October 2003 1

Government Procurement @ Your Fingertips:

Strategic Framework of the World Bank

Government Procurement @ Your Fingertips:

Strategic Framework of the World Bank

Knut LeipoldOctober 2003

October 2003 2

Table of Contents

1. e-GP Basics• Definition

• Benefits

• Key Success Factors

2. e-GP Strategy of theWorld Bank• World Bank Procurement Policy

• Strategic Framework

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e-Confusion

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• e-GP is the use of information technology (especially the Internet) by governments in conducting their procurement relationships with suppliers for the acquisition of works, goods, and consultancy services required by the public sector.

• e-GP breaks down the physical barriers of space and time and allows a more transparent and efficient information flow and wider access to information and services.

Shared e-GP Definition

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e-Tendering:A solution designed to electronically handle the process of public tender for the acquisition of specialized works, goods, and consulting services that are of high value and low volume. Introduction can be phased and provides wide exposure to e-GP at low incremental cost.

e-Purchasing:A solution designed to electronically facilitate the acquisition of low value and high volume standard goods and services. Key components of the system tend to be complex and require substantial system development.

e-Tendering vs. e-Purchasing

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Tracking Tracking Opening Opening Upload Upload Clarification Clarification Download DownloadDisclosureDisclosure

e-Tendering:

e-Purchasing:

Ordering & Payment

Ordering & Payment

Best quotationBest quotation

Reverse Auction Reverse Auction

CatalogueCatalogue

Pre-qualificationPre-qualification

Functional Requirements

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• Transparency

• Reduced corruption

• Increased competition

• Lower transaction costs and prices

• Shorter procurement cycles

• Improved quality

Benefits

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Benefits & Beneficiaries

Government Supplier Public

Transparency • Anti-corruption

• Increased number of suppliers

• Better integration and inter- action between governments

• Professional procurement monitoring/management

• Higher quality of procurement decisions and statistics

• Political return from the public

• Increased fairness/competition

• Improved access to govt. market

• Open the government market to new suppliers

• Stimulation of SME participation

• Improved access to public procurement information

• Government accountability

• Access to public procurement infor- mation

• Monitor public expen- diture information

• Participation

• Government accounta- bility

Costs

Efficiency

• Lower prices/transaction costs

• Staff reduction

• Reduction in fiscal expenditure

• Lower transaction costs

• Staff reduction

• Improved cash flow

• Redistribution of fiscal expenditure

Time • Simplification/elimination of repetitive tasks

• Communication anywhere/time

• Shorter procurement cycle

• Simplification/elimination of repetitive tasks

• Communication anywhere/time

• Shorter procurement cycle

• Communication anywhere/time

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Benefits (Examples)

• By using the national education portal www.feonline.net in Great Britain, some 500 schools achieve price reductions of up to 100 million British Pounds per year and time reduction of about 90% in order processing.

Source: Public E-Procurement, Gehrmann/Schinzer, 2002

• With the phased introduction of the Government electronic Procurement System (GePS), Korea is able to save some US$ 2.7 billion of all government procurement (US$ 17.1 billion) as compared to US$ 26 million investment. Between 1998 and 2002, staff of the Public Procurement Service PPS were reduced from 1,058 to 935, while the total government procurement volume increased by some 30% (from US$ 12..8 billion to US$ 17.1 billion). Payments to suppliers are electronically transferred which usually takes no longer than 4 hours.

Source: DRAFT Discussion Note, The World Bank, 2003

• Romania uses a government-wide e-Procurement system bringing together about 1,000 public agencies and 8,000 suppliers. During the first 4 months of 2003, more than 60,000 transactions were completed. According to the Ministry of Communications and Information Technology, the savings through this e-GP platform amount to some 22% (US$ 35.5 million) of the volume of purchased goods and services (US$ 161.4 million). Source: IDA, 2003

• During the first three years of the procurement portal COMPRASNET, the Federal Government of Brazil spent about US$ 7million on system development and maintenance. During the first two years of on-line reverse auction use, the Federal Government is estimated to have saved up to US$ 1.5 million. While the normal procurement process takes more than two months, the on-line reverse auction may be completed in less than 15 working days. The use of on-line procurement has also increased the participation of small businesses in government supplies.

Source: http://www.egov4dev.org/brazeproc.htm, 2002

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Key Success Factors

Policy & LegalFramework

Policy & LegalFramework

TechnologyTechnologyInstitutional

ChangeInstitutional

Change

HumanResources

HumanResources

GovernmentLeadership

GovernmentLeadership

Policy & Legal Framework

• Enabling environment

• e-GP strategy

• Roles & Responsibilities

• Flexibility

Human Resources

• Awareness raising

• Capacity building

• Incentives

• User help desk

Institutional Change

• Procurement process (BPR)

• Organizational structures

Technology

• Infrastructure

• Compatibility & standards

• Scalability & security

• e-GP system ownership

Government Leadership

• Taking the driver’s seat

• Vision and goals

• Collective commitment for change

• Partnerships with private industry

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e-GP & World Bank Procurement Policy

Compatibility of e-GP with WB procurement policy and goals:

Modernization, simplification

Economy & efficiency

Equal access

Encouragement of local industry

Transparency

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E-Tendering E-Purchasing

ICB

NCB 2

Shopping 1

Direct Contracting 1 … Pre-qualification 2 … Reverse Auctioning

100% price evaluation

e-GP and Procurement Methods

13October 2003

Strategic e-GP Framework

Policy&

Guidelines

Policy&

Guidelines

Country-basedwork

Country-basedwork

ProcurementOperations

&Monitoring

ProcurementOperations

&Monitoring

Awareness Raising

Capacity Building

Harmonization

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Strategic e-GP Framework

Policy&

Guidelines

Policy&

Guidelines

Country-basedwork

Country-basedwork

ProcurementOperations

&Monitoring

ProcurementOperations

&Monitoring

Awareness Raising

Capacity Building

Harmonization

Policy & Guidelines

•Simplification & modernization

•Revision of guidelines for procurement under IBRD Loans and IDA Credits and

for selection of consultants

•Assessment of e-GP systems

•e-GP guideline

•Develop harmonized policies for the use of e-GP in MDB-financed procurement

•Revision of harmonized SBD for Goods

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Policy

&Guidelines

Policy&

Guidelines

Country-basedwork

Country-basedwork

ProcurementOperations

&Monitoring

ProcurementOperations

&Monitoring

Awareness Raising

Capacity Building

Harmonization

Strategic e-GP Framework

Country-based work

• Country-specific support

• Inclusion of e-GP in CPAR’s

• Training

• Knowledge exchange (e.g. VC, BBL)

• Project financing

• e-GP toolkit (e.g. readiness assessment, roadmap)

• Joint website with forum, database, tools

• 3rd International e-GP Conference

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Policy

&Guidelines

Policy&

Guidelines

Country-basedwork

Country-basedwork

ProcurementOperations

&Monitoring

ProcurementOperations

&Monitoring

Awareness Raising

Capacity Building

Harmonization

Strategic e-GP Framework

Procurement Operations & Monitoring

•Client Connection Portal

•Project Portal

•Self-entry system for the publicationof procurement notices

•Disclosure of awarded contracts

•e-Procurement system for hiring ofconsulting firms and individualconsultants by the World Bank

•Procurement reporting systemsIntegration•Interactive bidding documents