san sebastian, aprile 11 th 2005
DESCRIPTION
“Public e-Procurement in Italy: the Consip’s role”. Luca Mastrogregori –E-procurement Strategy Resp. - Consip S.p.A. San Sebastian, Aprile 11 th 2005. Italian Public Procurement Legal Framework - Purchasing above the European thresholds. - PowerPoint PPT PresentationTRANSCRIPT
San Sebastian, Aprile 11th 2005
Luca Mastrogregori –E-procurement Strategy Resp. - Consip S.p.A.
““Public e-Procurement in Italy: Public e-Procurement in Italy: the Consip’s role”the Consip’s role”
2San Sebastian, April 11th, 2005
Italian Public Procurement Legal Framework - Purchasing above the European thresholds
Italy, as member of the European Community (EU), has adopted, within its regulations (DL 157/95 and DL 358/92), the following EU directives:
92/50/CEE concerning open tenders for public services supply 77/67/CEE, 80/767/CEE, 88/295/CEE concerning open tenders
for public goods supply
Within the above frame, three different types of tenders are regulated:
open procedures, i.e., national procedures whereby all interested providers may submit a tender
restricted procedures, i.e., national procedures whereby only providers invited by the authority may submit a tender
negotiated procedures, i.e., national procedures whereby authorities consult the chosen suppliers and negotiate with one or more of them the terms of the contract
In this context, tenders which appear to be abnormally low are regulated by the following articles: 25 DL 157/95 and 19 DL 358/92
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When the value of the purchases is less than EU thresholds (154,014.00 € or 236,945.00 €, depending on the kind of contract and administration), the general principles of open tendering are regulated by national laws.
These national laws are specific to each Administration: RD 827/24 (for Central Administrations), DLGS 502/92 (for Health Agencies), DLGS 267/00 (for Municipalities and Provinces).
Central Administrations have also a special regulation - Law DPR 384/01 - for a particular kind of procurement, the so called “purchasing in economy” (that is for purchases up to € 130.000 and where the administration also directly provides with its own resources a part of the work/service/supply), that provides for:
“cottimo fiduciario”, when the procurement is obtained from external providers after having asked for at least 5 estimate tenders (RFQ-Request for Quotation). If the spending is below €20.000 procurement may be made from one specific provider.
“amministrazione diretta”, when the PA uses its own material/tools and its own personnel
Italian Public Procurement Legal Framework - Purchasing below the European thresholds
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• In year 2002, the Italian Government has approved and signed an innovative Decree which regulates the use of digital procedures for public procurement. By means of this Decree, public administrations may use digital procedures as a whole or as a partial replacement of steps foreseen in traditional tenders.
• Two different digital procedures for goods & services purchasing are taken into consideration:
• on-line auctions, for purchase both above and below the European threshold limit whereby the whole tendering process is managed on-line
• marketplace, (type B2G) only for purchasing below the European threshold limit
• To access to these new instruments, enterprises only need a limited equipment (digital signature according to Italian legislation)
• Italy has been the first EU Country to have an e-procurement regulation allowing purchases above the EU threshold limit, anticipating some of the contents of the “Legislative Package”.
Italian Public Procurement Legal Framework - e-Procurement Regulation
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The financial act 2000 (December 23, 1999 n.488) has laid down the foundations of the “Program for Public Spending Rationalization of Goods and Services”. Article 26 says:
“ The Ministry of Economy and Finance (MEF), according to the regulations currently available regarding suppliers selection, draws up national frame contracts with providers. Within the frame contract, the selected providers have to accept any order coming from public administrations.”
Public Spending Rationalization
By means of 2 Ministerial Decrees (February 2000, May 2001), the Ministry entrusted Consip S.p.A. with the development and management of the Program.
Note:National Frame Contract (adopted by Consip) do not fall within the category of Framework Agreement (as defined by the EU legislative Package).It falls within the general concept of contract since it is not possible to modify or negotiate the conditions of the contract
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Public Spending Rationalization
The following Financial Acts (2001, 2002, 2003, 2004) streamlined the Program scope and the roles of involved actors.Today, according to the current legal framework:
Frame contracts regard goods and services of national interest;
All public administrations (e.g. Central Government, municipalities, health agencies, etc.) may purchase within the frame contracts. Alternatively, whenever they run their own tenders, they have to take price and quality of the frame contracts as a benchmark;
Within the frame contracts, that specify a maximum amount of sales, selected suppliers commit themselves to accept orders coming from all Public Administrations.
