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18 May 2012 | Paul Henty
The European Commission recently published its paper Strategy for e-procurement. The publication followed the recent proposed revised procurement directives, in which the Commission proposed the wholesale adoption of electronic procurement as the default means of public and utilities purchasing.
The paper argues e-procurement can deliver massive reductions of between 5 and 20 per cent in procurement costs. These arguments are backed up by experience from various EU nations, as well as from other jurisdictions such as South Korea (which has a fully online marketplace). Other advantages of e-procurement are also claimed, such as greater participation from SMEs and environmental benefits (principally from reduced paper usage).
The EU has missed a previous target to make 50 per cent of all procurements electronic by 2010 (it is currently between 5 and 10 per cent). The Commission attributes that to two particular barriers: an inertia or ingrained unwillingness of many purchasers to switch from traditional, paper-based systems, as well as market fragmentation across the EU Member States with a variety of different technical systems.
The proposed EU directives
The Commission hopes the revised procurement directives, introducing a new legal framework for full transition to e-procurement, will be adopted by the European Parliament and Council of Ministers by the end of 2012.
On 14 May, the Presidency of the Council of the European Union published a briefing paper summarising the status of negotiations on the European Commission's proposals for modernisation of the public procurement rules.
To re-cap, the directives propose:
- ● Compulsory electronic means of communication for specified phases of procurement procedures (electronic notification of tender opportunities and electronic availability of other documents) by mid-2014 (expected transposition time of the revised directives);
● Mandatory transmission of notices in electronic form, mandatory electronic availability of procurement documents and switch to fully electronic communication in all procurement procedures by mid-2016;
● Streamlining of dynamic purchasing systems, e-auctions and e-catalogues and introduction of e-CERTIS, a mandatory electronic clearing-house, which lists exhaustively the certificates and other proofs which contracting authorities may request from suppliers;
● Central purchasing bodies must make the full transition to electronic communication by the date of entry into force of the directive
The new law also encourages interoperability between systems in order to address a current divergence in technologies, fragmented along national borders.
The key proposals of the strategy paper
The paper states while the directives represent a step forward, they cannot by themselves bring about the shift to full electronic procurement. It has put forward the following complementary measures and proposals to assist the process.
●Supporting the development of e-procurement infrastructure via EU programmes and funding financially and technically. The Commission would follow earlier pilot programmes such as Pan-European Procurement Online (PEPPOL) to promote cross-border procurement infrastructure with significant investment in the development of e-procurement infrastructure across Europe, via the Connecting Europe Facility (CEF). Supported projects would be rolled out during 2014-2015 (CEF) and during 2014-2020 (structural funds).
●Identifying and sharing best practice in the area of e-procurement. Current online purchasing techniques need to be ironed out, to remove barriers to greater cross-border and SME participation. The Commission’s e-Tendering Expert Group (e-TEG) will survey current practices in e-procurement across the EU, issue recommendations to promote e-procurement systems to facilitate cross-border access by early 2013. By mid-2013, it will issue a report on best practice in e-procurement.
●Monitoring the level of take up and the benefits of e-procurement. The Commission intends to track the implementation of e-procurement and to document the efficiencies it can deliver. The Commission has launched a study aimed at developing EU wide indicators for e-procurement. It further intends to closely monitor both the take-up of e-procurement and its economic impact and to publish a report on e-procurement by mid-2013.
●Implementing a wide-ranging dissemination strategy to inform stakeholders about the opportunities and benefits offered by e-procurement. Contracting authorities have been slow to take up e-procurement. The Commission proposes to address this by disseminating information on e-procurement to local authorities, in order to boost its take-up rate.
The EU is itself a major purchaser of goods and services. The paper commits the Commission to the total use of e-procurement by mid 2015. The Commission states its willingness to share its own e-procurement tools and technologies. It will also use its clout on the international stage to push e-procurement within the World Trade Organization.
The legal implications
The paper does not alter the ‘hard law’ aspects of e-procurement proposed in the draft procurement directives (although the legislative process may do so). If, as planned, the draft directives are adopted by the end of 2012, the Member States will be required to implement the e-procurement by no later than mid-2016. The paper is a complement to this overriding aim, proposing supporting initiatives to realise interoperability and best practice.
Certainly, the paper’s aims are common sense and well-intentioned. Few would argue that e-procurement is less efficient than paper-based purchasing and a reduced number of divergent systems will facilitate cross-border service provision. The timeframes are, however, possibly unrealistic and dangerously ambitious; systems require proper time to be bedded down. To affect change in technology is a process which will itself have a cost, yet this is not counterbalanced against expected efficiency gains in the strategy paper. It is perhaps not surprising that timing was one of the key e-procurement points negotiated between the Commission and the presidency. To its credit, the Commission has sought political guidance on this aspect.
Care is indeed required. There have been unfortunate instances where e-procurement has created its own problems (see for example the case of J B Leadbitter & Co Limited v Devon County Council). These can include e-submission facilities that do not allow for proper or timely uploading of tender information, or the loss or leakage of confidential information from online systems (possibly resulting in commercial loss or a skewing of the competitive tender). These are more likely to arise if new models are imposed with undue haste, not allowing their users the necessary time to get used to and operate them correctly.
While these problems are not mentioned in the paper, they must be factored into any meaningful strategy on e-procurement. The occurrence of technical glitches can gain infamy and in themselves deter tenderers from participation. The proper time must be allowed to implement a sensible, realistic policy on e-procurement, so the strategy can yield expected efficiencies and not prove a false economy.
☛ Paul Henty is a solicitor at Speechly Bircham