Gustavo Piga

About This Presentation
Title:

Gustavo Piga

Description:

Title: Slide 1 Author: Bright_E Last modified by: drouillon_f Created Date: 4/23/2003 8:37:17 AM Document presentation format: On-screen Show (4:3) Company – PowerPoint PPT presentation

Number of Views:11
Avg rating:3.0/5.0
Slides: 29
Provided by: Brig199
Learn more at: https://www.sigmaweb.org

less

Transcript and Presenter's Notes

Title: Gustavo Piga


1
The Italian system for centralised purchasing and
electronic procurement
Gustavo Piga University of Rome Tor
Vergata THE NEW PROCUREMENT PROCEDURES AND
INSTRUMENTS, Department of Contracts, Malta and
OECD/Sigma Valletta, January 26th
2
The electronic developments in US procurement
  • Survey over 47 US states (1998 vs. 2001)
  • In Moon (2001), Journal of Public Procurement
  • Electronic Ordering from 44,7 to 68,1 of all
    States
  • Purchasing Cards from 68,1 to 85,1
  • Digital Signature Accepted for Tender Documents
    from 0,09 to 14,9
  • Reverse Auction 10,6 in 2001
  • E-proc Adoption grows with
  • Managerial Innovation
  • Centralized procurement with a high level of
    authority
  • Size of the State.
  • Anyway
  • It is also true that ICT development has lead
    public procurement to become more centralized,
    spending and investing in qualified human
    resources to manage purchases. Indeed, the new
    European Directive introduces both e-proc and
    central purchasing stations.
  • Italy is no exception. To the contrary .

3
Rationalization Program on Public Spending
Spending for Goods and Services
Total amount of Italian public expenditure for
goods and services sums up to about 100,9
billion, about 15 of overall public spending and
7,7 of GDP
Public spending for goods and services, 2003 ()
Public spending for goods and services eligible
for the Program, 2003 ()
University and other P.A. 5
University and other P.A. 6
CentralGovernment 16
Central Government 17
Local Government 26
LocalGovernment 36
Health bodies 42
Health bodies 52
About 102,3 billion
About 42 billion
3.2 of GDP 20 of discount permanent
reduction 0.4 deficit if so desired
Report on needs for the year 2003 and Consip
estimate
4
Rationalization Program on Public Spending the
aim of the Program
  • Define purchasing strategies
  • Draw up competitive frame contracts for Public
    Administrations
  • Promote the use of e-procurement within the
    Public Administration
  • Provide purchasing monitoring tools to the
    Public Administration
  • Deliver innovative e-procurement models

Service efficiency and quality
Processsimplification
Cost saving
5
Rationalization Program on Public Spending
The financial act 2000 (December 23, 1999 n.488)
laid down the foundations of the Rationalization
Program for Public Spending on Goods and
Services. Article 26 says
The Ministry of Economy and Finance (MEF),
according to the regulations currently available
regarding suppliers selection, draws up 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.
6
Rationalization Program on Public Spending
  • The following Financial Acts (2001, 2002, 2003,
    2004, 2005, 2006) streamlined the Program scope
    and the roles of involved actors.
  • Today, according to the current legal framework
  • Frame contracts regard goods and services
  • 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. 2006
    Financial Act has contingency plans in case
    public finances worsen
  • Our tenders affect all purchases of the Public
    Administration, where a Consip frame contract is
    available, thanks to the benchmarking effect.

7
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 160 employees, is in charge of implementing
    the Rationalization Program on Public Spending
    for goods and services.

