In the Case Studies section:
Success/Failure Case Study No.12
eProcurement by Brazil's Federal Government
Case Study Author
Marcos Ozorio de Almeida (marcos.o.almeida@planejamento.gov.br)
Application
This is a government e-procurement system (COMPRASNET), set up by the Secretariat of Logistics and Information Technology in the Brazilian Ministry of Planning, Budget & Management. The system is a Web-based on-line procurement system used by all the more than one thousand Federal Government procurement units. It enables on-line price quoting and reverse auction commodity purchases. It has a client/server architecture, resident on secure 32-bit Pentium III Xeon corporate servers. The operating system is Windows 2000 Advanced Server. The front end is supported by three Unisys Aquanta STD Web application servers. The solution software used is the Vesta Business Services Suite.
Application Description
COMPRASNET is a system where Federal Government organisations register their procurement needs (i.e. goods and services they need to buy). The system automatically informs registered suppliers by e-mail and the supplier may download the bidding documents. The procurement officer uses a Federal Catalogue to specify the description of the good or service required. If the item is classified as a commodity, the whole process may be done through the Internet, using the price quoting system (which is a two- to three-day purchase posting site for non-competitive small purchases). For larger procurement of general-purpose goods and services (such as building maintenance services or office supplies and equipment), a reverse auction procedure is used. In the reverse auction the bids (prices the suppliers will charge for that item) are submitted on the Web. Each supplier reduces their bid price competitively with others during the auction and the one offering the lowest price at a pre-agreed end time for the auction will be the one awarded the contract. Auctions and prices are open for inspection by the public, and auction results are posted immediately.
Application Purpose
COMPRASNET was introduced to automate the procurement process. The aim of automation was to make the procurement process uniform without centralising the buying process of the Federal organisations. It was also intended to reduce procurement costs and give more transparency to the process. Other aims were to increase the number of government suppliers; to reduce participation costs for these suppliers; and to increase competition among suppliers, which should also bring about costs reductions and better quality of goods and services acquired.
Stakeholders
Federal Government agencies and organisations, as well as the suppliers of goods and services to the Federal Government (there are over 150,000 registered suppliers) are the main affected parties. Citizens and society are affected in the sense that e-procurement is intended to provide an instrument for social control of public expenditure, through its public transparency.
Impact: Costs and Benefits
During COMPRASNET's first three years the Federal Government spent about US$7m on system development and maintenance. During the first two years of on-line reverse auction use, the Federal Government is estimated to have saved up to US$1.5m. Besides this positive return on investment, the system enables better and more transparent procurement, as well as reducing the red tape in the process. For example, a normal procurement process takes more that two months. The on-line reverse auction may be completed in less than 15 working days. The use of on-line procurement has also increased the participation of small businesses in government supplies.
Evaluation: Failure or Success?
There is insufficient data from a broad enough range of stakeholders to describe the system as a total success, but it can certainly be described as largely successful, bringing an estimated average 20% reduction of final price for goods and services acquired through reverse auction and price quoting. Suppliers also see it as successful due to it being linked to the financial payment system, guaranteeing timely payments on supplies sold to the government.
Enablers/Critical Success Factors
- Political will inside government .
- External pressures . Particularly from citizens and citizens' groups for greater transparency and effiiciency in government spending.
- Acceptance by suppliers of transparency .
Constraints/Challenges
- Technological factors . Causing temporary unavailability of the system at times.
- Legislative delays . Caused by the need for new legislation and rules to allow for new forms of procurement.
Recommendations
- Get the technology right . This system needed a robust platform, scalability, a basis in open systems, with heavy investment in back office sustainability.
- Provide intense training . This needed to cover users on both government and supplier sides.
- Adopt a phased approach . This project worked well by having modules, the first of which could provide a demonstration effect for the system that would develop usage and interest.
Further Information
http://www.ejisdc.org/ojs2/index.php/ejisdc/article/view/51
Case Details
Author Data Sources/Role : Application Coordinator Role
Outcome : Largely Successful. Reform : eSociety (working better with business).
Sector : General Services (Procurement).
Region : South America. Start Date : 2000. Submission Date : August 2002