A strategy for European e-Procurement. Is e-invoicing next? [11 FAQ’s]

May 22, 2012  |  Europe, Government, Legal

A few days ago we mentioned that the European Commission wants to mandate e-procurement across all Europe institutions and Member States in 2016. And even thought he European Parliament has to vote on this proposal, it is highly interesting.

First, because this initiative can be a solid driver for e-invoicing adoption. And second, because this approach could very well be the road that lies ahead for e-invoicing adoption in Europe. Just take a look at question 7 and 8 underneath. You’ll get the picture.

01

What is e-Procurement?

The use of electronic communication and transaction processing by government institutions and other public sector organisations when buying supplies and services or tendering for public works.

02

How is e-procurement relevant for the European economy?

Public procurement is one of the major items of expenditure for Member States and an important element of the European Single Market. The EU’s public procurement market is estimated to have been worth in excess of €2 trillion (or just under 20% of the EU’s GDP) in 2010.

03

What are the benefits of e-procurement for contracting authorities?

Well, e-procurement:

A. can prevent public bodies from reducing the level of services they provide to citizens
B. allows public bodies to deliver public services more efficiently without introducing more cuts to government outputs to serve citizens.
C. can significantly simplify the way procurement is conducted,
D. reduces waste
E. delivers better procurement outcomes (lower price, better quality) by stimulating greater competition across the Single Market.
F. makes the procurement process simpler,
G. makes that contracts can be concluded more quickly and that processing costs for contracting authorities can be lowered.
H. delivers higher participation in tenders by the increased transparency and easier access to tender opportunities , which ultimately leads to lower prices and better outcomes.

Contracting authorities and entities that have already made the transition to e-procurement commonly report savings of between 5 and 20% of their procurement expenditure. Given the size of the total procurement market in the EU, each 5% saved could return around €100 billion to the public purse (equivalent to building more than 150 large-sized hospitals).

04

Are there examples of how e-procurement benefits public authorities?

There is a growing body of evidence that e-Procurement can benefits public authorities. Some example of savings.

A. Following the introduction of e-procurement, Portuguese hospitals were able to achieve price reductions of 18% on their procurement contracts. In aggregate, the switch-over to e-procurement in Portugal is estimated to have generated savings of about €650 million in the first year.

B. XchangeWales – the Welsh e-procurement programme - delivered benefits of £58 million (December 2011), three years after it was launched.

C. UGAP (Union des groupements d’achats publics) – the French central purchasing body – estimates that the progressive switch to e-procurement reduced the administrative burden for buyers by 10% (e.g. through faster analysis of bids and easy access to documents) and by another 10% for the legal services involved (as less legal control was required when e-procurement is used).

05

What are the benefits of e-procurement for SMEs?

E-procurement:

A. makes the life of SMEs easier as the process becomes simpler and cheaper than when using paper.
B. reduces the costs of participating in public tenders for SMEs (less printing, no mailing costs etc.)
C. allows SMEs to more easily identify tender opportunities relevant for them (all tender documents can be downloaded directly from the internet) and therefore can expand their business opportunities.

06

What are the costs of implementing e-procurement?

In many countries e-procurement solutions already exist. There is no need for a small contracting authority to build its own solution as it can either use the services of a Central Purchasing Body or subscribe to an e-procurement service already available on the market, for a reasonable price.

Even when new infrastructure for e-procurement is set-up, the costs are rapidly recouped. The investment costs of setting up the Welsh e-procurement programme (XchangeWales) were recouped in only one year.

07

Why is Europe presenting this strategy?

In 2005, ambitious targets for the use of e-procurement were set. However, today e -procurement is used in only 5-10% of procurement procedures carried out across the EU.

In order to address the slow level of take-up and to reap the benefits offered by e-procurement, the European Commission identified the need for a comprehensive strategy for e-procurement including both legislative and non-legislative actions.

08

Why is the take-up of e-Procurement still lagging behind expectations?

The responses to the 2010 Green Paper on e-procurement identified two main drivers of the slow take-up:

A. the inertia exhibited by certain stakeholders who need to be persuaded to change their ingrained habits;
B. market fragmentation that can emerge from the existence of a wide variety of systems, sometimes technically complex, deployed across the EU that can lead to increased costs for suppliers.

The strategy published today aims to address these two barriers.

09

What actions is the Commission proposing under this Strategy?

The European E-procurement Strategy contains both legislative and non-legislative measures.

The legislative measures presented in the strategy refer to the legislative proposals to modernise European public procurement adopted by the European Commission in December 2011 (IP/11/1580). One objective of these proposals is to make e-procurement the rule rather than the exception.

The strategy also describes how the Commission wishes to support Member States, contracting authorities and suppliers in implementing these legislative proposals.

The non-legislative flanking measures are:

A. Supporting financially and technically the development of e-procurement infrastructure via EU programmes and fund;
B. Identifying and sharing best practice in the area of e-procurement
C. Monitoring the level of take-up and the benefits of e-procurement;
D. Implementing a wide-ranging dissemination strategy to inform stakeholders about the opportunities and benefits offered by e-procurement;
E. The Strategy also announced that the European Commission itself will move towards full e-procurement by mid-2015 – a full year ahead of the deadline for Member States – and that the Commission will make its e-procurement solutions available to Member States.

10

Why now? Were there any other proposals in the past?

The 2010 evaluation of the 2004 Action Plan E-procurement found out that, despite good progress in implementing e-procurement legislation and in setting-up the infrastructure, the level of up-take of e-procurement was low. So, additional actions were needed.

11

What are the next steps?

The Commission intends to organise an annual high-level conference on e-procurement, bringing together a wide-range of stakeholders to debate the latest developments in e-procurement.

The first annual conference will take place on the 26th of June 2012 and will be entitled  “Electronic Procurement - Challenges and opportunities”. It invites interested stakeholders to attend.

In order to promote steady progress towards the objective of full e-procurement in the EU, the Commission intends to closely monitor both the take-up of e-procurement and its economic impact and will publish a report on e-procurement by mid-2013.

This report will identify both the progress that has been achieved and any outstanding issues which remain, together with recommendations on the next steps to be taken.


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