procurement and e-Business) solutions. In order to achieve this, CEN WS/BII 3 has the objective to provide increased value to the CEN WS/BII user community, by: 3.3 Scope of work The focus of the workshop will obviously still be the interoperability along the procurement process, with a B2G perspective, including where possible also a B2B perspective (which in the post-award is very close to B2G perspective). The CEN WS/BII 3 will build upon the work carried out and on the lessons learnt in the two previous Workshops, concentrating its effort on areas where gaps have still to be filled and strengthening the topics that have been perceived as key to ensure an ever increasing adoption of the Workshops results. Providing a focal point for governance and life-cycle management of the CEN WS/BII deliverables; Filling the gaps to ensure that all relevant aspects of e-Procurement are covered; Encouraging increased adoption both in public and private e-Procurement through capacity building.

157

Business Interoperability Interfaces por public procurement

Figure 2 - Visual representation of the CEN WS/BII 3 scope of work

Figure 2 illustrates the scope of work with respect to the typical focus of the workshop, namely the central steps of the procurement process (i.e. those that require interoperability between the users; planning and back-office processes are out of scope, as they are only internal). In particular, along the process, the scope of work in the pre-award will be: further development of the profiles from phase 2, in particular on the topics of Virtual Company Dossier and e-Catalogues, taking into account the feed-back from the expanding community of users; provide support to the users, including life-cycle management of deliverables to ensure their continued relevance; development of new or revised profiles related to procurement processes such as dynamic purchasing systems, e-Auctions, direct award procedure, framework agreement, etc. The new development may also add parts in the already defined profiles (for instance messages used with unstructured information, for example Question and answers); defining common notification content and means to exchange of metadata information, so as to facilitate/make more efficient the search and discovery of opportunities.

The scope of work in the post-award will be: further development of the profiles from phase 2, taking into account the feed-back from the expanding community of users; provide support to the users, including life-cycle management of deliverables to ensure their continued relevance; improvements and developments in new areas.

In addition to the activities that are strictly related to the business processes in scope, the participants of CEN WS/BII 2 have realized the strategic importance of accompanying activities,

Kornelis et al. which are necessary to achieve the goal of making the CEN WS/BII deliverables ever more used in real cases. The scope of work will therefore also include Methodology and Capacity building: improvements to existing deliverables, including the development of test cases and validation tools; review existing approaches to ensure that an optimal modularity is achieved; facilitate targeted workshops in different parts of Europe (back-to-back with BII 3 workshop meetings) to ensure the proper understanding and use of BII deliverables in that area; establishing a registry of self-conformance statements to monitor implementations and foster convergence through visibility; creation of a user-friendly website (online training material, centre point for URLs in CEN relating to whats going on, calendar of events); sharing of good examples regarding implementations of the CEN WS/BII deliverables; coordination with other initiatives such as UN/CEFACT, OASIS/UBL, GS1 in Europe, CEN WS/eCAT, CEN GITB, etc.; Encouraging and supporting other standardization initiatives to provide syntax bindings to BII for their standards.

4 Workshop Programme
The basis for the work in CEN WS/BII 3 is the CWAs already provided by CEN WS/BII and CEN WS/BII 2. Furthermore the CEN WS/BII 3 will solicit input and requirements amongst its members in order to provide the best possible coverage for European requirements related to e-Procurement both in the public and private sector. Recommendations from eTEG as well as recommendations from the Golden Book on e-Procurement will also be a basis for the further development of profiles and other building blocks in order to pave the way for the usage of structured information in e-Tendering systems/platforms. 4.1 Governance and life-cycle management Beyond representing the strategic positioning of the Workshop CEN WS/BII, figure 3 illustrates also the reference model for governance and life-cycle management activities.

Figure 3 - reference model for governance and life-cycle management activities

159

Business Interoperability Interfaces por public procurement According to the model, the CEN WS/BII 3 will undertake governance activities to provide support and life cycle management for existing deliverables. In particular to provide support for change and release management during the duration of the workshop. This will include development of hands-on instructions / guidelines for internal LCM & Governance and a blueprint for a continued support organization beyond CEN WS/BII 3, in coordination with initiatives such as eSENS, CEF, etc. Governance also means to follow and monitor the outcome of the research by the European Commission and implement required changes in the CEN WS/BII deliverables, such as the report by eTEG, the Golden Book on best practices in Europe (PwC) and the indicators report by IDC/Gap Gemini. 4.2 Pre-award In the pre-award area some implementations of the CEN WS/BII deliverables have already been set up, while others are in the process of initiation. Consequently users are increasingly requiring reference tools to ensure compliance for the work carried out. At the same time, the proposal for a new Public Procurement Directive is a major change at the horizon. It will push towards a higher maturity level, meaning also the emergence of a limited number of fully developed e-Procurement standards, and the convergence between those different standards so as to make cross-border e-Procurement a reality. In line with the above, both eTEG and the Golden Book expect CEN WS/BII to continue standardization in the e-tendering process. The Workshop will develop new profiles - based on a more modular approach including choreography and business requirements: Open procedure - Development of a new profile "Open procedure" including all relevant transaction. A procedure profile based on a modular approach will better support the e-procurement process. This new profile will contain an updated process model and business requirements. Restricted procedure - Development of a new profile "Restricted procedure" including all relevant transaction. A procedure profile based on a modular approach will better support the e-procurement process. This new profile will contain an updated process model and business requirements. Negotiation procedure - Development of a new profile "Negotiation procedure" including all relevant transaction. A procedure profile based on a modular approach will better support the e-procurement process. This new profile will contain an updated process model and business requirements. Competitive dialogue - Development of a new profile "Competitive dialogue" including all relevant transaction. A procedure profile based on a modular approach will better support the e-procurement process. This new profile will contain an updated process model and business requirements. Direct award procedure - Development of a new profile "Direct award procedure" including all relevant transaction. A procedure profile based on a modular approach will better support the e-procurement process. This new profile will contain an updated process model and business requirements. Dynamic Purchasing System - Development of a new profile "Dynamic Purchasing System" including all relevant transaction. A procedure profile based on a modular approach will better support the e-procurement process. This new profile will contain a new process model and business requirements. A white paper will elaborate on the use of the Dynamic Purchasing System in e-procurement.

Kornelis et al. Framework agreement - Development of a new profile "Framework agreement" including all relevant transaction. A procedure profile based on a modular approach will better support the e-procurement process. This new profile will contain a new process model and business requirements. A white paper will elaborate on the use of Framework agreements in e-procurement.

The Workshop will create new transactions, including choreography, business requirements, information requirement model, validation rules and mapping to UBL/UNCEFACT: Publish Notification - Review on existing transactions in the "Notification" profile with specific attention to Open Data nature of notices. Where needed update the choreography and add business requirements. Based on the mapping exercise to UBL and UN/CEFACT in CEN WS/BII 2 the information requirement model and validation rules might need change. Publish Rectification - Creation of a new profile/transaction publish "Rectification". This profile will support the rectification of notices procedure by publication portals like the Publication Office. The profile will include choreography, business requirements, information requirement model, validation rules and mapping to UBL and UN/CEFACT. Express interest - Creation of a new profile/transaction "Express interest". This profile will support economic operators in order to make efficient search of opportunities below and above thresholds. The profile will include choreography, business requirements, information requirement model, validation rules and mapping to UBL and UN/CEFACT. Dispatch Call for Tender - Review on existing transactions in the "Call for Tender" profile. Where needed update the choreography and add business requirements. Based on the mapping exercise to UBL and UN/CEFACT in CEN/BII2 the information requirement model and validation rules might need change. Ask Question & get answer - Creation of a new profile/transaction ask "Question & get answer". This profile will support economic operators to ask questions relating notices and tender documents and receive the answer from contracting authorities. The profile will include choreography, business requirements, information requirement model, validation rules and mapping to UBL and UN/CEFACT. Submit Qualification - Review on existing transactions in the "Qualification" profile. Where needed update the choreography and add business requirements. Based on the mapping exercise to UBL and UN/CEFACT in CEN WS/BII2 the information requirement model and validation rules might need change. The scope of this profile can be broadened with evaluation feedback. Submit Tender - Review on existing transactions in the "Tender" profile. Where needed update the choreography and add business requirements. Based on the mapping exercise to UBL and UN/CEFACT in CEN WS/BII2 the information requirement model and validation rules might need change. Dispatch Award notice - Creation of a new profile/transaction "Award notice". This profile will support contracting authorities to send the preliminary award notice to all tenderers and the award notice to the winning tenderer. The profile will include choreography, business requirements, information requirement model, validation rules and mapping to UBL and UN/CEFACT.

161

Business Interoperability Interfaces por public procurement Sign Contract - Creation of a new profile/transaction sign "Contract". This profile will support contracting authorities and economic operators to sign the contract. This will bridge the gap between pre-award and post-award e-procurement. The profile will include choreography, business requirements, information requirement model, validation rules and mapping to UBL and UN/CEFACT.

Based on the comments on the CEN WS/BII 2 deliverables the workshop will continue to work on product descriptions and the use of catalogues in the pre-award. This will include business requirements, information requirement model, validation rules and mapping to UBL/UNCEFACT. Product - Evaluating the appropriateness of the product description in the existing preaward catalogue (template) profiles, in particular define requirements on a product description rich on content from a pre-award perspective and a product type perspective. Catalogue template - Extensive review on existing information requirement model in the "Call for Tender with Catalogue template" profile. Where needed update the business requirements. Based on the mapping exercise to UBL and UN/CEFACT in CEN WS/BII 2 the information requirement model and validation rules might need change. Catalogue - Extensive review on existing information requirement model in the "Tender with Catalogue" profile. Where needed update the business requirements. Based on the mapping exercise to UBL and UN/CEFACT in CEN/BII2 the information requirement model and validation rules might need change. Also promoting, explain and document the usage of classification systems and property lists in the pre-award catalogue/template aligned with the work of CEN WS/eCAT.

In addition to the deliverables the workshop will focus on providing improved artifacts for validation and conformance testing, including development of test cases, where required. 4.3 Post-award The current CEN WS/BII deliverables applicable in the post-award phase are considered to be mature for a wide scale adoption, which is already taking place. In addition, to complete the eProcurement process, the customer has to pay the invoice(s) received and the supplier has to ensure that settlement is accounted for. To provide consistent support for the e-Procurement process, developments are needed. In the post-award context, the activities of the workshop will focus on: provide improved artifacts for validation and conformance testing, including development of test cases, where required; provide guidelines for the use of profiles in a master data context; convergence with, and inclusion of the new requirements from implementation projects such as the OpenPEPPOL Community and the eSENS project; provide profiles to support the business processes of payment initiation and settlement, defining the interfaces between the post-award e-Procurement activities and the payment processes, by: Developing a CEN WS/BII profile for payment initiation;

Kornelis et al. Developing a CEN WS/BII profile for reconciliation; Providing syntax binding to relevant international standards (e.g. Sepa rulebook and CGI).

In addition, for suppliers, the completion of an e-Procurement process frequently involves trade financing. To complement the e-Procurement process of the supplier, the Workshop should: define the required interfaces (i.e. profiles) between the e-Procurement activities and the financial supply chain; provide syntax binding to relevant international standards (e.g. Sepa rulebook and CGI).

With respect to Post-award e-Catalogue the workshop will focus on: promote, explain and document the usage of classification systems and property lists in the post-award catalogue aligned with the work of CEN WS/eCAT; provide guidance to users binding activity of relevant e-Catalogue syntaxes; evaluating the appropriateness of the product description in the existing post-award catalogue (template) profiles, in particular define requirements on a product description rich on content from a pre-award perspective and a product type perspective.

4.4 Methodology In the area of methodology the workshop will focus on: providing an improved and elaborated methodology for customization to support national/community adoption of deliverables with specific local requirements; reviewing current approach and methodology in order to ensure that an optimal modularity is achieved; providing improvements related to the use and management of code lists and classifications tools; provide guidelines on the use of the Business Document Header and Envelope.

4.5 Capacity Building Taking the opportunity of the workshop meetings being organized in different Member States the workshop will facilitate targeted workshop seminars in different parts of Europe (back-toback with CEN WS/BII 3 workshop meetings). The objective of these workshops is to ensure the proper understanding and use of CEN WS/BII deliverables in that area. These targeted workshop seminars will be aimed at representatives from national ministries, public entities, ERP vendors/providers, system integrators, private enterprises, developers, etc. in order to address the specific needs of the various user groups. Topics covered are expected to include: review of needs and business requirements from that specific market/region/country;

163

Business Interoperability Interfaces por public procurement implementation strategies at national as well as enterprise level; review of selected profiles; how to implement the profiles; lessons learned from practical use.

Furthermore the workshop will develop and establish a registry of self-conformance statements (i.e. a list of all derived formats related to CEN WS/BII with a clear indication of the differences from the original CEN WS/BII work). Such a registry will provide for monitoring implementations, foster convergence through visibility and establish the CEN WS/BII website (www.cenbii.eu) as an efficient and user friendly communication tool. Possibly including for instance: on-line training materials; trade facilitation implementation guide; centre point for URLs in CEN relating to whats going on; calendar of events.

The workshop will participate in external presentations and seminars in order to share information of good examples regarding implementations of the CEN WS/BII deliverables as well as engage in collaborative marketing and representation in target communities.

5 Coordination With Other Initiatives

The CEN WS/BII 3 will continue the work already initiated with respect to European and international coordination. Specifically the workshop will engage in active coordination with other European and/or national initiatives in order to synchronize European business requirements (E.g. GS1 in Europe, CEN WS/eCAT, CEN GITB, BMEcat, eCl@ss, the German process initiative REPROC, etc.). In particular by inviting participation and submission of requirements and encouraging liaisons (cross-participation, collaborative marketing and representation in target communities). The workshop will give feed back to international initiatives (e.g. UN/CEFACT and OASIS UBL) to ensure that these initiatives provide support for European business requirements identified by the workshop. This is expected to be achieved through ensuring active participation through nominated representatives and focusing work on concrete and specific topics of mutual interest (e.g. the realization of the Business Document Header and Envelope).

Kornelis et al.

Notes
1.http://www.cen.eu/CEN/SECTORS/SECTORS/ISSS/Pages/default.aspx 2.http://www.cenbii.eu/welcome/bii3businessplan_draft_20130121-2/ 3.www.cen.eu/cwa/bii/specs

165

E-Procurement: A Challenge To Inertia With Cascading Benefits And Opportunities

Maria Silvia Sabbatini

1 Introduction
The use of electronic instruments for the transmission of data also in procurement proceedings has been discussed since the 1980s, having been recognized for their potential to increase transparency and quality information. However, at that time, the main concern was about the disadvantaged position due to the technological gap as well as lack of economic and professional resources which would not have allowed some countries to implement technologies, procedures and organizational modalities deriving from the Information Communication Technology (ICT) in order to reorganize and simplify the management of public procurement processes. At a juridical level, in addition to the issue of terminology to be adopted (i.e. the notion of in writing), delicate questions arose related to the suitability of the information media to be a vehicle of expression of will, imputability and formation of contracts. With the adoption of the Recommendation on the legal value of Computer Records (1985)1, the UNCITRAL highlighted the need to revise the relevant legislation in order to extend, to electronic documents, the juridical value attributable to those traditionally formed. A number of reports followed, analyzing the matter with reference to the phases and acts necessary to form contracts2 and in 1996, the UNCITRAL Model Law on Electronic Commerce (to which, in 1998, article 5 bis Incorporation by reference was added), was adopted. This represented the necessary reference to set provisions sufficiently broad to allow recourse to the ICT in the 1994 Model Law on procurement (see, in particular, art. 9)3, and the precedent to which other international and supranational subjects conformed4. At communitary level, the second generation directives on public procurement, while not explicitly regulating the use of electronic media for the transmission of tenders, allowed it, subject to the satisfaction of four conditions; however, the decision was referred to each State5. With the directives of 20046 once understood the strategic importance of electronic procurement, modifications were introduced in order to allow recourse to the electronic processes as well as new techniques and instruments permitting contracting authorities/entities to fully use the electronic means of communications and enhance the proceedings results. Moreover, the Commission created the cultural background needed for the digital market implementing over 30 non-legislative initiatives (between them the cofinancing of research and the developing of other practical tools to overcome administrative and technical barriers to cross-border e-Procurement, i.e. initiatives such as PEPPOL, e-CERTIS7 and e-PRIOR). This because e-procurement provisions have a double implication: operational since they regulate the modalities of using information systems; delimitative since, they have to confront with the legislation and limits imposed by the system with reference to public procurement (Mangiaracina, F., 2008, p. 11).

166

M.S.Sabbatini In October 2010, in the frame of the Europe 2020 strategy - centred on the objective of smart, sustainable and inclusive growth - a crucial role has been assigned to public procurement as one of the market-based instruments to be used to achieve these objectives by improving the business environment and conditions for business to innovate and by encouraging wider use of green procurement supporting the shift towards a resource efficient and low-carbon economy8. By now, the focus is on the necessity to make the existing public procurement legislation better suited to deal with the evolving political, social and economic context. This can be done by simplifying and increasing flexibility of legislative instruments, which responds also to the logic of public governance undoubtedly finding an effective implementation in the electronic processes. The 2011 UNCITRAL Model Law9, the 2012 WTO GPA10 and the proposals of directives currently under discussion aim to support the harmonization of international standards in public procurement in order to create a real cross-border and, in the mid-long term, a digital market. E-procurement can help improve the transparency of and access to procurement opportunities, especially for SMEs, thus stimulating cross-border competition, innovation and growth.

2 The Juridical Frame

Indeed, Directives 2004/17/EC and 2004/18/EC have helped to establish a culture of transparency and outcome-driven procurement, generating savings and improvements in the quality of procurement outcomes that far exceed the costs [] of running those procedures (COM(2011)896, 2011/438, p. 5). This since they have concretised the exigencies of simplification, updating and flexibility exemplified, inter alia, by the rules regarding the electronic purchasing systems helping to increase competition and streamline public purchasing even providing for entirely electronic processes such as the dynamic purchasing system, for making commonly used purchases, and the electronic auctions, when the contract specifications can be established with precision. The introduction of these techniques has been made possible also thanks to the adoption of a communitary system of classification of public contracts11 and the fact that the mentioned issues posed by the introduction of the new technologies had already been dealt within Directives 1999/93/EC on electronic signature12 and 2003/31/EC on electronic commerce13. In directives 2004/18/EC and 2004/17/EC, considering that the public procurement procedures and the rules applicable to service contests require a level of security and confidentiality higher than that required by directives 1999/93/EC and 2003/31/EC (to which they made reference), the provision of devices for the electronic receipt of offers, requests to participate and plans and projects complying with specific additional requirements is encouraged14. In particular, the use of electronic signatures and mainly of the advanced electronic signatures, is suggested. In order to avoid that the recourse to the electronic means can be a tool to carry out discriminatory practices, art. 42 of the 2004/18 (and the substantially equivalent art. 48 of the 2004/17) not only provides for the putting on a par with electronic and classical means of communication, but also that the means of communication chosen must be generally available and thus not restrict economic operators access to the tendering procedure (para. 2), specifying in para. 4 that the tools to be used for communicating by electronic means, as well as their technical characteristics, must be non-discriminatory, generally available and interoperable with the information and communication technology products in general use

167

E-Procurement: A Challenge with Benefits And Opportunities In the same perspective, the notion of in writing has been broadened, meaning any expression consisting of words or figures which can be read, reproduced and subsequently communicated. It may include information which is transmitted and stored by electronic means (art. 1(12), of the 2004/18/EC)15. The 2004 legislation is the archetype of what can be defined as the third generation directives, representing only the first step16 of a reordering in itinere that, has recently found new impetus. An improvement of transparency, efficiency and effectiveness of procedures is indeed highly required for the efficiency of public expenditure and economic growth in a continuously evolving political, social and economic context17. On April 13, 2011, with the adoption of the Single Market Act18, the Commission included the revision of the european public procurement legislation among its twelve key priority actions to be adopted by the EU institutions before the end of 2012, and in December announced its revision, which seems to go far beyond the boundaries of a revision, since the original legislative package19 includes also a Directive on concessions (!).20 Even though this is not the seat for a deep analysis of the proposed directives, some aspects deserve to be mentioned in addition to the tools and techniques of e-procurement, since they are strictly connected to the subject of this pages; indeed, e-procurement appears to be an essential instrument for reaching all the objectives and a good tool to support the harmonization of international standards in public procurement. The proposals have been formulated with the aim to facilitate a qualitative improvement in the use of public procurement by ensuring greater consideration for social and environmental criteria such as life-cycle costs or the integration of vulnerable and disadvantaged persons, thereby helping to achieve the objectives of the Europe 2020 strategy21 and with the main objective to thoroughly modernize the existing tools and instruments22 simplifying their present structure, starting from the classification of the contract types and, independently of their possible restructuring, reviewing and simplifying their current definitions as well as the concept of procurement itself23. The other interventions are the simplification of the procedures24 (as well as the provision of options and instruments to assure the flexibility needed to adapt procedures and instruments to specific circumstances, the so-called toolbox approach); a drastic reduction of the administrative burden; measures to encourage access to public procurement for SMEs; improvements to the existing guarantees aimed at combating conflicts of interests, favouritism and corruption and, specific subject of this report, the extension and, in the medium term, generalization of electronic communication. The transition towards the digital market provides that starting from the term to comply with the directives25, the use of electronic means is mandatory when calling for dynamic purchasing systems, electronic auctions, electronic catalogues, centralised purchasing activities, in drawing up, transmitting to the Commission and publishing of prior information notices, contract notices and contract award notices as well as in offering electronic availability of procurement documents26. Within two years from the indicated term27, all procurement procedures are to be performed using electronic means of communication, unless their use would require specialised tools or file formats that are not generally available in all the Member States28. The rationalization, also aimed to make the legislation more user friendly (in step with the logic which guided the elaboration of the 2011 Model Law and the 2012 WTO GPA), appears prima facie: the rules on communications are included between the general rules29 and a specifc Chapter has been dedicated to the techniques and instruments for electronic and aggregated procurement (where specific procurement techniques and tools have been improved and clarified modifying the legislation of 2004)39.

