REGIONAL PUBLIC PROCUREMENT CONFERENCE

1. EU eProcurement Star: the case of Portugaldeveloping and implementing eProcurement solutionsJoão de AlmeidaPublic Procurement Consultant Former Executive Board Member of Portuguese National Agency for Public Procurement (2007 – 2012 REGIONAL PUBLIC PROCUREMENT CONFERENCE 22 – 23 April 2013 Marrakesh, Morocco

2. 1. The National Agency for Public Procurement – overview Overall strategy for public procurement – review and results 3. The e-procurement perspective

3. MPU ANCP National Agency for Public Procurement MPU - Ministerial Purchasing Unit NATIONAL SYSTEM OF PUBLIC PROCUREMENT Key Stakeholders NISSION of ANCP is to increase the efficiency and savings of the Portuguese Public Administration Public Entities Public Entities Community / Society Tax payers / Citizens Government MoF Community / Society Tax payers / Citizens Contractors Suppliers MPU

4. Key values • Transparency, equal treatment, fair competition • Compliance with National and EU Legislation • Sustainability (priority to economic and environmental elements) • Encouragement of SME’s access to public markets Economic: Increase savings in public procurement (contributing to sound and better usage of tax payers’ money); Environmental (green public procurement): gradually incorporate environmental requirements within the selection / qualification and award criteria in public tenders Main goals The Agenda: towards a sustainable public procurement system

5. Public tenders with the aim of awarding framework agreementscovering categories of goods and services that aim to fulfill common needs of the Public Administration (16 categories so far). This strategy aims at creating value, financial gains, savings and cost reductions through framework agreements, which in turn promote synergies and economies of scale as a result of a concentration process. Development and implementation of a Technological Modelable to provide full support to framework agreement procedures and call-offs. Enhanced statistical information and reports on public procurement(goods and services). Setup of a comprehensive Public Procurement Information System, responding to both management control needs and EU requirements. The Agency’s Top priorities (2008 – 2012)

6. The SNCP comprises, apart from ANCP and the UMC, the mandatory and the voluntary contracting authorities and entities The mandatory contracting authorities and entities comprise Central Administration Services and Public Institutes The entities that can join SNCP on a volunteer basis are Local Authorities (Municipalities); Local Authorities’ Owned Companies Regional Authorities State Owned Companies Others (e.g. public associations...) The Portuguese Public Procurement System (SNCP)

7. Centralized Model - Framework Agreement (FA) ANCP (central purchasing body) Ministerial Purchasing Units (MPU) Selecting suppliers and awarding the best proposals for each Framework Agreement (FA) Acquisitions of goods and services for categories available in the FAs Call Off Stage Public Tender Supplier Selection Request for proposals Awarded suppliers Request for proposal Negotiation Awarding Contract awarded to the most economically advantageous tenders OR to the lowest price tenders Invitation for tendering to all the awarded suppliers (FA contractors) Supplier technical and financial selection criteria Best proposal (the Most Economically Advantageous Tender OR the lowest price), as defined on the FA Technical and functional requisites, contract requirements and economic proposal evaluation E-auction or traditional negotiation Purchase of goods and services covered by FAs are mandatory for the central public administration Framework Agreement Centralization Centralization of acquisitions of goods and services under the FAs ANCP can opt to centralize the purchase of goods and services covered by the FA (example: Vehicles and Vehicle Insurance)

8. Framework Agreements (FAs) Objectives Measures Benefits Public expenditure • FAs for the categories of major expenditure • Goods and services standardization • Reduction and rationalization of public expenditure and consumption. • Controlling Public Debt Savings • Awarding mainly based on the lowest price criteria • Definition of maximum price and minimum technical specifications, assuring quality and SLA patterns • Reduction of public debt balance Efficiency • Simplifying of purchasing process • IT innovation through e-procurement • Suppliers selection • Dematerialization of business processes • Allowing Public Administration modernization and increasing e-Government Competitiveness and quality • Supplier selection based on economic, financial, technical, environmental, quality and SLA related criteria • Possibility of grouping and subcontracting • Subdivision in lots – regional as well as by goods or services • Strengthening of market competion • Suppliers diversity and SME access • Best market conditions for Public Administration purchases (value for money) • Green Public Procurement goals • Monitoring of FAs performance • Ongoingimprovement of purchasing process Management information system • Management information through suppliers to ANCP, MPU and contracting authorities (mandatory)

