Titolo della presentazione

1
Public e-Procurement in Italy the Consips role
Luca Mastrogregori E-procurement Strategy Resp.
- Consip S.p.A.
San Sebastian, Aprile 11th 2005
2
Italian Public Procurement Legal Framework -
Purchasing above the European thresholds

• Italy, as member of the European Community (EU),
  has adopted, within its regulations (DL 157/95
  and DL 358/92), the following EU directives
• 92/50/CEE concerning open tenders for public
  services supply
• 77/67/CEE, 80/767/CEE, 88/295/CEE concerning open
  tenders for public goods supply
• Within the above frame, three different types of
  tenders are regulated
• open procedures, i.e., national procedures
  whereby all interested providers may submit a
  tender
• restricted procedures, i.e., national procedures
  whereby only providers invited by the authority
  may submit a tender
• negotiated procedures, i.e., national procedures
  whereby authorities consult the chosen suppliers
  and negotiate with one or more of them the terms
  of the contract
• In this context, tenders which appear to be
  abnormally low are regulated by the following
  articles 25 DL 157/95 and 19 DL 358/92

3
Italian Public Procurement Legal Framework -
Purchasing below the European thresholds

• When the value of the purchases is less than EU
  thresholds (154,014.00 or 236,945.00 ,
  depending on the kind of contract and
  administration), the general principles of open
  tendering are regulated by national laws.
• These national laws are specific to each
  Administration RD 827/24 (for Central
  Administrations), DLGS 502/92 (for Health
  Agencies), DLGS 267/00 (for Municipalities and
  Provinces).
• Central Administrations have also a special
  regulation - Law DPR 384/01 - for a particular
  kind of procurement, the so called purchasing in
  economy (that is for purchases up to 130.000
  and where the administration also directly
  provides with its own resources a part of the
  work/service/supply), that provides for
• cottimo fiduciario, when the procurement is
  obtained from external providers after having
  asked for at least 5 estimate tenders
  (RFQ-Request for Quotation). If the spending is
  below 20.000 procurement may be made from one
  specific provider.
• amministrazione diretta, when the PA uses its
  own material/tools and its own personnel

4
Italian Public Procurement Legal Framework -
e-Procurement Regulation

• In year 2002, the Italian Government has approved
  and signed an innovative Decree which regulates
  the use of digital procedures for public
  procurement. By means of this Decree, public
  administrations may use digital procedures as a
  whole or as a partial replacement of steps
  foreseen in traditional tenders.
• Two different digital procedures for goods
  services purchasing are taken into consideration
• on-line auctions, for purchase both above and
  below the European threshold limit whereby the
  whole tendering process is managed on-line
• marketplace, (type B2G) only for purchasing below
  the European threshold limit
• To access to these new instruments, enterprises
  only need a limited equipment (digital signature
  according to Italian legislation)
• Italy has been the first EU Country to have an
  e-procurement regulation allowing purchases above
  the EU threshold limit, anticipating some of the
  contents of the Legislative Package.

5
Public Spending Rationalization
The financial act 2000 (December 23, 1999 n.488)
has laid down the foundations of the Program for
Public Spending Rationalization of Goods and
Services. Article 26 says
The Ministry of Economy and Finance (MEF),
according to the regulations currently available
regarding suppliers selection, draws up national
frame contracts with providers. Within the frame
contract, the selected providers have to accept
any order coming from public administrations.
By means of 2 Ministerial Decrees (February 2000,
May 2001), the Ministry entrusted Consip S.p.A.
with the development and management of the
Program.
Note National Frame Contract (adopted by
Consip) do not fall within the category of
Framework Agreement (as defined by the EU
legislative Package). It falls within the general
concept of contract since it is not possible to
modify or negotiate the conditions of the contract
6
Public Spending Rationalization

• The following Financial Acts (2001, 2002, 2003,
  2004) streamlined the Program scope and the roles
  of involved actors.
• Today, according to the current legal framework
• Frame contracts regard goods and services of
  national interest
• All public administrations (e.g. Central
  Government, municipalities, health agencies,
  etc.) may purchase within the frame contracts.
  Alternatively, whenever they run their own
  tenders, they have to take price and quality of
  the frame contracts as a benchmark
• Within the frame contracts, that specify a
  maximum amount of sales, selected suppliers
  commit themselves to accept orders coming from
  all Public Administrations.

7
Rationalization Program on Public Spending
Objectives and strategies
Objectives
Strategies

• Focus on state of the art in supply market
• Wide range of goods and services
• Constant assessment of service levels

To guarantee quality standards in P.A. purchases

• Direct costs, through
• demand aggregation (economies of scale)
• competition among suppliers
• product standardization
• Indirect costs, through
• on-line bidding and ordering
• process simplification
• centralization of litigation

while reducing
8
Rationalization Program on Public Spending
- Challenges

• Change Management in the Public Administration
• changes in P.A. may face cultural resistance
• time and cost savings in processes allow
  re-qualification of Human Resources profiles and
  operations
• Industry Dynamics
• economical and political impact on the market
  operators, in particular SMEs
• possibility to develop an industrial policy
• Quality
• possibility to obtain better quality
• difficulty to monitor ex-post the respect of
  agreed standards (rating firms?)