M.S.Sabbatini As already underlined, the proposed modifications are marked also by the exigency to make the legislation more flexible. Infact, while the use of electronic means is mandatory in a number of specific cases subject to the respect of the principles of non-discrimination and competition, the contracting authorities/entities may use tools which are not generally available, provided that they offer alternative means of access such as: unrestricted and full direct access by electronic means to these tools from the date of publication of the notice or from the date when the invitation to confirm interest is sent; ensure that tenderers established in other Member States than the contracting authoritys/entitys may access the procurement procedure through the use of provisional tokens (i.e. a temporary electronic credential for a provisional authentication) made available online at no extra cost; support an alternative channel for electronic submission of tenders (art. 19(4) of the proposed directive on public procurement and 33(4) of the proposed directive on utilities sector). Another revision has been made in order to take into consideration the Commission Decisions 2009/767/CE31, setting out measures facilitating the use of procedures by electronic means through the points of single contact and 2011/130/UE establishing minimum requirements for the cross-border processing of documents signed electronically by competent authorities32. Paragraph 5 of the mentioned articles, sets forth (lit. d) that where advanced Electronic Signatures33 are required, contracting authorities/entities shall, as long as the signature is valid, accept signatures supported by a qualified electronic certificate referred to in the Trusted List provided for in the Decision 2009/767/EC, created with or without a secure signature creation device, subject to compliance with the following conditions: they must establish the required advanced signature format on the basis of formats established in Decision 2011/130/EU and put in place necessary measures to be able to process these formats technically; where a tender is signed with the support of a qualified certificate that is included in the Trusted list, they must not apply additional requirements that may hinder the use of those signatures by tenderers34. However, it is also underlined that contracting authorities/entities shall specify the level of security required for the electronic means of communication in the various stages of the specific procurement procedure, since the level shall be proportionate to the risks attached35. As far as the electronic procedures are concerned, hereinafter their main features are shown in order to introduce the following section dedicated to the cascading opportunities and benefits. As it is known, framework agreements are between one or more contracting authorities/entities and one or more economic operators (multi-suppliers agreements). Their purpose is to establish the terms governing contracts to be awarded during a given period, in particular with regard to price and, where appropriate, the quantity envisaged. In the communitary sphere (once it was acknowledged that the use of framework agreements was already widely used in some Member States), they were introduced also for supply, works and services contracts with the directives of 200436. These, as well as the proposals currently under elaboration, limit themselves to set some procedural rules aimed to guarantee the respect of the transparency principle and avoid that framework agreements are used to distort, limit or falsify the competition37. However, it is worth underlying that the proposals aim to clarify the conditions for the use of a framework agreement by contracting authorities which are not themselves party to it. This technique lends itself to support the contracting authority in managing repeated orders in the long term38, to allow that prices variation and evolution of products are taken into account. Contracts awarded in the sphere of the framework agreement shall be awarded only to the economic operators originally party to it and the parties may under no circumstances

169

E-Procurement: A Challenge with Benefits And Opportunities make substantial amendments to the terms already laid down. The provision is not further explained, however, since it is arguable that substantial changes may take place in respect to the specification, quantities envisaged or price, longer term framework agreements may not be suitable vehicles for the purchase of products subject to frequent changes of specifications or price fluctuation. The 2011 Model Law provides a more detailed legislation in comparison with the European directives. It provides that closed framework agreements (corresponding to that provided by the directives) and open framework agreements may be implemented. The difference between the two types is that also economic operators not originally part of the framework agreement if qualified and if their indicative submission is responsive - can become part of the open framework agreements; moreover, while the closed framework agreements can or cannot be in electronic form, the open are only in electronic form39. It implies not only the use of electronic media to collect the documents needed and transmit offers, but also the use of on-line procedure (i.e. electronic auctions) to award the contract (and infact the award criteria are the lowest price and the lowest evaluated submission). The procedure is designed to involve a permanently open web-based procurement opportunity, which economic operators can consult at any time to decide whether they wish to participate in the procurements concerned, without necessarily imposing the administrative burden of providing individual information to those economic operators, with consequent delays in response times. Responses to opportunities and requests to participate are intended to be completed in a time frame that only online procurement can accommodate (2012 Draft Guide, Commentary to art. 60, para. 2). As it was stated by the European Commission40, electronic auctions, are drawn as a particular step of the awarding stage of the procurement procedure (SEC(2005)959, p. 17), i.e. a purchasing technique, since they allow to conduct the submission, evaluation and awarding phases electronically. Thus, they are defined as a repetitive process involving an electronic device for the presentation of new prices, revised downwards, and/or new values concerning certain elements of tenders, which occurs after an initial full evaluation of the tenders, enabling them to be ranked using automatic evaluation methods (art. 1(7) of Directive 2004/18/EC)41. Unlike the European directives and the 2012 WTO GPA (see Arts. VII(2)(f) and XIV(1)), the 2011 Model Law provides the possibility to use them as an autonomous method.42 Specifically, under the directives, electronic auction - implying an automatic evaluation of the offer - may be held in open, restricted, negotiated with prior publication of the notice proceedings (according to the 2004 directives and the proposed directive on utilities sector)43, competitive procedures with negotiations (according to the proposal on public procurement)44, in the reopening of competition among the parties to a framework agreement and in the opening for competition of contracts to be awarded under the dynamic purchasing system when the contract specifications can be established with precision. Consequently, certain service contracts and certain works contracts having as their subject-matter intellectual performance, such as the design of works, may not be the object of electronic auctions.45 In step with the European directives, the 2011 Model Law and the 2012 WTO GPA, although with a different approach. The 2011 Model Law clarifies the conditions under which irrespective of being used as an autonomous method or a purchasing technique - the electronic auction may be held. Precisely they are: it is feasible for the procuring entity to formulate a detailed description of the subject matter of the procurement; there is a competitive market of suppliers or contractors anticipated to be qualified to participate in the electronic reverse auction such that effective competition is ensured; and the criteria to be

M.S.Sabbatini used by the procuring entity in determining the successful submission are quantifiable and can be expressed in monetary terms (art. 31(1)). Instead, in the 2012 WTO GPA it can be deducted by the definition of electronic auction as [] iterative process that involves the use of electronic means for the presentation by suppliers of either new prices, or new values for quantifiable non-price elements of the tender related to the evaluation criteria, or both, resulting in a ranking or re-ranking of tenders (art. I(f)). The 2011 Model Law specifies that, in addition to fixing the minimum number of suppliers or contractors required to register in order for the auction to be held (which must be sufficient to ensure effective competition, art. 53(1)(j)), when it is used as an autonomous method, the procuring entity may impose the maximum number of economic operators to invite (art. 53(2)). Lastly, the dynamic purchasing system is a proceeding of uncertain classification; infact it is characterized as being an open procedure, entirely electronically conducted and managed and in the course of which there are negotiations between economic operators and contracting authorities. It is limited in duration46, and can be held only for making commonly used purchases, generally available on the market, since the rapid, dynamic and computerized negotiation which characterize it, is not suited for technically sophisticated purchases47. The underlying ratio can be found in the attempt to create a fluid purchasing system which is also dynamic because it allows a plurality of rapid awards; in other words, the managing of a series of tenders without having to elaborate complex technical documents and impose repeatedly a new phase of qualification because it will be managed through the system of indicative tenders (Mangiaracina, F., 2008, p. 115). However, as emphasized in the proposed directives on public procurement and utilities sector, the experience acquired, shows that there is still need to adjust the rules governing dynamic purchasing systems to enable contracting authorities to take full advantage of the possibilities afforded by this instrument; the systems need to be simplified, in particular by operating them in the form of a restricted procedure, hence eliminating the need for indicative tenders, which have been identified as one of the major burdens associated with these systems. Thus any economic operator that submits a request to participate and meets the selection criteria should be allowed to take part in procurement procedures carried out through the dynamic purchasing system. This purchasing technique allows the contracting authority to have a particularly broad range of tenders and hence to ensure optimum use of public funds through broad competition (Whereas n. 22 of the proposed directive on public procurement)48.

3 Cascading Benefits and Opportunities

E E-procurement breaks down spatial and temporal barriers, allows a more transparent and efficient information flow also improving access. It can be easily included in the frame of egovernment, i.e. the technological and administrative solutions making the management of the public administration more efficient thanks to the progressive debureaucratisation of the relationship between the administration and the public and the reduction of costs and times related to the management of the administration itself. Beneficiaries are not only governments and economic operators, but also the public who, through access to transparent information, can monitor the public expenditure of funds. E-Procurement presenting more efficient and less onerous operational modalities as well as lending itself to be monitored both by authorities and the public and through the realization

171

E-Procurement: A Challenge with Benefits And Opportunities of secondary policies~49 - to the achievement of shared aims, is an effective tool of public governance. This identifies the achievement of best value for money adage also in the cooperative logic with the consequent passing or at least abatement of the strict division of powers and competencies, i.e. the dichotomy between public and private sector highlighted by Bobbio50. While enhanced compliance contributes to avoid corruption and fraud, the transparency of real-time procurement information allows the early detection of such misconduct. Infact, contacts between procuring entities and economic operators are drastically reduced and procurement data are collected into securely operated electronic systems51; it implies that the risk of manipulating information and documents can be minimized, and the availability and completeness of public procurement audits can be improved. The reduction of transaction costs and prices (achieved as a result of e-procurement features: price transparency, stimulation of competition, and innovative public procurement procedures and approaches52) is linked to savings related to workflow including significant savings in time. This reduction can have a significant macro-economic impact and help to promote fiscal consolidation and increase enhancing initiatives. The online publication of procurement notices helps improve the transparency of and access to procurement opportunities, especially for SMEs, thus stimulating cross-border competition which, on its turn, contributes to reducing prices. In order to enhance transparency, trust and confidence it would be desirable to implement the system introducing in addition to the publication of procurement notices other information such as the current state of work in respect to the time allotted, the completion date of assigned work or the supply of goods. Eprocurement provides also significant, although less quantifiable, benefits through greatly improved management information and analysis. The application of digital technology for procurement information disclosure and transactions, in addition to the reduction of error rates, allows the collection of data and thus the performance measuring and monitoring, ensuring also a consequential higher quality of public procurement reporting and decisionmaking. The level of transparency, compliance, performance and quality of public procurement due to the application of e-procurement can achieve a dimension which does not only provide for the development of a public procurement system that meets internationally recognized standards, but also establishes the basis for a sound (digital) market economy with cascading benefits in productivity and competitiveness. E-procurement also delivers significant environmental benefits by reducing paper consumption and transport, as well as the need for costly storage space and the related energy consumption. However, effective e-procurement implies changes in personnel and executive behaviours (what has led and leads to some resistance), skills, regulations and legislation, operation policies and business behaviours. A strong political leadership has been needed in order to overcome resistance and barriers and mainly to keep a long term perspective in mind. It has so revealed to be at the same time both a challenge and an opportunity. The full benefits resulting from e-procurement adoption will only be realized (as the practical experience has shown) through significant changes in the organization of public procurement operations and as such will require effective change management and collective commitment. The experience has demonstrated that where Central Purchasing Bodies exist, the use of electronic procedures can contribute to centralize costly procurement back-office functions and realize scale economies in procurement administration. It provides also a wider opportunity to rationalize and review the procurement process.

M.S.Sabbatini E-procurement is a tool to reform public procurement supported by (and together with) an appropriate policy and legal framework53, effective buyer/supplier awareness and capacity building programs, technological infrastructure development aimed to establish the interoperability between different platforms, established standards, and sustainable operational e-procurement application.

4 Conclusions
Many of the benefits arising through e-procurement derive from enhanced transparency which helps also to support confidence-building. As a consequence of rapid technological advances and of the different level of technical sophistication, the relevant legislation has been drawn in a technologically neutral way; in addition, the general legal requirements rely on the functional equivalent approach. The European Commissions legislative proposals as well as the 2011 Model Law and the 2012 WTO GPA, are based on simplification, rationalization and flexibility. The solutions drawn appear to provide balance between performance, cost-effectiveness and accessibility, while supporting the harmonization of international standards in public procurement. As outlined by the European Commission, there is still a great variably geometry because States, regions and sectors due to different technical capacity, governance capabilities, financial management and aptitudes - are implementing e-procurement at different speeds54. The transition towards full e-procurement is not more primarily a technical nor technological challenge; it is mainly a cultural challenge. A fully integrated e-procurement system involves a lengthy reform program, as shown by the approach adopted by the European Commission as well as the recommendations and motivations within the 2012 Draft Guide55, involving different considerations for each stage of the procurement process and for its integration with the system.

173

E-Procurement: A Challenge with Benefits And Opportunities

Notes
1 In A/40/17, (pp. 3 46), pp. 43 44, para. 360. 2.E.g. the Preliminary study of legal issues related to the formation of contracts by electronic means (in A/CN.9/333, (pp. 253 - 266)), the Electronic Data Interchange (A/CN.9/350, (pp. 381 398)), and the Report of the Working Group on International Payments on the work of its twenty-fourth session (in A/CN.9/360 (pp. 347 365)). 3.UNCITRAL Model Law on Procurement of Goods, Construction and Services, art. 9 Form of communications (1) Subject to other provisions of this Law and any requirement of form specified by the procuring entity [ ] documents, notifications, decisions and other communications referred to in this Law to be submitted by the procuring entity or administrative authority to a supplier or contractor or by a supplier or contractor to the procuring entity shall be in a form that provides a record of the content of the communication. (2) Communications between suppliers or contractors and the procuring entity referred to in articles [] may be made by a means of communication that does not provide a record of the content of the communication provided that, immediately thereafter, confirmation of the communication is given to the recipient of the communication in a form which provides a record of the confirmation. (3) The procuring entity shall not discriminate against or among suppliers or contractors on the basis of the form in which they transmit or receive documents, notifications, decisions or other communications. 4.As, e.g., the European Union; cf. Whereas n. 58 of Directive 2000/31/EC, stating [] in view of the global dimension of electronic commerce, it is [] appropriate to ensure that the Community rules are consistent with international rules; this Directive is without prejudice to the results of discussion within international organizations (amongst others WTO, OECD, UNCITRAL) on legal issues. See, also, the most recent ICC e-Terms, and the United Nations Convention on the Use of Electronic Communications in International Contracts. 5.See, arts. 23 of Directive 92/50/EEC, 15 of Directive 93/36/EEC, 18 of Directive 93/37/EEC (as amended by Directive 97/52/EC, OJ L 328, 28.11.1997, p. 1 59) and 28 of Directive 93/38/EEC (as amended by Directive 98/4/EC, OJ L 101, 1.4.1998, pp. 1 16). They set forth that [t]enders shall be submitted in writing []. Member States may authorize the submission of tenders by any other means making it possible to ensure: that each tender contains all the information necessary for its evaluation, that the confidentiality of tenders is maintained pending their evaluation, that, where necessary, for reasons of legal proof, such tenders are confirmed as soon as possible in writing or by dispatch of a certified copy, that tenders are opened after the time limit for their submission has expired. 6.Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors (OJ, L 134, 30.4.2004); Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (OJ, L 134, 30.4.2004); 7.Which has been developed to assist contracting authorities/entities in assessing evidentiary documents submitted by tenderers to prove eligibility for selection. 8.As underlined in the grounds of the directive on public procurement (COM(2011)896, 2011/438, p. 2), currently under elaboration. 9.UNCITRAL Model Law on Public Procurement; see also the Draft Guide to the Enactment of the UNCITRAL Model Law on Public Procurement. 10.The 1994 WTO Agreement on Government Procurement only provides that the parties consult regularly on the developments in the sector of e-procurement, while the text agreed in 2012 (see GPA/113, 2 April 2012, adopted on March 30, 2012), explicitely includes it in its scope, removing any doubts about the possibility of using electronic means which, instead, arose under the 1994 GPA. 11.The Common Procurement Vocabulary (CPV) (Regulation (EC) n. 2195/2002), was adopted as the reference nomenclature for public contracts, replacing the four nomenclatures previously used and, together with the standard contract notice forms, allows a better visibility of the offered opportunities.
.

M.S.Sabbatini
12.Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures, (OJ, L 13, 19.1.2000). 13.Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market ('Directive on electronic commerce'), (OJ, L 178, 17.7.2000). 14.See, art. 42, paras. 3, 5 and 6 of directive 2004/18/EC as well as the substantially equivalent art. 48, paras 3, 5 and 6 of directive 2004/17/EC 15.See also the equivalent art. 1(11) of Directive 2004/17/EC; see also art. I(g) of the 2012 WTO GPA. 16.Indeed, they have concretized both the guiding lines established by the Commission in the communication of 1998 (Public Procurement in the European Union, COM(98)143, of March 11, 1998), referenced to the exigencies of simplification, updating and flexibility and, by setting forth provisions guaranteeing and promoting social and environmental interests, the interaction of economic, social and labour policies described at the Lisbon European Council of March 2000. As far as the substantive law is concerned, the sistematization was also realized thanks to the principles established by the ECJ, as well as (through the approaching of terms) to principles already fixed in the 1994 WTO GPA, whose revision was in the meantime under discussion. As a main point, unlike the former Directives setting forth respect of the equal treatment, the cornerstone of the system become explicitely the respect of the mentioned principle joined to that of transparency. This allowed the concomitant alignment to the GPA and will imply subsequent legislative interventions. 17.The Green Paper on the modernization of EU relevant policy (COM(2011) 15 final, pp. 1 56), and the broad public consultation on options for legislative changes, were relevant to identify three key problems: an insufficient cost-efficiency; missed opportunities for stakeholders to optimise the use of their resources and/or make the best purchasing choices; a national rather than EU public procurement market. Moreover, with reference to the utilities sector, the finding of the evaluation showed that legislative activity to liberalise access to them has not yet been translated into sustained or effective competitive pressure. 18.Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions, Single Market Act, Twelve levers to boost growth and strengthen confidence, Working together to create new growth (COM(2011) 206 final). 19.The revision aims to replace Directive 2004/17/EC (see the Proposal for a Directive on procurement by entities operating in the water, energy, transport and postal services sectors, COM/2011/0895 final 2011/0439 (COD)), as well Directive 2004/18/EC (see the Proposal for a Directive on public procurement, COM(2011) 896 final, 2011/0438 (COD)), with the objective of bringing the legislation of the utilities sector closer to that of the classical sectors, and includes a Proposal for a Directive on the award of concession contracts (COM(2011) 897 final - 2011/0437 (COD)). 20.The Proposal for a Directive on the award of concession contracts, has been drawn up in compliance with the Proposals for the Directives replacing the 2004/17/EC and 2004/18/EC, and the majority of the obligations which apply to the award of public works are extended to all services concessions. It is worth underlying that, presently, the debate is focused on the observation that the proposal covers all concession contracts, for both works and services, but fails to distinguish between them adequately. The EESC has noted that considerable doubts persist regarding the need itself for a EU Directive on the award of concession contracts, calling for a further and full impact assessment to be carried out before the proposals are allowed to progress, taking the view that the ECJ case-law has largely clarified the application of the Treaty principles of equal treatment, non-discrimination and transparency to the award of concession contracts. 21.Notwithstanding the purposes of the Commission, both the Proposals have been considered not going far enough, particularly on social aspect. It is worth underlying that one of the main points of the current debate regards the recommendation to select the most economically advantageous offer as the sole award criterion (or at least to increase its use, depending on the form of procedure). Indeed, the lowest price award criterion discourages and prevents innovation and the pursuit of better quality and value. Instead, the most economically advantageous offer can encourage a more efficient public

175

E-Procurement: A Challenge with Benefits And Opportunities

procurement, increasing the participation of SMEs including social enterprises, combating favouritism, fraud and corruption and promoting cross-border contracts in public procurement. 22.The definitions of certain key notions determining the scope of the Directives have been revised in the light of the ECJ case-law. As far as the proceedings are concerned, Member State systems will provide, in case of procurement of supplies, works and services, two basic forms of procedures, open and restricted and in addition, subject to certain conditions, the competitive procedure with negotiation, the competitive dialogue and/or the innovation partnership, a new form of procedure for innovative procurement, according to which the partnership shall be structured in successive stages following the sequence of steps in the research innovation process; the contracting authority may decide after each stage to terminate the partnership and launch a new procurement procedure for the remaining phases. Instead, in the proposal related to the utilities sector, the system will provide three basic forms, i.e. open, restricted and negotiated procedures with prior call for competition; the innovation partnership can be foreseen either as standard procedure or restricted to certain types of procurement. 23.In perfect alignment with the findings of the Working Group which has drawn the 2011 Model Law, dedicated to public procurement and derived from the increasingly different forms of public action as well as highlighting the complexity of the procurement. 24.In particular, the Commission has proposed the possibility to increase recourse to negotiation, thus enabling the contracting authorities to purchase goods and services which are better tailored to their needs at the best price. 25.Temporarily fixed on June 30, 2014. 26.However, the contracting authorities have the possibility to make mandatory the use of electronic means of communication in other situations than those set for in art. 19 of the proposed directive on public procurement and 33 of the proposed directive on the utilities sector. 27.The proposal on concessions also includes requirements on electronic means of communication and foresees a transition period of five years instead of two (see art. 25(7)(1)). 28.Art. 19(7) of the proposed directive on public procurement. However, the article provides that: [i]t is the responsibility of the contracting authorities [...] to demonstrate in the procurement documents that the use of electronic means, due to the particular nature of the information to be exchanged with the economic operators, would require specialised tools or file formats that are not generally available in all the Member States. A presumption has also been introduced, infact as legitimate reasons to not request electronic means of communication, appear the following cases: the description of the technical specifications, due to the specialised nature of the procurement, cannot be rendered using file formats that are generally supported by commonly used applications; the applications supporting file formats that are suitable for the description of the technical specifications are under a proprietary licensing schema and cannot be made available for downloading or remote use by the contracting authority; the applications supporting file formats that are suitable for the description of the technical specifications use file formats that cannot be handled by any other open or downloadable applications. Cf., also the equivalent art. 34 of the proposed directive on utilities sector. 29.While in the 2004 Directives, they appeared in the Chapter dedicated to the rules on advertising and transparency. 30.Having also considered the results accomplished in the course of the elaboration of the 2011 UNCITRAL Model Law. 31.Commission Decision of 16 October 2009 setting out measures facilitating the use of procedures by electronic means through the points of single contact under Directive 2006/123/EC of the European Parliament and of the Council on services in the internal market, (OJ, L 274, 20.10. 2009), (Corrigenda in OJ, L 299, 14.11.2009, and in OJ, L 004, 7.1.2011). 32.Commission Decision of 25 February 2011 establishing minimum requirements for the cross-border processing of documents signed electronically by competent authorities under Directive 2006/123/EC of the European Parliament and of the Council on services in the internal market, (OJ, L 53, 26.2.2011) 33.As defined by Directive 1999/93/EC.

