Luca Mastrogregori Head of e-Procurement Strategies Consip Spa [email protected] Amman, July 7, 2010 Public e-Procurement in Italy: Consips.

Luca MastrogregoriHead of e-Procurement StrategiesConsip [email protected]

Amman, July 7, 2010

Public e-Procurement in Italy: Consip’s role and e-Proc System

2

• Public Procurement and e-Procurement in the EU

•General Overview on Consip in the Italian Public Procurement System

• E-procurement platform, e-marketplace and new e-proc tools

3

EU Legislation Framework

• The legislative package of public procurement Directives, approved in 2004 by the European Parliament and the EU's Council of Ministers and entered into force on 20 April 2004, aims to simplify, harmonies and modernise procurement procedures applied by the EU Member States.

• This revision merges the four existing European directives into two legal instruments:

– The so-called "traditional" Directive 2004/18/EC for public works contracts, public supply contracts and public service contracts;

– Directive 2004/17/EC on the "special sectors" of water, energy, transport and postal services.

• Among several innovative provisions the new Directives strongly promote the development of electronic procedures while enforcing general fundamental Principles:

– Non-discrimination– Transparency– Fair competition

4

EU Legislation Framework

Contracting Ordering

Ordering InvoicingPayment

Monitoringof Contract

Outside the scope of EU public

procurement Directives

E-commerce Directive

(Electronic Signatures Directive)

E-invoicing (VAT Directive) Data protection

PublicationAccess to

documents

Contract specifications

BiddingReceipt of offers

Offer evaluation Contract award

Choice ofprocedure

Thresholds/Rules of aggregation

Shorter time-limits for online notices & electronicaccess to tender documents

New standard formsfor publication in OJEU

Data integrity

Confidentiality

Security &

Authentication

Traceability

Non- discrimination

e-cataloguese-auctions

Automatedevaluation

Automated Award

Electronic Purchasing Methods

The Directives focus on the tendering procedure and establish the legal framework from the publication of notices to the award of contracts.

5

EU Legislation Framework

• The new Directives set out the procedural rules and detailed provisions for the use of electronic means in public procurement:

– Use of electronic means is a choice of contracting authority– All stages of procedure can be conducted electronically– General requirements for communicating, advertising and receiving

tenders• Unrestricted access to tendering procedure: use of non-

discriminatory, generally available and interoperable tools (communication, tender submission, etc.)

• Integrity, confidentiality, exact time stamping, locking of data, ‘4-eyes principle’

• Traceability of all operations• Specifications for transmitting tenders (encryption, format etc.)

must be published in the tender documents• E-signatures in conformity with national legislation transposing Dir

1999/93/EC

• and introduce new purchasing techniques: – Electronic auctions– Electronic catalogues– Dynamic Purchasing Systems

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The benefits of e-procurement for Public Procurement

• The importance of eProcurement in the European Union is widely recognized. The Ministerial declaration approved unanimously on 24 November 2005 in Manchester, states that eProcurement “will lead to lower transaction and processing costs for public administrations and to increased efficiency, for example greater speed in procuring services and goods and reduced spending due to increased choice and competition”

• But significant benefits are taken by eProcurement in terms of efficiency and improved competition as well; as stated in the same declaration above mentioned “competition, with a higher participation of SMEs, in turn will lead to greater innovation in the private sector.”

• According to an estimation made by the European Commission and reported in the Action Plan for the implementation of the legal framework for electronic public procurement [1],

– administrative cost saving of e-procurement are expected to be about 30%, while

– purchasing cost savings could be as high as 10% to 50%.

[1] Communication from the Commission 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, Brussels 13.12.2004.

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The role of government agencies

• A number of EU countries have developed initiatives for the modernisation of Public Procurement, based on the Centralisation of competencies and investments

• These “competence centres” (some of them are listed)) play a key role in e-proc implementation, supporting awarding authorities and suppliers with education, consultancy and transactional services

Country Entity

Austria BBG

Denmark SKI

Finland Hansel

France UGAP

Germany BeschA

Ireland NPPPU

Italy Consip

Scotland Scottish Procurement Directorate

Spain Subdirección General de Compras

Sweden Statskontoret

United Kingdom OGC

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• Public Procurement and e-Procurement in the EU

•General Overview on Consip in the Italian Public Procurement System

•E-procurement platform, e-marketplace and new e-proc tools

9

• Inhabitants: 59 mln people

• Public Admin. employees: 3.350.000

• Ministries: 23

• Central PA Authorities: >100

• Regions: 20

• Provinces: 110

• Municipalities: 8.100

• School system: Universities: 94 Public schools:

>10.000

• Health Sector: Hospitals, Local Health Agencies, Public Clinics: >300

• Consip Ordering points: 61.593

A complex scenario

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Consip is a public stock company, created in 1997 by the Ministry of Economy and Finance (MEF), its sole stockholder.

