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.
Development Impact
- 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.
Economic Development
- 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.
Implementation Challenges
- 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.