9
Rationalization Program on Public Spending
Spending for Goods Services
Total amount of public expenditure for goods and
services sums up to about 97 billion(), about
15 of overall public spending and 8.8 of GDP
Other P.A. 8
Central Government 16
University 2
Public spending for goods and services, 2003 ()
Local Government 24
Health bodies 50
Total 96,6 billion
In 2003 the Programs activity has been covering
goods and services for which public expenditure
amounts to approximately 15 billion
Report on estimated needs for the year 2003 and
Consip estimate
Source Consip estimates
10
Consip Task and structure

• Consip is a joint-stock company totally and
  directly owned by the Italian Ministry of Economy
  and Finance (MEF), and it operates exclusively to
  serve Public Administrations
• Consips operations are carried out through two
  divisions
• the DSIT (Treasury Information System Division),
  with about 300 employees, is in charge of
  managing the Information System of the Ministry
  of Economy and Finance
• the DARPA (PA On-line Procurement Division), with
  about 180 employees, is in charge of implementing
  the Rationalization Program on Public Spending
  for goods and services

11
Consip Task and structure - DARPA
DARPA
Legal Advice
Staff (Program Mgmt, Monitoring, Innovative
Projects, Research Unit)
Puchasers
eProc Systems (IT Platform management)
Sourcing (Purchasing strategies)
eProc Strategies (Marketplace management)
Marketing Supplier side
Marketing Purchaser side
Universities
Industry 1
Healthcare Admin.
Industry 2
Local Authorities
Central Administrations
Industry n
12
E-Procurement tools
www.acquistinretepa.it
Electronic Shops
On line Auctions
e-Marketplace

• Purchases within frame contract (through
  traditional tender or on-line auctions process)
• Direct Purchase
• Many to one approach
• Purchase scope
• Large volumes
• Standardized
• Low price volatility
• Slow obsolescence
• Demand aggregation

Development of Frame contract through electronic
system
ASP towards other Administration

• Purchases below the Eu threshold
• Direct Purchase or RFQ
• Many to Many approach
• Supplier defined eCatalog
• Purchase Scope
• Low cost
• Highly fragmented

• Automatic Technical and economic offer evaluation
• Purchase scope
• Specialized
• High price volatility
• Rapid obsolescence

Above and Below EU Threshold
Below EU Threshold
13
E-Procurement Portal
On-line services
Registration
Public buyer registration
Data News
Who we are, what we do, what you can buy, how you
can buy, Newsletters, Magazines
Notices
Tender publication, supplier qualification for
Public Marketplace, ....
On-line orders
Opportunity to buy on line using frame contracts
conditions
Marketplace
On line access to public Marketplace
On line auctions
On line access to public auctions
Supplier Area
Information on e-procurement models, correct way
to participate to public tender, ...
Specific Market Area
Data and information on Client market Area
(Central PA, Health bodies, Universities,
Municipalities)
14
Electronic shops Operational model
Portal www.acquistinretepa.it
Frame Contracts (public tender) and e-shops
activation
Consip
Suppliers
Contracts reporting
Needs Feedback
Monitoring tools
On-line/fax order
Public Administrations
Delivery
Payments
15
Electronic shops Operational model
E-shops represent an open window on the web in
which goods and services selected through tenders
and frame contracts are available to PA
procurement offices registered to the Program
Traditional and electronic tenders
Product selection and online ordering
16
Frame contracts Process simplification
From the traditional process for goods and
services procurement .
Consip activities
Goods/ Services delivery
Payment
Needs analysis
Supplier selection
Possible litigation with suppliers
Contract and tender documentation
Contract signing
Fax / on-line Order
to the new process
... achieving reductions of
transaction cost for both P.A. and suppliers
17
Frame contracts and electronic catalogues Usage
and break down by public sectors
Source Consip estimates
18
Customer satisfaction
Macro indicators Analytic indicators Average
Consips imagine Innovation 7.44 Transparency 7.36 Confidence 7.05 7.24
Expectations from Consip Simplification of production processes 7.43 Inexpensiveness 7.23 Intermediation capability 7.22 Product/Service quality 6.9 7.18
Quality Web site 7.8 Call Centre 7.7 Ordering comfort 7,5 Correspondence of products with expectations 7 ... .. Product completeness 5.8 Number of products 5.5 6.51
Value Comparison with other products/services 6.7 Time saving 6.26 Quality/Price Ratio 6.0 6.26
Customer retention Purchasing of other products 6.42 Advice of colleagues 5.9 Re-purchasing of the same product 5.7 6.02
Claims 8.02
Customer Satisfaction 6.35 6.35
Customer satifaction Index (1-100) by sector
Evaluation 1 Very low 10 Very high
19
Innovative e-procurement toolsOn line auctions

