The Central project management agency, a public institution established by the Ministry of Finance of the Republic of Lithuania, acts as a Central purchasing body in Lithuania and provides an electronic catalogue available to the public and private sectors to arrange and manage their orders of products, services and works online.
Decision to launch the system
When the centralized public procurement was introduced in Lithuania, the electronic catalogue was also made operational; it acts as an interface and a workspace to carry out the post-award public procurement through the Central purchasing body. The goals of this electronic tool are to minimize paperwork, simplify the procedures, save time, reduce the cost of procurement and prices of products, services and works that are provided under the Framework agreements. Started on a voluntary base and having proved itself to be effective, the use of electronic catalogue was made mandatory for most public sector organizations. In 46 months of operation the electronic catalogue was used by more than 750 purchasing authorities for more than 4500 orders of products, services and works.
Benefits and impacts
The electronic tool proved itself to be very efficient and its benefits exceeded the implementation and operational costs by far. The direct savings due to the repetitive supplier competition organized and evaluated online reduced time expenditures from the procuring organizations' side are rated up to 45% of the order value or more than €2 million in total. Average time to complete the procurement has decreased by 4 times. Six product, services and works groups are available to be ordered, more are still to be added. SMEs compete on equal rights and succeed winning most of placed orders.
Policy Context
The initiative of setting up an electronic catalogue for the post-award public procurement is in the context of the European Commission initiative "i2010 eGovernment Action Plan"; accelerating eGovernment in Europe for the Benefit of All", by adding to the objective of achieving 50% of public procurement being carried out electronically in 2010, whose goal is also communicated in national legal acts. Together with the pre-award electronic procurement system of national Public Procurement Office, the electronic catalogue system is the only tool to perform electronic public procurement in Lithuania.
Green products with environmental consideration are included in the range of specifications provided in the electronic catalogue. The criteria are based on the European Commission's "Communication on public procurement for a better environment" and the "Green public procurement toolkit" presented on the Commissions website (http://ec.europa.eu/environment/gpp/toolkit_en.htm). Products are easily identified in the electronic catalogue, making it easy for a purchasing organization to choose among them. The eelectronic catalogue decreases the paper usage in public procurement to the minimum, as no tender documentation, proposals or evaluation documents on paper are required.
The electronic tool complies with the EU policy of information society as a Central purchasing body providing the training needed to perform electronic orders, preparing and submitting the proposals, using the electronic Signature and taking advantage of other functions of the system.
SMEs are encouraged to make use of the system, by providing only minimal reasonable requirements to qualify for the catalogue entry and non discriminating procedures to compete with any suppliers in the electronic workspace to win the orders afterwards.
The idea to use open source software was proposed since the beginning of the project. The idea is to support the companies working on open source projects and prove it is possible to implement a system without a need of expensive solutions.
Centralized public procurement and electronic public procurement in Lithuania are governed by national Law on the Public procurement, which includes the main principles on this subject from directives 2004/17/EC and 2004/18/EC of the European Parliament and of the Council.
The use of electronic signatures in public procurement in Lithuania is regulated by the national Law on electronic signature and the national Law on the Public procurement.
The activity of Central purchasing body is established according to the national Government decree and acts in the framework of the above mentioned national and European legal acts.
Description of target users and groups
Administrations: public authorities who are required to perform public procurement by the national Law of the Public procurement are allowed to use the electronic catalogue to order products, services and works that are provided there. The Target user in these organizations is the personnel responsible for carrying out public procurement procedures (typically preparing the tenders,documentation, specifications, evaluating the proposals etc.). There are approximately 2 500 organizations in Lithuania that would be able to fully use the system (central government, municipalities, education, health care institutions, environmental, culture organizations etc.), around 500 of which are autonomous or established by Central or regional government sector organizations. Almost 75% (374) of the organizations of the government sector have used the system at least once. Half of the organization registered within the system use the electronic catalogue on a regular basis. The number of organizations increases constantly as additional products and services are added to the system to be ordered, trainings are held and savings and other benefits are communicated.
Private sector: Whenever new products or services are to be introduced to the catalogue, tenders are held to sign the Framework agreements with private sector suppliers of needed products or services (be it industries, SMEs or individuals). For each agreement suppliers are limited from 5 to 15 for each product or service lot, or 200 in case of works. In 32 months of operation 122 companies have used or are using the electronic catalogue to win the order contracts, most of which are the SMEs. The number increases as new Framework agreements to enter the catalogue are signed, and interest in catalogue grows as public administrations switch to electronic catalogue from usual paper based public procurement.
Description of the way to implement the initiative
The initiative to start an electronic catalogue to manage the post-award public procurement derives from the need to make things simpler and more effective. The idea of simplicity was crucial to the project team as well, composed by 7 people, who have elaborated its main concept, by planning, organizing the activities, programming, tendering, advertising the project, and providing trainings.
Coordination
The electronic catalogue does not realize this simplification of the procedure by revolutionizing the public procurement process, but by automatically managing most of it stages, leaving to the user only the decisional part and making it convenient to manage for all parties involved. Presented nationally as an alternative way of doing public procurement, it has become a way of doing "less" procurement for public sector and making more use of succeeded tenders for the private sector.