Consip has no profit goals and it deals with two main fields of action.

1997

managementand development of

ICT services for the MEF

2000

Eprocurement for Public Administrations

MEF PAs

Set up, diffusion and support

of Eprocurement system & tools

Consip SpA

Consultancy on Technical and Organizational

Projects

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Implementation of the Program for the Rationalization of Public Spending on Goods and Services through the use of information technology and innovative tools for the purchases of the Administrations (frame contracts, web-based tenders, the Electronic Marketplace, as well as special projects and on demand consultancies).

In such activity Consip acts as an “awarding administration and contracting authority” that defines, implements and awards tenders on behalf of other Administrations. The implementation phases of the projects are executed by means of an accurate identification of the best solutions offered by the market that meet the needs of the Administrations

Consip Fields of Action

Public / eProcurement

2000

IT services

for MEF

Eprocurement

1997

PAs

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Consip’s Organization

Chief Executive Officer

Information SystemsDivision

Public Procurement

Division

Public FinanceDivision

Business support Division

Human Resources and Organization Division

Administration andGeneral Accounting

Corporate Affairs

IT Infrastructures Division

R&D

Budget and Control

Legal AffairsDivision

Corporate Identity

Institutional RelationsDivision

•Employees: 500 people (170 in the Public Procurement Division)

•Women: 44%•Average age: 40

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Consip’s Public Procurement Division

Public Procurement

Relationship with PAs

Relationship with suppliers

eProcurement

strategies

TLCgoods/services

Real Estate goods/servicesIT goods/services

Promotion vsPublic Administrations

Utilities and other goods and services

GPP

Health sector goods and services

Planning and Monitoring

14

Process simplification

Quality

Improve the ratio between cost and quality of the goods and services offered to PA

Reduce procurement time simplifying the entire procurement process

Public SpendingOptimization

Guarantee transparency and public communication on tender procedures and awarding criteria, enhancing competition and competitiveness

Innovation

Develop innovation procurement tools encouraging change management among public officials and suppliersE-PROCUREMENT

Transparency

Public Procurement System goals

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Suppliers

Consip

PA • Detailed analysis of PA needs

• Public procurement purchasing tools offer (platform)

• Ready-made tenders

• Supply market analysis (offer)

• Tender strategies identification

• Cooperation and working tables (supplier desk)

SUPPLY DEMAND

Finding the best match between PA and supplier needs:

- offering the most appropriate procurement systems to PA

- offering business opportunities to the supply market.

Two opposites parties with apparently different goals…

16

• Public Procurement and e-Procurement in the EU

•General Overview on Consip in the Italian Public Procurement System

• E-procurement platform, e-marketplace and new e-proc tools

17

Consip action lines

Electronic ShopsElectronic Shops e-Marketplacee-Marketplace

Purchases within frame contract

Direct Purchase Many-to-one approach Purchase scope:

Large volumes Standardized Low price volatility Slow obsolescence Demand aggregation

On line AuctionsOn line Auctions

Development of Frame contracts or ASP towards other administrations

Automatic Technical and economic offer evaluation

Purchase scope: Specialized High price volatility Rapid obsolescence

Purchases below the Eu threshold

Direct Purchase or RFQ Many-to-Many approach Supplier defined e-Catalog Purchase Scope:

Low cost Highly fragmented

Above and Below EU Threshold Below EU Threshold

FRAMEWORK CONTRACTSFRAMEWORK CONTRACTS MARKETPLACEMARKETPLACESUPPORT TO PA SPECIFIC NEEDSSUPPORT TO PA SPECIFIC NEEDS

E-PROCUREMENT SYSTEM

The development of the Program in the short/medium term is based, therefore, on three main action lines …strongly supported by a comprehensive e-procurement system

1. 2. 3.

Program portal: www.acquistinretepa.itProgram portal: www.acquistinretepa.it

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The e-Procurement Portal

On-line services

Notices

e-shops

Marketplace

Tender publication, supplier qualification for Public eMarketplace, ....

