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Reducing Corruption through Electronic Procurement

Eduardo Talero Washington, April 21, 2005

2Eduardo@Talero.name –4-21-05

OVERVIEW

• What is e-procurement?

• What is the e-procurement cost/benefit function?

• How can e-procurement reduce corruption?

• What are the key points to remember?

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e-GP: FULL SYSTEM

SUPPLIERS

BUYERS

User Support Facilities

Transaction Facilities

Disclosure Facilities

Systems Integration Facilities

Procurement AuthorityLegislatureExecutivePublic

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e-GP DISCLOSURE FACILITIES

BUSINESS OPPORTUNITIES

CONTRACT AWARDS

LAWS / REGULATIONS

BIDDING DOCUMENTS

Disclosure Facilities

SUPPLIER ROSTER

SUPPLIERS

BUYERS

Procurement AuthorityLegislatureExecutivePublic

CODING SCHEME

STATISTICAL DATA BASE

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VOLUME

COST

E-Purchasing

High

Online Auctions Bidding Reverse Bidding

Online Shopping

High

Low

Low

e-GP: TRANSACTION FACILITIES

E-Tendering

Framework Contracts

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e-GP: USER SUPPORT FACILITIES

Supplier Registration & Alerts

Solicitation Preparation Support

Bid Preparation Support

Bid Evaluation Support

Research Support

Reference Prices

Electronic Payments

SUPPLIERS

BUYERS

Procurement AuthorityLegislatureExecutivePublic

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E-Government

e-GP: INTEGRATION FACILITIES

Integrated Fiscal Management

Requisitioning

Contract Management

Inventory Control

Asset Management

SUPPLIERS

BUYERS

Procurement AuthorityLegislatureExecutivePublic

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OVERVIEW

• What is e-procurement?

• What is the e-procurement cost/benefit function?

• How can e-procurement help reduce corruption?

• What are the key points to remember?

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User Support Facilities

Transaction Facilities

Disclosure Facilities

Integration Facilities SYNERGY

ECONOMY

EFFICIENCY

TRANSPA-RENCY

THE e-GP COST-BENEFIT FUNCTION

IMPACTe-GP SYSTEMINPUTS

Governance

Leadership/Human

Resources

Institutional Change

Technology

Financing

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Leadership and policy reform

• Declares e-GP system official publication vehicle• Mandates publication through the system of

business opportunities, bidding documents, questions and answers, contract awards.

• Establishes publication time standards to be enforced by the system.

• Declares non-compliant transactions invalid.• Makes management responsible for accuracy of

information.

Example: Chile: Jan.,2003 Executive Order

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e-GP COST – BENEFIT RATIO

Full e-GP System

Financing: US$ 2.5 – 3.5

million/Country

Over 8% of GDP

10-20% Transaction cost reduction

Non

-Fin

anci

al In

puts

EFFICIENCY

TRANSPA-RENCY

ECONOMY10% cost reduction (0.8% of GDP)

SYNERGY

•E-Government•Fiscal Management•Systems Integration

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OVERVIEW

• What is e-procurement?

• What is the e-procurement cost/benefit function?

• How can e-procurement help reduce corruption?

• What are the key points to remember?

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HOW CAN E-PROCUREMENT HELP REDUCE CORRUPTION?

• Illuminating the playing field

• Facilitating entry

• Standardizing communications

• Keeping score

• Leveling the playing field

• Enforcing the rules

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e-GP: TRANSPARENCY BENEFITS

OVER 8% OF GDP

•HEALTH SERVICE RECIPIENTS•PUBLIC TRANSPORT USERS• STUDENT POPULATION•MOTORISTS•ETC.

•MID SIZE BUSINESSES•LARGE SUPPLIERS•SMALL SERVICE FIRMS

•ALL GOVERNMENT

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e-GP: TRANSPARENCY BENEFITS

OVER 8% OF GDP

•HEALTH SERVICE RECIPIENTS•PUBLIC TRANSPORT USERS• STUDENT POPULATION•MOTORISTS•ETC.

•MID SIZE BUSINESSES•LARGE SUPPLIERS•SMALL SERVICE FIRMS

•ALL GOVERNMENT

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How can e-procurement help reduce corruption?

• Illuminating the playing field

• Facilitating entry

• Standardizing communications

• Keeping score

• Leveling the playing field

• Enforcing the rules

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How can e-procurement help reduce corruption?

• Illuminating the playing field

• Facilitating entry

• Standardizing communications

• Keeping score

• Leveling the playing field

• Enforcing the rules

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e-GPSTANDARDIZES COMMUNICATIONS

SUPPLIERS

BUYERS

Clarification questions

Proposals

Bidding documentsClarifications

Request for documents

Clarification questions

Payment

Purchase plans

RFQs & RFPs

Notice of Award

Clarifications

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How can e-procurement help reduce corruption?

• Illuminating the playing field

• Facilitating entry

• Standardizing communications

• Keeping score

• Leveling the playing field

• Enforcing the rules

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How can e-procurement help reduce corruption?

• Illuminating the playing field

• Facilitating entry

• Standardizing communications

• Keeping score

• Leveling the playing field

• Enforcing the rules

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Policy Reform + Institutional Reform + Human resource development

STAGED DEVELOPMENT OF e-GP SYSTEM

INTEGRATION FACILITIES

TRANSACTION FACILITIES

DISCLOSURE FACILITIES

E-catalog Purchases

Reverse Bidding E-Tendering

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How can e-procurement help reduce corruption?

• Illuminating the playing field

• Facilitating entry

• Standardizing communications

• Keeping score

• Leveling the playing field

• Enforcing the rules

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OVERVIEW

• What is e-procurement?

• What is the e-procurement cost/benefit function?

• How can e-procurement help reduce corruption?

• What are the key points to remember?

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E-GP AND CORRUPTION: KEY POINTS TO REMEMBER

• Political leadership and policy reform are critical

• Success not possible without culture change

• Gradual development is possible and desirable

• Modest start yields large transparency benefits

• Overall impact can be major

• Every country case is different