9. Public tenders run by the Agency – 2008/2012 • 429 qualified and selected Suppliers (60%+ are SME) • Annual Public Expenditure addressed via the Agency’s framework agreements: • 1.000 MEUR (about 80% of total expenditure transverse to SNCP entities) • Savings 2009-2010: • Estimated: 150 MEUR • Achieved: 168 MEUR (+12%) • 16 Framework Agreements 27

10. 2011 2012: 514 Voluntary Entities / 429 Suppliers (271 SME = +60% of total) Approx. 1.800 public entities use the system on a mandatory basis

12. Green Public Procurement

13. Public Procurement in Portugal – Major Challenges • Increase centralization through call-offs under the Agency’s FAs • Increase the number of voluntary entities joining the System • New wave of Framework Agreements (version 2.0): offer new categories of goods and services and further improve the renewal of existing FA • Implement new Strategy for Ecological Public Procurement and Green Criteria (revision 2011-2013) • Conducting training and awareness sessions, development of skills and use of electronic means to support public procurement (end-to-end) • Monitoring the results and performance of framework agreements. • Developing the Technological Model (from sourcing to pay) Maintaining sustainability and delivering value

14. 1. ANCP, the National Agency for Public Procurement – overview Overall strategy for public procurement – review and results 3. The e-procurement perspective

15. Procurement Process • The procurement model (components) • The e - Procurement model (components) Mandatory since Nov’ 2009 e-tendering / e-awarding e-sourcing e-aggregation e-contract e-catalogue e-ordering e-invoicing e-payment

16. Security • Introduction of e- signature and e-registation • Workflow document management • Improve Data Auditing processes; Transparency Process • Simplified the relation Suppliers/Public Entities in Tendering Process • Reduced Paper consume • Improve standard Tendering Process • Improve communication • Operational management change 3 years of mandatory e-Public Procurement now! • Monitoring the value of contracts above and below thresholds • Improve auditing • Processes– faster and more efficient.

17. ReformingPublicProcurement in Portugal – Focuson E-Tender Public Entities Suppliers E -Platforms Web based tools – Report public contracts awarded • Public Procurement Savings • Management Fees

18. eProcurement – lessons learned and major challenges • Key issue: lack of integration of information along the procurement process make it impossible to run a proper controlling and monitoring function and system • Solution: develop an end-to-end technological model to ensure not only transparent and cost effective procurement processes, but also the construction of the knowledge base that is needed to support strategic decisions towards public expenditure reduction and optimization: • The Agency believes that implementation of this model will allow it to pursue its mission along three key strategic dimensions: • Financial – obtaining much needed savings and public expenditure reduction both in the short and the long term; • Political – through completely transparent, rigorous and efficient procurement processes; • Social – providing a better service for all stakeholders, achieving their buy-in and contribution, alongside a fundamental cultural change in the Public Administration towards the effective use of taxpayers’ funds.

19. eProcurement – Setting a New Trend in Public Management eProcurement The Next Step • Eprocurement as a support IT Tool for a better procurement management • Each public entity invests in technology, processes and control; • Investment in IT integration instead of Process Optimization; • Be reactive in data management instead of pro-active; • Each public entity invests in their own human and functional skills. • Eprocurement as part of public procurement strategy • Build common processes based on functional design, business process & supplier interfaces • Create a shared value sustainable solution reducing investments for the Government; • Manage Procurement as a strategy area of Government • Promote corporate Governance in electronic Public Procurement. Global E-Procurement Investment needs (M€)

20. Procurement development strategy: major goals • One Platform: Offering all components of the public procurement chain in one single web based tool • Single Sign On: One access point and data management for the different stakeholders • Real Time Solution: Real time data monitoring and control for the entire procurement process

21. Conclusions from our e-procurement implementation experience Key factors to E-Procurement Critical Success Factors and Dimensions E-Procurement as a new approachto define Public Procurement Strategy and not a mere “IT Tool to support public procurement”. Governmental Top-Down Project, transforming procurement from a tactical into a strategic issue. Political Investing in a Global Shared E-Procurement model optimizes management and decreases waste and redundancy costs. Create a Corporate Governance model to E-procurement and adapt Legislation to the new global trend. Financial E-Procurement success depends firstly on simplicity, transparence, reliable processes and people skills- and only then technological issues come. Improve a change management plan focused on Implementation. Social Deliver value and service (full visibility into cost, risk, performance) to the Stakeholders and get economic and business compliance. E-Procurement is not just “Savings”, it is also “Profits.”