M.S.Sabbatini
34.On the topic, see also the UNCITRAL report Promoting confidence in electronic commerce: legal issues on international use of electronic authentication and signature methods (2007), which analyses the main legal issues arising out of the use of electronic signatures and authentication methods in international transactions. More in detail, Part one provides an overview of methods used for electronic signature and authentication and their legal treatment in various jurisdictions; Part two considers the use of electronic signature and authentication methods in international transactions and identifies the main legal issues related to cross-border recognition of such methods. 35.See, art. 19 (5)(c), of the proposed directive on public procurement and 33(5)(c), of the proposed directive on utilities sector 36.In the communitary sphere, originally they were provided only by the directive on the utilities sector (cf. arts. 1(5) and 5 of directive 93/38/EEC); cf. now arts. 1(5) and 32, of directive 2004/18/EC, arts. 1(4) and 14, of directive 2004/17/EC, arts. 1(11) and 29 of directive 2009/81/EC. Cf. also, art. 31 of the proposed directive on public procurement and art. 45 of the proposed directive on the utilities sectors. 37.Cfr. arts. 32(3) and (4) of directive 2004/18/EC and 14(4) of directive 2004/17/EC and 29(3) and (4) of directive 2009/81/EC. 38.Cf. the definition in art. 1(5) of 2004/18/EC (and of the substantially equivalent Arts. 1(4) of the 2004/17/EC and 1(11) of the 2009/81/EC); see also art. 31(1)(2) of the Proposal (COM(2011)896), 45(1). In order to avoid an improper use of the framework agreements eluding the mechanisms of the market, the term of a framework agreement shall not exceed four years (seven according to the directive in the fields of defence and security), save in exceptional cases duly justified, in particular by the subject of the framework agreement (cf. art. 32, para. 2(4) of Directive 2004/18/EC, art. 29, para. 2(4) of Directive 2009/81/EC, art. 31, paras. 1(3) and 2(4) of the Proposal on public procurement; art. 45(1)(3) and (2)(4) of the Proposal on the utilities sectors). Cf. also art. 32(1) of the 2011 Model Law about the conditions for use a framework agreement procedure. 39.Compare art. 60(1) of the 2011 Model Law with art 59. 40.Cf. SEC (2005) 959, of July 8, p. 17. Infact, the electronic auctions inserted with the directives of 2004, are regulated in the chapter dedicated to the award of the contract. 41.Cf. also the substantially equivalent Arts. 1(6) of Directive 2004/17/EC and 1(12) of Directive 2009/81/EC, as well as art. 33(1) of the proposed directive on public procurement and art. 47(1) of the proposed directive on the utilities sector. With reference to the 2012 WTO GPA, cf. the definition given by art. I, lett. f), as well as art. XIV Electronic Auctions. 42.Cf. art. 31 Conditions for use of an electronic reverse auction, paras. 1 and 2. It is worth underlying that the Dynamic Purchasing System set forth by the European Directives presents similarities with both the Open Framework Agreements and the Request for Quotations set forth by the Model Law. 43.See. art. 54(2) of the Directive 2004/18/EC and art. 47(2) of the proposal on the utilities sector. 44.See art. 33(2) of the Proposal on public procurement. 45.Cf. art. 1(7) of directive 2004/18/EC; art. 1(6) of directive 2004/17/EC and art. 1(12) of directive 2009/81/EC. 46.Cf. art. 33, para. 7(1) and (2) of directive 2004/18/EC; art. 15(1) and (2), of directive 2004/17/EC. 47.Infact, the dynamic purchasing system is not set forth in directive 2009/81/EC, on procurement in the fields of defence and security. 48.See Whereas n. 30, of the proposed directive on the utilities sector. 49.Those policies are also defined pro-active because they aim to travalicate the traditional policies connected to the awarding in order to satisfy wider social objectives. The most common tend to concentrate on the protection and development of workers rights and works conditions, on human rights (of genus and racial), on equality in employment, on SMEs and on the environment. 50.Bobbio, N., 1985, La grande dicotomia: pubblico/privato, Torino: Stato, governo, societ.

177

E-Procurement: A Challenge with Benefits And Opportunities

51.Protection of personal data, network and information security, the fight against cybercrime and dependability are prerequisites for a properly functioning information society and core policy issues for which the European Commission together with the Member States launched a comprehensive strategy 52.Such as the managed aggregation of demand and electronic proceedings (mainly electronic reverse auctions), when lower prices can be attributed to aggregate purchases (and to online negotiation). As underlined by S. Arrowsmith (2011, p. 301), auctions in electronic form have potential to enhance value for money in procurement for several reasons, including: by inducing tenderers to make more competitive offers than they would have made in traditional sealed tendering; by promoting better planning and drafting of specifications and award criteria; by limiting opportunities for corruption or discrimination in favour of particular bidders because of the transparent nature of the auction phase; and by reducing administrative costs and procurement timescales. 53.Their importance is highlighted considering the objective to encourage access to public procurement for SMEs also to get them to be more effective in the international economy; infact, SMEs are more affected than large enterprises by the legal and institutional environment. See J. Linarelli (2011, pp. 444 458). 54.And infact, considering the impact which could derive for both the procuring entities and interested parties, the proposed directives provide a transition period towards the generalization of eprocurement. 55.Guide to Enactment of the UNCITRAL Model Law on Public Procurement.

A new model for the automatic evaluation of e-tendering

Pedro Maia and L. Valadares Tavares

A.Scope
The European Union is committed to develop a single market since the Treaty of Rome and therefore the market related to public contracting authorities (public procurement), has deserved special attention due to its size (about 16% of GDP, [Hoddevik, PEPPOL, 2009]). Since 1962, multiple decisions and several directives have been approved to guarantee equal treatment to any supplier and to enforce transparency and competitiveness. The last Directive, 2004/18/EC (or 2004/17/EC for special sectors, namely water, energy, transport and postal sectors) is particularly clear about the decision-making principles that should be adopted by a contracting authority to award a contract:

Contracts should be awarded on the basis of objective criteria which ensure compliance with the principles of transparency, non-discrimination and equal treatment and which guarantee that tenders are assessed in conditions of effective competition. As a result, it is appropriate to allow the application of two award criteria only: the lowest price and the most economically advantageous tender (in 46).

Obviously, the lowest price is only adequate for procuring simple or standard goods or services. Regarding the most interesting rule the most economically advantageous tender this Directive states (in (46)):
To ensure compliance with the principle of equal treatment in the award of contracts, it is appropriate to lay down an obligation established by case-law to ensure the necessary transparency to enable all tenderers to be reasonably informed of the criteria and arrangements which will be applied to identify the most economically advantageous tender. It is therefore the responsibility of contracting authorities to indicate the criteria for the award of the contract and the relative weighting given to each of those criteria in sufficient time for tenderers to be aware of them when preparing their tenders. Contracting authorities may derogate from indicating the weighting of the criteria for the award in duly justified cases for which they must be able to give reasons, where the weighting cannot be established in advance, in particular on account of the complexity of the contract. In such cases, they must indicate the descending order of importance of the criteria. Where the contracting authorities choose to award a contract to the most economically advantageous tender, they shall assess the tenders in order to determine which one offers the best value for money. In order to do this, they shall determine the economic and quality criteria which, taken as a whole, must make it possible to determine the most economically advantageous tender for the contracting authority. The determination of these criteria depends on the object of the contract since they must allow the level of performance offered by each tender to be assessed in the

179

Pedro Maia and L. Valadares Tavares

light of the object of the contract, as defined in the technical specifications and the value for money of each tender to be measured. In order to guarantee equal treatment, the criteria for the award of the contract should enable tenders to be compared and assessed objectively.

These principles imply the adoption of a multi-criteria decision model to evaluate alternatives tenders or qualifying candidates . Many procurement processes do not require subjective evaluation of criteria s , thus, such model can be applied to e-auctions and e-catalogues, to be reinforced by the forthcoming Procurement Directives.

B.How to evaluate alternatives?

Everyday each individual and public or private organization has to make decisions. Quite often such decisions can be formulated in terms of selecting one alternative from a list of alternatives previously proposed as feasible alternatives. This formulation can be exemplified by the buyer of a car comparing N alternative brands or by a public contracting authority selecting the best tender from a set of N submitted tenders on a public procedure. Thus, the list of alternatives may result from: 1. a process carried out by the decision maker, or 2. the market response to a notice or to an invitation from the decision maker. This is the case of any public competition opened to allocate public grants to R&D proposals or the case of the open or restricted procedures to allow a public contracting authorities to select the best tender (See Directives 2004/17/EC and 2004/18/EC). In the open procedure, the public contracting authority accepts tenders presented by any company complying with the defined general conditions. The selection of the best tender out of this set is then required. In the restricted procedure, only those passing through the qualifying stage are invited to present tenders. Directive 18/2004/EC states that In restricted procedures, () contracting authorities may limit the number of suitable candidates they will invite to tender, to negotiate or to conduct a dialogue with, provided a sufficient number of suitable candidates is available. (in 44-3) This qualifying stage can be based on yes/no economic and technical conditions (simple model) or be based on the selection of the K best candidates according to specified scoring rules expressed in terms of such economic and technical conditions (complex model), requiring a multi-criteria evaluation model for the candidates. Lastly, the selection of the tender can be made in terms of the minimal price criterion if there is no other criterion subject to competition but, in most cases, the selected tenders should be the most economically advantageous tender requiring a multi-criteria evaluation model for the tenders. In addition to candidates qualification and tender evaluation, the multi-criteria models can also be applied to perform on-going or ex-post evaluations of the contract performance. In this case, the models outputs would be criteria-based and global measures of the suppliers performance.

A new model for the automatic evaluation of e-tendering In any of these cases, the selection of an alternative from a list of alternatives requires the specification of a multi-criteria model including (Tavares et al, 2008): a) Formulating the N evaluation criteria (j = 1, , N) The formulation of each criterion, j, requires the specification of how it is measured for each alternative i, i = 1, , M. I.e. the definition of the descriptor Xj(i), and how it is scored, Vj(i), in terms of Xj (i). For instance, T(i) can be the duration of a project proposed by tender i and Vj(i) a scoring function that allows giving a score to each duration (Fig. 1):
V j(i) 10

Fig. 1 Scoring Function for T

In this case T is the minimal credible duration (with score 10) and T is the maximal accepted duration (with score 0). Any duration between T and T is given a score between 0 and 10. As long as these criteria do not require the subjective scoring from the decision maker the model can be applied to automatic tender or suppliers evaluation. b) Defining the mathematical model to aggregate N criteria. Usually, a multi-criteria model is adopted: Vi= .
j=1 N

Where V(i) is the multi-criterion score of i and j and the weight assigned to j with: 0 1 and N j=1 = 1

Directives 2004/17/EC and 2004/18/EC require the presentation of the evaluation model with their weights when the notice is published in order that competitors can understand, when preparing the tenders, how they will be evaluated: 1. Without prejudice to national laws, regulations or administrative provisions concerning the remuneration of certain services, the criteria on which the contracting authorities shall base the award of public contracts shall be either:
(a) when the award is made to the tender most economically advantageous from the point of view of the contracting authority, various criteria linked to the subject-matter of the public contract in question, for example, quality, price, technical merit, aesthetic and functional characteristics, environmental

181

Pedro Maia and L. Valadares Tavares

characteristics, running costs, costeffectiveness, aftersales service and technical assistance, delivery date and delivery period or period of completion. 2. Without prejudice to the provisions of the third subparagraph, in the case referred to in paragraph 1(a) the contracting authority shall specify in the contract notice or in the contract documents or, in the case of a competitive dialogue, in the descriptive document, the relative weighting which it gives to each of the criteria chosen to determine the most economically advantageous tender.

Thus, public contracting authorities have to specify the presented model to award a contract and they may also use this type of model to rank candidates and to select the best M candidates from the qualifying stage (complex model) of a restricted procedure. SIAP is a decision model and software designed to support decision-makers to develop and to apply a multi-criteria linear model to rank and to select alternatives from a given list. This model can be easily applied to decision processes based on automatic evaluation of lists of alternatives, namely, candidate applications, tenders or proposals coming from the market. This includes e-auctions and e-catalogues.

C.How to build criteria trees?

The evaluation of any alternative implies considering its ability to satisfy the decision maker according multiple perspectives such as quality, cost, time, etc. Unfortunately, the elicitation of such perspectives frequently tends to generate list of concerns that are incomplete or overlapping. Therefore, a special effort has to be made to help the decision maker to formulate the relevant areas of concern avoiding any forgotten perspective and avoiding double coverage through overlapping concepts. The list of major criteria will be based on such concerns. SIAP model helps to set up this list allowing the user to branch the overall evaluation criterion into other sub-criteria. Obviously, each criterion, for instance, quality, can be branched down into sub-criteria (e.g., reliability, durability, resistance). SIAP builds a criteria tree by adding up new nodes and links. Usually, the number of criteria branching from each node should not be high (namely, more than 3) because if so, the allocation of weights by the decision-maker is more painful. This means that grouping several sub-criteria into a few criteria will be better that a longer list of such sub-criteria.

A new model for the automatic evaluation of e-tendering Having a multi-layer tree, like:

Overall evaluation criterion

Cost

Duration

Quality

Initial cost

Maitenance cost

Reliability

Durability

Resistance

Fig. 2 Multilevel criteria tree

is better than adopting one-level tree:

Overall evaluation criterion

Initial cost

Maitenance cost

Quality

Reliability

Durability

Resistance

Fig. 3 Single level criteria tree

Any node, can have a assigned weight and it can be defined as an elementary criterion or if it will be branched down into further sub-criterion.

D.How to assess criteria weights?

The specification of the criteria weights can be defined as the relative importance of two criteria (j, k) and easily expressed by the ratio Xj / k. Actually, this concept answers to the question of knowing how much should the change of Vk(i) be [ k(i) ] , if a change on Vj(i) is introduced and equal to j(i), in order that V(i) remains constant? Vi= . . and so, to have Vi= 0, one should have: i= -

183

Pedro Maia and L. Valadares Tavares The ratio expresses the trade-off between k and j: for one unit of variation on j, how

much should be variation on k (Tavares, 1984; Tavares, 2004).

Graa and Tavares developed an innovative model OPTIONCARDS to elicit criteria weights without the need to directly quantify the criteria weights (Maia Graa and Tavares, 2012).

E.How to rank alternatives? The ranking of alternatives is easily computed after specifying the model and after introducing the descriptors of each elementary criterion for each alternative. F.How sensitive is the alternative ranking to changes on the weights or changes on the scores?
The application of any multi-criteria linear model to evaluate and to rank alternatives implies the specification of the weights and of the metrics of each descriptor to evaluate each alternative according to each elementary criterion. Obviously, such specification and such measurement is not an easy job as doubts can be raised about the trade-offs between pairs of elementary criteria and because any measurement has a degree of uncertainty and randomness. Therefore, the decision maker is interested to carry out sensitivity analyses to help him understand how sensitive is the ranking of alternatives to the adopted weights and magnitudes for the descriptors. Therefore, the decision maker tends to ask: a) How different should the weights be to have another alternative (e.g., alternative k) as the winner instead the present winner (e.g. alternative i); b) How different should the descriptors of k and i be to have k as winner instead of i. With this model it is possible to answer the following questions: a) How different should the weights be to have alternative i ahead of that one ranking first, k (with ik)? b) How different should the magnitudes of the descriptors be to have alternative I ahead of that one ranking first, k (with ik)?

G.Applications to multi-attribute auctions and multi-attribute e-catalogues

This section presents two examples of the application of the SIAP model: Example 1 Multicriteria evaluation model for a procurement procedure for medical equipment for tumor diagnosis; Example 2 Multi-criteria evaluation model of proposals for R&D public financing.

A new model for the automatic evaluation of e-tendering Example 1 Multi-criteria evaluation model for a procurement procedure for medical equipment for cancer diagnosis Criteria tree

Consider a criteria tree representing the dimensions considered:

Overall evaluation criterion

Cost

Delivery time

Quality

Warranty Fig. 4 Criteria Tree

Accuracy

The elementary criteria (j) are: 1) Cost 2) Delivery time 3) Warranty 4) Accuracy Scoring rules Each elementary criterion should have a comprehensive description and a defined scoring rule. 1) Criterion Cost (C) a) Description: Unit price in 103Euros b) Scoring function:
V j(i) Points 10

130

600

185

Pedro Maia and L. Valadares Tavares

Fig. 5 Cost scoring function

2) Delivery Time (T) a. Description: Time in days between signing the contract and actual delivery b. Scoring function:
Vj(i) Points 10

90 T (i) j Days

Fig. 6 Delivery time scoring function

3) Warranty period (W) a. Description: Warranty period in years b. Scoring function:

Vj(i) Points 10

20

Wj(i) Years

Fig. 7 Warranty period scoring function

4) Accuracy (A) a. Description: Probability os no diagnosis error: = Where = probability of existing a tumor is the diagnosis is positive = probability of no tumor if the diagnosis is negative. b. Scoring function :
V j(i) Points 10

1.8

A new model for the automatic evaluation of e-tendering

Figure 8 Durability scoring rule

Criteria Weights 1) Cost in Euros,: C=40%; 2) Delivery Time in Days, T=10% 3) Warranty in Years, W=10% 4) Durability in points, D=40%

Fig. 9 Criteria tree and weights

Descriptors Matrix Four tenders with the descriptor values indicated in the next table.
Cost Delivery time Warranty Accuracy

Euros 130-600 Alt 1 Alt 2 Alt 3 Alt 4 240 300 540 215

Days 0-90 15 30 30 20

Years 0-20 2 2 5 2

Points 0-2 1.2 1.85 1.95 1.85

Table 2- Descriptors matrix

Dominance Analysis

187

Pedro Maia and L. Valadares Tavares Alternative 4 is better or equal on every criteria than alternative 2, meaning that there is no possibility that alternative 2 ranks better than alternative 4. This analysis may be relevant to improve the algorithm that determines the winning alternative. In public procurement procedures, however no alternative should be discarded given the possibility of having to exclude winning alternatives, e.g. due to the violation of administrative obligations. Scores Matrix After applying the scoring rule to each criterion and each alternative one gets the following matrix:

Rank

ID

Cost

Delivery time

Warranty

Durability

Final Score

1st 2nd 3rd 4th

Alt4 Alt1 Alt2 Alt3

V(215)=8,19 V(210)=8,29 V(300)=6,38 V(540)=1,28

V(20)=7,78 V(15)=8,33 V(30)=6,67 V(30)=6,67

V(2)=0 V(3)=0,56 V(2)=0 V(5)=1,67

V(1,85)=3,25 V(1,7)=0,94 V(1,85)=3,25 V(1,9)=5,5

5,35 4,59 4,52 3,54

Values in 0-10 points. Table 3- Scores matrix

Sensitivity Analysis to the Weights The following matrix answers the question of how different should the weights be to have another alternative (e.g., alternative k) as the winner instead the present winner (e.g. alternative i). The matrix shown is relative to the criterion cost, but a similar matrix can be computed for the other criteria.

Rank 1st 2nd 3rd 4th

ID Alt4 Alt1 Alt2 Alt3

Cost 40% > 42.0% ----< 17.4%

Table 4 Cost weights sensitivity analysis matrix

Alternative 1 would outrank alternative 4 if the cost weight (now 40%) was higher than 42.0 % and the difference equally distributed between the other criteria weights. Alternative 3 would outrank alternative 4 if the cost weight (now 40%) was lower than 17.4 % and the difference equally distributed between the other criteria weights. On the other hand, there is no set of weight that could put Alternative 1 better ranked than Alternative 4.

A new model for the automatic evaluation of e-tendering

Sensitivity Analysis to the Scores The next tables answers to the question of how different should the descriptors of k and i be to have k as winner instead of i).
Rank 1st 2nd 3rd 4th ID Alt4 Alt1 Alt2 Alt3 Cost V(215)=8,19 ---->=V(202)=8,47 [V(300)=6,38] >=V(327)=5,8 [V(540)=1,28]

Table 5- Sensitivity analysis to descriptor cost

The table 5 indicates the thresholds of the descriptor cost that allows each alternative to be ranked the best alternative (final score), all things equal ceteris paribus. e.g.: alternative 2, now with 6,38 cost points (300 Euros) would have to have 8,47 cost points or more (202 Euros or less) to be ranked number one. For alternative 1 there is no cost that could rank it best alternative due to the low score in other criterion(ia).Alternative 3 would have to lower its cost from 540 Euros to 327 Euros or less to outrank the wining alternative 4. The same reasoning also applies to the Quality criterion but in this case one should extend the analysis to its sub-criteria:
Rank 1st 2nd 3rd 4th ID Alt4 Alt1 Alt2 Alt3 --------Warranty V(2)=0 >=V(16,8)=8,24 [V(3)=0,556] >=V(17)=8,35 [V(2)=0] Durability V(1,85)=3,25 >=V(1,84)=2,87 [V(1,7)=0,944] >=V(1,9)=5,34 [V(1,85)=3,25] Quality 2,6 >=2,4 [0,867] >=4,27 [2,6] >=8,35 [4,73]

Table 6- Sensitivity analysis to descriptors warranty and durability

As to the criterion Delivery Time, with this weights and scoring functions, there is no value in the respective domain that can make the other alternatives outrank alternative 4 in the final score.
Rank 1st 2nd 3rd ID Alt 4 Alt 1 Alt 2 Delivery time V(20)=7,78

189

Pedro Maia and L. Valadares Tavares

4th Alt 3

Table 7- Sensitivity analysis to descriptor Delivery time

Example 2 Multi-criteria evaluation model of proposals for R&D public financing Criteria tree Consider a criteria tree representing the dimensions considered:
Overall evaluation criterion

Cost

Quality of the Proposals

Quality of the Team

Importance of the addressed problem

Number of potencial patents

Societal impacts

Competences

Experience

Individuals

Firms

Fig. 10 Criteria Tree

The elementary criteria (j) are: 1. Cost (C) 2. Importance of the addressed problem (R) 3. Number of potential patents (P) 4. Societal impacts: Individuals (I) 5. Societal impacts: Firms (F) 6. Team Competences (T) 7. Team Experience (E) Scoring rules Each elementary criterion should have a comprehensive description and a defined scoring rule. 1.Criterion Cost (C) a. Description: Projects total funding in 103Euros b. Scoring function:

A new model for the automatic evaluation of e-tendering

V j(i) 10

1000 Cj(i) 1000Eur

Fig. 11 Cost scoring function

2. Patents (P) a) Description: Number of potential patents to be registered as a result of the project b) Scoring rule:
# Patents (P) 0 1-3 4-7 8+ Score (0 to 10 Points) 0 4 6 10
Table. 8 Patents scoring rule

3. Other Criteria a) Description: Average points given by peering committee b) Scoring functions:
Vj(i) 10

10 Quality Points

Fig. 12 Quality criteria scoring function

Criteria Weights 1. Cost,: C=10%; 2. Importance of the addressed problem, R=20%; 3. Number of potencial patents, P=10% 4. Societal impacts: Individuals I=20% 5. Societal impacts: Firms ,F=10% 6. Team Competences, T=15%

191

Pedro Maia and L. Valadares Tavares 7. Team Experience, E==15% Descriptors Matrix Six project applications with the descriptor values indicated in the next table.

