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Dr. Florencia Ferrer, PhDCEO – FF/e-Strategia Pública
Strenghtening Government Procuremente-Procurement as part of Public Procurement Policy
Procurement: Public –vs– Private
Public Procurement should not be
defined by same rules as the market.
Public Procurement should mean PUBLIC
POLICY
It may address:
Development of local economy
Employment generation indirect
Strengthening of small business
Reduction of market distortions
ICT as bus way
Government Procurement
Policy
Princípios de Regulação
Federal AcquisitionRegulation (FAR)
Federal Government
Subnacional Governments
Tesouro Nacional – Ministério da Fazenda
Procurement Policies EUA
Buy american act
(1933)
Balance os
payments programm
(exterior)
• Small business programm (1953)
Government Procurement
Policy
Regulatory PrinciplesRegulatory Principles•Buy American Act (1933)•Balance payments program (Foreign)•Small business program (1953)
Governamental Procurement
15%
85%
Focus in national purchasingAbout 1 to 10% e-proc
Governo Federal -US$ 250 milhões
Subnacionais - US$ 1,3 trilhões
Tesouro Nacional – Ministério da Fazenda
Governo Federal;
44%
Sub nacionais;
46%
Total Compras Eletrônicas Brasil 2006
Fonte: índice e - licitações FF/e-Stratégia Pública
Focus on corruption prevention:
About 70 to 90 % e-proc
Government Procurement
Policy
“e-Licitações”® index – 2004-2009
Total public procurement traded through auctions that have most of their
buying steps performed in an innovative way:
Publication
Participations
Transactions
SCOPEDirect and indirect administration, foundations and local government (except public and mixed)
National / Federal Government
States
Local Government
e-licitaçoes index
Evolution of the volume of electronic procurement in Brazil on the total (%)
7%
19%
25%
36%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2004 2005 2006 2007
e-licitaçoes
index®
Average Federal and Subnacional Governments
Brazil – Public Procurement and Payrollin 2007
U$S 452 billion
Market Value2:
U$S 182 billons
2,5 x
Nestlé
1: Source: OCDE – Total spending on public purchasing equates to 30% of Brazilian GDP
2: as of capital market quote on Jun/2009
Market Value2:
U$S 296 billons
1,5 x
Wal Mart
Government purchasing
power
State and local government spend
on payroll:
U$S 63 billion -Active
U$S 36,3 billion – Inactive
268,6 millions of liters of milk are offered in both Government Programs
Milk production in São Paulo State: 2,2 billons of liters
8% of the whole StateProduction
“VIVA LEITE” PROGRAM
State of São Paulo
Beneficiaries: 762.000 inhabitants
Total / year: 130 millions liters
Cost: US$ 0,81 liter
Total: US$ 183,3 Millions
“LEVE LEITE” PROGRAM
Government of São Paulo City
Beneficiaries: 1,1 thousand inhabitants
Total/year: 138,6 millions liters
Cost: R$ 4,50 / 7,7 liter in powder
Total: R$ 154,8 Millions
Sao Paulo-Brazil – Public Purchasing in 2007Government purchasing
power
Public EmployeeActiv an inactiv:
17 million
Brazil EAP:40,4 million
Economic Power of State Comparing Active Population and Public Employees in Brazil and employees of global companies
42%
EAP are public
Employees
266 thousand1,6 millon
329 thousand2,1 millons
Global companies – Employees around world
www.bec.sp.gov.br
São Paulo system of e-procurement: BEC+ electronic Auction+ 3 purchsaing
Costs reduction with e-procurementProcess Costs to São Paulo-Brazil
Savings: 73%
R$ 5.500
R$ 1.500
Tradicional BEC
US$ 3202,00
US$ 873
Reduction cost
Savings: 94%
R$ 75
R$ 4,5
Tradicional BEC
Costs reduction with e-procurement to suppliers in São Paulo - Brasil
US$ 43
US$ 2
Reduction
cost
Estrutucture of cost process in e-procurement in SP
Reduction
cost
Reduction
