E-Procurement Systems

INTRODUCTION

E-procurement is the combined use of electronic information and communications technology in order to enhance the links between buyers, suppliers and other value chain partners to improve internal and external procurement processes.

The typical components of an e-procurement system are outlined below:

E-procurement systems automate the procurement process. They allow for indent management (identify the need, define the requirement, consolidate & approve), request creation, sourcing (through e-tendering, e-auctions, e-catalogues or framework call-offs), and post-award contract management. Purchase to Pay (P2P) protocols allow for a three-way matching of purchase orders, delivery notes and invoices to ensure accurate reconciliation and prompt payment. Supplier portals are established which allow approved suppliers to be registered, and secure communication and transactions to be achieved.

CASE STUDY 1

Rwanda was one of the first African countries to implement a government e-procurement system nationally. This is how they did it.[1]

Behind the success 

After passing a new procurement law in 2007, and later establishing the Rwanda Public Procurement Authority, the country began looking at relevant experiences on how to modernise its procurement system. Rwandan officials travelled to Korea in order to learn from that country’s electronic procurement system, one of the most advanced in the world.

Then, in 2013, the Rwandan government approached the World Bank to fund a feasibility study on the implementation of its e-procurement system. The feasibility study identified major challenges and recommended solutions. Some the challenges included: inconvenient business registration; inaccurate management information & analytics; lack of a one-stop procurement portal; and inefficient document and records management system.

Based on the recommendations to tackle these challenges, Rwanda decided to develop the Rwanda e-procurement system called  UMUCYO, which means “transparency” in the local language. UMUCYO, a web-based e-procurement system, was developed as part of a World Bank-funded public-sector reform programme.

About UMUCYO

The system consists of an online portal with modules for advertisement, e-bidding and disposal, evaluation, contract management, inspection and acceptance, framework agreements, catalogue and shopping mall, where suppliers can register and submit bids online. The system is open to all, including national and foreign bidders. During the registration process the system automatically accesses the databases from the Rwanda Development Board to authenticate the registration status of bidders to ensure they are in good standing.  

After a bid is accepted, the system allows contracts to be drafted and sent to the winning bidder for review. After the supplier accepts and electronically signs the contract, it is shared with Rwanda’s Financial Management Information System (SmartFMS) to issue a purchase order and to make payments.

Pilot programme

With the support of the World Bank, in July 2016, the government launched a pilot programme of the e-procurement system in eight government ministries, agencies and districts. The World Bank provided technical assistance and capacity building during the development and roll out of the new system.

Before launching the pilot, training was offered to government officials from the selected entities and the business communities on using the e-procurement system. Media and awareness-raising campaigns were also conducted across the country to encourage suppliers to register on the new system. The training was also extended to internet cafe operators to ensure that small and medium-size enterprises had access to opportunities in public procurement.

The overall one-time cost of the project at $7.8 million covered the development of the e-procurement system, data-centre equipment and capacity building, as well as about $1.12 million in ongoing costs.

“While the initial investment in the system seems to be high, experience from around the world shows that e-procurement provides powerful cost management solutions that lead to significant savings in public spending,” said Hiba Tahboub, Procurement Manager at the World Bank’s Governance practice.

After one year of successfully piloting the system, the government rolled out e-procurement nationwide beginning in July 2017, with healthcare facilities on-boarding during 2019/2020.

Benefits

The e-procurement system has reduced time and allowed cost savings for both government officials and suppliers, as the single online portal providing all the documents and information required eliminates the need for in-person visits and printing costs.

“The procurement management of the Ministry has significantly improved as the result of use of the e-procurement system,” said Mr. Yassin Iyamuremye, Director General of Corporate Service in MINAGRI. “The system also contributed to reducing fraud and corruption as there is no personal contact with bidders, and when complaints are received, these are responded to through the e-procurement system in a transparent way.”

The Director General of Rwanda Public Procurement Authority, Mr. Augustus Seminega, neatly summarised the benefits of Rwanda’s e-procurement system: “Government procurement officials should take advantage of the time saved in transactions to ensure compliance, transparency, competition, fairness and dedicate more time to achieve value for money, efficiency and effectiveness.”

CASE STUDY 2

Ghana was the first country in West Africa to establish a national e-procurement system in 2019.

The initiative, funded by World Bank at a cost of $5m, aims to reduce corruption by cutting the amount of direct human contact involved in tenders, reducing middlemen, and achieving efficiency savings through automation. World Bank estimates that the project could save Ghana $100m annually.[2]

Ghana’s vice president, Dr Mahamudu Bawumia, said at the launch that the e-procurement system will allow the public to track any tender application in real time. Ghana’s system uses the Open Contracting Data Standards (OCDS) developed by the World Wide Web Foundation, the Omidyar Network and the World Bank. The OCDS enables disclosure of data and documents at all stages of the contracting process by defining a common data model. It was created to increase contracting transparency and allow deeper analysis of contracting data by a wide range of users.

CASE STUDY 3

In order to successfully implement a government e-procurement system in Zimbabwe, Crown Agents undertook a number of preparatory activities.[3]

• Preparing an e-procurement strategy, based on a thorough assessment of Zimbabwe’s readiness for e-procurement. This strategy included an action plan and recommendations.
• Analysing and re-engineering the current procurement business processes and practices, using new procurement legislation and international best practices to provide an efficient and effective environment for e-procurement implementation.
• Preparing e-procurement guidelines to support implementation. These guidelines assist users to make the best use of an e-procurement system.
• Defining business, functional and technical requirements in specifications for use in the selection of an appropriate e-procurement solution.

Preparing for e-procurement is not just about technology, but about a new, more efficient and effective way of doing business that saves governments and businesses money. Emphasis was placed on the people and processes that make it work and on ensuring that the solution was appropriate for the maturity of the procurement environment.

A useful model for the successful implementation of e-procurement is shown below.

[1] https://www.worldbank.org/en/news/feature/2018/09/05/how-rwanda-became-the-first-african-country-with-an-electronic-procurement-system

[2] https://www.globalgovernmentforum.com/ghana-launches-africas-first-national-e-procurement-system/

[3] https://www.crownagents.com/project/developing-an-e-government-procurement-strategy-for-zimbabwe/