A new model for the automatic evaluation of e-tendering

C 10 Eur
3

R Points 0-10 4 9 2 6 4 7

P # Patents 0- 3 2 0 5 2 1

I Points 0-10 6 4 7 8 2 9

F Points 0-10 9

T Points 0-10 8 6

E Points 0-10 6 9 8 7 8 9

01000 Alt 1 Alt 2 Alt 3 Alt 4 Alt 5 Alt 6 100 400 300 700 200 800

4 8 5 2

7 5 8 9

Table 9- Descriptors matrix

Scores Matrix After applying the scoring rule to each criterion and each alternative one gets the following matrix:
Cost 4 (1) 2 (2) 1 (3) 5 (4) 3 (5) 6 (6) V(6)=9,88 V(400)=2 V(100)=8 V(4)=9,92 V(2)=9,96 V(7)=9,86 Quality of the proposal 6,5 5,6 5,3 3,9 3,6 4,0 Quality of the team 8,5 9,5 7 9 9 4,5 Final Score 7,434 6,45 6,09 6,09 5,89 4,73

Values in 0-10 points. Table 10- Scores matrix

193

Pedro Maia and L. Valadares Tavares

H.References

.Commission of the European Communities, European code of best practices facilitating access by smes to public procurement contracts, Brussels, 25.6.2008, SEC(2008) 2193 .Maia Graa and L. V. Tavares, 2012, Chapter 7 - Decision Support and Procurement in The Applied Law and Economics of Public Procurement, Eds. Professor Steen Treumer and Professor Gustavo Piga, Routledge, 32 pp. .Commission of the European Communities, Think Small First - Small Business Act for Europe, Brussels, 25.6.2008, COM (2008) 394. .Fishburn, P.C., 1970, Utility Theory for Decision Making, Wiley. .Hoddevik, Andr, PEPPOL - Pan European Public Procurement Online Conference, Oslo, 19th May 2009. .Keeney, Ralph, L., 1992, Value-focused thinking, Harvard University Press. .OBrien, John, 2005, The Future of Shared Services in the UK Public Sector, Ovum. .Tavares, L.V., 1984, The Trident approach to rank alternative tenders for large engineering projects, Foundations of Control Engineering, 9, 4, 181-193. .Tavares, L.V., 2004, A model to support the search for consensus with conflicting rankings: Multrident, International Transactions in Operational Research, 11, 107-115. .Tavares, L.V., Maia Graa, P. Maia, Coelho, J., 2008, O Modelo e o Software SIAP para Avaliao de Propostas e Candidaturas Segundo o Cdigo dos Contratos Pblicos.

Sustainable E-Procurements Framework: Taking Information Governance And Assurance Issues

Kirsten Ferguson-Boucher And Sangeeta Khorana

Stock

Of

1 Introduction
Growing academic interest in public sector expenditure on purchases of goods and services (Brulhart and Trionfetti, 2004, Fernandez-Martin, 1996; McCrudden, 2004 and Trionfetti, 2000) is attributed firstly to the scale of public procurement, which is between 8% and 25% of the gross domestic product (GDP) of OECD countries; and, secondly, government purchases of goods or services account for nearly 16% of European Union (EU) GDP (Afonso et al., 2005; European Commission, 2006 and OECD, 2000). There have been some major changes in recent years in the procurement landscape and e-procurement is an emerging feature of the current international trading system, with electronic purchase procedures increasingly being implemented through Internet communication and Web based buying tools. This form of procurement is described as the use of information technologies to facilitate business-tobusiness (B2B) purchase transactions for materials and services (Wu, Zsidisin and Ross, 2007). E-procurement also utilises electronic commerce technologies to identify potential suppliers of goods and services, to interact with suppliers in e-marketplaces and to transfer payments (Min and Galle, 2003; Standing et al., 2007). E-procurement requires public records to be held in complex and dynamic systems and this multifaceted and fluid information ecology, which includes the cloud, mobile computing, web 2.0 and big data, requires efficient management of the digital assets that public institutions use to demonstrate transparency and accountability in their decision making processes. Growing e-procurement activity associated with new and evolving business models for storage, access and dissemination has increased the need for effective information governance and assurance. This information and knowledge aspect of the broader procurement architecture makes it imperative to enhance confidence in the soundness of the information governance and assurance processes. The rationale for adopting e-procurement buy different countries as a mode for procurement is that these can assist governments in the way they do business by reducing transaction costs, preventing maverick buying, making better decisions and getting more value (Panayiotou et al., 2004). E-procurement is thus an important tool to reduce administrative costs and bureaucracy by reducing repetitive tasks by the contracting authorities, which include registration and certification of contractors, and at the same time allows for efficient control mechanisms while reducing paperwork. But the uptake of e-procurement initiatives, such as the Cloud, has been limited despite the fact that developed countries such as the EU have initiated an eprocurement strategy. The EU Green Paper (2010), which aimed to expand the use of eprocurement, identifies inertia and market fragmentation as underlying factors for slow uptake of e-procurement by EU Member States. Other factors that influence countries reluctance to adopt e-procurements have been identified as apprehension with regard to information governance and assurance aspects associated with this form of procurement; and, secondly, a lack of a clear and coherent legal framework to facilitate e-procurements (KPMG, 2012). Within the evolving realm of e-procurements, information governance and assurance (IGA) is an emerging cross-disciplinary field which concentrates on information governance i.e.

195

Sustainable E-Procurements Framework how to ensure effective and efficient use of information in enabling an organisation to achieve its goals (Gartner, n d.). Within the broader framework, information governance (IG) is achieved through a specification of decision rights and an accountability framework, specifically targeted at the creation, storage, use and deletion of information. Equally critical in establishing a robust framework for consideration within the context of e-procurement activities is Information Assurance (IA). IA is the discipline that provides the technical and managerial measures designed to ensure the confidentiality, integrity, and availability of information--sometimes called the CIA of information management. The goal of IA is to ensure that the information flows within a company are confidential; their integrity is safeguarded and available and the integrity of the systems architecture and the authenticity of its contents can be validated in order to assure that the information in question is what it purports to be. Given that public information and records are core business assets for eprocurements, the control of processes and procedures related to these assets is critical, especially given that technological environments can and do vary across countries. Within the broader procurement arena, decision-making processes that rely on public information and records form part of a complex structure of assessments regarding information use and value in e-procurement activities. These are targeted at aligning information strategies with core objectives, and monitoring impact on performance, within an overarching assurance and risk framework. Increasing e-procurement activity associated with new and evolving business models has amplified the need for effective IGA. In the eprocurement process the identification of core objectives and how best to monitor impact is as yet ill-defined and lacks theoretical grounding of the linkages between e-procurement, IGA and information governance. This paper explores the IGA aspects of e-procurement activities and presents an integrated framework through analysis of the EUs recent strategy for eprocurement prepared by the European Commission (in 2012). In this context, the paper proposes a holistic framework for managing information which offers a strategic and technology neutral structure, provides common standards and a scalable approach to implement the e-procurement framework. The proposed e-procurement framework provides an holistic approach, counter balancing the perceived the risks associated with e-procurement processes and procedures with a framework of rights and obligations, aimed at increased market access. It further offers a lens through which to view citizen perception of procuring agencies and small scale and medium enterprises (SMEs) providing e-procurement services. The structure of the paper is as follows: section 2 reviews related literature and linkages between e-procurement and IGA; section 3 gives an overview on EUs e-procurement initiatives; section 4 presents the conceptual framework for sustainable e-procurements and explores whether an holistic and cross disciplinary framework can support the broader aims of recent EU policy developments in e-procurement in 2004 and 2011. This proposes a theoretical framework which offers a strategic and technology neutral structure for managing procurement related information by employing common standards and a scalable roadmap that rests on four-pillars of procurement: transparency, accountability, competition, and equity; and, section 5 concludes.

2 E-Procurement and Information Governance Assurance: Review of Related Literature and Linkages
Procurement activity, at the multilateral level, is governed by the World Trade Organization (WTO) within the WTO Government Procurement Agreement (GPA), which is a plurilateral agreement, i.e. applies only to signatories. The original Agreement (in operation until April 2012) contained very limited provisions on e-procurement and merely foresaw that GPA parties shall consult regularly on developments in this area (WTO, 2006). The recently agreed

Kirsten Ferguson-Boucher And Sangeeta Khorana 2012 GPA text represents a step-change as it recognises the importance of using and encouraging the use of electronic means for procurement, while contracts awarded by electronic means are now explicitly within the scope of the Agreement (WTO, 2012). The uptake of e-procurement in developed countries is limited as this is also the case in developing economies as very few are members of the GPA, though emerging economies are rapidly moving into e-procurements. Within the context of government procurement, e-procurement refers to the use of electronic communications by public sector organisations when buying supplies and services or tendering public works (European Commission, 2012). This utilises electronic commerce technologies to identify potential suppliers of goods and services, to interact with suppliers in e-marketplaces and to transfer payments (Min and Galle, 2003; Standing et al., 2007). In Wu, Zsidisin and Ross words (2007): this kind of procurement employs information technologies to facilitate business-to-business (B2B) purchase transactions for materials and services. Subramaniam and Shaw (2002) posit that the degree of integration with existing organisational systems is considered key for the developing and implementing the e-procurement system. This follows on from the conventional procurement process which incorporates financial activities (payment, budget/cost code allocation, authorisation of expenditure) and e-procurement systems are thus not seen as independent, stand-alone projects. Rajkumar (2001) suggests that systems integration and data management are integral for system specification, as these are critical to the operational performance of the e-procurement system. In this manner, e-procurement is an integral element of any organisation's information strategy because in the management of procurement process, most organisations are faced with limited levels of management information concerning expenditure, product and service specifications and supplier information (Croom and Jones, 2007). Studies highlighting the objectives behind the adoption of e-procurement suggest that the underlying aims are demand aggregation, reduced inventory cost (Croom, 2000; de Boer et al., 2002; Wyld, 2002; Kameshwaran and Narahari, 2007; Mishra et al., 2007), and reduction in cost of procurement (Croom, 2000; Essig and Arnold, 2001; de Boer et al., 2002; Wyld, 2002; Rai and Tang, 2006). Others focus on the consistency of procurement procedures across departments (Malone et al., 1989; Barratt and Rosdahl, 2002) and how e-procurements lead to a fair and equal opportunities to all suppliers, such that tendering processes are efficient which result in value for money (Panayiotou et al., 2004). Within the supply chain management context, e-procurement activities help firms to increase efficiency, improve contract compliance, reduce cycle time, minimise human error, and achieve better supply chain management (Yu et al., 2008). Moon (2005) and Bendoly & Schoenherr (2005) summarise the major benefits of e-procurement as leading to: (1) reduced transaction costs, (2) faster ordering, (3) wider range of vendor choices, (4) streamlined procurement processes, (5) better control over procurement spending and employee compliance, (6) access to more alternative buyers, (7) less paperwork and duplication of tasks, and (8) reengineered procurement workflows. Literature on the benefits of employing e-procurement as a policy broadly clusters into (a) efficiency and effectiveness of the processes, and (b) increased equity and competition. For instance, increased competition in the bidding process is likely to lead to lower prices and greater quality. Further, cost competition is likely to be intense when the bidders are homogenous and less intense when bidders are heterogeneous, thus impacting on the market structure with short and long term competition and equity effects. Further, eprocurement practices employed by the contracting authorities can also have an impact on the market conditions of other buyers (through the overall number and capacity of suppliers) and the range of products and services available. For example, it is not uncommon that low usage of e-procurement practices might place public sector suppliers in an advantageous position vis-vis other suppliers, pushing the latter out of the market. The OFT (2004) has discussed the

197

Sustainable E-Procurements Framework competition impact of e-procurement practices from the perspective of knock-on effect or impact on other buyers markets.

3 Eus e-procurement initiatives amidst recent developments: definitions and semantics

The legal basis for public procurement in the EU is in Procurement Directives1 provided by Directives 2004/17/EC2 and 2004/18/EC3. As part of the Single Market Act, the Commission adopted proposals on public procurement revision of Directive 2004/17/EC (procurement in the water, energy, transport and postal services sectors) and 2004/18/EC (public works, supply and service contracts), and a directive on concessions, which were until now only partially regulated at European level. Developments have been ongoing in the EU in the realm of eprocurements since 2004, with legislative changes supporting the use of technology in procurements. A review of e-procurement strategies shows that the EU has been focussing on e-procurement strategies and this has generated momentum in the adoption of eprocurement in the market place. In 2004, the EU adopted the current public procurement directives (2004/17/EC and 2004/18/EC), introducing the possibility of using electronic means of communication when conducting public procurement. This was followed by the adoption of an Action Plan to promote the use of e-procurement (EUROPA 2004, European Commission 2010). The Manchester Ministerial Declaration of 24 November 2005 noted that all public administrations across Europe will have the capability of carrying out 100% of their procurement electronically and that at least 50% of public procurement above the EU public procurement threshold will be carried out electronically by 2010. In April 2012 the Commission adopted a set of proposals to modernise and reform European Public procurement Directives in December 2011, which propose a gradual but ambitious transition towards e-procurement in the EU4. These aim firstly, to make electronic means of communication mandatory for the notification of tender opportunities and ensuring electronic availability of the tender documents by mid2014, the expected date for transposition of the revised Directive. In other words, this envisages that central purchasing bodies would also move to full electronic means of communication, including the electronic submission of bids by mid-2014. Second, the Directive aims to make electronic means of communication mandatory for all contracting authorities and all procurement procedures by mid-2016. And third, the proposal aims to adopt more detailed provisions to encourage the interoperability and standardisation of e-procurement processes (European Commission 2012, 5). The 2012 e-procurement Strategy aims to make eprocurement the rule rather than the exception. The Strategy also announced that the European Commission itself will move towards full e-procurement by mid-2015 (but Member States move in 2016). Commissioner Barnier expressed the view [] electronic procurement offers a unique opportunity to reform public procurement by radically simplifying its procedures. This represents a significant untapped potential for the European economy5. Extolling the potential benefits of this strategy the EU perceives that e-procurement should be the standard procurement method in the EU by mid-2016 [.] to make it the rule rather than the exception. The adoption of e-procurement, by the EU, is couched in the explanation that tendering public works electronically simplifies the way procurement is conducted, reduces waste and delivers better outcomes in terms of lower prices and better quality (EU Business week 2012). The adoption of this strategy is also guided by the rationale that governments are driven by the need to provide an optimal balance between performance, cost-effectiveness and accessibility. In keeping with this, the European Commission is of the view that: employing e-procurements will increase efficiency in procurements, generate increased

Kirsten Ferguson-Boucher And Sangeeta Khorana competition in the market place, higher transparency and lower transaction costs (2012). At the same time, the opportunity for fraud and corruption will be reduced following automation of procedures enabling the procuring authorities to monitor procurements more efficiently. Finally, e-procurement is expected to generate significant savings for the tax payer, thus ensuring value for money and maximising the efficiency of public expenditure. The economic aspects are, in particular, applicable given the EU economy is battling with fiscal constraints and there is growing need to find new sources of economic growth. These factors, therefore, have added to the recently unveiled EU e-procurement strategy being perceived as a relevant tool of commerce (European Commission 2012). In light of the increasingly important international dimension of e-procurement, the European Commission has stress laid on the openness of e-procurement systems to bidders from all jurisdictions, especially among WTO GPA members (European Commission 2012). The EU perceives that the GPA agreement represents a changing approach and expectations are that information will be shared at a multilateral level. At the multilateral level, the GPA establishes general principles governing the use of electronic means while specific rules apply inter alia to the electronic publication of notices and the use of electronic auctions. This is an agreed framework of rights and obligations among members with respect to their national laws, regulations and procedures on government procurement. Non-discrimination (equity) and national treatment are core principles. Other highlights include independent national bid challenge procedures which enable suppliers to challenge alleged breaches of the Agreement (Article XX), and this is in addition to the WTO Dispute Settlement Understanding. The original Agreement on Government Procurement, however, failed to address the electronic procurement methods. Following negotiations, the GPA was revised and came into effect in 2012, and the Agreement covers electronic procurement, provides for greater government transparency in procurement procedures and embraces advances in information technology and evolving procurement methods. This takes into account the increasing use of electronic procurement methods, e-catalogues to electronic reverse auctions, which have gained traction among developed and developing economies. The revised GPA text explicitly applies to procurement methods whether or not ... conducted exclusively or partially by electronic means {GPA Art. II(1)}. The revised 2012 Agreement also provides general principles on the use of e-procurement and encourages members to maintain mechanisms that ensure the integrity of requests for participation and tenders {GPA Art. IV(3)}. Procedural rules on the use of electronic means, including the conducting of electronic auctions, among others (Arts V: 3, VII:1, XIV, XVI:5, XVI:6), have been addressed with a view to ensuring transparency. Also, the grounds for exclusion of suppliers by procuring entities have been clarified through the inclusion of a larger exemplificative list when compared to Art. VIII:(h) of the GPA 2012. The GPA and other national initiatives at the EU level, therefore, target transparency, accountability, equity and competition as the core aims for promoting the e procurement agenda. Currently, however, there are no specific guidelines on how information will be governed and assured within the scenario of e-procurement. This suggests that individual countries have collective coordination, regulatory structures and a framework of practices in relation to information which are aligned with the European objectives of fostering the uptake of e-procurement in contracting activity. IGA, which is a growing dimension of information technology, provides the scaffolding for the e-procurement structure and the IGA agenda has been seeking to identify the evolving issues surrounding transparency and accountability arising from the use of emerging technologies. The existing disciplines which had evolved organically to manage information targeted very specific needs and requirements are often based in paper paradigm. A broader and more comprehensive approach to organisational needs has increasingly been identified, in the context of the digital ecology and governance.

199

Sustainable E-Procurements Framework Within a broader setting, governance as a term became popular in the late 1990s and has been used commonly in the political sphere where it refer[s] to a paradigm shift in the way we govern postmodern societies. Due to processes such as Europeanization, neo-liberalization, individualization, and decentralization, traditional command and control steering by the state seems to have become obsolete (Van Tatenhove et al. 2000 quoted in Buizer 2011). In the same article, Buizer et al. (2011), reference the issues relating to the complexity environmental fields but their observations are equally valid for the information disciplines: governance is a response to the mounting complexity and multilayered nature of [environmental] problems, which are assumed not to have been adequately addressed by hierarchical government (Bulkeley 2005; Grg 2007; Buizer et al. 2011). Governance, therefore, is conceived as a change in how we manage and govern: less hierarchical, less centrally driven and more networked and negotiated. In 2004, Van Kersbergen and Van Waarden undertook a study of governance as an evolving cross disciplinary research area and concluded that the meaning of governance may differ, but most of the nine approaches they identified in their research had some characteristics in common. These shared characteristics are that: the approach is pluricentric rather than unicentric. This refers to the motivation and drive for governance originating in more than one centre i.e. the need is identified by many functional areas in the organisation and for many purposes like accountability to stakeholders; auditing, risk, operational requirements, etc. networks, whether inter- or intra-organisational, play an important role. The networks are loose, bringing together interested parties, but not imposing a hierarchical leadership structure within; the emphasis is on the processes of governing or the functions - not the structures - and these are relatively similar regardless of sector. Negotiation, accommodation and cooperation are the main attributes, rather than command and control; relations between actors pose specic risks and uncertainties, and the developments by institutions to reduce these aim to make cooperation possible or easier; Finally, many approaches are normative i.e. striving towards an ideal (an aspirational goal) as well as an empirical reality (something which can be observed and proven. This holds in particular for terms like good governance, corporate governance and multilevel governance which refer to trends and/or anticipated developments, rather than concrete things which have already been observed and experienced (Van Kersbergen and Van Waarden, 2004). Thus, the broad definition/set of characteristics applies across common usages of the term in other fields; for example, media governance, (Puppis 2010); IT governance (Van Grembergen and De Haes) and e-governance (Palvia and Sharma, 2007). An analysis of the application of governance as a concept to diverse fields, suggest a set of key elements: (1) strategic direction/alignment (2) delivery of business value (3) application of rights and rules (4) measurement of performance in relation to 1-3 and (5) an uncertain, risky and unbounded environment. IG, therefore, forms part of the wider approach to governance, but is related specifically to information and its management and use. Kooper et al. (2011) state that in context, IG can be viewed as a framework that pursues a precious equilibrium for all parties (Kooper et al., 2011, p. 197) and is a set of activities aimed at establishing a normative foundation for making sense of, in this case, e-procurement processes and procedures. This wider governance context impacts on approaches to strategic eprocurement, both from the perspective of alignment and adding value, and applying the controls and rules employed in achieving e-procurement objectives. IA, as defined by the National Security Telecommunication and Information Systems Security Instruction (NSTISSI), concerns information operations that protect and defend information and information systems by ensuring their availability, integrity, authentication, confidentiality and non- repudiation. This includes providing for the restoration of information systems by incorporating protection, detection and reaction capabilities (CNSS, 2010, p35).

Kirsten Ferguson-Boucher And Sangeeta Khorana Confidentiality, integrity, and availability, are the core requirements. These were extended by Maconachy, et al. (2001) to include authentication, and non-repudiation and are now known as the five pillars. Within the context of IA, confidentiality is ensuring that information is accessible only to those authorised to have access; integrity is safeguarding accuracy and completeness; availability is ensuring authorised users have access when required. Dardick (2010) goes on to say that authentication and non-repudiation are not attributes of information or systems, but are attributes used to describe the procedures or methods used to assure the integrity and authenticity of information and to protect the confidentiality of those same. Therefore, it is imperative to provide a holistic and integrated approach to both governance and assurance of information from the perspective of a contracting organisation involved in e-procurement activities. The basic prerequisites of this approach will be to ensure that transparency and accountability are demonstrated as the overarching aims in the drive to ensure fair competition and equity of access for bidders and suppliers.

4 Conceptual Framework Model For Sustainable E-Procurements: Application And Relevance

The model provides a conceptual framework for sustainable e-procurements and draws on the ongoing debate about harnessing procurement to increase the levels of transparency, accountability and compliance within legal frameworks (Henriksen and Mahnke, 2005; Varney, 2011). The review of literature shows that employing e-procurement tools, which include enotice, e-auction, e-catalogue, e-dossier, e-submission and e-signatures, are likely to reduce costs and improve buyer-vendor relationships (Croom, 2000; Zsidisin and Ellram, 2001; deBoer et al., 2002; Croom and Johnston, 2003; Mishra et al., 2007; Lsch and Sin 2007; BrandonJones and Carey, 2010) and in light of this, the proposed framework attempts to integrate economics with IGA. Other studies suggest that e-procurement approach facilitates the documentation of the bidding process which enhances transparency and accountability of contracting activity (Croom, 2000), and this aspect of public policy has been accounted for in the e-procurements paradigm. The model assumes that adoption of such strategies would enhance the quality of goods or services offered to the government, generate competition among sellers and foster competition within the procurement market place. In this manner, the model (figure 1) focuses on transparency, accountability, competition and equity as the four building blocks of a sustainable e-procurement framework, and interesting these too form the basic guiding principles of EU e-procurement in particular and procurement policies in general.