Partnership
Partnership between public and private sector was given great attention by attracting both sides in decision making in order to propose new products, assess specifications before the publication, submit comments on overall changes to be implemented. This has been achieved through an electronic survey tool, which is part of the system.
Management of ICT and resources
As much the electronic catalogue was implemented using only internal human resources for programming, it was also based mainly on open source software, possibilities to add new functionality blocks to the existing construction and use freely available software snippets made it a highly configurable and flexible system. Presence of local resources makes it fast to develop and to implement new components.
Knowledge management
The statistics module represents the summarized data on the number of processed orders, their duration, prices, basic conditions set out by the purchasing organizations, discounts, number of participating suppliers. It gives a general view on how the catalogue is used, what are the typical conditions set out by purchasing authorities, what are the typical discounts or prices provided by suppliers for certain product groups and amounts. Every user has the possibility to view the history of each order made, the results and the status (cancelled, contract signing, delivery, payment thanks to an order monitoring system. Administrators access the information of all orders.
Technology solution
The system was created using mainly open source or freeware software to keep the budget low and have the ability to obtain and start using the software instantly; this was an issue at the beginning of the project. The following technologies were used:
- Linux operating system for server.
- Apache web server application.
- MySQL database management system.
- Joomla content management system.
The programming language was in PHP and technologies such as AJAX were also used. The solution allows easy user access to the electronic catalogue using any common web browser and an internet connection. A PDF file reader is required to open the contracts, which are generated by the system automatically as the supplier is awarded the contract.
User authentication and SSL connection is used for any online activity, involving order management or personal workspace.
Electronic signature is used to sign documents and catalogue contents by suppliers.It complies with the national Law on electronic signature; the signature verification is done using PKI.
Technology choice: Standards-based technology, Mainly (or only) open standards, Open source softwareMain results, benefits and impacts
Benefits perceived by the Public Authorities who use the electronic catalogue based on Framework agreements are:
- The price decrease due to repetitive competition in the catalogue is in average 26%. For certain product groups the discount reaches up to 40% compared to a regular public procurement.
- The time needed to perform the public purchase decreased by 4 times in average. Furthermore the purchasing authority is free to choose the terms that might be as tight as 7 days to sign the contract.
- The catalogue is being used as an effective and fast ordering tool to do the numerous "request-on-demand" orders.
Easy to use, the system is employed by many public authorities not particularly skilled in public procurement (such as kindergartens, libraries, care institutions etc.).
No special software is required to do public procurement electronically. Users require only basic ICT skills and go through the process intuitively as in a e-shop.
Public procurement law infringements are excluded and so there is no need to repeat the ordering process afterwards and there is no to break the law.
Private sector suppliers also benefit from the use of the electronic catalogue:
SMEs successfully compete against "big players" on the market. Electronic tool makes every supplier equal in submitting their proposal, as no qualification check is required once the supplier joins the catalogue. No public procurement law infringements detected resulting in fines. Elimination of paper work is necessary to qualify for and submit the proposal for the repetitive competition for orders placed online. Proposals are made using the prepared forms.
Transparency and high level of trust are guaranteed due to automated processes.
General benefits include the contribution to the spread of EU policies of electronic public procurement, green public procurement promotion.
Return on investment
Return on investment: Larger than €10,000,000Track record of sharing
Although the general approach on the electronic catalogues and legal aspects are different from country to country, before launching the project, several examples of working electronic catalogues were studied by reading the following documentation:
- EPS, Latvia: http://www.epractice.eu/cases/2238
- Consip, Italy: http://www.epractice.eu/cases/mepa
- OGC Buying solutions, United Kingdom: http://www.epractice.eu/cases/eMS
- Beschaffungsamt, Germany: http://www.epractice.eu/cases/1930
As the electronic catalogue was created, the solution was described in terms of processes and documents to the PEPPOL community, which is working on standards for electronic public procurement in Europe and electronic catalogues is one of their work packages. Membership in a reference group for any inquiries or collaboration request was agreed.
The electronic catalogue system was also presented for two other European countries. One of them was during the visit to Rikiskaup (State trading centre) in Iceland. During the visit from Bulgarian Public Procurement Agency, National Audit Office and Public Financial Inspection Agency in Lithuania, the electronic catalogue was described by the visiting parties as a comprehensive tool deserving a closer examination.
On a national level, an agreement with the authorities administrating the EU support for national projects has been reached, that simplified procedures that may be applied while checking the public procurement documentation for possible infringements if the procurement is done through electronic catalogue of the central purchasing body.
Lessons learnt
- A highly functional and economically effective system may be implemented using mainly Open Source software. While some organizations tend to buy or build solutions that are based on commercial software linking to existing platforms or interoperability issues, focusing on user support, there is a valid alternative to keep the budget low while receiving the declared goals.
- The electronic catalogue is a great tool to disseminate good practice among Public authorities and it could be used to implement EU policies on Green procurement,eProcurement, promote the usage of eSignature etc. Once implemented, the tool is usable by many organizations related to public procurement. That way e.g. expertise in developing and applying environmental criteria is easily shared and widely spread.
- It is important to focus on a user-friendly interface and on the simplicity of the system for its user rather than on effective user support and comprehensive instructions. To reduce the need of support, especially if human resources are limited, it is crucial to make the interface intuitive, processes recognizable, the state of the system and the status of the process easily to identify.