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Objectives Strategies
Focus on “state of the art” in supply market
Wide range of goods and services Constant assessment of service levels
Direct costs, through: - demand aggregation (economies of scale)- competition among suppliers- product standardization
Indirect costs, through: - on-line bidding and ordering- process simplification- centralization of litigation
To guarantee quality standards in P.A. purchases …
… while
reducing
Rationalization Program on Public Spending Objectives and strategies
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Change Management in the Public Administration• changes in P.A. may face cultural resistance• time and cost savings in processes allow re-
qualification of Human Resources profiles and operations
Industry Dynamics• economical and political impact on the market
operators, in particular SMEs • possibility to develop an industrial policy
Quality• possibility to obtain better quality• difficulty to monitor ex-post the respect of agreed
standards (rating firms?)
Rationalization Program on Public Spending - Challenges
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Rationalization Program on Public Spending Spending for Goods & Services
* Report on estimated needs for the year 2003 and Consip estimate
Total amount of public expenditure for goods and services sums up to about € 97 billion(*), about 15% of overall public spending and 8.8% of GDP
In 2003 the Program’s activity has been covering goods and services for which public expenditure amounts to approximately € 15 billion
Public spending for goods
and services, 2003 (%)
Source: Consip estimates
Central Government16%
Health bodies50%
Local Government
24%
University2%
Other P.A.8%
Total = € 96,6 billion
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Consip Task and structure
Consip is a joint-stock company totally and directly owned by the Italian Ministry of Economy and Finance (MEF), and it operates exclusively to serve Public Administrations
Consip’s operations are carried out through two divisions:
the DSIT (Treasury Information System Division), with
about 300 employees, is in charge of managing the Information System of the Ministry of Economy and Finance
the DARPA (PA On-line Procurement Division), with about 180 employees, is in charge of implementing the Rationalization Program on Public Spending for goods and services
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Consip Task and structure - DARPA
Legal Advice Staff (Program Mgmt, Monitoring, Innovative
Projects, Research Unit)
eProc Systems(IT Platform
management)
Universities
Sourcing(Purchasing strategies)
Healthcare Admin.
Local Authorities
Central Administrations
Industry 1
Industry 2
Industry n
Puchasers
“Marketing” Purchaser side
“Marketing” Supplier side
eProc Strategies(Marketplace management)
DARPA
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ElectronicShops
Purchases within frame contract (through traditional tender or on-line auctions process)
Direct Purchase Many to one approachPurchase scope:
- Large volumes- Standardized- Low price volatility- Slow obsolescence- Demand aggregation
On lineAuctions
Automatic Technical and economic offer evaluation
Purchase scope:- Specialized- High price volatility- Rapid obsolescence
e-Marketplace
Purchases below the Eu threshold
Direct Purchase or RFQ Many to Many approach Supplier defined
eCatalog
Purchase Scope:- Low cost- Highly fragmented
E-Procurement tools
Above and Below EU Threshold Below EU Threshold
www.acquistinretepa.it
Development of Frame contract through electronic system
ASP towards other Administration
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E-Procurement Portal
On-line services
Notices
On-line orders
Marketplace
Tender publication, supplier qualification for Public Marketplace, ....
Opportunity to buy on line using frame contracts conditions
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 & News Who we are, what we do, what you can buy, how you can buy, Newsletters, Magazines…
On line auctions On line access to public auctions
Supplier Area Information on e-procurement models, correct way to participate to public tender, ...
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Electronic shops Operational model
Contracts reporting
Monitoring tools
NeedsFeedback
Delivery
On-line/fax order
Public Administrations
Consip Suppliers
Frame Contracts (public tender)and e-shops activation
Payments
Portal www.acquistinretepa.it
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Electronic shops Operational model
E-shops represent an open window on the web in which goods and services selected through tenders and frame contracts are available to PA procurement offices registered to the Program
Product Product selection selection
and online and online orderingordering
Traditional Traditional and and
electronic electronic tenderstenders
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Frame contracts Process simplification
From the traditional process for goods and services procurement ….