cost
Estrutucture of cost process in e-procurement in SP
Savings on final Prices in Sao Paulo with BEC
- 25% in Payed
Prices
CompetitionIncrease
Credibility in Payments and Delay Shrinkage
Reduction cost
Investments BEC - 2002 SP
Information System Developing and Implementation
Data Processing and Integration
Information Treatment
Training
Hardware
TOTAL
Maintenance
TOTAL
US$ 552.000
US$ 172.000
US$ 103.000
US$ 35.000
US$ 172.000
US$ 1.030.000
US$ 330.000 per year
US$ 2.394.000
Reduction cost
BINPS®: Benefits over Public Investment BEC SP
PayBack: 2 days in
operation
Cost Reduction in São Paulo State in 2003
US$ 25,8 millions
Investment Depreciated in 5 years
US$ 536.000
BINPS: = 4.707%
Reduction
cost
Bolsa Eletrônica de Compras de São Paulo e-Procurement – Savingswww.relogiodaeconomia.sp.gov.br
US$ 39 millionsUS$ 447 millions
Reduction cost
Cost Reduction“servicios de terceiros” São Paulo
US$ 10 billions
Reduction cost
Savings with “Subasta Electrónica” São Paulo governmentwww.relogiodaeconomia.sp.gov.br
US$ 5 billions
Reduction
cost
Cost Reduction 2009 e-procurement SP BEC
COST REDUCTION
BY PROCESS BY PRICE BY PROCESS
GOVERNMENT FIRMS
US$ 211 millions US$ 40 millionsUS$ 272 millions
US$ 483 millions
Reduction
cost
Costs Reduction Procurement Process Costs to
State of Amazonas Brazil
www.placardaeconomia.am.gov.br
Savings: 75,6%
R$ 3.100
R$ 760
Tradicional e-compras
US$ 1804,00
US$ 442,00
Reduction
cost
Amazonas was the only state with legal limitations on modernize to e-gov procurement
Savings: 65%
R$ 83,00
R$ 29
Tradicional e-compras
Costs Reduction Procurement Process to
suppliers: Amazonas, Brazil
www.placardaeconomia.am.gov.br
US$ 48
US$ 17
Reduction
cost
Cost reduction in e-procurement processe-Compras Amazonas. BRwww.placardaeconomia.am.gov.br
US$ 270 millionsUS$ 747
millions
Reduction
cost
= 4,4%
BINPS® : Benefits over Investiments
in Public Sector Amazonas- Brazil-
PayBack: 59 days of operation
State Benefitis + Suppliers Benefitis
(process and prices)
Investiment Depreciated in 5 years
BINPS®
Reduction
cost
Minas Gerais– Brasil- Tradicional
Vs. Auction
Tradicional Purchase X Pregão : Costs Comparison
Direct Purchase vs. COTEP: Costs Comparison
Source: FF/e-stratégia pública.
US$ 2.095
S$ 3.172
R$ 0
R$ 1.000
R$ 2.000
R$ 3.000
R$ 4.000
R$ 5.000
R$ 6.000
CV TP CC Pregões
US$ -1.007
Reduction
cost
Government
Savings
Electronic Procurement:
Total Savings in process- Minas Gerais-Brasil
Suppliers
Savings
R$ 2 milhões
R$ 237 milhões
Empresas
Estado
Source: FF/e-stratégia Pública.
Reduction
cost
Continue to emiliminate bureacracy
Reinventing government
Rethink process
Long home-work to do
Procurement Process: Procedural Costs
Necessity of reducing the bureaucracy in Brazil
Tradicional x Electronic (US$ Thousand)
Source: FF/e-stratégia Pública.
US$ 2910
US$ 1910
US$ 3667
US$ 2211
US$ 5937
US$ 4249
US$ 5878
US$ 7275
Public Agency 1 Public Agency 2 Public Agency 3 Public Agency 4
GDP= U$S1,1 bilhão
700 thousands of citizens9º place in the education ranking of Brazil (Source: MEC)
State of Acre- North of Brazil. Less than 0, 5 % GDP
Standardization of the purchasing groups:Energy
Cenário 1 Errores in the use Cenário 2 Best Practice
Cenário 2
Difference between measured value and hored: Fine, Tarifa de Ultrapassagem
Consumption outside working hours and high dry period
Exit ways
How much do we earn with standardization?Earnings – Energy Group (Acre)
Economia sobre todos os órgãos solicitantes no prazo de 4 anos.
7 times the primary
education fund.
More than 46
thousand of basic
alimentation
1,6 times the central
government support for
the municipal fund in the
1st quater 2009
2,5 time the Acre´s public
purchasing sistem value.
