Public e-Procurement in Italy: Consip’s role and e-Proc System

1. Public e-Procurement in Italy: Consip’s role and e-Proc System Luca Mastrogregori Head of e-Procurement Strategies Consip Spa Luca.mastrogregori@tesoro.it Amman, July 7, 2010

2. Public Procurement and e-Procurement in the EU • General Overview on Consip in the Italian Public Procurement System • E-procurement platform, e-marketplace and new e-proc tools

3. EU Legislation Framework • The legislative package of public procurement Directives, approved in 2004 by the European Parliament and the EU's Council of Ministers and entered into force on 20 April 2004, aims to simplify, harmonies and modernise procurement procedures applied by the EU Member States. • This revision merges the four existing European directives into two legal instruments: • The so-called "traditional" Directive 2004/18/EC for public works contracts, public supply contracts and public service contracts; • Directive 2004/17/EC on the "special sectors" of water, energy, transport and postal services. • Among several innovative provisions the new Directives strongly promote the development of electronic procedures while enforcing general fundamental Principles: • Non-discrimination • Transparency • Fair competition

4. Contract specifications Publication Access todocuments BiddingReceipt of offers Offer evaluation Contract award Contracting Ordering Monitoring of Contract Ordering Invoicing Payment Choice of procedure Thresholds/ Rules of aggregation Shorter time-limits for online notices & electronicaccess to tender documents New standard forms for publication in OJEU Data integrity Confidentiality Security &Authentication Traceability Non- discrimination e-catalogues e-auctions Automated evaluation Automated Award Electronic Purchasing Methods Outside the scope of EU publicprocurement Directives E-commerce Directive (Electronic Signatures Directive) E-invoicing (VAT Directive) Data protection EU Legislation Framework The Directives focus on the tendering procedure and establish the legal framework from the publication of notices to the award of contracts.

5. EU Legislation Framework • The new Directives set out the procedural rules and detailed provisions for the use of electronic means in public procurement: • Use of electronic means is a choice of contracting authority • All stages of procedure can be conducted electronically • General requirements for communicating, advertising and receiving tenders • Unrestricted access to tendering procedure: use of non-discriminatory, generally available and interoperable tools (communication, tender submission, etc.) • Integrity, confidentiality, exact time stamping, locking of data, ‘4-eyes principle’ • Traceability of all operations • Specifications for transmitting tenders (encryption, format etc.) must be published in the tender documents • E-signatures in conformity with national legislation transposing Dir 1999/93/EC • and introduce new purchasing techniques: • Electronic auctions • Electronic catalogues • Dynamic Purchasing Systems

6. The benefits of e-procurement for Public Procurement • The importance of eProcurement in the European Union is widely recognized. The Ministerial declaration approved unanimously on 24 November 2005 in Manchester, states that eProcurement “will lead to lower transaction and processing costs for public administrations and to increased efficiency, for example greater speed in procuring services and goods and reduced spending due to increased choice and competition” • But significant benefits are taken by eProcurement in terms of efficiency and improved competition as well; as stated in the same declaration above mentioned “competition, with a higher participation of SMEs, in turn will lead to greater innovation in the private sector.” • According to an estimation made by the European Commission and reported in the Action Plan for the implementation of the legal framework for electronic public procurement [1], • administrative cost saving of e-procurement are expected to be about 30%, while • purchasing cost savings could be as high as 10% to 50%. [1]Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions, Action Plan for the implementation of the legal framework for electronic public procurement, Brussels 13.12.2004.

7. The role of government agencies • A number of EU countries have developed initiatives for the modernisation of Public Procurement, based on the Centralisation of competencies and investments • These “competence centres” (some of them are listed)) play a key role in e-proc implementation, supporting awarding authorities and suppliers with education, consultancy and transactional services

8. Public Procurement and e-Procurement in the EU • General Overview on Consip in the Italian Public Procurement System • E-procurement platform, e-marketplace and new e-proc tools

9. A complex scenario • Inhabitants: 59 mln people • Public Admin. employees: 3.350.000 • Ministries: 23 • Central PA Authorities: >100 • Regions: 20 • Provinces: 110 • Municipalities: 8.100 • School system: Universities: 94 Public schools: >10.000 • Health Sector: Hospitals, Local Health Agencies, Public Clinics: >300 • Consip Ordering points: 61.593

