EBRD Annual Meeting 2014: eProcurement

By Marcus  Warren

Improving public procurement frameworks is on the agenda of many countries in the EBRD region, both to ensure optimal use of budget resources and to develop and promote anti-corruption initiatives.

This panel at the 2014 EBRD Annual Meeting and Business Forum explored the latest best practice in creating public procurement policies, with a focus on the use of eProcurement tools, on recent success stories and on the impact that international organisations can have in this area.

“EU directives have brought totally new standards to our region, requiring member states to introduce eProcurement as the main tool for public tenders,” said the EBRD’s Eliza Niewiadomska.

“The new requirements force countries to rethink their procurement systems, redraft laws and make online communication standard for everyone in the market.”

Other new procurement practices are rapidly emerging in the market, prompting revisions in still more jurisdictions. The last two years have seen several key international instruments for public procurement updated: the 2011 UNCITRAL Model Law on Public Procurement has replaced the 1994 version; the 2012 World Trade Organization revision of the Government Procurement Agreement enters into force in 2014.

What the new policies have in common is the aim to make public procurement deliver better value for money and provide tools for economic development, while also safeguarding the transparency of procurement decision-making.

The new approaches have been particularly effective in Georgia, where, until they were introduced, the state was losing half a million dollars a day through waste and corruption, one of the panellists recalled.

“This was the sum we were losing every day before the start of reforms,” said Tato Urjumelashvili. “When we realised that, we were like crazy, saying ‘Hurry up, hurry up’.”

The previous system for supervising procurement in Georgia also involved an office containing 15 million reports monitored by only 20 civil servants. It was plagued by inconsistent and unreliable data housed in spreadsheets or scanned documents.

“Even an angel will be spoilt if he is responsible for US$ 1.8 billion a year in these circumstances,” said Urjumelashvili.

The new approach to regulating procurement is based on introducing electronic procurement (eProcurement) for default mandatory use in the public sector. eProcurement – online procurement procedures which are automatically recorded in real time – enhances both the transparency and efficiency of public contracts.

Thanks to information and communication technologies, the improvement in transparency and accountability comes at no extra cost. And with economies of scale and greater competition, more transparent online procedures deliver better value for money.

In addition, by ensuring more open and equal access to procurement opportunities for local and international suppliers and contractors alike, including small and medium-sized enterprises (SMEs), eProcurement supports economic development.

The principles on which eProcurement are based include it being “friendly to small businesses and open to international trade,” said Niewiadomska.

EU governments will need to work hard to master the new policies, develop necessary regulatory capacity and produce legal framework and operational tools, like eProcurement platforms and systems, to ensure reforms are effectively implemented and bring the expected results.

Thursday 15 May, 14:00-16:00

Moderator

  • Gustavo Piga, @GustavoPiga, Professor of Economics, Department of Business, Government and Philosophy Studies, University Rome Tor Vergata, Italy

Panellists

  • Adam Jonczyk, Sales Director, Otwarty Rynek ElektronIczny SA
  • Paulo Magina, Senior Policy Analyst, Public Sector Integrity Division, OECD
  • Eliza Niewiadomska, Principal Counsel - Public Procurement, Legal Transition Programme, EBRD
  • Tato Urjumelashvili, International expert, EBRD UNCITRAL Initiative