8
Consip Task and structure - DARPA
9
E-Procurement tools
www.acquistinretepa.it
Electronic Shops
e-Marketplace
  • Purchases below the Eu threshold
  • Direct Purchase or RFQ
  • Many to Many approach
  • Supplier defined eCatalog
  • Purchase Scope
  • Low cost
  • Highly fragmented
  • 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
  • Demand aggregation
  • Slow and High obsolescence

When the good has a rapid obsolescence Consip
resorts, if possible, to ONLINE
AUCTIONS Automatic Technical and economic offer
evaluation
Development of Frame contract through electronic
system
ASP towards other Administrations
Below EU Threshold
Above and Below EU Threshold
10
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)
11
Electronic shop Strategy
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
Side effects
Change Management in the Public Administration
Industry dynamics
12
Frame contracts Process simplification
From the traditional.
to the new process of goods and services
procurement
Public Administration activities
Goods/ Services delivery
Payment
Needs analysis
Supplier selection
Possible litigation with suppliers
Contract and tender documentation
Contract signing
Fax / on-line Order
... achieving, in addition, administrative
procedures reductions for suppliers
13
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
14
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
15
Frame Contracts Some examples of unit cost
reduction
70 signed frame contracts and more than 40
product categories by 31/12/05
16
Split of framework contract in many lots
competition issues (1/2)
  • Consip started a comprehensive plan of
    cooperation with the Antitrust Authority. The
    objective is to make the tenders handled by
    Consip even more open and accessible to all
    providers.
  • This is why, for any tender procedure, Consip
    asks Antitrust Authoritys advice (via the
    Ministry of Economy and Finance) concerning the
    competitiveness of the tender itself.
  • The degree of competition in a given procurement
    auctions may depend on the participation
    requirements, rules regarding enterprises
    groupings, and the number and dimension of lots
    in which the contract is divided.

17
Split of framework contract in many lots
competition issues (2/2)
  • Length of contract to avoid lock-in (but mind
    collusion)
  • Participation requirements should be as low as
    possible and not focus excessively on requests
    which are only indirectly related to the
    execution of the contract, allowing alternative
    means of proof for the capacity to fulfil the
    contractual duties
  • Temporary groupings of enterprises and
    sub-contracting are a mean to overcome the
    barriers to entry for enterprises not having the
    necessary critical mass to participate to
    public tenders however it should not be allowed
    in a grouping the presence of two enterprises
    who could match participation requirements
    autonomously
  • Increasing the number of lots decreases their
    size hence facilitates participation of SME and
    reduce risk of lock-in on the other hand, more
    and smaller lots may facilitate collusive
    market-sharing agreements and render more
    difficult the exploitation of potential economies
    of scale
  • Combinatorial auctions where package bidding is
    allowed can be a way to allow the exploitation of
    possible scale economies while at the same time
    facilitating participation of SMEs.

18
Innovative e-procurement tools On line auctions
  • Possible Procurement auction formats
  • 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 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.
  • Sealed Bid Auctions bidders submit bids in
    sealed envelopes the person submitting the best
    bid wins the auction and pays what he bid
    (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-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, in order to hinder
    potential collusion generated by dynamic.
  • The various formats have different advantages and
    disadvantages in terms of information gathered
    by the bidders and by the auctioneer, potential
    collusion, and participation. Some of these
    format my not be allowed by current directive,
    albeit useful in same cases
  • Consip experimented the following auction
    formats
  • Descending, Multiple round with unlimited n. of
    round, Multiple round with a pre-defined n. of
    round, Sealed bid (pay-as-you-bid).

19
Does e-proc curb corruption?
Procurement and corruption by Lengwiler e
Wolfstetter, in Handbook of Public
Procurementedited by Dimitri, Piga e Spagnolo,
Cambridge University Press, forthcoming in
September 2006
  • Possible formats of corruption
  • Modify bid of favored bidder to let him/her
    win reverse auction keeps all players active
    until price hits each players cost
  • Pre-Auction to determine favored bidder with
    sealed bid tender the purchasing price for the
    taxpayer is higher as winning firm has to pay the
    bribe. Wth reverse on-line auction firm wins, not
    paying bribe, by having taxpayer pay lower price
  • After seeing bids, the most advantageous briber
    is approached on-line auction eliminates this by
    making bids public.
  • Good! However keep in mind that
  • If on-line auction favors collusion, then sealed
    bid electronic auction with proper security
    reduce possibility of corruption ( see Consip)
  • Corruption through lower quality of goods and
    services remains a possibility.
  • Public e-Procurement Common Technical
    Specifications elaboration using State of the Art
    and Learning Demonstrators. Framework Contract
    ENTR/01/58-TOOLSW DG ENTR.

