By Julia Mills
E-procurement is not new technology. In fact, it’s one of the top seven due diligence measures discussed in our December 2016 online webinar Closing Time: How to Avoid Being a Late-Bid Case Study. Increasingly, e-procurement is becoming the standard to which private and public organizations are doing business, including in developing economies, as a report published by the World Bank Group in 2016 details: of 77 developing economies surveyed, 73 had websites set up for procurement with varying degrees of advancement, from handling bids and awards to simply providing information.
But there are still entities that are not adopting the new technology and processes. For example, according to a report by Blur Group, councils in the UK are not following best practices for e-procurement, despite the National Procurement Strategy of 2014, which required that public organizations introduce e-procurement portals and e-tendering to make the processes more time and money efficient.
Fortunately, there are reports of e-procurement successes cropping up in the media with increasing regularity.
Saving time and money
According to a report from India, the Directorate General of Supplies and Disposals is working on the development of an electronic portal for procurement. Among the benefits touted by the government, saving time within the streamlined process tops the list, as the portal will reportedly provide an ease of business that supports the “Minimum Government, Maximum Governance” campaign of the current administration. The report also discusses the money that will be saved, as the new system will allow for more competition for each tender.
Reportedly, the EU Commissioner for Internal Market, Industry, Entrepreneurship and SMEs stated in April 2016 that EU members that had made the transition to e-procurement were already experiencing savings of 5% to 20%, and posited that given the size of the EU procurement market, even at the lowest level of 5%, those savings could amount to around €100 billion if all economies were to adopt e-procurement platforms.
In 2014 the UK launched G-Cloud, an e-commerce platform designed to enable IT procurement, specifically cloud services, and in 2015 began building the Crown Marketplace to facilitate all government procurement. According to Cloud-9: The Future of Public Procurement, a report put together by think-tank Reform, G-Cloud has delivered savings of 20% to 50% compared to legacy contracts. If this savings could be translated across all procurement, Reform posits that government could experience an estimated savings of £10 billion (based on successes like those reported from South Korea and Estonia). And even if that level of success is not available and the UK stays on their current trend, Reform predicts gains of close to £500 million annually.
Providing protection
E-procurement is being used as a tool for ensuring transparency in the public bidding process in Nepal, according to an article in Republica. The portal will reportedly be a “one-stop platform” for bidders and will work to make public procurement objective and transparent. According to the article, e-tendering began in April 2016 with only a small number of departments and it is expected that the rest of the government will be integrated slowly.
In Bangladesh, e-procurement has reportedly seen a jump from 8,000 online tenders in June 2014 to more than 55,000 by May 2016. According to the report from The Daily Star, online procurement is significantly reducing collusive bidding practices. With a loan from the World Bank, the government has announced plans to expand online procurement capabilities in order to keep pace with the ongoing demand.
ARKA Telecom reports that there are over 4,500 users on Armenia’s electronic procurement system, which was launched in 2011 and was fully functioning by 2012. The system now has a reported 130 ordering customers and over 4,500 total participants, made up of local and foreign entities that use the platform every day. Hayk Hovhannisyan, head of a unit in the Armenian finance ministry’s procurement promotion centre, is reported as saying that the system is ensuring “active competition” within Armenia’s electronic market. When asked about cybersecurity concerns, he reportedly stated that the system is secure and has not experienced any cyber attacks, but that the government is taking precautionary steps now in order to ensure that the system remains secure.
Evolving for the better
As organizations move away from paper-based, physical submissions, email and fax replies, there are bound to be growing pains and kinks to work out. As reported by diginomica in an April 2016 article, while e-procurement in the UK leveled the playing field for small- and medium-sized enterprises (SMEs), gave everyone access to the public sector, and opened a network of suppliers that buyers had otherwise never heard of, old habits are causing some pushback. For example, according to the article, some buyers are concerned by shortened contract terms, from 10 to two years, as they are expecting a rigorous procurement process at the end of the term. But issues such as this can be resolved by better communication and training by the government in helping organizations navigate the new processes.
The good news is that as economies and procurement evolve, so will e-procurement, and the evolution will be much smoother than when using paper-based systems. As reported by The Register, current users are looking forward to such developments because they want more of what e-procurement can offer across both public and private sectors.