10. Consip SpA Consip is a public stock company, created in 1997 by the Ministry of Economy and Finance (MEF), its sole stockholder. Consip has no profit goals and it deals with two main fields of action. MEF PAs 1997 management and development of ICT services for the MEF 2000 Eprocurement for Public Administrations Consultancy on Technical and Organizational Projects Set up, diffusion and support of Eprocurement system & tools

11. Consip Fields of Action PAs 1997 2000 IT services for MEF Eprocurement Public / eProcurement Implementation of the Program for the Rationalization of Public Spending on Goods and Services through the use of information technology and innovative tools for the purchases of the Administrations (frame contracts, web-based tenders, the Electronic Marketplace, as well as special projects and on demand consultancies). In such activity Consip acts as an “awarding administration and contracting authority” that defines, implements and awards tenders on behalf of other Administrations. The implementation phases of the projects are executed by means of an accurate identification of the best solutions offered by the market that meet the needs of the Administrations

12. Consip’s Organization Chief Executive Officer Corporate Affairs Human Resources and Organization Division Administration and General Accounting Legal Affairs Division Budget and Control Institutional Relations Division R&D Corporate Identity Business support Division Public Finance Division Public Procurement Division IT Infrastructures Division Information Systems Division • Employees: 500 people (170 in the Public Procurement Division) • Women: 44% • Average age: 40

13. Consip’s Public Procurement Division Public Procurement Promotion vs Public Administrations Relationship with PAs Planning and Monitoring eProcurement strategies GPP Health sector goods and services IT goods/services TLC goods/services Real Estate goods/services Utilities and other goods and services Relationship with suppliers

14. Process simplification Transparency Reduce procurement time simplifying the entire procurement process Guarantee transparency and public communication on tender procedures and awarding criteria, enhancing competition and competitiveness Public Spending Optimization Innovation Quality Develop innovation procurement tools encouraging change management among public officials and suppliers E-PROCUREMENT Improve the ratio between cost and quality of the goods and services offered to PA Public Procurement System goals

15. Two opposites parties with apparently different goals… DEMAND SUPPLY Suppliers PA • Detailed analysis of PA needs • Public procurement purchasing tools offer (platform) • Ready-made tenders • Supply market analysis (offer) • Tender strategies identification • Cooperation and working tables (supplier desk) Consip Finding the best match between PA and supplier needs: - offering the most appropriate procurement systems to PA - offering business opportunities to the supply market.

16. Public Procurement and e-Procurement in the EU • General Overview on Consip in the Italian Public Procurement System • E-procurement platform, e-marketplace and new e-proc tools

17. Consip action lines The development of the Program in the short/medium term is based, therefore, on three main action lines …strongly supported by a comprehensive e-procurement system 2. 1. 3. SUPPORT TO PA SPECIFIC NEEDS FRAMEWORK CONTRACTS MARKETPLACE Program portal: www.acquistinretepa.it Electronic Shops On line Auctions e-Marketplace • Purchases within frame contract • Direct Purchase • Many-to-one approach • Purchase scope: • Large volumes • Standardized • Low price volatility • Slow obsolescence • Demand aggregation • Development of Frame contracts or ASP towards other administrations • Automatic Technical and economic offer evaluation • Purchase scope: • Specialized • High price volatility • Rapid obsolescence • Purchases below the Eu threshold • Direct Purchase or RFQ • Many-to-Many approach • Supplier defined e-Catalog • Purchase Scope: • Low cost • Highly fragmented Above and Below EU Threshold Below EU Threshold E-PROCUREMENT SYSTEM

18. The e-Procurement Portal www.acquistinretepa.it 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 eMarketplace, .... Opportunity to buy on line using frame contracts conditions (on-line orders) e-shops On line access to public auctions Electronic auctions On line access to public Marketplace Marketplace 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)

19. Fornitori Fornitori PP.AA. Framework contracts -the model Public Procurement Model Fornitori Frame contracts Fornitori Consip Suppliers Contracts Reporting Monitoring Tools Needs Feedback On-line/fax order Delivery Payments