Opportunity to buy on line using frame contracts conditions (on-line orders)

On line access to public Marketplace

Registration Public buyer registration

Specific Market Area

Data and information on “Client market Area” (Central PA, Health bodies, Universities, Municipalities)

Data & NewsWho we are, what we do, what you can buy, how you can buy, Newsletters, Magazines…

Electronic auctions On line access to public auctions

Supplier AreaInformation on e-procurement models, correct way to participate to public tender, ...

www.acquistinretepa.it

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FornitoriFornitoriConsip Suppliers

FornitoriFornitoriPP.AA.

Payments

Delivery

On-line/fax order

Frame contracts

Contracts Reporting

Needs Feedback

Monitoring Tools

Public Procurement Model

Framework contracts - the model

20Source: analysis and research from consip

Consip’s framework contracts - 2009 results

Central

38%

Local

33%

Health

24%University

5%

• The Consip’s framework contracts’ turn over in 2009 corresponds to 1,7 billion euro

• Consip managed 69 framework contracts; 19 of them activated in 2009

• The most important framework contracts, in terms of total expenditure in €, are meal vouchers, energy related services (heat, electricity), facility management, fuel coupons

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Framework contracts – eshops

E-shops represent an open window on the web in which goods and services selected through framework contracts are available to PA procurement offices registered to the Program

Product Product selection and selection and online (or fax) online (or fax)

orderingordering

Traditional Traditional and electronic and electronic

tenderstenders

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Electronic tenders and marketplace - Decree 101/2002

• In particular, by the adoption of this Decree, new electronic awarding procedures are introduced for the first time in the italian legislative framework. These new methods do not replace the traditional awarding procedures, but they represent an alternative measure for the awarding authorities in the public procurement processes.

• In particular the Decree provides for the Public Administration two different electronic goods and services purchasing techniques, to be performed in compliance with the transparency and non discrimination principles:

• the electronic tender

• the marketplace

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Decree 101/2002 – The electronic tender

1. The Electronic tender, according to the provision set by the article 1.a) and b) of the Decree 101/2002

• is a procurement procedure with whom contracting authorities purchase goods and services both above and below the European threshold limit

• and exactly a public contract awarding procedure exclusively performed through electronic devices in compliance with the provisions set out in the Decree itself.

2. Auction format is defined by the following elements:

• Style of negotiation: Open - Blind (sealed bid)

• Award criteria: Lowest price - More economically advantageous tender

• Ranking algorithm: SUM Score = “Technical Score” + “Economical Score” RATIO Score = Economical bid/Technical Score

• Type of negotiation: Continuous - Single round – Multiple round

1. The Electronic tender, according to the provision set by the article 1.a) and b) of the Decree 101/2002

• is a procurement procedure with whom contracting authorities purchase goods and services both above and below the European threshold limit

• and exactly a public contract awarding procedure exclusively performed through electronic devices in compliance with the provisions set out in the Decree itself.

2. Auction format is defined by the following elements:

• Style of negotiation: Open - Blind (sealed bid)

• Award criteria: Lowest price - More economically advantageous tender

• Ranking algorithm: SUM Score = “Technical Score” + “Economical Score” RATIO Score = Economical bid/Technical Score

• Type of negotiation: Continuous - Single round – Multiple round

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Advantages (vs traditional auctions) Transparency :

Each step is recorded; Clearness and standardisation of procedures; It is not possible to modify data recorded; The procedure can be seen by hundreds of persons

Time reduction Automation of awarding criteria evaluation, that can lead to choose to

have no Awarding Commission Closing steps (e.g.: notification to participants; signing of contract) can

be performed on-line Cost reduction

Facilitate participation travel costs

Disadvantages (vs traditional auctions)

Tenders can be contended on a minor number of parameters

IT equipment required

The electronic auction – advantages and disadvantages

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MEPA

Qualified suppliers selected through a qualification process, starting from the date of publication of the “qualification notice”

Suppliers

Central Government

Universities Local

Government Health bodies

Buying administrations

Mark

et

Qualification notice(public

announcement)

The PA marketplace - the modelMEPA (Electronic Marketplace for Public Administrations)

• The marketplace is a fully electronic system for purchasing goods and services below the EU threshold

• It works as a virtual market in which the acquiring Public Administration can select goods and services offered by several suppliers from an electronic catalogue offered in a virtual shop shown on the Consip’s website. The marketplace is open to qualified suppliers who comply to the provided selection criteria