• Advantages (vs traditional auctions)
• Transparency
• Each step is recorded
• Clearness of procedures
• It is not possible to modify data recorded
• The procedure can be seen by hundreds of persons
• Time reduction
• Automation of awarding criteria evaluation, that
  can lead to choose to have no Awarding Commission
• Closing steps (e.g. notification to
  participants signing of contract) can be
  performed on-line
• Cost reduction
• Facilitate participation
• travel costs
• Disadvantages (vs traditional auctions)
• Tenders can be contended on a minor number of
  parameters
• IT equipment required

20
Innovative e-procurement toolsOn line auctions

• Possible Procurement auction formats
• Standard Sealed Bid or one Single Auctions
  bidders submit a single secret bid the person
  submitting the best bid wins the auction and pays
  what she bids (pay-as-you-bid) OR the person
  submitting the best bid wins the auction but pays
  only the second best bid (pay-as-the-second-best).
  
• Descending Auction (English Auction) the price
  starts high and competing bidders cut the price
  until no-one is willing to bid any lower.
• Multiple-Round Descending Auction multiple round
  auctions are similar to descending ones in
  multiple round the price does not decrease
  continuously but round by round with a predefined
  percentage. A multiple round auction is the
  discrete version of the descending auction.
• Descending-Clock Auction (Japanese) the price
  decreases continuously in a predetermined period
  of time (e.g. 1 hour) in which players do not
  have to submit bids and they are considered to
  stay in the auction until they decide to exit.
  The prize is awarded to the last bidder remained
  in the auction.
• Anglo-Dutch Auction consists in adding a final
  sealed-bid round (e.g. only for the two best
  bids) to a descending auction.

21
Innovative e-procurement toolsOn line auctions
Auction rules
Time
Bids
22
Innovative e-procurement toolsOn line auctions
Base Price 199,000
Saving 83,000
N of competing vendors 8
Awarding Price 116,000
cost reduction 42
200
Last 10 min. Best bid at 147,500 Euro (-25.8)
190
180
Extension time starts Best bid at 137,000
Euro (-31)
170
160
M
150
Tender awarded Winning bid at 116,000 Euro (-42)
140
130
120
7 vendors
3 vendors
6-5-4 vendors
8 vendors
2 vendors
110
20
0
10
30
40
50
60
70
80
90
100
110
120
Minutes
23
Innovative e-procurement tools Public
Administrations Marketplace

• The Marketplace is a virtual market in which any
  P.A. can select goods and services offered by
  several suppliers, for purchases below EU
  threshold
• The Marketplace is open to qualified suppliers
  (and goods) according to non restrictive
  selection criteria
• The entire process is digital, using digital
  signature in order to ensure legal compliance and
  overall trasparency of process

Qualification notice (public announcement)
Buying administrations
Suppliers
Qualified suppliers selected through a
qualification process, starting from the date of
publication of the qualification notice
Public Administration Marketplace

• Central Government
• Universities
• Local Government
• Health bodies

Market
24
Marketplace buying options

• Public users may buy in 2 different ways
• making a direct purchase selecting goods and
  services from the catalogue
• negotiating the product quality and service
  levels with qualified suppliers (Request for
  Quotation), handling on-line the entire
  purchasing process and digitally signing the order

25
Innovative e-procurement tools Public
Administrations Marketplace
Item name
technical specifications (standardized catalogue)
Suppliers name
Price
26
Public Administrations MarketplaceA snapshot
(March 05)
Product categories
Number of Items gt 125.000

• Available
• Electric material
• Office equipment
• IT (SW/HW)
• IT aid for disabled (HW/SW)
• Individual protection devices
• Small laboratory equipment
• Products and accessories for venous and arterial
  catheter
• Stationery and printing supplies
• Office furnishings
• Air Conditioning supplies
• Surgical instruments
• Phone products and accessories
• Facility Mgmt Services

Registered Users gt2.200 Active Users 700
Performed Transactions (Jan 2004 March
2005) 5000 (12 Mio Euro)
Registered Suppliers 450
27
Public Administrations Marketplace - Major
advantages

• To Public Administrations
• costs and length of process reduction
• potential broadening of suppliers base
• easy access to selected goods (pre-defined
  quality standards)
• information transparency and ease of comparison
  among goods
• purchases logging and subsequent expenditure
  monitoring

• To Suppliers
• higher visibility and broadening of potential
  customers base
• selling cost reduction (due to lower
  intermediation cost)
• possibility to exploit competitive advantages in
  local markets (for small and medium sized
  enterprises)
• B2G introduction, especially for large sized
  enterprises, in addition to existing B2B and B2C