20. Consip’s framework contracts - 2009 results • The Consip’s framework contracts’ turn over in 2009 corresponds to 1,7 billion euro • Consip managed 69 framework contracts; 19 of them activated in 2009 • The most important framework contracts, in terms of total expenditure in €, are meal vouchers, energy related services (heat, electricity), facility management, fuel coupons Source: analysis and research from consip

21. Framework contracts – eshops E-shops represent an open window on the web in which goods and services selected through framework contracts are available to PA procurement offices registered to the Program Traditional and electronic tenders Product selection and online (or fax) ordering

22. Electronic tenders and marketplace - Decree 101/2002 • In particular, by the adoption of this Decree, new electronic awarding procedures are introduced for the first time in the italian legislative framework. These new methods do not replace the traditional awarding procedures, but they represent an alternative measure for the awarding authorities in the public procurement processes. • In particular the Decree provides for the Public Administration two different electronic goods and services purchasing techniques, to be performed in compliance with the transparency and non discrimination principles: • the electronic tender • the marketplace

23. Decree 101/2002 –The electronic tender • The Electronic tender, according to the provision set by the article 1.a) and b) of the Decree 101/2002 • is a procurement procedure with whom contracting authorities purchase goods and services both above and below the European threshold limit • and exactly a public contract awarding procedure exclusively performed through electronic devices in compliance with the provisions set out in the Decree itself. • Auction format is defined by the following elements: • Style of negotiation: Open - Blind (sealed bid) • Award criteria: Lowest price - More economically advantageous tender • Ranking algorithm: SUM Score = “Technical Score” + “Economical Score” RATIO Score = Economical bid/Technical Score • Type of negotiation: Continuous - Single round – Multiple round

24. The electronic auction – advantages and disadvantages Advantages (vs traditional auctions) • Transparency : • Each step is recorded; • Clearness and standardisation 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

25. Qualification notice (public announcement) Buying administrations Suppliers Qualified suppliers selected through a qualification process, starting from the date of publication of the “qualification notice” MEPA • Central Government • Universities • Local Government • Health bodies Market MEPA (Electronic Marketplace for Public Administrations) The PA marketplace - the model • The marketplace is a fully electronic systemfor purchasing goods and services below the EU threshold • It works as a virtual market in which the acquiring Public Administration can select goods and services offered by several suppliers from an electronic catalogue offered in a virtual shop shown on the Consip’s website. The marketplace is open to qualified suppliers who comply to the provided selection criteria • The whole process is conducted by using electronic and digital means including the electronic signature, in order to legally guarantee the transactions

26. Suppliers qualification Suppliers qualification notice The PA marketplace - the phases Qualification notice publication Transactions ‘una tantum’ phases operating phase The qualification notice will also provide information on: • product and service categories • objective and subjective needs for qualification • technical and quality characteristics of supplies as well as service levels to take into consideration during the qualification phase • assessment criteria for qualification requests Furthermore, general supply conditions have to be drafted (i.e. contract template)

27. The PA Marketplace - the catalogues Item name technical specifications (standardized catalogue) Supplier’s name Price

28. Public user Supplier Direct purchase Request for Quotation The PA 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

29. The PA Marketplace - the available product categories Individual protection devices Training & Education svcs IT HW and SW Electric maint. svcs Elevators maint. svcs Healthcare Furnitures Stationery Electric material and air condit. equip. Gas providingsvcs Print & Copy equipment Office cleaning svcs Cleaning products Laboratory equipment TLC products Office and road signals

30. 180 172,2 165 150 130,7 135 120 109,2 105 2006 93,4 Value of orders (mln €) . 90 83,4 78,7 2007 75 63,4 2008 60 50,4 45 38,9 30,4 30 19,6 9,4 15 0 January February March April May June July August September October November December 2,9 5,1 7,9 9,7 12,5 15,4 18,0 18,9 21,2 24,7 29,3 38,0 2006 2,8 5,8 9,3 11,6 15,2 18,9 23,9 25,1 29,9 39,3 50,8 83,6 2007 9,4 19,6 30,4 38,9 50,4 63,4 78,7 83,4 93,4 109,2 130,7 172,2 2008 80.000 63.245 60.000 51.209 42.602 35.433 40.000 Transactions n° 30.672 28.691 23.656 18.733 20.000 13.903 11.899 6.238 2.926 0 January February March April May June July August September October November December 779 1647 2812 3492 4559 5483 6342 6707 7596 8860 10046 11468 2006 766 1757 3035 3910 5271 6445 8119 8744 11069 14842 20289 28173 2007 2926 6238 11899 13903 18733 23656 28691 30672 35433 42602 51209 63245 2008 The PA Marketplace - the business (transactions and value of orders) 230 2009 73.000 29

