ACTIVITIES :: eGovernment :: Policy :: High impact services :: eProcurement
Capitalising on eProcurement
European governments buy goods and services worth up to one-fifth of their collective gross domestic product (GDP). Most of this expenditure is made through public tenders. Targeted correctly, this spending can make a significant contribution to stimulating economic growth and creating more jobs. eProcurement can help do this, create free and fair competition, promote access to all and cut costs as well.
European governments collect some 45% of their collective GDP in the form of taxes and other revenues and are responsible for spending about 15-20% of GDP – around €1.5-2 trillion – on goods and services.
It is estimated that electronic procurement and invoicing could reduce total procurement costs by around 5% and lower transaction costs by 10% or more, saving governments – and therefore taxpayers – tens of billions of euros annually.
The benefits of eProcurement do not stop at saving money. Traditional procurement systems can be difficult for potential bidders to access, while many may simply be unaware of existing tendering opportunities. This lack of information and knowledge is particularly the case with SMEs, which often lack the manpower to monitor the market.
In addition, despite EU-wide publication of higher-value calls for tender, public procurement still operates mainly at national level, with potential bidders from other countries unaware of opportunities and lacking the resources to bid. Opening procurement up to wider competition across the EU would help to ensure that governments achieve the best price-quality balance for their taxpayers’ money. In addition, governments can carefully target their public spending to stimulate innovation and create jobs.
Moreover, once a contract has been awarded following a tender, Information and Communication Technologies can continue to reduce administration costs and improve efficiency. Electronic ordering and invoicing systems have shown significant potential for cost savings in public administrations.
Road map for eProcurement
Given the benefits of eProcurement, European governments have committed themselves to an ambitious road map for its rollout. Member States are committed to giving all public administrations across Europe the capability of carrying out 100% of their procurement electronically by 2010 and have set a minimum target of 50% for the actual use of electronic procurement.
In order to achieve this, Member States have signed up to a specific eProcurement action plan covering the period 2006-10. The Commission is launching a pilot project with support from the ICT Policy Support Programme to demonstrate an EU wide eProcurement system. The aim is to show that companies, particularly SMEs, will benefit from such a system, that it reduces their costs and simplifies the processes they need to follow to bid for public contracts outside their home Member State.