Fax / on-lineOrder
... achieving reductions of transaction cost for both P.A. and suppliers…
Needs analysis
Goods/ Services delivery
PaymentSupplier selection
Possible litigation
with suppliers
Contract and
tender document
ation
Contract signing
Consip activities
…to the new process
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Frame contracts and electronic catalogues Usage and break down by public sectors
Source: Consip estimates
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Customer satisfaction
Macro indicators
Analytic indicators
Average
Consip’s imagineInnovation 7.44Transparency 7.36Confidence 7.05
7.24
Expectations from Consip
Simplification of production processes 7.43Inexpensiveness 7.23Intermediation capability 7.22Product/Service quality 6.9
7.18
Quality
Web site 7.8Call Centre 7.7Ordering comfort 7,5Correspondence of products with expectations 7.....Product completeness 5.8Number of products 5.5
6.51
Value
Comparison with other products/services 6.7Time saving 6.26Quality/Price Ratio 6.0
6.26
Customer retention
Purchasing of other products 6.42Advice of colleagues 5.9Re-purchasing of the same product 5.7
6.02
Claims 8.02
Customer Satisfaction
6.35
0
10
20
30
40
50
60
70
Customer satifaction Index (1-100) by sector
Evaluation: 1= Very low 10= Very high
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Innovative e-procurement toolsOn line auctions
Advantages (vs traditional auctions) Transparency :
Each step is recorded; Clearness 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
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Innovative e-procurement toolsOn line auctions
Possible Procurement auction formats:
Standard Sealed Bid or one Single Auctions: bidders submit a single secret bid; the person submitting the best bid wins the auction and pays what she bids (pay-as-you-bid) OR the person submitting the best bid wins the auction but pays only the second best bid (pay-as-the-second-best).
Descending Auction (English Auction): the price starts high and competing bidders cut the price until no-one is willing to bid any lower.
Multiple-Round Descending Auction: multiple round auctions are similar to descending ones; in multiple round the price does not decrease continuously but round by round with a predefined percentage. A multiple round auction is the discrete version of the descending auction.
Descending-Clock Auction (Japanese): the price decreases continuously in a predetermined period of time (e.g. 1 hour) in which players do not have to submit bids and they are considered to stay in the auction until they decide to exit. The prize is awarded to the last bidder remained in the auction.
Anglo-Dutch Auction: consists in adding a final sealed-bid round (e.g. only for the two best bids) to a descending auction.
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Innovative e-procurement toolsOn line auctions
Auction Auction rulesrules
Auction Auction rulesrules
BidsBidsBidsBidsTimeTimeTimeTime
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Innovative e-procurement toolsOn line auctions
Base Price:€ 199,000
Saving:€ 83,000
N° of competing vendors: 8
Awarding Price:€ 116,000
% cost reduction:42%
110
120
130
140
150
160
170
180
190
200
Tender awardedWinning bid at 116,000 Euro
(-42%)
200 10 30 40 50 60 70 80 90 100 110 120
Minutes
7 vendors 3 vendors6-5-4 vendors8 vendors 2 vendors
Extension time startsBest bid at 137,000 Euro
(-31%)
Last 10 min.Best bid at 147,500 Euro
(-25.8%)
€ M
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Innovative e-procurement tools Public Administrations’ Marketplace
The Marketplace is a virtual market in which any P.A. can select goods and services offered by several suppliers, for purchases below EU threshold
The Marketplace is open to qualified suppliers (and goods) according to non restrictive selection criteria
The entire process is digital, using digital signature in order to ensure legal compliance and overall trasparency of process
Public Administratio
n Marketplace
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)
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Direct purchase
Request for Quotation
Public user Supplier
Marketplace: buying optionsMarketplace: 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
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Item Item namenameItem Item namename
technical specifications technical specifications (standardized catalogue)(standardized catalogue)technical specifications technical specifications
(standardized catalogue)(standardized catalogue)Supplier’s Supplier’s namename
Supplier’s Supplier’s namename
PricePricePricePrice
Innovative e-procurement tools Public Administrations’ Marketplace
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Public Administrations’ Marketplace:A snapshot (March ‘05)
Product categoriesNumber of Items:
> 125.000
Registered Users: >2.200
Active Users:700
Performed Transactions (Jan 2004 – March 2005):
5000 (12 Mio Euro)
Registered Suppliers:
450
Available
• Electric material
• Office equipment
• IT (SW/HW)
• IT aid for disabled (HW/SW)
• Individual protection devices
• Small laboratory equipment
• Products and accessories for venous and arterial catheter
• Stationery and printing supplies
• Office furnishings
• Air Conditioning supplies
• Surgical instruments
• Phone products and accessories
• Facility Mgmt Services
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Public Administrations’ Marketplace - Major advantages
To Public Administrations:
costs and length of process reduction
potential broadening of suppliers base
easy access to selected goods (pre-defined quality standards)
information transparency and ease of comparison among goods
purchases logging and subsequent expenditure monitoring
To Suppliers:
higher visibility and broadening of potential customers base
selling cost reduction (due to lower intermediation cost)
possibility to exploit competitive advantages in local markets (for small and medium sized enterprises)
B2G introduction, especially for large sized enterprises, in addition to existing B2B and B2C