• The whole process is conducted by using electronic and digital means including the electronic signature, in order to legally guarantee the transactions

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The qualification notice will also provide information on:

• product and service categories• objective and subjective needs for qualification• technical and quality characteristics of supplies as well as

service levels to take into consideration during the qualification phase

• assessment criteria for qualification requests

Furthermore, general supply conditions have to be drafted (i.e. contract template)

Qualification notice

publication

Suppliers qualification

operating phase ‘una tantum’ phases

Suppliers qualification

notice Transactions

The PA marketplace - the phases

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Item nameItem name

technical specifications (standardized catalogue)technical specifications

(standardized catalogue)Supplier’s name

Supplier’s name

PricePrice

The PA Marketplace - the catalogues

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The PA Marketplace - buying options

Public users may buy in 2 different ways:

• making a direct purchase selecting goods and services from the catalogue

• negotiating the product quality and service levels with qualified suppliers (Request for Quotation), handling on-line the entire purchasing process and digitally signing the order

Direct purchase

Request for Quotation

Public user Supplier

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Furnitures

IT HW and SW

Stationery

Healthcare

Individual

protection devices

Electric maint. svcs

Training &

Education svcs

Elevators maint. svcs

Gas providing

svcs

Electric material and air condit. equip.

Cleaning products

Print & Copy

equipment

Laboratory

equipment

TLC products

Office cleaning

svcs

Office and road signals

The PA Marketplace - the available product categories

3030

9,419,6

30,438,9

50,4

63,4

78,7 83,4

109,2

130,7

172,2

93,4

0

15

30

45

60

75

90

105

120

135

150

165

180

Val

ue o

f or

ders

(m

ln €

)

.

2006

2007

2008

2006 2,9 5,1 7,9 9,7 12,5 15,4 18,0 18,9 21,2 24,7 29,3 38,0

2007 2,8 5,8 9,3 11,6 15,2 18,9 23,9 25,1 29,9 39,3 50,8 83,6

2008 9,4 19,6 30,4 38,9 50,4 63,4 78,7 83,4 93,4 109,2 130,7 172,2

January February March April May June July August September October November December

2.926 6.23811.899 13.903

18.73323.656

30.67235.433

42.60251.209

63.245

28.691

0

20.000

40.000

60.000

80.000

Tra

nsac

tions

n°

2006 779 1647 2812 3492 4559 5483 6342 6707 7596 8860 10046 11468

2007 766 1757 3035 3910 5271 6445 8119 8744 11069 14842 20289 28173

2008 2926 6238 11899 13903 18733 23656 28691 30672 35433 42602 51209 63245

January February March April May June July August September October November December

2009

230

73.000

The PA Marketplace - the business (transactions and value of orders)

3131

The PA Marketplace - some results, more in depth…

2004 2005 2006 2007 2008 2009 Note

Product categories

17 19 18 16 17 14Focus on key categories (products and services)

“Active” Buyers

540 1.100 1.255 2.748 4.288 5.070Out of 6.000 “registered” buyers

On line Catalogues

324 771 1.146 1.809 3.692 5.477

SME’s represents more than 97% with strong presence (66%) of “micro” (< 10 employees)

On line items 113.207 190.484 226.748 332.465 539.725 1.355.985 87% ICT/Office supply

N° transactions

3.143 9.677 11.468 28.173 63.245 72.796 81% Direct Order 19% RFQ

Transaction value

8,3 mln €

29,8 mln €

38,2 mln €83,6 mln €

172,2 mln €

mio € 230,6overall:

mio €575,5

20% Direct Orders 80% RFQ Average value Direct

Order: 1.300 € Average value RFQ:

10.900€

3232

• Over 5000 suppliers making business on the emarketplace• 97% of enterprises registered are SMEs• 66% of the SME’s are micro enterprises ( < 10 employees)• More than 1.300.000 catalogue items

320 average transactions per working day

80% of the enterprises who used it in 2008 continued also in 2009 (with 17% increase in their turn over)

105.000 euro is the average yearly turn over

43% of SMEs sell outside the borders of their region (domestic cross border business)

140 eMarketplace Supplier Training Desks all over the country

2009

The PA Marketplace - some results

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The Jury’s motivation: the MEPA winner in category 2b “…as it is a highly innovative initiative. Its impact is high for government administrations but most importantly for SMEs as they can offer goods and services which are relevant for public administrations… The MEPA has also ensured user take-up through communication plans and training. More specifically through the setting up of training desks responding to specific needs shown by the enterprises using the system…”

This award given to Consip represents an acknowledgement to the MEPA for having improved and facilitated the access to public procurement to enterprises, especially SMEs. At the same time MEPA contributes to rewarding the valiant effort the Italian PA and suppliers are making towards modernization.