20
Does e-proc lower collusion?
On-line auctions and collusion (1)
  • Strictly speaking, e-auctions increase
    transparency.
  • For example, compared to a sealed-bid tender, in
    ascending auction economic operators get to see
    the evaluation of their competitors in real time
    and are allowed to react to it. This increased
    transparency is often positively considered by
    procurers
  • Thanks to electronic tools enterprises make
    various offers and at the same time see the
    others bids. In this way already at the
    psychological level competition is increased.
    This in turn leads to better results and savings
    for the Public Administration. Bidders are masked
    with a code, which does not allow them to know
    the identity of others during the tender. In this
    way the Administration tries to avoid
    collusions (cited in Magrini, p. 36).

21
Collusion in auctions

On-line auctions and collusion (2) taken from
Albano e Spagnolo, in Handbook of Public
Procurementedited by Dimitri, Piga and Spagnolo,
Cambridge University Press, forthcoming,
September 2006
  • Ascending auctions remove uncertainty about the
    value of the good and make firms bid more
    agressively. But online auctions can increase
    collusion
  • competitors get to see, in real time, if a cartel
    agreement is being broken by a defector and have
    the possibility to retaliate with lower prices.
    Knowing this, there will be no defection and
    collusion will be self-sustained, causing harm to
    the Administration
  • the openness of the format may scare away small
    firms that anticipate being easily topped by big
    firms during the auction.
  • Indeed, current practice seem to show a certain
    caution among EU procurers to choose the
    e-auction method even if available. Sealed-bid
    e-auctions are favored.
  • In a sealed-bid, retaliation can occur only in a
    successive tender, if there is one, and therefore
    cartels are less sustainable than in an
    e-auction.
  • And .
  • Do Framework Agreements facilitate or hinder
    collusion?

22
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 not particularly
    restrictive selection criteria
  • The entire process is digital, using digital
    signature in order to guarantee transactions
    legally

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
23
Innovative e-procurement tools Public
Administrations Marketplace
Results
  • 59 vs 2004
  • 274 vs 2004
  • 208 vs 2004

550 registered suppliers (81 SMEs) 1.100
Punti attivi registrati
24
Innovative e-procurement tools Public
Administrations Marketplace
25
Innovative e-procurement tools Public
Administrations Marketplace - Major advantages
  • To Public Administrations
  • costs and process cutting
  • 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
  • selling cost reduction (due to broadening of
    potential customers base and lower intermediation
    cost)
  • higher visibility
  • more competitiveness especially in local markets
    (for small and medium sized enterprises)
  • B2G introduction, especially for large sized
    enterprises, in addition to existing B2B and B2C.
  • WHAT WILL HAPPEN WITH DYNAMIC PURCHASING SYSTEMS?

26
Rationalization Program on Public Spending
Programs results
27
Back-Up
28
Green Procurement
Green procurement policies support represents
an additional goal to frame agreements stipulated
by Consip
  • The tender for the supply of paper to PA has been
    worked out also with ANPAs partnership (National
    Agency for Environmental Protection) focusing on
    the definition of eco-compatibility requirements
  • exclusion of products containing elementary
    chlorine ECF hexavalent chlorine etc..
  • Ecolabel, EMAS or ISO 14001 certifications
  • The tender on motor vehicles includes a double
    feeding model (methane petrol or gpl petrol) as a
    test to verify the feasibility of a future
    specific tender on ecological vehicles, electric
    vehicles, hybrids (electric-petrol)
    etc..according to the recent European regulation
  • Tenders for the supply of photocopiers include
    the collection of disused second-hand
    photocopiers according to the present regulation
  • Future tenders on the supply of rubbish skips for
    waste collection will comply with the present
    rules as they will include differentiated waste
    disposal
Write a Comment
User Comments (0)