22. Legal framework for e-Procurement in Public Procurement Sector • ePP IN THE CONTEXT OF A BROADER LEGAL AND ECONOMIC REFORM OF PUBLIC PROCUREMENT (2007 – 2013) • ePP AS A STRATEGIC TOOL FOR DELIVERING THE ENVISAGED RESULTS • THE LEGAL FRAMEWORK FOR ePP • MAIN FEATURES OF THE LEGAL REGIME • CONCLUSIONS & DISCUSSION

23. ePP IN THE CONTEXT OF A BROADER LEGAL AND ECONOMIC REFORM OF PUBLIC PROCUREMENT (2007 – 2011) • Overall reform environment (2007 – 2011) • Pressure from the market • Opportunity to improve efficiency in public administration • Three main pillars (Code + CPB + ePP) • The Code of Public Contracts • Transposition of EU 2004/17 and 18 Directives (compliance) • Coverage of the whole contract life cycle, beyond the formation stage (e.g. contract performance) • the provision of a mandatory usage of electronic means for all contracts valued above EUR 5.000

24. THE LEGAL FRAMEWORK FOR ePP • The Law making process: where policy makers and ICT experts meet Lawyers • Principles governing public procurement AND e-public procurement (EU, OECD, EBRD …) • Main sources: EU and National Law • The grounds for a trustworthy system: specific features • E-signature • Documents transmission, opening and “warehousing” • Time and deadlines management: time stamping • Automated decision making versus exclusive competences of awarding/selection committee

25. A SHORT SET OF LEGISLATION FOCUSING ON RELIABILITY A – Institutional regulations towards a centralised national system of PP B – Code of Public Contracts C – Specific ePP related provisions

26. A – Institutional regulations towards a centralised national system of PP B – Code of Public Contracts C – Specific ePP related provisions D – Implementation provisions 26

27. MAIN FEATURES OF LEGAL REGIME • Institutional law • accreditation of e-platforms – license to operate) • The process of accreditation is run by CEGER (an entity in charge of the government ICT networks, having no other involvement in public procurement) • Independent external compliance audit to each provider / platform • Aggregation, centralization and CPBs help delivering the change towards ePP • Public Contracts Law • Mandatory use of electronic means • The concept of “electronic means” • Operations covered • Selection of means depending on the type of procedure • Consequences of non-compliance • Contract formed through a non-ePP tool (“paper-based procedure”) is null and void (toughest sanction in Portuguese Administrative Law) • Disciplinary sanctions (e.f. fines) towards public entity management

28. 3 full years of mandatory e-Public Procurement The success of the adoption of e-Public Procurement in Portugal is by and large due to the constructive commitment of all stakeholders, namely the Public eTendering platform operators with several years of experience, mostly in the private market. All stakeholders involved in PP trust and rely on the system and tools and see ePP as a value-added improvement. Players involved Contracting Entities | Economic Operators | Public eTendering Platform Operators | External Auditors for Platform’s compliance auditing | National Certification Office of e-tendering Platforms – CEGER | National Agency for Public Procurement - ANCP | National Portal for Public Contracts – InCI (www.base.gov.pt) | Universities | Training Institutes | Lawyers | PP external consultants | Court of Auditors | Administrative Courts | Media | PR&Press | Political institutions | EU ................. 28

29. CONCLUSIONS & DISCUSSION • The winning partnership/alliance towards the big change • Government (political drive) • Industry (ePP operators and economic operators interested in accessing public markets) • Public Administrations (central, regional and local) • The key success factors • Overarching element: the magic word “confidence” • Attitude changing model: Legal, Economic, Educational/Training, Social Mkt • Three consistent pillars (Code, CPB, ePP) • Perception of gains and advantages • What to expect as future developments? TheLawmakers, the Lawyers and all other players have a say. Are we to evolve to an end-to-end ePP coverage? 29

30. Thank You.