Recent improvements in Internet technology connectivity provide an opportunity to make procurement for goods and services more transparent and efficient. When used for public procurement, information technology can be utilized as a mean to achieve the main principles of perfect competition, namely, access to information, no barriers to entry (transparency), and a large number of participants in market exchange. In this paper, we argue that the electronic procurement, particularly in the public domain, is an effective policy tool to establish the fundamentals of market economy and hence increase country’s productivity, remove domestic barriers to international trade, and improve efficiency. The main focus of this paper is to examine the efforts of European Union to transform the procurement process to a more cost-effective and innovative process. Moreover, our goal is to demonstrate that ICT is a power tool that can induce the structural changes within and between countries, and will enable procurement-sensitive goods and services to move freely, fostering the competitiveness of European suppliers in domestic and world markets. An effective public procurement policy is fundamental to the success of the single market in achieving its objectives: to generate sustainable, long-term growth and create jobs, to foster the development of businesses capable of exploiting the opportunities generated by the single market and competitive in global markets, and to provide tax-payers and users of public services with best value for money.
This paper will analyze and evaluate the electronic procurement projects carried out by European Commission to better understand how the use of new information technology supports the delivery of an effective public procurement policy. In the context of market opening and integration, the study will identify a number of key learning lessons based upon the experience of the European Union. The analysis of the data will provide a number of important results in relation to further actions to be undertaken by CEE countries, an action plan for follow-up and use of this research along with proposed recommendations for addressing the major issues for electronic public procurement development and use in the CEE region.
Recent improvements in Internet technology connectivity provide an opportunity to make procurement for goods and services more transparent and efficient. The European Union experience demonstrates that the impact of ICT affects not only the public’s expectations with the way government performs its tasks, but also provides a better way for the government to improve its ability to meet these heightened expectations.
This study identified a number of important best practices in relation to further actions to be undertaken in the CEE countries. When used for public procurement in the European Union, information technology creates a more transparent EU public procurement market by a systematic use of electronic notification and dissemination, as developed in the SIMAP project on electronic tendering.
The dissemination of public procurement information between EU purchasers and suppliers is highly related to the creation of an efficient information system with improved capacity to standardize the forms, and support the notification functions. The increase of information support and training programs was essential to reduce the market distortions, which are specific to suppliers and buyers (accessibility problems, lack of know-how and low user acceptance). On the one hand, it enables buyers to draft procurement notices in a web interface, tag them with a standardized terminology, and publish them directly. Staff procurement expertise can be concentrated on establishing commercial arrangements rather than operating inefficient contract management and delivery systems. On the other hand, suppliers are able to make detailed searches, set up business profiles, and obtain automatic e-mail alerts whenever a procurement notice matches their business profile. Thus, agencies are in a position to make purchasing contracts with suppliers, on the basis of the more assured demand they can obtain.
The EU experience also demonstrates that electronic procurement poses a number of major challenges, and costs. Since technology is changing at incredible speed, investments in technology are perceived to be an important cost factor. It is difficult to invest wisely in a field, which is evolving so fast and where systems can become obsolete overnight. Another cost is related to the difficulty to find and keep the highly skilled personnel required to maintain complex information technology systems. E-procurement also requires the participants to have PCs with Internet access. Some of the e-procurement services are subscriber-based which represents a direct expense for the users.
Based on the lessons learned from the European Union experience, we intend to extend the research framework and to further examine the efforts of several post-communist governments to transform the current procurement process through to use of ICT. Our main objective for further research will be to analyze e-procurement readiness in the CEE region building upon the already existing initiatives undertaken by some of CEU countries (Romania, Bulgaria and Poland). We will use information gathered through primary research such as interviews and targeted questionnaires to key contacts in target governments, and content analysis of the selected procurement websites. The analysis design for this research will be based on the identification and rating of the perceived costs/benefits on the basis of results of the projects and will address the following questions:
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What are the barriers to greater open competition, transparency, disclosure of information, and accountability for target countries in central and eastern Europe?
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What are the main costs and factors of e-procurement in the CEE region?
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What is the start-up cost comparing to the operation costs?
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What are the direct, indirect, and strategic benefits of e-procurement for the governments, and private sector?
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What is the overall benefit ratio of e-procurement compared to the traditional paper-based procurement process in the context of economic transition?
The analysis will allow comparison of qualitative intangibles in a manner that may indicate the most cost-efficient option, in particular in cases where cost/benefit analysis is not possible due to lack of, or the qualitative nature of data and projects, such as transparency, responsiveness and democratic nature of government services and functions.
Future research ought to consider the necessary sequential steps that governments should undertake in order to implement electronic procurement, such as defining a legal and organizational framework, designing systems for availability and dissemination of procurement information. The objectives of future study are to contribute to increased transparency and efficiency in government procurement in CEE countries by providing a comprehensive assessment of the e-procurement readiness and guidance on the necessary measures that the countries have to put in place.