201

Sustainable E-Procurements Framework

Figure 1: Sustainable e-procurement framework

The horizontal axis (in Figure 1) identifies strategies for aligning with and delivery of value in the e-procurement strategy, which are in line with IGA best practices. This framework highlights that transparency and accountability are by-products of good governance and assurance, and compliance with e-procurement rules support the aim of strengthening the case for trusting the information produced in e-procurement systems. The third and fourth building blocks of the framework include competition and equity, which represent a normative approach to an efficient and idealist procurement setting and strive for fair competition and equity in terms of bidding processes and procedures. The road map of transparency, accountability, competition and equity, present a staged approach in which each building block consequentially ensures consideration of the totality of the challenges to be addressed. For example, transparency (T) is a sufficient but also a necessary condition to ensure accountability (A) of procurement activities. In turn, this leads to a competitive business environment and ultimately equitable terms for bidders. The subcategories have been identified by mapping IGA requirements against procurement processes. There is a close linkage and interdependency between the subcategories within each building block. For example, the intent for procurement expressed as an e-notification (T1), which is an obligation (A1) under the sustainable framework on the part of the authority to implement e-tools for contracting activity. This system of rights and obligations translates into increased opportunity to emerging and existing providers (C1) which allows bidders to innovate through flexibility in the bidding processes. A sustainable framework provides a fair competitive environment for bidders, which on the one hand is an obligation of the contracting authorities but on the other, is a right in terms of bidders bidding for contracts (E1) in an e-procurement business environment. The model proposes that detailed information on e-procurement processes and procedures (T2) will enable effective monitoring and authentication of activities which will facilitate crossborder economic operators (C2) through competitive market structure, which at the same time provides for interoperability and wider access to all bidders in the e-procurement market place (E2). Finally, information sharing and dissemination (T3) within the ambit of transparency demonstrates a chain of custody and digital continuity (A3) of the procurement process, which is an intangible asset. This in turn provides value for taxpayers money (C3) whilst encouraging

Kirsten Ferguson-Boucher And Sangeeta Khorana engagement between procuring agencies, bidders and authorities (E3) for an optimum outcome in contracting activity. Based on idealist e-procurement policies, the second horizontal level reflects the drivers of a sustainable e-procurement framework. Thus, the strategic external context forms the basis for the foundation of the normative agenda of an effective e-procurement framework. Each driver impacts on the way the strategies will be implemented: convergence in the legal framework for procurements is driving the need for transparent procedures. Similarly, harmonisation of technical standards impacts on how accountability is demonstrated, while the drive towards efficiency in the procurement market requires targeted approaches to competitions, and the underlying driver of wider market access for firms bidding for contracts in the procurement market place impacts on how equity of access is encouraged. The drivers of transparency, accountability, competition and equity which are the critical success factors for sustainable eprocurement framework within the context of IGA are representative of the current EU eprocurement agenda. These form the basis for developing performance measures which relate to governing and assuring information in a manner that reflects legal framework convergence, harmonisation of technical standards, efficiency of procurement market and wider market access for firms in government contracting activity. Thus, the model interprets that legal convergence and harmonisation of technical standards are prerequisites for achieving efficiency and growth regeneration thus facilitating wider market access. This level of framework suggests that for sustainability e-procurement information is required for evidential purposes that are not purely legal, but also operational and regulatory. Given that the procurement process are complex (Leukel and Maniatopoulos, 2005), the choice of implementing substantive policies is even more challenging (Henriksen and Mahnke, 2005) which suggest that coordinated public procurement transformation is important for a sustainable e-procurement framework. It is pertinent to mention here that in any information asset management decision, a set of factors are essential to extracting the maximum benefit from the information content. These factors include: ensuring that only the important information is retained; that it can be retrieved in the time scales required for business need; that it is secure and yet accessible to all those who require it for as long as they require it. Thus, information adds value when consideration is given to information arrangement, appraisal, access and resilience, which suggest that a. holistic management of its lifecycle is likely to increase its use to the organisation. The measurement indicators are: assessing the effectiveness, efficiency, flexibility and sufficiency of information and information strategies throughout the data governance lifecycle. The quality of information i.e. its accuracy, validity and timeliness (Schwolow and Jungfalk, 2009) is, therefore, dependent on a balanced approach to inherent quality (i.e. that which is current and accurate: data accurately reflects the real-world object that the data represents and pragmatic quality (i.e. that accurate information supports the work of the enterprise (Al-Hakim, 2007). This then impacts on how effective the information and the information strategies will be as well as how efficiency can be best measured. How flexible and innovative e-procurement strategies can be very much depends on how they have been designed and set up to anticipate unintended uses. Perfection though is not achievable and the ability to declare a sufficiency, within a risk and assurance framework forms a critical part of the performance matrix within broader ISA. Finally, identifying and managing risk throughout the lifecycle of the procurement process is a significant but necessary undertaking to ensure this evidential nature for procuring authorities. The goal of risk analysis is to achieve a balance between risk probability and impact, on the one hand and the sufficiency of the mitigation strategies and the impact they will have, on the other hand. Adopting a method of assessment, identification and documentation of risks acceptable to the e-procurement process can be approached using the sustainable e-

203

Sustainable E-Procurements Framework procurement framework as a method for measuring its accomplishment. Performance indicators would further enable the evaluation of each building block and the specific subclassifications in terms of IGA. Each of these sub-classifications requires a series of steps to ensure that information is managed in line with its value and related attributes. There are four activities which can be viewed as a blueprint for achieving IGA goals: Classification, Appraisal, Access and Resilience.

Figure 2- source: Authors compilation

We can refer to this blueprint as an Information Governance and Assurance Functional taxonomy or iGAFT, i.e., a conceptual map of the organisation which enables us to think about the four main activities and what tools we can make best use of on the context in which we operate. The conceptual map Classification refers to the order and organisation of information in such a way that employees of an organisation can exploit the digital evidential assets they hold and require. This demands an understanding of the organisation and its e-procurement processes, so that deposit, access and retrieval are made possible, whilst respecting access rules. iGAFT provides a conceptual map of the functions and activities in relation to eprocurement within the procuring institution. It can be used to a reasonable level of granularity to apply access and security rights to the various activities and attach the relevant retention and disposal instructions for the resulting digital assets. It should also be possible to earmark those likely for longer term duration and more rigorous security and uses continuity strategies (Resilience) at an early stage. The second activity, information appraisal refers to the selection of information of value to the e-procurement process and required by regulatory, legal, operational and longer term drivers. For example, it can be applied to information regarding the notification of tender, process of the award and on-going management of contracts and decisions relating to expenditure on each aspect of the process. E-procurement strategies are likely to be successful only when these are aligned with the wider legal, system, structure and business initiatives. For instance, legal initiatives focus on the checks which are needed to ensure that the requirement of law are met and takes cognisance of the convergence of legal frameworks visible in current trends. Systems initiatives focus on the mechanisms for holding information - the systems and the media in the context of the harmonisation of technical standards. Structural initiatives focus on the content and structures which enable access and drive the efficiency of the procurement market. Finally, business initiatives focus on the rules and controls organisations can put in place which corresponds to the acceptable levels of risk to that entity but still facilitating wider market access. This approach to IGA, known as the VaPaR (vapour) model, has been applied here has been developed by one of the authors. It reflects a balanced governance and assurance

Kirsten Ferguson-Boucher And Sangeeta Khorana approach, and focuses on: Value, Alignment, Performance, Assurance and Risk that provide specific nodes which need to be addressed (Ferguson-Boucher and Convery, 2011).

Figure 3 (Copyright KNB 2011)

In applying the VaPaR approach to e procurement activities, the resulting sustainable eprocurement framework presents a systematic and holistic approach. The convergence and evolvement of the legal framework for e-procurement will inform the decisions made under each of the sub-categories of the framework, i.e. if the legislation relates to e-signatures and authentication changes (A2) then the question that needs to be posed in regards to accountability (A) become more focused. This in turn informs decisions to be made about the systems and structures which support the e-procurement framework within the broader context of IGA. Equally, if the technical standards are revised in relation to interoperability (E2) then questions relating to Equity (E) become more focused, impacting on the competition and accountability elements.

5 Recommendations and conclusions

Within the current EU e-procurement agenda our framework suggests that legal and regulatory convergence, harmonisation of technical standards, and wider market access are the critical success factors for a sustainable e-procurement framework. Our model recognises four main external interdisciplinary drivers: strategic direction; alignment and delivery of business values; performance measurement and indicators; and information governance and assurance. We conclude that an interdisciplinary approach to sustainable public procurement is imperative in addressing the complexity of the current procurement landscape, and that this is a prerequisite for a fully realised internal common market. Barriers to engagement with e-procurement processes have been identified as inertia and market fragmentation by the European Commission (2012, 5). This goes on to say that [] the challenge is to persuade hesitant purchasers and suppliers to change their ingrained habits; convince them that the predicted benefits are attainable and that investments can be recouped in a reasonable period. The balance between benefits and perceived challenges is one which is essential to encourage more bidders to enter the market by presenting a framework for sustainable e-procurement through an IGA lens that can potentially positively impact on these perceptions. It is pertinent to view the IGA aspects of e-procurement using a

205

Sustainable E-Procurements Framework holistic approach that is technologically and geographically neutral. It is important to emphasize that these are the normative goals of e-procurement and that an interdisciplinary and unified approach is important to bring economics and IGA together. Future research is required in this rapidly growing interdisciplinary field to contextualize future direction of eprocurement in the existing research landscape. This is critical from the perspective of developing economies, and in particular to explore the linkage between green technology and procurements to ensure the sustainability aspect in this evolving field. Cloud is an important example of a growing technology use for e-procurements and case studies on the uptake of this novel feature in procurement is the next step forward.

Kirsten Ferguson-Boucher And Sangeeta Khorana

Notes
1.The Procurement Directives are based on the principles of the Treaty and in particular the principle of freedom of movement of goods, the principle of freedom of establishment and the principle of freedom to provide services and the principles deriving therefrom, such as the principle of equal treatment, the principle of non-discrimination, the principle of mutual recognition, the principle of proportionality and the principle of transparency. The provisions of the Procurement Directives should be interpreted in accordance with both the aforementioned rules and principles and other rules of the Treaty (see Recital 2 of Directive 2004/18/EC and Recital 9 of Directive 2004/17/EC). 2.Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors (hereafter the Directive 2004/17/EC). 3.Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (hereafter the Directive 2004/18/EC). 4.Proposals of 20 December 2011: COM(2011)895final; COM(2011)896 final and COM(2011)896 final. 5.Commissioner Barnier at the 1st Annual Conference on e-procurement in June 2012. Available on http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/12/498&format=HTML&aged=0&la nguage=FR&guiLanguage=en

References
.Afonso, A., Schuknecht, L., Tanzi, V., 2005. Public sector efficiency: an international comparison. Public Choice 123 (34), 321347. .Al-Hakim, L. (Ed.), 2007. Information quality management: theory and applications. Hershey, PA, USA: Idea Group Publishing (IGI Global). .Brandon-Jones, A., & Carey, S. 2010. The Impact of User-Perceived E-procurement Quality on System and Contract Compliance. International Journal of Operations & Production Management, 31 (3): 374-396. .Brulhart, M., Trionfetti, F., 2004. Public expenditure, international specialisation and agglomeration. European Economic Review 48 (4), 851881. .Buizer, M., B. Arts, and K. Kok, 2011. Governance, scale, and the environment: the importance of recognizing knowledge claims in transdisciplinary arenas. Ecology and Society 16.1, 21. .Bulkeley, H., 2005. Reconfiguring environmental governance: towards a politics of scales and networks. Political Geography. 24:875-902. .Committee on National Security Systems, (CNSS) 2010. CNSS Instruction no. 4009. National Information Assurance (IA) Glossary. Retrieved from http://www.cnss.gov/Assets/pdf/cnssi_4009.pdf .Croom, S. 2000. The Impact of Web-Based Procurement on the Management of Operating Resources Supply. The Journal of Supply Chain Management, 36(1): 4-13. .Croom, S., & Johnston, R. 2003. E-service: Enhancing Internal Customer Service Through Eprocurement. International Journal of Service Industry Management, 14 (5): 539-555. .Dardick, G.S., 2010. Cyber Forensics Assurance. Proceedings of the 8th Australian Digital Forensics Conference, Edith Cowan University, Perth Western Australia, November 30th 2010) .De Boer, L., Harink, J., & Heijboer, G. 2002. A Conceptual Model for Assessing the Impact of Electronic Procurement. European Journal of Purchasing and Supply Management, 8(1): 25-33.

207

Sustainable E-Procurements Framework

.European Commission, 2006. Handbook on Green Public Procurement. European Commission, Brussels. .Ferguson-Boucher, K. and Convery, N., 2011. Storing information in the cloud: a research project. Journal of the Society of Archivists, 32 (2): 221239. .Fernandez-Martin, J., 1996. The EC Public Procurement Rules: A Critical Analysis. Clarendon Press, Oxford. .Gartner, Inc. 2012. IT glossary: information governance. Retrieved from http://www.gartner.com/itglossary/information-governance/ .Grg, C., 2007. Landscape governance. The "politics of scale" and the "natural" conditions of places. Geoforum. 38:954-966. .Henriksen, H. Z., & Mahnke, V. (2005). E-procurement Adoption in The Danish Public Sector: The Influence of Economic and Political Rationality. Scandinavian Journal of Information Systems, 17 (2): 85-106. .KPMG, 2012. Exploring the Cloud: A Global Study of Governments adoption of Cloud. .Kooper, M.N., Maes, R., & Roos Lindgreen, E.E.O., 2011. On the governance of information: Introducing a new concept of governance to support the management of information, International Journal of Information Management, 31 (3), 195-200. .Leukel, J., & Maniatopoulos, G. 2005. A Comparative Analysis of Product Classification in Public vs. Private E-procurement. The Electronic Journal of e-Government, 3(4): 201-212. .Logan, D., 2010. What is information governance, and why is it so hard? [Web log post]. Retrieved from, http://blogs.gartner.com/debra_logan/2010/01/11/what-is-information-governance-and-why-is-itso-hard/ .Lsch, A., & Sin, L.J. 2007. E-reverse Auctions Revisited: An Analysis of Context, BuyerSupplier Relations and Information Behavior. The Journal of Supply Chain Management, 43 (4): 47- 63. .Maconachy, W.V., Schoiu, C.D., Ragsdale, D. and Welch, D., 2001. Proceedings of the 2001 IEEE, Workshop on Information Assurance and Security, United States Military Academy, West Point, NY, 5-6 June, 2001. .McCrudden, C., 2004. Using public procurement to achieve social outcomes. Natural Resources Forum 28 (4), 257267. .Min, H., Galle, W.P., 2003. E-purchasing: profile of adopters and non-adopters. Industrial Marketing Management 32, 227233. .Mishra, A. N., Prabhudev, K. & Barua, A. Antecedents and Consequences of Internet Use in Procurement: An Empirical Investigation of U.S. Manufacturing Firms. Information Systems Research, 18 (1): 103-120 .OECD, 2000. Greener Public Procurement: Issues and Practical Solutions. Organisation for Economic Cooperation and Development, Paris. .OFT (2004) Assessing impact of public sector procurement on competition Office of Fair Trading. .Palvia, S. C. J., & Sharma, S.S., 2007. E-government and e-governance: definitions/domain framework and status around the world. In Agarwal, Ramana, V.V. (Ed.) Foundations of e-government. ICEG 5th International Conference on E-Governance 2007, 1-12. http://www.iceg.net/2007/books/1/1_369.pdf .Panayiotou, N., Gayialis, S., Tatsiopoulos, I., 2004. An e-procurement system for governmental purchasing. International Journal of Production Economics 90 (1), 79102. .Puppis, M., 2010, Media governance: a new concept for the analysis of media policy and regulation. Communication, Culture & Critique, 3, 134149. .Schwolow, S., & Jungfalk, M., 2009. The information value chain strategic information management for competitive advantage. Retrieved from, http://www.informationvaluechain.com/wpcontent/uploads/information-value-chain.pdf

Kirsten Ferguson-Boucher And Sangeeta Khorana

.Standing, C., Stockdale, R., Love, P., 2007. Hybrid buyersupplier relationships in global electronic markets. Information and Organization 17 (2), 89109. .Trionfetti, F., 2000. Discriminatory public procurement and international trade. World Economy 23 (1), 5776. .Van Grembergen, W., & De Haes, S., 2009. Enterprise governance of information technology: achieving strategic alignment and value. New York: Springer Science and Business Media, LLC. .Van Kersbergen, K., & F. Van Waarden, 2004. Governance as a bridge between disciplines: crossdisciplinary inspiration regarding shifts in governance and problems of governability, accountability and legitimacy. European Journal of Political Research, 43: 143-171. .Van Tatenhove, J., B. Arts, and P. Leroy, (Eds.) 2000. Political modernisation and the environment: the renewal of environmental policy arrangements. Dordrecht, The Netherlands: Kluwer Academic Publishers .Varney, M. 2011. E-ProcurementCurrent Law and Future Challenges. ERA-Forum, 12 (2): 185-204. .W.V., Schoiu, C.D., Ragsdale, D. and Welch, D. 2001. Proceedings of the 2001 IEEE, Workshop on Information Assurance and Security, United States Military Academy, West Point, NY, 5-6 June, 2001). .Wu, F., Zsidisin, G.A., Ross, A.D., 2007. Antecedents and outcomes of e-procurement adoption: an integrative model. IEEE Transactions on Engineering Management 54 (3), 576587. .Zsidisin, G. A., & Ellram, L. M. 2001. Activities Related to Purchasing and Supply Management Involvement in Supplier Alliances. International Journal of Physical Distribution & Logistic Management, 31 (9): 629-646. .

209

An Architecture and Best Practices of e-Procurement in Cloud Computing

Bernardo Nicoletti

1 Introduction
The global recession hits hard. All major functions of the organizations are impacted. Figure 1 summarizes some of these challenges. In this situation, it is important to develop and manage innovative strategies also in the Procurement arena. It is essential to innovate through process improvement and automation management. To analyze how this can be done a possible entry point is the innovations in Information and Communication Technology (ICT). ICT traditionally has supported procurement in the administrative process of the Procure to Pay (P2P) processes (Dimitri, Piga, Spagnolo, 2006). ICT has supported the production of paper orders, their printing, and their accounting. EProcurement should do much more. It should represent the set of solutions which can support managers and buyers at all stages of the procurement processes, from strategic procurement, to pre-negotiation (search for new vendors), up to the monitoring of expenditures and better estimates of future needs.

Figure 1 Changes in the Procurement Function

210

An Architecture and Best Practices of e-Procurement There are essentially two broad categories of e-Procurement tools which support: Directly the relationship with the vendors; The internal processes (strategy, workflow authorizations, reconciliations, controls, management reports, and so forth). verifications,

The paper considers both aspects and how they can be improved.

2 Literature Review
E-Procurement, be it public or private, has spurred the interest of researchers on very different fields: computer and management science, theory of organizations, law, and economics. It would then be almost impossible to provide a fully fletched picture of the main research papers written during the last two decades. E-Procurement is electronic tendering and procurement of goods and services (Timmers, 1998). Companies or public authorities implement some form of e-procurement on the web. They search benefits such as a a wider choice of vendors, which is expected to lead to lower cost, better quality, improved delivery, shorter cycle times, and reduced total cost of ownership (for instance tendering specifications are downloaded by vendors rather than mailed by post). Electronic negotiation and contracting, and possibly collaborative work in specification can further enhance time- and cost-savings and convenience. For vendors the benefits are in more tendering opportunities, on a global scale, lower cost of submitting a tender, and possibly tendering in parts which may be better suited for smaller enterprises, or collaborative tendering (if the e-procurement site supports some forms of collaboration). The main sources of increase in the margins came until now from the reduction of costs (automated tender processing, more cost-effective offers and similar) (Timmers, 1998). The emergence of internet platforms, such as eBay and Amazon, has progressively provided data to economists, and Information and Telecommunication Technology (ICT) experts to conceptualize and analyze aspects such as the structure of the information needed in emarketplace, the nature of forces affecting price formation, the main performance dimensions, namely the degree of participation from both sides of the market, and the level of competition. The benefits connected with e-Procurement are substantial. Public procurement accounts for more than 16% of GDP. It has not yet made full use of innovative models and tools to streamline their supply chains, to increase transparency and speed, as well as to reduce administrative cost and contract prices. E-Procurement can bring significant savings when used in public procurement. Such process of change requires a new management culture and new tools. Several authors have analyzed the key lines of change to be pursued. They have shown that e-Procurement and, particularly, e-Tendering are the appropriate tools to implement such changes because they in connection with Business Process Intelligence (PBI) can support significant improvements to cope with strategic and tactical challenges of public procurement. The experience of Portugal is an important case study. It is the first E.U. member State to have mandatory e-public procurement including e-public tendering for any open, restricted or negotiated procedures, since November 2009 (Tavares, 2011). The different types of savings in Portugal were estimated using public procurement data for 2010. They brought overall savings between 6% and 12% for the total public expenditure, due to e-Tendering and PB I.

211

B.Nicoletti The Deutsche Bank Research department has underlined the importance of attacking public procurement worth two trillion euros (Meyer, 2011). The School of Management of Politecnico di Milano presented six main areas of intervention. They highlighted the benefits that could be achieved in Italy in the medium term (three years) from e-Procurement, under certain assumptions (Scuola di Management Politecnico di Milano, 2012): E-Procurement in the Public Administration (PA): savings around 7 billion per year; Electronic invoicing: savings around 5 billion per year, $ 1 billion for the PA, and the rest for private individuals; Electronic payments to the PA: savings round 0.6 billion per year; Electronic payments to the vendors: increased tax revenues around 5 billion per year; Dematerialization and digital innovation in the processes of PA: savings around 15 billion euro per year.

