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Presentation by Tato Urjumelashvili, Georgia (ENG) Second SIGMA Regional ENP East Conference on Public Procurement, Kyiv 29-30 May 2018


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Presentation by Tato Urjumelashvili, Georgia (ENG) Second SIGMA Regional ENP East Conference on Public Procurement, Kyiv 29-30 May 2018

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Presentation by Tato Urjumelashvili, Georgia (ENG) Second SIGMA Regional ENP East Conference on Public Procurement, Kyiv 29-30 May 2018

  1. 1. © OECD SECOND SIGMA REGIONAL ENP EAST CONFERENCE ON PUBLIC PROCUREMENT The future of electronic procurement Tato Urjumelashvili, eProcurement Expert, Georgia Kyiv, Ukraine, 29-30 May 2018
  2. 2. Embedded problems of Public Procurement (PP) 2 This is individual purchase This is Public Procurement Most problems and challenges of public procurement are caused by spending someone’s money on someone else
  3. 3. Other “standard” PP problems In addition to the major systemic problem, highlighted by Friedman: Laws, regulations and procedures are too bureaucratic, complicated, lengthy and vague; Procurement is not a profession in majority of (developing) countries; (1/3 in OECD countries); Vacuum of competence: corrupted systems alienate competence; Absence of agreed standards and quality criterions; Not enough analytics (unit prices, quantities, etc.). 3 OECD: are procurement officials recognized as a specific profession?
  4. 4. Traditional vs optimal resource distribution during PP process 4 — As is — To be needs identification market survey/RFQ to suppliers tendering contract purchase order receive & pay manage &close contract
  5. 5. Why should we spend the most valuable asset (time) on the routine procedures, that can be automated? Public Procurement is undergoing inevitable technological changes, eProcurement systems are emerging in many countries, including Eastern European and post Soviet countries. Two major trends for PP systems development •semi-automated competitive tendering procedures - for bespoke procurement objects, using standardized tender documents and specifications; • fully automated eCatalogues - for FAs and small value procurement. 5
  6. 6. Hybrid systems for bespoke procurement 6
  7. 7. Traditional mono PP systems • Procurement system of the country is (could be) highly competitive and profitable function; • It is not fair and wise to monopolize this function neither by the government agency nor by a single private provider. 7 Single provider/ administrator
  8. 8. Future is here: hybrid PP systems 8 • Hybrid architecture modular systems based on micro services: different modules can be grouped in a free forms; • Collaboration & integration with other systems; • PPP - Golden triangle of partnership; • Everyone sees everything; Open and accurate data (OCDS); • More efficient public oversight
  9. 9. Why should we spend the most valuable asset (time) on the routine job, that can be standardised? Everything possible to be standardized should and will be standardized to save time and minimize administrative burden both for procuring entities and bidders: • rules/procedures; • tender documents; • technical specs; • contracts; • data (OCDS) 9 Prozorro TechSpecs Generator
  10. 10. eCatalogues for standardised, off-the-shelf procurement 10
  11. 11. eCatalogues - center of PP system 11 eCatalogue Contracts Open Tenders TechSpecs Direct Contracts FAs Payments Data&Analytics Reverse Auction Price Quotation Restricted Tenders
  12. 12. Maximum automation and simplification for catalogable items • Traditional PP procedures for standard items should disappear as they become fully automatic; • Almost everything, produced on the industrial level can be standardised and procured through eCatalogues: small purchases and FAs (aggregated procurement); • Time, previously spent on procurement of standard items will be released for other important tasks, like tendering of strategic and bespoke items The main question and challenge is whether the state should develop and maintain its own catalogue or create the aggregator of commercial catalogues? 12
  13. 13. Future of PP eCatalogs Maintenance and update of eCatalogues is quite costly. Instead of competing with commercial catalogues, it would be to collaborate with them through aggregator of commercial catalogues (like Amazon) Amazonization of PP is inevitable - following the famous proverb about Mohamed and mountain… …if we don’t go to Amazon, Amazon will come to us This looks to be the matter of the years, not the decades 13
  14. 14. Voice search and orders to get procurement done • Voice search and orders (e.g. Amazon Alexa, Google Assistant); • Google says 20 percent of mobile queries are voice searches 14
  15. 15. ePayments The traditional checkout form is going to be less and less used in the future. Thanks to mobile payment applications, like Google Pay, Apple Pay, Samsung Pay, PayPal and others — process of payment is extremely simplified - we just click ‘buy’ and the rest will be done automatically. Other option, especially in case of budgetary organizations - kind of digital wallets, using the principle - deliver to pay, instead of pay to deliver 15
  16. 16. Future of PP officers • CPBs; Strategic functions; • Professionalization; Less staff; More motivation; Performance- related pay ; • Categorization (focus on bespoke goods, services and works); • SRM in supply categories that are important and critical for procuring entities; • Switch from public procurement mindset to just procurement; Outsourcing. 16
  17. 17. The future is open: OCDS Best example so far: Prozorro and its BI. API is must. 17 _
  18. 18. Other major trends for future PP 18
  19. 19. • Use of blockchain to create the systems, track products, transactions and suppliers; AliBaba is using Blockchain to track the origin of products platform-to-pilot-phase/ • Cloud-based technologies; SaaS popularity increases; • Integration with other electronic (government and commercial) services; • Wider use of machine learning and artificial intelligence (AI); • AR & VR (e.g. virtual tour to eCatalogue or fitting products to the interior) • Smartphone as the main purchasing tool, desktop - secondary (only for bespoke procurement); • Image search - products and technical specs; • Chat bots (e.g.telegram channel in prozorro to check companies’ status); • Faster delivery, up to the same-day delivery; • More use of reviews/feedbacks, like in Amazon or eBay. 19
  20. 20. Lessons for the future from Prozorro Prozorro lessons can help the current PP reforms to be implemented faster and smoother. • Get relevant champions of the project. Implementing team champions (MEDT&Civil activists), as well as user champions (such as Ministry of Defence and Metro) are essential to success; • Keep the system transparent. Everyone sees everything - main principle; • Keep the system simple. Simplicity is power. Not all users are proficient in public procurement and/or IT systems; • Start with micro value procedures. Micro value procedures are a good place to start with simple things to mitigate resistance to change; • Communicate through relevant channels. Extensive use of social media, especially Facebook, to keep momentum high and communicate the achievements and setbacks; • Allocate budget for training / capacity building. Vacuum of competence issue; • Use an agile approach (scrum). Helps to deliver working versions of the system in a short period of time, achieve quick-wins and early adoption from day one both in IT and non-IT directions. 20
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