31. The PA Marketplace - some results, more in depth… 30

32. The PA Marketplace - some results 2009 • Over 5000 suppliers making business on the emarketplace • 97% of enterprises registered are SMEs • 66% of the SME’s are micro enterprises ( < 10 employees) • More than 1.300.000 catalogue items 320 average transactions per working day 80% of the enterprises who used it in 2008 continued also in 2009 (with 17% increase in their turn over) 105.000 euro is the average yearly turn over 43% of SMEs sell outside the borders of their region (domestic cross border business) 140 eMarketplace Supplier Training Desks all over the country 31

33. The PA Marketplace - The European eGovernment Awards 2009 The Jury’s motivation: the MEPA winner in category 2b “…as it is a highly innovative initiative. Its impact is high for government administrations but most importantly for SMEs as they can offer goods and services which are relevant for public administrations… The MEPA has also ensured user take-up through communication plans and training. More specifically through the setting up of training desks responding to specific needs shown by the enterprises using the system…” This award given to Consip represents an acknowledgement to the MEPA for having improved and facilitated the access to public procurement to enterprises, especially SMEs. At the same time MEPA contributes to rewarding the valiant effort the Italian PA and suppliers are making towards modernization. More information on:www.epractice.eu/en/awards

34. The new purchasing procedures - The framework agreements • A FA is “an agreement between one or more contracting authorities and one or more economic operators, the purpose of which is to establish the terms governing contracts to be awarded during a given period” • Where a FA is concluded with several economic operators and not all the terms of the contracts are laid down in the FA (“incomplete” FA), specific contracts can be awarded by the CAs by reopening competition “on the basis of the same and, if necessary, more precisely formulated terms, and, where appropriate, other terms referred to in the specifications of the framework agreement”. • Nevertheless, “When awarding contracts based on a framework agreement, the parties may under no circumstances make substantial amendments to the terms laid down in that framework agreement”. • Supply contracts (specific contracts, SC) based on FAs are concluded between a single CA and a single supplier. four kinds of FA • Several suppliers • Complete (all terms fixed) • 1 supplier • Incomplete (not all terms laid down) • Several suppliers • Incomplete (not all terms laid down) • 2-stage: competition shall be reopened • 1 supplier • Complete (all terms fixed) Framework contracts

35. The new purchasing procedures - The dynamic purchasing system • Entirely digital purchasing process • For purchases above and below the EU threshold • Based on Indicative Bids (maybe an e-Catalogue) that can be, later, up-to-date to qualify to a Call for Tenders • Maximum 4 years • Call for Qualification to DPS contains: • List of Commodities, Categories, Meta-products • List of requested Business Attestations (i.e. Certifications) • (eventually attached to Call for Qualification) Technical Specs., S.L., Terms & Conditions • Awarding Criteria for the following Call for Tenders • No dead-line, for Suppliers, to present Request for Qualification (Open Procedure) • Supplier’s Request for Qualification has to be evaluated within 15 days • Public Buyers buy in only one way: publishing a Call for Tenders (Open Procedure), inviting all the Suppliers that qualified before the dead-line, sending the Request for Quotation and receiving Suppliers’ Bids

36. Evolution of the e-Procurement tools • Customised MEPA Dynamic Purchasing System • mult. suppliers • with negotiation Framework Agreement Buy side • 1 supplier • with negotiation • mult. suppliers • fixed conditions • 1 supplier • fixed condition Framework Contracts • Standard … • Fragmented • Specialised • Concentrated • Standardized Supply side • The adoption of different tools is related to the market (buy and supply side) characteristics • More business opportunities for SME’s through e-procurement