In the case of the businesses, a research framework suggests that alignment among business strategy, e-procurement strategy, e-procurement tool, strategic ICT capability, and strategic typology have a positive influence on a companys strategic performance (Phillips and Piotrowics, 2006) The subject of cloud computing is currently in the very early stages of development and there is a lot of scope to do research in this area. It is interesting that a major interest is in emerging countries, where the current infrastructure is still relatively weak. Cloud computing can provide almost instantaneously working environments. It requires only a good telecommunication infrastructure. Tewari and Sharma (2011) proposed the use of cloud computing in e-Governance models in India, as a new and ideal solution for Government future projects. They analyzed cloud computing and examined its application in the context of e-Governance. E-Governance projects in India are currently facing many challenges, right from the development phase to implementation. Galih (2011) proposed cloud computing scheme architecture for e-Procurement systems in Indonesia (Jawa Barat) to reduce the ICT costs for implementing e-Procurement systems. Galith carried out an analysis of the ROI to select which cloud scheme is best to apply in Indonesia conditions. He also proposes the architecture of a new cloud based system based on the analysis conducted. The analysis results show that a significant cost reduction is achieved by implementing the Infrastructure as a Service scheme of cloud computing in an e-Procurement system at Jawa Barat Indonesia. Cloud computing can be useful in economic sectors very different from each other. For instance, Grilo and Jardim-Goncalves (2010a and 2010b) analyzed the emergence of cloud computing as an enabler of a full de-materialization of the whole building life-cycle. The use of e-Procurement becomes more efficient and increases market competitiveness with the cloud computing support. Their papers present results of the industrial research of the application of this approach in the construction phase of building development projects. Their papers describe how BIM, SOA, and Cloud Computing can change traditional e-Procurement functions, namely the processing of tendering documents, as the technical data can be automatically coupled with transactional information, as in RFP, orders, or invoices, and published in electronic procurement platforms. Their papers conclude that despite its potential to move to cloud computing practices in the AEC sector, there are some hurdles to overcome before the approach of e-Procurement achieves a tipping point

An Architecture and Best Practices of e-Procurement Stamison, Campbell, and Winkler (2011), librarian and vendors both, highlight thoughts and theories on an integrated approach among ILS vendors, Information Service Providers (ISP) and librarians. Experienced in working with web-based e-Procurement systems for corporate libraries, ISPs are in a unique position to offer streamlined, real-time integration with cloudbased services. These services (the silver linings) go beyond EDI to include exchanging licensing information, pricing, purchase orders, and renewals, just to name a few. ISPs are already comfortable in the cloud. They are dedicated to playing a vital role in the supply of information. As a matter of fact, cloud computing is much more than just a new technology or a saving model. It can be an enabling model to change the ways organizations work and interact with external parties (Nicoletti, 2013). It is always important to combine technology automation with process improvements (Nicoletti, 2012). Implementation of manual procedures in eProcurement systems often leads to unmanageable and inefficient system flows. Therefore, it is important that organizations undertake a fresh look at all procurement functions/ processes. The inefficient and non-value adding processes must be purged, while mandatory processes must be optimized for e-use. The importance of substantial business process re-engineering has been underlined in successful e-procurement implementations in India (Panda and Sahu, 2012). Prier, Cski, and McCue (2012) explore e-Government and e-Procurement by examining their deployment and integration. Utilizing a recent survey of governments in the U.S.A. and Canada, their paper discusses the relevance of applying maturity models to ICT within public procurement Cloud computing technology is a rapidly growing field. It has attracted significant research attention. Zhou et al. (2012) set out to better understand how cloud computing can be applied in supply chain management, and to identify the consequent benefits and challenges. They developed a conceptual model which includes three levels: cloud computing and service, the supply chain, and supply chain management software solutions. This model helps to develop a framework for adopting cloud computing in supply chain management. The paper identifies a six step-model identifying a certain number of considerations before moving a supply chain to the cloud. They are: developing the cloud strategy, market research, service provider selection, risk assessment and management, performance modeling, and implementation plans. All these papers underline the importance of a model. This paper will address this aspect. It aims to define a holistic and advanced architecture for e-Procurement which is strictly connected with improved procurement processes and the availability of new ICT technologies.

3 A new Architecture for e-Procurement

It is interesting to analyze the new developments in ICT relevant to the e-Procurement. We refer to them as the six "C"s: Cloud Computing; Communication increasingly mobile; Comprehension, meaning how to improve the knowledge of the organizations through the tools referred to as Big Data and analytics;

213

B.Nicoletti Collaboration, also through the so-called social networks; The use of external Contractors; Costs to be more and more reduced, despite a growing decline in the number of vendors.

Each of these trends is a strong change agent in the processes of Procurement: Cloud computing is the use of computing resources, accessed through networks and payment for services provided and paid based on use. The impacts on procurement are significant since they open new horizons for accessing computing resources; Communication pushes towards working anywhere, anytime, on any device; Comprehension of the organization, through tools such as Big Data and analytics supports an analysis of the procurement not possible in the past, thanks to the increasing availability of large amount of information and documentation; New collaboration tools make possible to develop integration along the value stream; The need to be lean pushes the use of external resources, such as contractors, for specific and limited in time needs. In this case, the difficulty is to rate the vendors. The acquisition of valuable resources and the introduction of mechanisms of productivity is not easily definable in contracts; The last aspect, the reduction of costs, is alas particularly pressing in these times of deep and long crisis. In this situation, the pressure on the procurement function tends to become very strong in order to achieve reductions in the prices of products/services procured. This goes against the trend of the past to try to create partnerships with vendors rather than confrontation. Particularly important is the management of the energy costs (or in general of the use of natural resources).

This paper examines these developments one at a time to analyze what might be their possible uses in support of Lean Procurement. 3.1 Cloud Computing Cloud computing is a set of technologies that allow the form of a service offered by a vendor to the clients, in order to process, and/or store data through the use of distributed hardware/software and virtualized in the network (normally internet) (Nicoletti, 2013a). Clients pay for the services on a pay-per-use basis, like the provision of other utilities, such as electricity or gas. The service is fully managed by the provider (be it private, community, public, or hybrid) and the client only requires an access device and an internet connection. The users can access the cloud from anyplace, anytime, and any device. They are more and more external to the organizations. There are many types of cloud computing services. The most popular ones are: In the SaaS model, the full software suite (including the applications and their updates) is provided by a service provider. The client cannot change or modify the software but only configure it in a self-service mode. For this service, the user pays a fee based on usage or a monthly charge (which can move upwards or downwards);

An Architecture and Best Practices of e-Procurement PaaS offers an entire platform (operating system, server, relational database but not applications) to clients for various purposes. As with SaaS, the platform is managed and kept stable and current by the service provider. The platform can be accessed by both in-house and remote staff. This enables all members throughout an organization to view, edit, and share data no matter their location. Each user has the option to utilize only the services they need. These services tend to be very customizable. laaS is basically an infrastructure on demand service in which clients outsource servers, storage, network components, and so on. The service provider owns the equipment and is responsible for its deployment, operations, upgrade and maintenance.

An interesting use of cloud computing in Procurement is the so-called B2B cloud (Kim, Shunk, 2004). This solution helps to address the very important aspect of collaboration and integration among vendors and client organizations. This solution is interesting when: There is a need for frequent exchanges of information between different organizations; Organizations that want to co-operate are distant from a geographical point of view; There are available standard formats for the connection of different solutions.

This situation allows implementing a partnership B2B outsourcing and management of a community for trading. This is a typical situation present in Procurement. It would greatly alleviate the procurement processes thanks to the possibility of collaboration via computer and network. The best solution might be, at least initially, a hybrid B2B. This would allow the organization to connect directly with its most important partners. At the same time, the organization may use a B2B cloud to connect with the remaining partners. The cloud makes easier also to build a procurement social network to improve collaboration between the partners. 3.2 The Mobile Cloud computing is great in supporting the recent trends in technology (and social) in mobility communication. The mobile computing is the interaction of an operator with information systems anyplace, anytime, and any device using a network (such as the web or Wi-Fi). The possible uses in the context of the procurement are several. The devices and applications in this domain are multiplying and spreading. Procurement has been involved relatively little so far. This situation is changing. Examples of possible uses are: Mobility for sourcing. Mobile devices can be used to detect requirements directly on the shelf, send orders, and get their acceptance directly in the store or in the warehouse. Spend visibility would be available on the move; Mobility for logistics. Mobile devices are also very important for logistics. In the case of transportation, mobility can help considerably to detect the location of the carriers or to be used for long-distance communication, written or verbal; In the case of warehouses, mobile devices can be used for picking, deciding the arrangement of the items on the shelves, receiving, or shipping;

215

B.Nicoletti Mobile devices can be used very efficiently for inspections, as they allow to work in the proximity of the materials or components to inspect or verify the quantity and /or quality on the spot; Mobile devices can also assist for leaning administrative processes. The most important application is the inventorying wherein the detection of existences is not done manually and reported by hand on the terminals. It is carried out directly in the warehouse or in places of transit, with a whole series of benefits.

3.3 Procurement Process Intelligence Today it is essential to maximize the value provided by the Procurement to the organizations. In the current volatility, there is the difficulty of providing some variables that can come into play and disrupt programs. It then becomes essential to increase organizational agility. To achieve this it is important to act on the processes and systems. This must mean: Modernizing and improving the efficiency of the processes of procurement (online auctions, orders via the internet, and so on); Optimizing price/quality ratio, ensuring the quality standard of supplies and ancillary services; Rationalizing spending on goods and services; Creating a network of communication with the supply market.

To achieve all these objectives with Lean Procurement it is important to adopt a model of Business Process Intelligence, also referred to as Procurement Process Intelligence. It is Business Intelligence focused on the optimal management of procurement processes. It has a major innovative aspect. The traditional approach of Business Intelligence is designed primarily to analyze information, and in some cases allow simulations (what-if analysis). Procurement Business Intelligence adds also the management of the workflows connected with the processes. The main components of the Procurement Process Intelligence are: . The analytics are models for data analysis. They are especially valuable in areas rich in data. This is a situation increasingly common due to the use of pervasive information systems also for procurement. This analysis can be the production of: Statistics; Forecasting; Procurement Strategy; Planning; Budgeting; Collaboration; Execution; Monitoring

An Architecture and Best Practices of e-Procurement Report, or Executive dashboards.

They allow one to have a better management visibility. For example in the case of purchases, the analytics tools allow to analyze the costs in a very accurate manner (the so-called Spending Review or Spending Visibility). The analytics may require the processing of huge masses of data (in this case, people talk of Big Data). 3.4 Collaboration Collaboration is important because organizations increasingly require a team effort. Procurement amplifies the collaboration within organizations and with people outside the organization, be they vendors, financial services, logistics, and/or government operators. The collaboration platform must allow the organization to adapt to new ways of collaboration in support of procurement within and outside the organization. Current systems in support of procurement (ERP, MRP, PLM, and others) provide access to structured information, but do not normally allow enabling collaborative mechanisms with unstructured information, such as documents, where people, including the vendors, interact, negotiate, decide, and finally execute. Collaboration can be supported by electronic means. In this case we talk more and more of e-Collaboration. It is related to operational planning (demand forecasting, inventory management, monitoring, and control) as well as the level of development of new products and quality management, with the ultimate goal of improving the effectiveness, efficiency, and economics of processes through the sharing of knowledge and information. E -Collaboration includes all the activities of a collaborative nature between clients and vendors, in terms of production planning and supply, new product development, and so forth (for instance, collaborative planning, forecasting and replenishment, and vendor managed inventory). A powerful way to enhance collaboration is to use social networks. They are internet solutions which connect a set of actors (both individuals and organizations) and create dyadic ties between them. In the area of procurement, social networks provide a framework for collaboration between procurement operators, vendors and users of products and services. This community supports the process of relationship with vendors. It allows organizations to move from a supply to a partnership relationship with mutual benefits and the setting of digital communities with their partners.

217

B.Nicoletti

4 Results
In order to use all these new solutions, it is necessary to adopt an advanced architecture (shown in Figure 2).It is based on cloud computing, and in particular with the SaaS mode. This solution assures the proper connection with the organization, the customers, the vendors, and the partners, anytime, anywhere, and from any device.

Figure 2 An Architecture for e-Procurement

The architecture is based on the following modules made accessible in the cloud from an organization app store. The ERP manages the basic processes connected with the enterprise and specifically with the procurements. The e-Procurement components integrate the ERP with a series of advanced modules. The e-Procurement system can be divided into two main areas: e-Sourcing: this defines the technical and economic requirements of the product until the time of order. There are several sub-processes: from the solicitation of an offer to be sent to the vendor, the collection of published offers and the selection of the vendor. The chosen vendor must engage in contractual terms with the organization. The e-Sourcing should provide support to the whole process P2P (Procure to Pay): Streamline and automate the entire process from the acquisition request up to the payment of the invoice to the vendor; Develop the documentation (such as functional and technical specifications orders, invoices, manuals, and so on) in electronic formats to avoid duplication and continuous update of the contents; Facilitate the vendors to generate electronic invoices and manage catalogs online. e-Supply Chain Management to support the operations of the supply and a continuous assessment.

An Architecture and Best Practices of e-Procurement Each of these macro areas can be broken down into several specific areas. E-Sourcing can be split into: Processes to purchase products or services in limited quantities and specifications (eTendering). They include all activities from the search for new vendors, their qualifications and certification, negotiation itself (based on tools such as the request for information/proposal/quotation and the online auctions); Repetitive purchasing processes (E-Catalog), web-based catalogs, products or services already defined, specified, and contractualized. It thus refers normally to standard and indirect products; Purchasing processes on the market (e-Marketplace); Management of vendors and contracts (Vendor Management).

The e-Supply Chain Management can be broken down into the following areas: The transportation management system which supports the logistics operations after the issuance of the order. It includes transportation management up to the storing of the goods or the delivery of the services; The warehouse management system which supports activities related to the storing of goods; The e-Supply Chain Execution supports the operational and administrative processes with the goal of making automated and integrated interfaces between the operators and the phases of operations.

At the basis of all these components is a module of e-Collaboration which supports the relationships within the organization and with the third parties (be those vendors, partners, or clients). The ERP manages the stream of the physical supplies (bet them goods or services). In its connection, there should be a module to take into account the Finance Supply Chain. All the processes should be managed by a module of Business Process Intelligence which helps extract, summarize, and display the data and supports the workflows to manage the processes. All the modules should be connected with a Big Data base, which will manage all the contents, be them structured or unstructured (such as documents, emails, and so on). The data will be in the cloud or on-premise based on security, compliance, and performance. Finally a module of Access and Security manages the access and the protection of the system. transmission, and interfaces from external or non-properly authorized intrusions. The correct implementation of Lean Procurement should be done combining process optimization and automation using the method of Lean & Digitize, as shown in Figure 3 (Nicoletti, 2012).

219

B.Nicoletti

There is no doubt about the usefulness of this approach. This has been demonstrated in the field at many organizations. In attempts to use this approach, often it is not given due importance to the improvement of the processes and especially to the people who have to use them. The introduction of Lean Procurement requires a cultural change. It order to make the procurement process simpler and more immediate to manage, it is essential to transfer the benefits to the staff that will be required to use them, so that the success is guaranteed.

5 Benefits and Challenges

Cloud Computing promotes shared collaboration and a greener environment while reducing the need for expensive equipment. It provides also other benefits in connection with the proposed architecture: Flexibility; Security and Data Privacy; Capital investment and (potentially) expense cost saving; Easiness of implementation and usage; Resources elasticity and expandability (such as manpower and energy savings); Increased efficiency.

The challenges connected with the proposed architecture are to assure: Cultural changes; Availability of the applications, platforms, network, and infrastructure; Security, privacy, and trust issues; Reliability; Controllability.

An Architecture and Best Practices of e-Procurement Cloud computing e-Procurement tools bring - directly or indirectly - significant intangible benefits: The guarantee of transparency in relations to supply undertakings; The attention to environmental sustainability and green public procurement; The search for new sources; Efficiency by aggregating the needs of most organizations with similar needs, and the modernization and reorganization of the extended supply chain besides internal processes; The opportunity to optimize the effectiveness of e-Procurement processes through the use of various tools best suited to the specific cases.

6 Further Research
An interesting question is relative to what comes after the Lean Procurement, as a method rather than as a set of tools. Lean is a "means" not a "goal" for the organizations. In a situation of great turbulence and uncertainty, the objective for the organizations is to become more agile. The real target is an e-Procurement which supports agility. The key objective of procurement management is to have processes that are able to provide flexible capacity planning, collaboration, and execution of procurement processes based on contextual information and relevant documents. Greater agility should allow the organizations seizing the opportunities offered by the market and ensuring that procurement processes do not prevent the organizations to adapt to the increasingly rapid changes in the markets and those of supply. Some factors necessary for the realization of an agile procurement are. Flexibility; Visibility; Control; Integration

The definition and detail of an agile e-Procurement require further research and experimentation.

7 Conclusions
This paper presents a cloud computing architecture for Lean Procurement, which expands on earlier developments combining new technologies in order to create interoperable communities of e-platforms. The development of eProcurement is expanding in public and private organizations. It is important to have a clear vision of the final target architecture and to develop it through several generations. The proposed cloud computing architecture for eProcurement brings a series of benefits. The analysis results show that a significant flexibility and cost reduction is achieved by implementing Software as a Service scheme cloud computing in eProcurement

221

B.Nicoletti system. The main reason for such a use has been economics. As a matter of fact, eProcurement in combination with cloud computing is much more than just a new technology or a saving model. It can change the culture of he organization, products, processes, organizations, and business models (Nicoletti, 2013). The development of web-based e-Procurement changes the way companies work. However, due to the reliability of connections, security, and interoperability issues, the main problems of distributed data and information management across companies and projects are still challenging.

References
.Albrecht, C., Dean, D., Hansen, J. (2005), Marketplace and technology standards for B2B e-commerce: progress, challenges, and the state of the art, Information and Management, 42. .Armbrust, M. et al. (2009), Above the Clouds: A Berkeley View of Cloud Computing, Technical Report No.UCB/EECS-2009-28. .Bartezzaghi, E., Ronchi, S. (2004), A portfolio approach in the e-purchasing of materials, European Journal of Purchasing and Supply Management, 10, pp. 117-126. .Bartezzaghi, E., Ronchi, S. (2005), E-sourcing in a buyer-operator-seller perspective: benefits and criticalities, Production Planning and Control, 16(4), pp. 405-412. Bertel, U., Rangone, A. (2005), eProcurement, eSupply Chain: una scelta tattica o strategica?, School of Management Politecnico di Milano, Milano. .Chopra, S., Dougan, D., Taylor, G. (2001), B2B e-commerce opportunities, Supply Chain Management Review, May/June, pp. 50-58. .Clarke, I., Flaherty, T. (2003), Web-based B2B portals, Industrial Marketing Management, 32. .Croom, S.R. (2000), The impact of web-based procurement on the management of operating resources supply, The Journal of Supply Chain Management, Winter. .Davila, A., Gupta, M., Palmer, R. (2003), Moving procurement systems to the internet: the adoption and use of e-procurement technology models, European Management Journal, 21(1), February. .Dimitri, N., Piga, G., Spagnolo, G. (2006), Handbook of Procurement, Cambridge University Press. .Durgesh P., Sharma M.K. (2009), Cloud Computing " ,CSI Communication -2009, 32(10), pp. 10-13. .European Commission (1997), European Initiative in Electronic Commerce, COM(97) 157, April, chapter 1. Also available at http://www.cordis.lu/esprit/src/ecomcom.htm. See also related publications at www.ispo.cec.be/ecommerce/. .European Commission (2004), Communication to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions. Action plan for the implementation of the legal framework for electronic public procurement. .European Commission (2004), On the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, Directive 2004/18/EC of the European Parliament and of the Council, 31 March. .Forrester Research (1997), Sizing Intercompany Commerce, 28 July. See also www.forrester.com. .G7-10 WG (1997), Electronic Commerce Better Practice, case study book of the G7 Global Marketplace for SMEs Pilot Project, first edition April. A Web version can be found atwww.ispo.cec.be/ecommerce/bonn.html.

An Architecture and Best Practices of e-Procurement

.Galih, S. (2011), Cloud Computing Approach for IT Cost Reducing in Indonesia Government's eProcurement System: Case Study Jawa Barat e-Procurement System Unit (LPSE Jabar Indonesia), ICID 2011 Conference, 26 November, Yogyakarta, Indonesia. .Gaudeul, A. and B. Jullien (2001): E-commerce: Quelques elements deconomie industrielle. Revue Economique, 52, pp. 97117. .Grilo, A., Jardim-Goncalves, R. (2010a), Changing e-procurement in the AEC sector with BIM, Proceedings of the CIB W78 2010: 27th International Conference Cairo, Egypt, 16-18 November. .Grilo, A., Jardim-Goncalves, R. (2010b), Electronic public procurement of construction and public works: towards a new reality, Journal of Public Procurement, 10(3). .Grossman, R. L. (2009), The case of cloud computing, IEEE-2009, Cloud Computing: First International Conference, CloudCom 2009, Beijing, China. .Hartley, J., Lane, L., Hong, Y. (2004), An exploration of the adoption of e-auctions in supply management, .IEEE Transactions on Engineering management, 51(2), May. .Heek, R.(2006), Implementing and Managing E-Government., Vistaar Publication., New Delhi, India. .Janssen, M., Cresswell, A. (2005),Enterprise Architecture Integration in E-Government, Proceedings of the 38th Annual Hawaii International Conference on System Sciences, 3 January. .Jullien, B. (2005): Two-Sided Markets and Electronic Intermediaries. CESifo Economic Studies, 51 (2 3), pp. 235 262. .Jullien, B. (2006): Pricing and other business strategies for e-Procurement platforms, in N. Dimitri, G. Piga and G. Spagnolo (eds.), Handbook of Procurement, Cambridge University Press. .Kalakota, R. (2000), Next-generation B2B solutions, Supply Chain Management Review, July/August. .Kaplan, S., Sawhney, M. (2000), E-hubs: the new B2B marketplaces, Harvard Business Review, MayJune, 97-103. .Kim, J., Shunk, D. (2004), Matching indirect procurement process with different B2B e-procurement systems, Computers in Industry, 53. .Larsen, T., Kotzab, H., Grieger, M. (2003), Electronic marketplaces and supply chain relationships, Industrial Marketing Management, 32. .Lucking-Reiley, D. and D. F. Spulber (2001): Business-to-Business Electronic Commerce, Journal of Economic Perspectives, 15 (1), pp. 55-68. .Marawar, T., Kale, S., Araspure, K. (2010), e-Governance, International Conference on Data Storage and Data Engineering, Bangalore, India, 9-10 February. .Maria, A. F., Fenu, G., and Surcis, S. (2009), An Approach to Cloud Computing Network, in Proceedings of the 3rd International Conference on Theory and Practice of Electronic Governance, Bogota, .Colombia, 1013 November, pp. 409410. .Meyer, T., (2011): E-Procurement, Deutsche Bank Research Paper, retrieved from http://www.dbresearch.de/PROD/DBR_INTERNET_DE-PROD/PROD0000000000269867.PDF, access on 8 February 2013. .Mithas, S. and J. L. Jones (2007): Do Auction Parameters Affect Buyer Surplus in E-Auctions for Procurement?, Production and Operations Management, 16 (4), pp. 455470. Moon, M. J. (2005): E-procurement Management in State Governments: Diffusion of E-procurement Practices and its Determinants. Journal of Public Procurement, 5 (1), pp. 54-72. .Neef, D. (2001), E-procurement: From Strategy to Implementation. Prentice Hall, Upper Saddle River, NJ, USA. .Nicoletti, B. (2012), Lean and Digitze, Gower Publishing, Abingdon, UK. .Nicoletti, B. (2013a), Cloud Computing and Financial Services, Palgrave-McMillan, London, UK. .Nicoletti, B. (2013b), Lean Procurement, FrancoAngeli, Milano, Italy.