More information on:www.epractice.eu/en/awards

The PA Marketplace - The European eGovernment Awards 2009

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1. A FA is “an agreement between one or more contracting authorities and one or more economic operators, the purpose of which is to establish the terms governing contracts to be awarded during a given period”

2. Where a FA is concluded with several economic operators and not all the terms of the contracts are laid down in the FA (“incomplete” FA), specific contracts can be awarded by the CAs by reopening competition “on the basis of the same and, if necessary, more precisely formulated terms, and, where appropriate, other terms referred to in the specifications of the framework agreement”.

3. Nevertheless, “When awarding contracts based on a framework agreement, the parties may under no circumstances make substantial amendments to the terms laid down in that framework agreement”.

4. Supply contracts (specific contracts, SC) based on FAs are concluded between a single CA and a single supplier.

1. A FA is “an agreement between one or more contracting authorities and one or more economic operators, the purpose of which is to establish the terms governing contracts to be awarded during a given period”

2. Where a FA is concluded with several economic operators and not all the terms of the contracts are laid down in the FA (“incomplete” FA), specific contracts can be awarded by the CAs by reopening competition “on the basis of the same and, if necessary, more precisely formulated terms, and, where appropriate, other terms referred to in the specifications of the framework agreement”.

3. Nevertheless, “When awarding contracts based on a framework agreement, the parties may under no circumstances make substantial amendments to the terms laid down in that framework agreement”.

4. Supply contracts (specific contracts, SC) based on FAs are concluded between a single CA and a single supplier.

The new purchasing procedures - The framework agreements

four kinds of FA

Framework contracts

•1 supplier•Complete (all terms fixed)

•Several suppliers•Complete (all terms fixed)

•1 supplier•Incomplete (not all terms laid down)

•Several suppliers•Incomplete (not all terms laid down)•2-stage: competition shall be reopened

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1. Entirely digital purchasing process

2. For purchases above and below the EU threshold

3. Based on Indicative Bids (maybe an e-Catalogue) that can be, later, up-to-date to qualify to a Call for Tenders

4. Maximum 4 years

5. Call for Qualification to DPS contains:

• List of Commodities, Categories, Meta-products

• List of requested Business Attestations (i.e. Certifications)

• (eventually attached to Call for Qualification) Technical Specs., S.L., Terms & Conditions

• Awarding Criteria for the following Call for Tenders

6. No dead-line, for Suppliers, to present Request for Qualification (Open Procedure)

7. Supplier’s Request for Qualification has to be evaluated within 15 days

8. Public Buyers buy in only one way: publishing a Call for Tenders (Open Procedure), inviting all the Suppliers that qualified before the dead-line, sending the Request for Quotation and receiving Suppliers’ Bids

1. Entirely digital purchasing process

2. For purchases above and below the EU threshold

3. Based on Indicative Bids (maybe an e-Catalogue) that can be, later, up-to-date to qualify to a Call for Tenders

4. Maximum 4 years

5. Call for Qualification to DPS contains:

• List of Commodities, Categories, Meta-products

• List of requested Business Attestations (i.e. Certifications)

• (eventually attached to Call for Qualification) Technical Specs., S.L., Terms & Conditions

• Awarding Criteria for the following Call for Tenders

6. No dead-line, for Suppliers, to present Request for Qualification (Open Procedure)

7. Supplier’s Request for Qualification has to be evaluated within 15 days

8. Public Buyers buy in only one way: publishing a Call for Tenders (Open Procedure), inviting all the Suppliers that qualified before the dead-line, sending the Request for Quotation and receiving Suppliers’ Bids

The new purchasing procedures - The dynamic purchasing system

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•1 supplier•with negotiation

Framework Agreement

Dynamic Purchasing

System

Supply side

…

Buy side

Framework Framework ContractsContracts

•1 supplier•fixed condition

•Standard

•Customised

•Concentrated•Standardized

•Fragmented•Specialised

• The adoption of different tools is related to the market (buy and supply side) characteristics

• More business opportunities for SME’s through e-procurement

MEPAMEPA

Evolution of the e-Procurement tools

•mult. suppliers•fixed conditions

•mult. suppliers•with negotiation