Presentation to IIAC

by Stanley Wong Deputy Director of Government Supplies

Government Supplies Department

Purchasing agent for government departments and non-government public bodies (including Hospital Authority) acquiring high value goods and services

Store and deliver common user items

Total value of purchases : HK$6,794 million

(US$873 million)

Registered suppliers : 4,864 Tender invitations issued : 44,680 Tender offers received : 9,711 Contracts awarded : 4,124

Key Procurement Statistics 1999

computer equipment and software :HK$2,513 million (US$324 million) 37%

pharmaceuticals :HK$1,288 million (US$166 million) 19%

aircraft and spares:HK$737 million (US$95 million)11%

hospital and medical equipment :HK$413 million (US$53 million) 6%

telecommunications equipment and spares:HK$272 million (US$35 million) 4%

Major categories of purchases

Key Procurement Statistics 1999

Key Procurement Statistics 1999

Major categories of purchasesscientific, analytical and laboratory equipment

and consumables :HK$190 million (US$25 million) 3%

medical consumables :HK$164 million (US$21 million) 2%

photographic and audio/video equipment and consumables :

HK$146 million (US$19 million) 2%other categories :

HK$1,071 million (US$138 million) 16%

Purchased products were manufactured in 38 different countries or administrative regions

Less than 2% of products originated in Hong Kong

Approx. 90% of tenders submitted by branches/agents in Hong Kong

Key Procurement Statistics 1999

IT Systems Being Maintained Two mid-range based computer systems

Goods On-line Ordering, Distribution, Stock Management and Accounting Network System (GOODSMAN)

Procurement Management System Upgrade (PMSU) One web-based system

Electronic Tendering System (ETS)

GOODSMAN The system supports

2 LANs with 43 and 15 workstations at GSD Headquarters and GLC

285 remote terminal users Major functions of the system provided to

remote terminal users includeOn-line orderingOn-line Enquiry

The system was enhanced in June 1999 by a barcode function whichImproves the efficiency of warehouse operationImproves the accuracy of stock verification, picking and

goods receipt functions

PMSU Supports more than 100 user licenses

installation and Chinese character processing Electronic Data Interchange (EDI) ready Internet ready with web enabled version

available Enables GSD to enhance tender processing, the

evaluation of offers, order/contract monitoring and supplier performance monitoring

Establishes an on-line linkage between remote clients and GSD Procurement Division to facilitate information interchange

Services provided by electronic means to subscribersregistration of suppliersnotification of tendersissue of tender documentsreceiving and responding to enquiriessubmission of tender offersnotification of contract award

Suppliers have choice between manual system and electronic tendering system

Electronic Tendering System

Operating Statistics (as at 22 September 2000)

403No. of subscribers

-2000

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Weekly total Withdrawal/DeletionAccumulative total

Operating Statistics (as at 22 September 2000)

526No. of tenders issued through ETS(total value HK$669 million)

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Weekly totalAccumulative total

Operating Statistics (as at 22 September 2000)

2,666No. of tender documents downloaded

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Weekly totalAccumulative total

Operating Statistics (as at 22 September 2000)

355No. of offers received

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Weekly totalAccumulative total

Operating Statistics (as at 22 September 2000)

Percentage of e-tenders out of all tenders issued

72% of total number of tenders

75% of total value of tenders

Security ConsiderationsSecurity Considerations

Application Security FrameworkApplication Security Framework

Privacy Authenticity

Integrity Non-repudiation

TotalSecuritySolution

Points to note Technical infrastructure, including

security features, have worked satisfactorily

Take up rate slow but rising steadily

Suppliers may need to redesign their business processes

Future developments Can lead to wider system linking

suppliers with many different public sector and private sector organizations

GSD System Supplier

Supplier

Supplierinitial system

extended system

System

Supplier

Supplier

Supplier

Supplier

Supplier

Supplier

Supplier

GSD

other public

sector purchasers

private sector

purchasers

Future Developments Enhancement to GOODSMAN

To support international barcodes To support web-based ordering of common-user items To accept EDI interface with Hospital Authority

Enhancement to PMSU To provide online interface with Pharmaceutical Supplies System of Hospital Authority in EDI format To cope with ETS enhancement to support CTB tenders and eCert To cope with GOODSMAN enhancement to support international barcodes

Enhancement to ETS Extension of ETS to tenders with value above HK$10 million Other parts of public sector may also use electronic tendering

Wider applications of e-commerce Electronic marketplace

For low value purchasesPurchasers display their requirements and potential suppliers respond with their offers

Electronic products cataloguesrange of available products and prices displayed in purchasing organization’s product cataloguesuppliers maintain the content of their page of product catalogue, provide updates to product features and pricesend-users select from catalogue the product brand that is available in the most favourable terms

Suppliers can offer more comprehensive packaging of related products and services with flexibility to adapt to unexpected changes Increases power of the purchaser vis à vis the supplier

more comprehensive product search and analysis to find best available offeryour alternative supplier is just a mouse-click away

Government procurement may become truly internationalsuppliers may seek access to a wider range of government markets

How will the Internet change Government Procurement?

Possibilities for government purchasersgovernments may eventually need to

follow the trend to Internet tradingprocurement rules may need to be

modified to take account of the changing environment

purchasers should retain flexibility to adapt to rapid changes in product features, prices and package deals

How will the Internet change Government Procurement?

Information Systems Strategy Study (ISSS)

Information Systems Strategy Study (ISSS) To assess the information technology

development potential To quantify the IT requirements of GSD in the

next 5 years To assess the following IS opportunities in

arriving at a portfolio of strategic applications:To enhance the GOODSMAN systemTo enhance the PMSU systemTo enhance the relevant PC-based applications of

Allocation Stores Ledger Posting System (ASLPS)Feasibility study on computerization of inventory and

uniform records maintained in departmental supplies section

Information Systems Strategy Study (ISSS)

To explore on the following IT opportunity:Contract Management (using Internet technology)Auto-replenishment of stock by suppliersBusiness improvement opportunities with the use of IT with a view to enhancing productivity, reducing costs, and improving customer serviceElectronic Payment (with GSD contractors)Electronic Tendering and Electronic Procurement for other bureaux/departments

Conclusions Successful migration to e-Commerce requires:

User maturityAn advanced, stable technological infrastructureProcurement rules may need to be modified to take

account of the changing environment

END