223

B.Nicoletti
.Panda, P., Sahu, G.P. (2012), E-Procurement Implementation: Critical Analysis of Success Factors Impact on prject Outcome, Working Paper. .Phillips, P., Piotrowicz, W. (2006), e-Procurement: How does it enhance Strategic Performance?, Working Paper No. 113, Kent Business School, April. .Pokharel, M. Park S.S. (2009), Cloud computing: future solution for e-governance, Proceeding of the 3rd international conference on Theory and practice of electronic governance, pp. 409-410. Prier, E., Cski , C., McCue, C. (2012), The efficacy of applying maturity models to public e- procurement th and e-Government, Proceedings of the 5 National Conference, Seattle, USA, 17-19 August. .Scuola di Management del Politecnico di Milano (2012), Osservatorio Agenda Digitale, Smau, Milano, Italy. .Simpson, M. and A. J. Docherty (2004): E-commerce adoption support and advice for UK SMEs, Journal of .Small Business and Enterprise Development, 11 (3), pp.315-328. .Somasundaram, R. (2004), Diffusion of e-Procurement in the Public Sector: Revisiting Centralized vs. Decentralized Debates As a Twist in the Tale, Proceedings of the 13th European Conference on Information Systems. .Somasundaram, R., Galih, S. (2012), Cloud computing scheme for lower IT cost in Indonesian government's eprocurement system, International Journal of Information and Communication Technology, Vol. 4, No. 24, pp. 187-197 .Somasundaram, R., J. Damsgaard (2005), Policy Recommendations for Electronic Public Procurement, Electronic Journal of e-Government, 3 (3), pp.147-156. .Stamison C.M., Campbell, A., Winkler, M. (2011), "Beyond EDI: An Agent's Role in the Cloud". Proceedings of the Charleston Library Conference. .Subramaniam, C. and M. J. Shaw (2004): The effects of process characteristics on the value of B2B eprocurement, Information, Technology and Management, 5 (1-2), pp.161-180. .Tavares, L.V. (2011), A strategy to reduce public expenditure based on e-tendering and procurement Business Intelligence: The case of Portugal, Eva paper. 3 May. .Tewari, N., Sharma, M.K. (2011),Towards e-Governance Framework in India using Cloud Computing Research Note #98-21, Proceedings of the 5th National Conference, INDIACom-2011, Computing For Nation Development, New Delhi, India, March 1011. .Timmers, P. (1998),Business Models for Electronic Markets, CommerceNet Research Report, 9 September. .Williams, R. (2006): Generalized ordered logit/partial proportional odds models for ordinal dependent variables. The Stata Journal, 6 (1), pp. 58-82. .Youseff, L., Butrico, M., and DaSilva, D. (2008),Towards a Unified Ontology of Cloud Computing. Grid Computing Environments Workshop , GCE08, pp. 1-10. .Zhang, S., Zhang, S., Chen, X, Huo, X. (2010), Cloud Computing Research and Development Trend, 2010 Second International Conference on Future Networks. .Zhou L., Zhu, Y., Lin Y., Bentley, Y. ( 2012), Cloud Supply Chain: A Conceptual Model, The 17th International Working Seminar on Production Economics, 20-24 February, Innsbruck, Austria.
, ,

The potential of e-tendering data to improve post-award contract management

Jos A. Antunes Ferreira and Ricardo C. Ribeiro de Spnola

Section 1 Introduction
The European Directive 2004/18/EC, of 31 March 2004 establishes provisions regarding awarding processes. The Directive enforces the principles of the Treaty of the European Union in particular the principle of freedom of movement of goods, the principle of freedom of establishment and the principle of freedom to provide services and to the principles deriving therefrom, such as the principle of equal treatment, the principle of non-discrimination, the principle of mutual recognition, the principle of proportionality and the principle of transparency. However, the Directive does not establish specific rules for contract execution which would allow for the enforcement of the principle of competition. This principle is not referred in the Directive but is considered essential by many authors despite not being indicated in the Directive (Oliveira, 2008). The paper develops an analysis of four large-scale litigation processes in order to attain a list of most common problems which result in contractual conflicts. Each problem is analysed and categorized. For each issue category, various instruments are suggested in order to provide for a comprehensive electronic contract management tool during contract execution. The tool incorporates contract and Law norms.

Section 2 Analysis
The present section describes conflicting situations in works construction contracts collected in four litigation processes in relation to which the authors have provided technical, time and cost management forensic support in a recent past. The first contract analysed (first case study) relates to the construction of a highway (Portugal, 2008). The authors provided technical support relating mainly to delays in the contract execution. The delays described later were not all proven in a court of law. Nevertheless, as it is the authors belief, a problem encountered does not have to be demonstrated or proven in order for it not to be an issue for contract management purposes. Furthermore, contract management must account for unproven or even unfounded conflicts arousing from a contract, since contract management should, among other objectives, contribute to preventing litigation processes, may they be legitimate or not. The following motives for contract delays were presented by the construction company: 1. Protected trees species were located in the future highway corridor. This situation had not been accounted for during the tendering process. According to the construction company, this unexpected event resulted in severe delays in the contract execution. However, the appropriate resources needed not be mobilized previously because this fact was known at the beginning of contract execution. Therefore, direct resources immobilization or sub productivity

225

The potential of e-tendering data to improve post-award contract management would not be an issue, but only a global delay would eventually result leading to higher indirect management and works support costs. 2. Archaeological findings interrupted the works in some segments of the highway and for several months. This event had consequences in the direct resources because those were fully operational and working at the time of the findings. Additionally, as in the previous situation, a global delay would eventually take place resulting in higher indirect management and works support costs. 3. Design flaws were identified during construction works preparation and design modifications were made during contract execution. These events may or may not have consequences in the direct resources allocated to the works depending on the moment the design corrections or modifications were made available to the construction company for proper works preparation. As a result, an answer to this kind of event (cf. section 3.) should take into consideration time management issues which are not always comprised in construction works contract norms. Additionally, as in the previous situations, a global delay might occur which would result in higher indirect management and works support costs. 4. Land lots were not made available according to plan. Again this problem might be an issue regarding direct resources if those were already in place to begin the works. Additionally, as in the previous situations, a global delay might occur which would result in higher indirect management and works support costs. The second contract analysed (second case study) relates to the construction of residential buildings (Lisbon, Portugal, 2008). The authors provided forensic support relating to technical problems and delays during contract execution. The following motives for contract cost increases and delays were presented by the construction company: 1. Clarifications regarding design documents were presented late and were vague. This resulted in the interruption of the construction works. This issue is frequent in construction works, as these following case studies will confirm, and is related to a common difficulty in construction management (from both the contractors and the construction companys point of view): where does design end and where do building drawings and production preparation begin. The limit between the two roles is established in public law regarding the obligations of the design and construction companies. However, on the one hand, some design companies encounter difficulties in understanding specific construction issues and, in the other hand, some construction companies encounter similar difficulties in dealing with theoretical design documents. 2. Some specific construction works were executed which had not been agreed upon during the tender process. Since the works and prices were undefined, a negotiation took place leading to further delays. This is another common problem faced by public or private contractors. The Portuguese Law (for public contracts but applicable to private contracts if accounted for in the contract norms) provides an answer to this problem: the construction company has the obligation of performing the works even if an agreement is not reached leaving the unresolved matters (new works, prices or delays) to a final phase of the contract. 3. Design was altered during the construction works execution (as in the previous case study). This issue is becoming rarer in public contracts due to the enforcement of the principle of equal treatment which prevents changes in the contract execution when those are not accounted for in the contract norms. Nevertheless, some public contracts take into account

J.A.A.Ferreira and R.C.R. Spinola the possibility of changes during contract execution, making the contract flexible to newly obtained information or to information which would only be available during contract/works execution. As for private contracts, design changes are more frequent, as it was the case in this contract and as it was foreseen in its norms. 4. The private contractor made several demands regarding materials to be used in the buildings, namely regarding finishing materials such as bathroom stones in walls or equipment models to be installed. Again, this is a common situation in private contracts. Unfortunately, private contractors do not always provide for the changes in the contract norms; those are frequently unaccounted for by construction companies unless stated in the contract norms. The following motives for contract cost increases and delays were presented by the private contractor: 1. The construction works management team was changed during contract execution. Contract norms usually provide some answers or concrete methods for changing part of the works management team, with or without contractual penalties. Nevertheless, it is common to begin construction works with a different manager than the one indicated in the proposal. It is however understandable since managers are seldom unoccupied and awaiting for new works contracts to begin. 2. The construction company made an excessive amount of demands concerning design documents in order to avoid proper and in time responses from the design team (hired by the private contractor). This is one of the hardest problems to measure and control from the contractors point of view. Where are the limits to demands for clarification? How incomplete must be the design for it to need extensive clarification? There are no general answers to this problem. Still, some solutions may mitigate its effects, as will be seen in the next section. 3. Some construction errors were made by the construction company resulting from insufficient preparation, namely from not having elaborated a production plan and all the detailed drawings as established in the contract norms. Again, the question of where design ends and where building drawings and production preparation begin arises. A general solution can be found using the (Portuguese) public law regarding the obligations of the design and construction companies. 4. The construction company made several demands regarding design changes in order to improve production and reduce losses (or increase benefits). Both private and public contractors are usually receptive to changes if those bring better quality, shorter durations or lower costs. However, those changes frequently result in side effects such as overall delays or decreased quality inherent to cost reduction measures. 5. The construction works management team was ineffective due to the lack of proper allocation to the construction works (according to the private contractor). Again, contract norms usually provide some answers or concrete methods for insufficient management team members or allocation. The third contract analysed (third case study) relates to the construction of a highway in Lisbon periphery (Portugal, 2011). The authors provided forensic support relating mainly with delays during contract execution. The following motives for contract cost increases and delays were presented by the construction company:

227

The potential of e-tendering data to improve post-award contract management 1. Design chapters, which were the construction companys duty, were, for some part, approved late according to contract norms and overall construction plan. This is a frequent issue in construction works contracts where the design is an obligation of the construction company and not the contractors. Usually, the former attributes responsibilities to the later and vice-versa regarding the delays in the analysis and the bad design quality, respectively. This issue, not referred until now, is frequent and does not have a general answer since there is no measure for bad designing and consequent slow analysis. However, contract norms must account for extreme situations where the design does not answer contract norms and where approval durations have to be increased in those situations. 2. Land lots were not made available according to plan. This problem might be an issue regarding direct resources if those were already in place to begin the works. Additionally, a global delay might occur which would result in higher indirect management and works support costs. 3. The two previous events described had consequences in the construction plan and led to frequent re-planning of the construction works. As a result, the human and equipment resources had to be reorganized which lead to additional costs. The forth contract analysed (forth case study) relates to the construction of a road in one of the Azores islands (Portugal, 2012). The authors provided forensic support relating with technical problems and delays during contract execution. The following motives for contract cost increases and delays were presented by the construction company: 1. Design chapters, which were the construction companys duty, were, for some part, approved late according to contract norms and overall construction plan. As said previously, contract norms must account for extreme situations where the design does not answer contract norms and where approval durations have to be increased in those situations. 2. Land lots were not made available according to plan. Again this problem might be an issue regarding direct resources if those were already in place to begin the works. Additionally, as in the previous situations, a global delay might occur which would result in higher indirect management and works support costs. 3. Detailed drawings and production plans were made available to the public contractor who assumed as his right to ask for changes in those solutions though contract norms or Law would allow it only in a limited manner. As a consequence, additional works and laboratory tests were performed leading to increased costs and durations. 4. Tender documents lacked precision regarding soil texture, structure, consistency and other characteristics. Furthermore, time given for a proper analysis of soils nature and land shape had been insufficient to allow proper technical analysis, planning and budgeting. As such, a solution regarding these problems should take into consideration the tendering phase of the procurement, not only the contractual phase. 5. As a result of the previous issue, soil requirements increased sharply which led to the difficulties in finding quality soils in a small island. Construction costs and durations increased as a consequence. 6. A road intersection had to be changed due to emergency management needs related to a future use of a land lot in the road corridor.

J.A.A.Ferreira and R.C.R. Spinola 7. The construction company made several demands regarding design changes in order to improve production, reduce losses (or increase benefits) and increase quality. Some of those changes were not accepted despite being suggested in the contract norms. Others were accepted and resulted in a cost increase. Since some of the works and prices were undefined, a negotiation took place but an agreement was not obtained. Nonetheless, this problem did not lead to delays since the construction company complied with the Law which postpones the resolution of disagreements until a final phase of the contract execution. Somehow, the final phase was also postponed until the litigation process. 8. Imprecise and incomplete information was given to the construction company during the tender process regarding electricity and water infrastructures. This situation led to an increase of the construction costs. 9. Inspection services and traffic signs had to be intensified in order to respond to the construction site situation (spatially and timely segmented works) resulting from the previously described problems. 10. Overall delays resulting from the problems encountered described previously. 11. Overall costs increase resulting from the problems encountered, which the contract norms did not consider. In fact, the contract was a lump-sum (fixed-price) contract whereas it should have been a time and material contract in which payments would have been made in a peritem basis in order to respond to the many changes resulting from inaccurate initial information. This recommendation has also been defended by Albano (2006). Table 1 summarizes the issues described earlier for each of the case studies.

Number of situations Type of issue Design, tender documents, tender duration or other information flaws Availability of land lots (for any motive) Design changes from contractors initiative Design changes from construction companys initiative Inaccurate or late design clarifications Excessive demands for clarifications on design Late design approval Contractors demands regarding materials or methods New works unaccounted in contract norms Construction errors Change or insufficient construction companys team Delays and need for re-planning and reorganization 1 1 1 1 2 1 1 1 CS1 1 3 1 1 1 1 1 1 1 2 1 2 1 CS2 CS3 CS4 5 1 Total 6 5 1 3 1 1 2 3 2 1 2 4

Table1 Summary of conflicting situations in works construction contracts (four case studies - CS), organized by type of issue.

229

The potential of e-tendering data to improve post-award contract management

Section 3 Results
The present section describes post-award contract management solutions for each situation faced in the litigation processes described in the previous section, using electronic contract management tools. 1. Design, tender documents, tender duration or other information flaws The electronic contract management tool should take its source in a tender process management electronic tool which would support the contractor in: Verifying if the information provided to the tenderers is complete in order for them to proceed with the design or the construction (depending on whose responsibility it is to make the design); Verifying if the time given to prepare the proposal is enough in order to allow study, planning and budgeting.

The electronic contract management tool should account for: A communication system between the parties which would ensure that the lack of information would be analysed by both and discussed in order to prevent additional conflicting; The communication system should be organized by design chapters and each clarification would be registered in appendix to the respective chapter.

2. Availability of land lots (for any motive) Regarding this issue, the electronic contract management tool should account for: Deadlines for land lots availability as indicated in the contract norms; Allow for communication between the parties in order to identify at early stages problems concerning land use for construction, such as archaeological findings or natural restrictions, which would then allow for re-planning within certain limits; For each land lot, the tool would indicate its status regarding the contract, whether within schedule or not, and in the later situation the date and terms of acceptance and related communications.

3. Design changes from contractors initiative and construction companys initiative Regarding this issue, the electronic contract management tool should account for: A communication system between the parties which would ensure that the changes would be analysed by both and discussed within certain time limits in order to prevent conflicting;

J.A.A.Ferreira and R.C.R. Spinola The tool would have to allow for the register of the consequences of the change in terms of time and cost; The communication system should be organized by design chapters and each change would be registered in appendix to the respective chapter; For each change, the tool would indicate its status regarding the contract, whether within or outside the contract norms, and in the later situation the date and terms of acceptance and related communications.

4. Inaccurate or late design clarifications In complement to the previous instruments, the electronic contract management tool should account for: A register of design clarifications (by either party, according to design responsibilities); The possibility of communication regarding the clarifications, namely concerning inaccuracies; The communication system should be organized by design chapters and each change would be registered in appendix to the respective chapter; A time limit analysis providing guidance to both parties on the consequences of providing late information in regards to the works plan.

5. Excessive demands for clarifications on design Regarding this issue, the electronic contract management tool should account for: Time limits for response considered in the contract, assuming that time given to clarify design ambiguities is calculated automatically and summed. Therefore conditions are created to limit clarifications demands to a minimum and to provide time for accurate clarification.

6. Late design approval Regarding this issue, the electronic contract management tool should account for: A register of design approvals; Deadlines for design approval as indicated in the contract norms; The possibility of communication regarding the design analysis, namely concerning inaccuracies; The communication system should be organized by design chapters and each change would be registered in appendix to the respective chapter; A time limit analysis providing guidance to both parties on the consequences of providing late information in regard to the works plan.

231

The potential of e-tendering data to improve post-award contract management

7. Contractors demands regarding materials or methods Regarding this issue, the electronic contract management tool should account for: Contract and Law norms regarding this issue, indicating the extent of participation of the contractor in these decisions; A register of demands for information or decisions regarding materials or methods; Deadlines for methods or materials approval as indicated in the contract norms; The possibility of communication regarding methods or materials; The communication system should be organized by design chapters and each change would be registered in appendix to the respective chapter; A time limit analysis providing guidance for to parties on the consequences of providing late information in regard to the works plan.

8. New works unaccounted in contract norms Regarding this issue, the electronic contract management tool should account for: A register of demands for new works execution, with prices (proposed, counter proposed, agreed, not agreed), quantities and time consequences; A register of communications between the parties, namely the order of execution and if the order is made with or without a formal agreement concerning the new prices (according to public Law or the contract); A time limit analysis providing guidance to both parties on the consequences of providing late information in regard to the works plan.

9. Construction errors Regarding this issue, the electronic contract management tool should account for: A register of errors identified by the inspection team and time for correction; A register of communications between the parties, namely the order for correction; A time limit analysis providing guidance to both parties on the consequences of late execution in regard to the works plan.

10. Change or insufficient construction companys team Regarding this issue, the electronic contract management tool should account for: A register of team members modifications, either at the construction companys demand or identified by the inspection team; A register of communications between the parties, namely contractual failure by the construction company and consequent penalties;

J.A.A.Ferreira and R.C.R. Spinola A time and qualifications limits analysis providing guidance to the construction company to prevent for irregular changes in the team.

11. Delays and need for re-planning and reorganization Regarding this issue, the electronic contract management tool should account for: A register of the works progress compared to plan, made both by the construction company and the inspection company; this register should promote immediate dialog in order to correct contradictory information; An automatic register of contractual failures by either party (according to the previous instruments and other contract verification tools) and possibility of response by the other party; Automatic information regarding the consequences of late decisions or late information by either party, in order to support re-planning; The initial plan and, if applicable, new plans and if those were accepted or not by the contractor; A register of communications between the parties.

Section 4 Conclusions
The paper developed an analysis of four large-scale litigation processes in order to obtain a list of most common problems which resulted in contractual conflicts. Each problem was analysed and categorized. For each issue category, various instruments were suggested in order to provide for a comprehensive electronic contract management tool during contract execution. The tool features should be developed in accordance with the contract norms and the Law. The tool also should take into consideration continuous learning through a statistical analysis of the events registered during the contracts for future improvement purposes. Finally, in addition to better contract management, the tool induces: Lower likelihood of lawsuits; Easier inspection by Courts of Auditors enforcing the principle of competition during contract execution.

233

The potential of e-tendering data to improve post-award contract management

References
.Oliveira, R. E., 2008, Os Princpios Gerais da Contratao Pblica, in Estudos de Contratao Pblica I, Coimbra Editora .Albano, G. L., Calzolari, G., Dini, F., Iossa, E., Spagnolo, G, 2006, Procurement Contracting Strategies, in Handbook of Procurement, Cambrige Editors

On e-negotiation processes for PPPs procurement

Ricardo C. Ribeiro de Spnola and Jos A. Antunes Ferreira

Section 1 Introduction
The paper develops an analysis of three large-scale PPPs in the health sector for the construction and operation of hospitals (the case studies). The second section of the paper describes the evaluation model and the negotiation process in its different stages. The third section describes the use of an electronic tool to enhance the negotiated process within the negotiated procedures. The electronic tool aims at allowing for proper registers and warnings enabling all parties to fulfil their role in the process.

Section 2 Analysis
This section describes the analysis made to the negotiation process within the negotiated procedures to contract three PPPs in the health sector for the construction and operation of hospitals. The first part of the section describes the evaluation model used in the three negotiated procedures. The second part of the section describes the negotiation process in its different stages. Sub-section 2.1 The evaluation model The evaluation model is based in multi-criteria decision analysis methodologies. As such, a set of criteria was defined according to the decision makers objectives (in this case the Ministries of Health and Finance) within the context of the contract and tender process. Therefore, an extensive set of objectives were not integrated in the evaluation model but was instead incorporated in the specifications as mandatory. The objectives included in the evaluation model, which would distinguish the best proposal from the remaining, were organized according to a simple and intuitive global structure with two main criteria: Quality; Price.

This paper will not enter into some details of the model, such as the weights and their calculations, since it is not the aim of the analysis. The Quality criterion is divided into several sub-criteria which, for some, are again divided into 3rd and 4th level criteria. Finally some of the lower level criteria of the decision tree (at a 2nd, 3rd or 4th level, according to the structure) make use of different sets of characteristics which were not weighted since judgmental independence would not be guaranteed if otherwise made (Belton, V., 2002). The sub-structure of the model regarding the Quality criterion is described below. The lower level criteria are underlined. The characteristics are in italic.

