Overview of e-Tendering System
- The use of electronic means to enhance the management of the public procurement process is one of the central components of public sector reform programs due to its potential development impact. Keeping in mind that governments are the single largest purchaser of a national economy and that the public procurement systems in low- and middle - income countries are typically far away from spending money in a transparent and efficient way, the application of digital technology offers opportunities for improvements that the public sector cannot afford to ignore. Benefits of e-Tendering System are in line with the objectives of internationally recognized public procurement systems: enhanced transparency & compliance, increased performance & quality, and economic development.
- Realizing the full potential of these technological advances in the area of public procurement is a challenge in itself. To perceive these developments simply as technological issues is to misunderstand their reach and relevance for policy, training, infrastructure, design, production and delivery, as well as technical literacy and awareness. As established ways of doing business and managing government procurement have long traditions and significant change will often encounter professional and vested interests, the most important ingredient for change will be government leadership, vision and change management capabilities.
- Breaking down the physical barriers of space and time, e-Tendering System allows a more transparent and efficient information flow as well as improved access to information and services. Beneficiaries include not only governments and suppliers but also the public at large in having access to transparent information on the public expenditure of taxpayers’ money.
- E-Tendering System facilitates higher quality outcomes for public procurement through improved accessibility and interoperability, which enable:
ü greater business access and competition for government expenditure (creating commercial benefits for business and price and quality gains for government);
ü integration and automation of many workflow processes for transactions and other supply chain management activities improving efficiency and reducing processing costs; and
ü greater and easier access to real time and historic information for management and audit (enabling higher quality decision making and planning as well as greater transparency and accountability).
- The implementation of e-Tendering System offers the opportunity of adding value to the relationship between government buyers and private businesses. An effective e- Tendering System program can deliver a broad range of benefits to taxpayers, the economy and the community generally. Online technology provides the potential to significantly reform the accountabilities and performance of public procurement systems.
Enhanced Transparency & Compliance
- At an early stage, e- Tendering System can provide access to a whole range of public procurement information at low cost and independently of time and location. Governments achieve a high level of transparency if they use the Internet for the free disclosure and distribution of public procurement information. Such information typically include the relevant legislation, policies and guidelines, procurement plans and notices, bidding documents, minutes of procurement activities, and contract award results. In reducing the asymmetry of public procurement information, e- Tendering System contributes to increasing the competition in terms of quantity (participation) and quality (openness and fairness).
- The application of online technologies can ensure compliance with the existing procurement policy end legislation. An e- Tendering System can automate the required procurement procedures thus allowing neither purchasing agencies nor bidders to deviate from the public procurement process. In this way, e- Tendering System helps governments to reduce the opportunities for corruptive practices.
- While enhanced compliance contributes to avoiding corruption and fraud, the transparency of real-time procurement information allows the early detection of corruptive and fraudulent activities. In addition, e- Tendering System contributes to reducing corruption and fraud by conducting the procurement process online and collecting all procurement data into a securely operated electronic system. Consequently, in-person contacts between purchasing agencies and bidders are no longer required, the risk of manipulating procurement information and documents can be minimized, and the availability and completeness of public procurement audit trails can be improved.
Increased Performance & Quality
- The benefits of online technology for the efficiency and effectiveness of government operations reflect the impact of e- Tendering System on the cost of transactions and value-for-money outcomes. These savings result from the reduction of transaction costs and prices.
- The potential impact of e- Tendering System on the cost of transactions is linked to savings that are related only to workflow and include significant savings in time due to the automation of the procurement procedures for both sides - purchasers and bidders. The fact that bidders do not have to travel any more to submit a bid in paper, does not only prevent coercive practices, such as physical attacks on bidders on their way to submit the paper bid, but also saves bidders a lot of time. Transaction costs of the public procurement process drop considerably by using the less expensive Internet rather than print media as public procurement information channel and reducing paperwork in general.
- Price reductions can be achieved as a result of three intrinsic e- Tendering System features: price transparency, stimulation of competition, and innovative public procurement procedures. Price transparency by disclosing contract award results online has reportedly avoided the conclusion of overprized public contracts and contributed to adjusting prices for goods, works, or services in line with true market price levels. The online publication of procurement notices provides an effective tool to reach out to private businesses in the market thus increasing the participation in public procurement. To this end, increased competition contributes to reducing the prices paid by the government. Innovative approaches in the area of public procurement include the managed aggregation of demand and electronic reverse auctions, when lower prices can be attributed to aggregated purchases and to online negotiation respectively.
- In addition to the measurable outcomes, e- Tendering System can be expected to provide significant but less quantifiable benefits through greatly improved management information and analysis. Currently, most large government organizations will have only limited insights into the wealth of public procurement information scattered around in multiple data formats and different archives and places. The application of digital technology for procurement information disclosure and transactions lays the foundation for the collection of those data, which provide the basis for performance measuring and monitoring. Besides the safekeeping of public procurement information and data, e- Tendering System ensures a much higher quality of public procurement reporting and decision-making.
- The level of transparency, compliance, performance, and quality of public procurement due to the application of e- Tendering System can achieve a dimension, which does not only provide for the development of a public procurement system that meets internationally recognized standards but also establishes the basis for a sound market economy with significant gains in productivity and competitiveness.
- The efficiency gains due to the application of e- Tendering System can have a clear economic impact. The total public procurement volume of a national economy typically counts for 10 to 20% of the GDP. Procuring only 10% of all public purchases through electronic means with a moderate 10% in price and cost reductions would result in total annual savings equal to one percent of the GDP.
- With government accounting for a substantial proportion of the economy, the speed of take-up of technology by the economy will be significantly influenced by the rate of government adoption. To this end, e- Tendering System catalyzes e-commerce and encourages the participation of small and medium enterprises, promotes the use of modern technology and the implementation of a national technological infrastructure, and supports the development of appropriate capacity and skills with the overall objective of economic growth and development.
- The complexities and risks of e- Tendering System program implementation are frequently misunderstood. Effective e- Tendering System implies that changes occur across areas of personnel and executive behavior, skills, regulations and legislation, operational policies, and business behavior. Few, if any, of these changes will occur simply through the acquisition of some hardware and software, and if this is the understanding and intended starting point to e- Tendering System then jurisdictions may find that the funds might better be spent on other priorities.
- The full benefits resulting from e- Tendering System adoption will only be realized through significant changes in the organization of public procurement operations and as such will require effective change management and excellent leadership bringing about collective commitment across government constituents and partnership with the business community. In the absence of such change management and leadership, the outcome may be at a net cost with technologies operating alongside or simply replicating traditional operational methods.
- Rather than being a technological add-on to an already complex environment, e- Tendering System needs to be understood as a tool to reform public procurement underpinned by an appropriate policy and legal framework, effective buyer and supplier activation including strong awareness and capacity building programs, technological infrastructure development, established standards, and sustainable operational e- Tendering System applications.
- Only if governments understand the potential benefits of e- Tendering System and demonstrate professional leadership and political will in managing the e- Tendering System program adoption as an integral part of reforming their public procurement systems, they will be able to tap the full potential of e- Tendering System and move forward their development agenda on the basis of increased public procurement governance and performance standards.