More than 3,8
millons of the
school meals.
596 thousand drugs
ASQM against
malaria.
64% of the cost for
building a mother-child
hospital (93 beds).
119 community
houses in Rio Branco
city.
Economic Analysis – Energy/Time: 4 years
Exit ways
US$1,47
millions
4,6 vezes el ajuda de la
União para o FPM ao
Acre no 1º trimestre de
2009
22 times the primary
education fund.
More than 131
thousand basic
alimentation
4,6 times the central
government support for
the municipal fund in the
1st quater 2009.
7,7 time the Acre´s public
purchasing sistem value.
More than 10
millons of the
school meals.
1,6 thousand drugs
ASQM against
malaria.
179% of the cost for
building a mother-child
hospital (93 beds).
336 community
houses in Rio Branco
city.
Economic Analysis
How much do we save with standardization? Earnings – Fuel Group (Acre)
Exit path
US$4,11
millions
Small state but a great economy
$ 5,5 millions of economy (energy and fuel)
of one state that is only in the 25º position of
the GDP states ranking of Brasil.
0,45% of brazilian GDP
Exponential increase if applied to the rest of
the country
e-Gov
Last 20 years in Brazil…
GDP growth: 43%
Growth of 113% financial expenditure
Tax about of 40% of GDP
Structural problems public-
setor Brasil
$ 4,9 millions
US$ 7 millions
US$ 63 millions
US$ 110 millions
US$ 160 millions
US$ 360 millions
US$ 326 millions
US$ 2,8 billions
US$ 3,7 billions
US$ 8,4 billionsOutsourced
services
(Ene/95 a feb/08)
E-procurement auction(2003 – feb/08)
IPVA (1996 – feb/08)
Poupatempo – Licensing e Driver´s Licence (2003 - fev/08)
BEC (2000 – feb/08)
e-Licensing (2001 – fev/08)
Criminal Background Certificates
(2003 – fev/08)
Citizens Identification Process
(2003 – fev/08)
Police Report (2004 – fev/08)
Metrô Open Office (1999 – fev/08)
US$ 16,2 billions
http://www.relogiodaeconomia.sp.gov.br
Savings to the São Paulo Statewith 10 e-Gov programs
Sucess experiences
Savings with 9 e-Gov programs in Brazil2007 – Projection on the experience of SP: US$ 32 billons
Income tax
Police Report
e-Licensing
Citizens Identification
IPVA - Electronic
Print Optimization
Outsouced Services
Electronic Purchasing
ICMS – Electronic bill
US$ 25 millons
US$ 54 millons
US$ 62 millons
US$ 67 millons
US$ 963 millons
US$ 1,2 billons
US$ 5 billons
US$ 8,2 billons
US$ 16,5 billons
Sucess experiences
3,5% of GDP Superávit Nominal de 2%
Doble del Superávit Primario (8%)
14 times the expenditure of
Welfare Benefits
Doble spending on
Primary Education
Reducing the tax burden
by 10%
9,5%
Increase of
public
expenditure 12 time the expenditure
of the
“Bolsa
Família ”
Global savings and increased incomeSome e-Gov Programs in Brazil
Sucess experiences
$8
$17 $32
0
5
10
15
20
25
30
35
Ahorro com 9
Programas
Jubilaciones del Sector
Publico
Pago de Intereses de
la Deuda Externa
Anual
Values US$ billions
Exit waysBrasil – Economic Impact of 9 programs of e-gov
9 e-GOV programs
Retirement Pubic Sector
Payment. Interest of the foreign debt
Consumption
Expenditures
Final of the LA´s
Government
US$ 323 millions
Purchases of goods and
services:
US$ 89 millions
Latin America
$16
$22
$0
$5
$10
$15
$20
$25
Reducción de Costos
por Sistema
Electrónico de
Compras
Pago de Intereses de
la Deuda Externa
Anual
Values US$ bililons
Costs of the Bureaucracy5% of the GDP: U$S 98 bi
Exit ways
Costs Reduction of e-procurement
Payment. Interest of the foreign debt
Thanks!
Florencia Ferrer
Tel. 11 3031-4688www.e-strategiapublica.com.br
Pesquisa: Felipe Feliciano e Diego Oliveira. Realização: Bete Costa
Tel. 55 11 3031-4688www.e-strategiapublica.com.br