235

On e-negotiation processes for PPPs procurement Infrastructures and equipments Architecture Organization, flexibility and image Organization and relationships between functions Flexibility for functional reorganization, for internal space adaptation and expansion Image and architectural conception Conception of outer-spaces Technical facilities and equipment Sanitation facilities and equipment Mechanical facilities and equipment Electrical facilities and equipment Centralized technical management Integrated safety General equipment Maintenance Earthworks, retaining structures, foundations and structures Services Sterilization service Meals service Laundry service Cleaning service Waste management service Safety service Infestation control service Auxiliary activities Utilities services Car parking service Financial and legal structure Financial structure Legal structure The Price criterion is based in a value function in which the performance scale is a sum of three NPV (Net Present Values). The first NPV is calculated using the cash-flows of the payments proposed by the tenderers (in-flows for the tenderer) related to the building availability. The second NPV is calculated using the weighted sum of the three other NPVs which incorporate different scenarios of risk and allow for a certain degree of mitigation of the risk transferred to the private party for three services which vary according to the hospital level of occupation. The third NPV is calculated using the cash-flows of the payments proposed by the tenderers

R.C.R. Spinola and J.A.A.Ferreira (in-flows for the tenderer, as in the previous NPVs) related to services which do not vary according to the hospital level of occupation. Every criterion at the lower level of the decision tree makes use of a value function which transforms the performance measurement into partial values within the criterion. Both scales of the value functions (being the performance measured using a quantitative or a qualitative scale), performance scale or value scale, are defined using the following reference levels: Maximum performance (ideal performance in the criterion and partial value of 10); Good performance (good performance in the criterion and partial value of 8); Neutral performance (not positive nor negative evaluation in the criterion and partial value of 5); Minimum performance (minimum performance in the criterion and partial value of 0).

The evaluation model is used in two different stages of the negotiated procedure: After the initial proposals have been received in order to select two for the negotiation process; At the end of the negotiation process when the final proposals have been received in order to select the best proposal.

The reference performance levels indicated earlier are relevant for the evaluation of the proposals in any procurement procedure but even more so in a negotiated process where the final proposals evaluation must be coherent with the initial proposals, as will be explained in the next sub-section. Sub-section 2.2 The negotiation process The negotiation process is aimed at improving the initial proposals of the two tenderers selected (using the evaluation model) in the previous stage of the procedure. One of the assumptions of the process is that the final proposals cannot have an overall evaluation (using the model) inferior to the one obtained with the initial proposal. In Kennedys list of considerations in the preparation for a negotiation (Kennedy, 1991), only two negotiable variables are at stake in this process: A lower price; Changes in quality.

The negotiation process is organized in eight stages (not formally, but it is assumed in this paper for clarity purposes). The stages are the following: 1. Handling of information to the tenderers regarding their proposals; 2. Selection of which parts of the proposal to improve communication; 3. Selection of which parts of the proposal to improve meeting and register;

237

On e-negotiation processes for PPPs procurement 4. Solutions for improvement of the proposals communication; 5. Solutions for improvement of the proposals meeting and register; 6. Handling of final proposals; 7. Final proposals evaluation; 8. Exclusion of proposals and selection of others (if applicable). Each of the stages is described and explained in the following paragraphs. 1. Handling of information to the tenderers regarding their proposals At this stage of the negotiation process tenderers receive information regarding the evaluation of their proposals which led to their selection for the negotiation. Evaluation information is contained in a report which was also made available to the unselected tenderers. This report is elaborated in conformity with the Law. Additionally, the contracting authority prepares a report for each participant containing desired improvements to each proposal and referring the related criteria where the evaluation can increase. These reports detail where each proposal should be improved in order to increase its performance in regard to the evaluation model and to increase its value for the contracting authority. Finally, a communication is made to the tenderers asking for a summarized document describing which parts of their proposal they will improve during the negotiation process (handled by the tenderers in the next stage). 2. Selection of which parts of the proposal to improve communication At the second stage, tenderers develop a summarized document describing which parts of their proposal they will change during the negotiation process. The scope of the change is independent of the second report received in the previous stage. However, the potential to improve a proposal is better assessed by the contracting authority, being therefore wise to follow at least some of the recommendations made. 3. Selection of which parts of the proposal to improve meeting and register The third stage aims at establishing an agreement between the contracting authority and each tenderer regarding the parts of their proposals that can be changed during the negotiation process. The agreement is made in a meeting with each tenderer where a final list of characteristic of the proposal is recorded. Future changes to each proposal must be on the list for them to be accepted. 4. Solutions for improvement of the proposals communication Based on the list agreed at the previous stage, the tenderers elaborate a corresponding list of solutions indicating their course of action to improve the proposals. This information is relevant at this stage since most part of the proposals is evaluated in qualitative terms regarding mainly technical features of the building or of the services. Hence, a description of the solution is an effective tool to provide a good insight over the final proposal.

R.C.R. Spinola and J.A.A.Ferreira 5. Solutions for improvement of the proposals meeting and register The fifth stage aims at establishing an agreement between the contracting authority and each tenderer regarding the solutions potential for improvement and a compromise of the tenderer towards incorporating the solution in the proposal. The agreement is made in a meeting with each tenderer where a final list of solutions is registered. Again, future improvements to each proposal must be on the list for them to be accepted. The tenderers are informed of the limit date for proposals submission. 6. Handling of final proposals The tenderers elaborate their final proposals according to the solutions list agreed at the previous stage. The final proposals should only incorporate the items described in the list. Other unchanged parts of the proposals are referred to as unchanged, not being necessary for the tenderers to repeat the same information in their proposals. The final proposals include all the necessary information needed to be evaluated according to the same documents requested for the initial proposal. Final proposals should implement the solutions defined in the previous stage. In addition to the information referred earlier, proposals can include new information regarding their final bid price. This information does not follow the rules described in the previous stages. 7. Final proposals evaluation At this stage, the contracting authority evaluates the final proposals using the same model used for the initial proposals. The evaluation should take into account solely the evaluation model and the proposal being evaluated. The previous (initial) proposal is only used at the end of the evaluation to confirm the improvement of the proposals performance. If a final proposal has a worse evaluation than the initial proposal, the former is rejected and the later becomes the final proposal. 8. Exclusion of proposals and selection of others proposals (if applicable) In the case of the exclusion of a final proposal, the contracting authority has the ability to contact the tenderer who obtained the third best score with its initial proposal. The tenderer is selected and the negotiation process is initiated with this newly selected tenderer until two final proposals are evaluated and admitted. All this process was developed without an electronic tool, using traditional communications means such as letters, faxes and emails.

Section 3 Results
This section describes the use of an electronic tool to enhance the negotiated process within the negotiated procedures to contract PPPs in the health sector for the construction and part of the operation of hospitals. The electronic tool will allow for proper registers and warnings enabling for all parties to fulfil their role in the process.

239

On e-negotiation processes for PPPs procurement The electronic tool will enable several communications and registers for each of the stages of the negotiation process. The features of the electronic tool are described in the following paragraphs. 1. Handling of information to the tenderers regarding their proposals The electronic tool should provide means for the following steps of the negotiation process: Upload by the contracting authority of the information regarding the evaluation of the proposals which led to the selection for the negotiation (evaluation report); Download by all the selected tenderers of the report; Upload by the contracting authority of the reports containing desired improvements to each proposal and referring the related criteria where the evaluation can increase; Download by each tenderer of their respective reports; Possibility for the contracting authority to communicate the demand for the document described in the next stage.

2. Selection of which parts of the proposal to improve communication The electronic tool should provide means for the following steps of the negotiation process: Upload by all the selected tenderers of the summarized document describing which parts of their proposal will be changed during the negotiation process; Download by the contracting authority of the documents of each tenderer.

3. Selection of which parts of the proposal to improve meeting and register The electronic tool should provide means for the following steps of the negotiation process: Upload by the contracting authority of the meeting minute; Download by each tenderer of the meeting minute; Upload by the contracting authority of the agreement regarding the change aspects; Download by each tenderer of their respective agreement regarding the change aspects; Formal acceptance of the respective agreements by all parties; Communications regarding the meeting(s), by all parties.

4. Solutions for improvement of the proposals communication The electronic tool should provide means for the following steps of the negotiation process: Upload by all the selected tenderers of the list of solutions indicating their course of action to improve the proposals; Download by the contracting authority of the lists of each tenderer.

R.C.R. Spinola and J.A.A.Ferreira

5. Solutions for improvement of the proposals meeting and register The electronic tool should provide means for the following steps of the negotiation process: Upload by the contracting authority of the meeting minute; Download by each tenderer of the meeting minute; Upload by the contracting authority of the solutions accepted by the contracting authority; Download by each tenderer of the previous document; Upload by each tenderer of the compromise of each tenderer towards incorporating the solution in the proposal; Download by the contracting authority of the previous document; Formal acceptance of the respective agreements by all parties; Communications regarding the meeting(s), by all parties; Communications regarding the limit date for proposals submission.

6. Handling of final proposals The electronic tool should provide means for the following steps of the negotiation process: Upload by all the selected tenderers of their final proposals; Download by the contracting authority of the each proposal; The tool should only allow for parts of the proposal which an improvement has been agreed in the previous step; The tool should allow the selected tenderers to indicate which parts of their proposal is unchanged; The tool should allow for the presentation of new information regarding the final price bid, limiting the prices to those allowed by the model.

7. Final proposals evaluation The electronic tool should provide means for the following steps of the negotiation process: Upload by the contracting authority of the information regarding the evaluation of the final proposals (final evaluation report); Download by all the selected tenderers of the report.

8. Exclusion of proposals and selection of others proposals (if applicable) The electronic tool should provide means for the following steps of the negotiation process:

241

On e-negotiation processes for PPPs procurement Contact the tenderer who obtained the third (and fourth, if two proposals have been rejected) best score with its initial proposal; Initiate the negotiation process with the new selected tenderer according to the previous stages.

Section 4 Conclusions The paper developed an analysis of three large-scale PPPs in the health sector for the construction and operation of hospitals (the case studies). The first part of the second section described the evaluation model used in the three negotiated procedures. The second part of the second section described the negotiation process in its different stages. The third section described the use of an electronic tool to enhance the negotiated process within the negotiated procedures. The electronic tool will allow for proper registers and warnings enabling all parties to fulfil their role in the process. The electronic tool will also enable several communications and registers for each of the stages of the negotiation process. The tool also should take into consideration continuous learning through a statistical analysis of the problems encountered during the negotiation processes for future improvement purposes.

R.C.R. Spinola and J.A.A.Ferreira References

.Belton, V., Stewart, T., 2002, Multiple Criteria Decision Analysis An Integrated Approach. Kluwer, Academic Publishers .Kennedy, G, 1991, Everything is negotiable, Arrow Books

243

Does E-public procurement help understand the EU public procurement market?

Tnde Tatrai

1 Introduction
How does e-public procurement provide information on current developments on the EU public procurement market? The size of public procurement depends on how we define this activity. Researchers have summarized and compared public procurement data from all over the world1. They have also tried to develop a complex model for the evaluation of e-public procurement website accessibility, which includes both website performance and user perceptions2. If data are available, it is easier to calculate micro-level efficiency at a contracting entity3. But results appear also at macro level about the importance of IT and its real role in public procurement. Electronic support of public procurement can provide information on the achievements of new regulations: for instance, the extent of support for SMEs or the changes in the proportion of innovative products and services in public procurement. Comparative analyses examine the issue from a legal point of view but we have few comparable data on the public procurement markets of EU Member States especially regarding procurement procedures under national regimes. Dissemination of basic knowledge on electronic public procurement as well as unveiling the methods behind the various national statistics ought to be among the aims of e-public procurement programmes. For example, there is a single SME definition while the definition of procurement spending contracted by SMEs might not be harmonized, thus the statistics that contain such data might be misleading. The review of electronic support and existing databases has already begun. This effort might be expanded, if more public procurement professionals realize the range of potentials of electronic public procurement. The role of ICT is also underscored by McCue and Roman (2012) when they say that the fact that employing ICT is not enough in achieving harmonious operation and integration. Eprocurement, like most ICT dimensions, is not deterministic in character. The lack of statistical difference in historic experience with e-procurement among groups with integrated and nonintegrated platforms suggests that if the integration of digital procurement is not undertaken during e-procurement's initial adoption, it is likely that it will not happen down the road4.

2 What do we know about the EU Public Procurement Market?

The question is to what extent EU statistics provide a realistic picture of the public procurement market. The most important comparative data, which simultaneously give rise to most misunderstandings, relate to the size of public procurement. For easier comparisons, public procurement spending is usually contrasted with the GDP. In the following, we compare the data available, and examine their coverage of reality.

244

Does E-public procurement help understand the EU public procurement market? The official statistics (gov_oth_procur)5 by Eurostat shows that the data are based on the documents (notices etc.) published in the Official Journal (hereinafter OJ).

Figure 1. Public procurement advertised in the Official Journal (as a % of total public procurement and as a % of GDP)

The data thus obviously appears to be distorted as they do not cover public procurement procedures under the EU threshold, the results of which are not published in the OJ. Insofar as we examine the data of another Eurostat survey, the statistics are based on the entire value of public procurement procedures openly advertised.

Figure 2. Public procurement, 2005 and 2010 (1) (value of public procurement which is openly advertised, as % of GDP)6

The titles of the two sets of data are different, though the data given are quite similar, i.e. they both either do not cover the entire public procurement market or include data published in

245

Tunde Tatrai the OJ. Reality can thus be approached through further searches for data. Searching for official data, the Public Procurement Indicators published in 2011 provide precise information again from the Eurostat website. Beside the two Eurostat data sets, we invoke official Hungarian public procurement data7 to establish what data actually found their way into the Eurostat statistics.

Figure 3. Public procurement as a % of GDP data comparison

The data above must therefore be identical. There should be several reasons for the differences, such as: - The mixing of OJ data and the figures of the entire public procurement market; - The expansion of the OJ data by way of statistical methods; - Taking over data from the national regimes of the Member States. The problem arises not form the differences but the fact that the database is unknown. Studying the example of a Member State, the Eurostat data are probably based on estimate. In this case the trend after a powerful drop-back in the wake of the first reckoning, demonstrates growth. However, all in all, the data are not homogeneous thus long-term conclusions cannot be drawn similarly to the previous case. We surmise that the estimate is made on the basis of the same methodology for each Member State, yet the significant oscillations of Figures 1 and 2 do not necessarily reflect higher standards or their want on the public procurement market but simply a different method of calculation. The size of public procurement markets calculated from the above and often publicized (3,5%/GDP) can thus be regarded as merely indicative. More in-depth analyses of the available and more-or-less controlled data are required.

Does E-public procurement help understand the EU public procurement market?

3 Data analysis, surveying connections

Defects and contradictions in basic data are hardly helpful. From several aspects, the publication of analyses trying to reveal relationships and highlight problems means a breakthrough. Case-by-case surveys will however not do, because of the regulatory and cultural, data-quality and other differences between countries, as a result which we must regard them incomparable. The so-called Ecorys study8 discusses several aspects worth thinking through. The reason why we examine a study is that, following official EU statistics, an official EU study should also be scrutinized. It is from this that we took as an example the section on the cost of public procurement procedures. 3.1 Costs of public procurement procedures In our opinion, it is worth presenting an interesting example of an element of the European public procurement market seldom quantified: the costs of procedures. The result is interesting and demonstrates well that savings can be made by making procedures smoother. A particular element of this is the litigation fee, which legislators have a predilection for increasing in order to decrease the number of redress procedures. When looking at unit costs for businesses we find that they are on average lower than for purchasers. Restricted procedures once again stand out as the most costly. In terms of staff day equivalents, it is the post-award stage that appears to be the most costly. Again this is a somewhat unexpected result as costs for firms would appear to be higher during proposal preparation. Complaints and litigation costs exist, but are small on average. For the majority of authorities there are no (person-day) litigation costs but there are high costs in a small number of cases. About 25 percent of the purchases surveyed reported litigation costs. Consequently, about 350.000 person-days are spent annually across Europe on managing complaints and litigations for government authorities9 Authorities Business

Figure 4. Cost by stages of procurement, by procedure (mean full-time equivalent days)10

The analysts admit that there is a risk that these measurements underestimate the impact of complaints and litigation. The survey findings, indicate that the fear of litigation and complaints is an important factor when choosing the procurement procedure and the fear of complaints and litigation may be important for driving costs. This hints at indirect costs of

247

Tunde Tatrai litigation and complaints though their effects on behaviour in the earlier phases of the purchasing process. Firms report having incurred considerably higher litigation costs than the authorities. This is surprising given that the research contains responses only from winning bidders. There is the possibility that they report on legal costs incurred while implementing the contract; e.g. conflicts that arise on the interpretation of aspects of the contract. Explicitly it is impossible to quantify the extent of this practice11. European public procurement thirsts after surveys highlighting deeper connections. There is no practical obstacle to obtaining data, as all participants in procedures are known, who are capable of answering questions, or about whom all necessary information can be gathered from the advertisements. The example above called attention to the limits of drawing conclusions from available information and the need to be careful and circumspect. The following example highlights the diversity of data to be achieved in the course of examination which should not be simplified even in communicating them. 3.2 Role of SMEs in public procurement The definition of SME 12 conforms to the interpretation of most EU Member States, it is based on turnover and on number of employees in SMEs.

Figure 5. Share of SMEs in the total value of contracts awarded, by Member State (total for 2006-2008)

13

Does E-public procurement help understand the EU public procurement market? It is difficult to identify with recent research results on SMEs In the preceding study from three years ago, the share of SMEs winning public contracts was estimated to be 61% in terms of the number of contracts, and 42% in terms of value. In terms of estimated total contracting value in 2010 of public procurement secured, SMEs accounted for between 31% to 38% (their combined share for three years was 34%)14-15.e current results provide information about the same proportion but a lower share in the value of contracts. However, these new results rest on an improved methodology, a better match rate of sampled companies, and on an extensive manual check of results, and are thus not directly comparable to those the preceding study16. The effects on SMEs and the refinement of analyses cannot be grounds for such differences between the years, moreover the difference below shown in respect of the actual share of SMEs in public procurement. Factors may cause such massive difference on the basis of the data are: various national value limits, the different income limits for SMEs under the definition, the exactness of data provision.

Figure 6 Difference between the share of SMEs in public procurement and their role in economy by 17 country (average 2006-2008)

It is obvious that the same issue has various interpretations even in a single legal context. The answer may be given by a single methodology where each Member State is perfectly clear about what answer to give, what elements of costs to list in what sampling procedure. SMEs are a good example of how probably incomparable data shape public procurement policy,

249

Tunde Tatrai which carries the possibility of unfounded objectives. The shaping of SME-friendly public procurement policy based on the above might not be relevant in some cases, and might imply the learning of basics in others. The truth is however that the role of SMEs in public procurement focuses on bidders, where data provision is made on the basis of inexact data. In cross-border procurement, we likewise have no precise picture of the role of SMEs; however, it cannot be a solution to establish a single SME policy on the basis of EU27 average with no regard for the fact that SMEs include 99% of all firms in some countries, while 250 employees might put firms in the major enterprise category in some (small states) and small in others (e.g. Germany). The basis therefore is not the existing single definition. As a side effect, the SMEfriendly public procurement policy of small states has resulted in the general support of all firms, which has not improved the conditions of the small ones, but has probably improved general results. There are problems which can be handled in the possession of data but there are others that cannot. The availability of statistics does not necessarily mean any reassurance for the policy maker.

4 Conclusions - IT is not enough

We have a lot of data and information available on EU public procurement. Data published in the Official Journal however do not and cannot answer all questions because of not taking into account public procurement below the EU threshold. Electronic announcements and the Member States own databases are serious resources, yet issues with the depth of procedure costs and SME shares cannot be presented in tables. Moreover, even the simplest data comparison must be regarded with reservations due to the differences of legal systems, practices and cultures. The most interesting data analyses can be called into question in the lack of a single methodology and unified data content. The above have demonstrated that, for all the availability of data on the EU public procurement market, the mass of contradictory data is not helpful for decision makers shaping public procurement policy at both EU and national levels. Drawing up a diagnosis and summary of the above situation will not really help in itself the actors of the European public procurement market. What would certainly help them is continuous data provision and analysis with a single methodology. Without this, no eprocurement by itself will help either.

Does E-public procurement help understand the EU public procurement market?

References
1 Trinofetti F. (2000) 2 Bruno et al. (2005) 3 Ohashi (2008) 4 McCue C., Roman A. V. (2012) p. 240. 5 http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Government_finance_statistics 6http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Public_procurement,_2005 _and_2010_(1)_(value_of_public_procurement_which_is_openly_advertised,_as_%25_of_GDP).png&fil etimestamp=20121023174114 7 Hungarian official database on the Annual Report of Public Procurement for the Hungarian Parliament 8 Public Procurement in Europe Cost and effectiveness A study on procurement regulation. Prepared for the European Commission, March 2011 http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/costeffectiveness_en.pdf 9 Public Procurement in Europe Cost and effectiveness A study on procurement regulation. Prepared for the European Commission, March 2011. pp. 80-81. http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/costeffectiveness_en.pdf 10 Public Procurement in Europe Cost and effectiveness A study on procurement regulation. Prepared for the European Commission, March 2011 p. 80. http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/costeffectiveness_en.pdf 11 Public Procurement in Europe Cost and effectiveness A study on procurement regulation. Prepared for the European Commission, March 2011. pp. 80-81. http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/costeffectiveness_en.pdf 12 The Commissions recommendation is that SMEs are enterprises which:- employ fewer than 250 persons; and - have an annual turnover not exceeding 50 million euro and/or an annual balance sheet total not exceeding 43 million euro (meeting only one of the two criteria is necessary). The thresholds apply to consolidated figures, taking into account partner and linked organisations, which means that a proportion or 100% of their respective headcount and financial figures have to be added to the companys data. 13 Evaluation of SMEs access to public procurement markets in the EU Final Report 2010 http://ec.europa.eu/enterprise/policies/sme/businessenvironment/files/smes_access_to_public_procurement_final_report_2010_en.pdf P. 23. 14 Micro-enterprises secured in total a share of 6%, small enterprises 11%, and medium-sized companies 17%. The relative weight of all three SME categories is smaller here due to their tendency to win contracts with lower values than large enterprises. 15http://ec.europa.eu/enterprise/policies/sme/businessenvironment/files/smes_access_to_public_pro curement_final_report_2010_en.pdf 16 Based on Evaluation of SMEs Access to Public Procurement Markets in the EU Final Report, 2007 http://ec.europa.eu/enterprise/dg/files/evaluation/pme_marches_publics_report_en.pdf 17 Evaluation of SMEs access to public procurement markets in the EU Final Report 2010 http://ec.europa.eu/enterprise/policies/sme/businessenvironment/files/smes_access_to_public_procurement_final_report_2010_en.pdf P. 27.

251

252