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Asia and Pacific Conference on Electronic Government Procurement for Effective Procurement
22-24 November 2011 Hotel Intercontinental, Denpasar, Indonesia

VPs Keynote Speech: 22 November 2011 Sharing Good Practice to Improve the Effectiveness of eGovernment Procurement in Public Procurement Reform Programs I. Introduction

Selamat Pagi Bapak dan Ibu, hadirin sekalian. Good Morning and welcome to the Honorable Dr. Lukita Dinarsyah Tuwo, Mr. Ahmad Heryawan, Mr. I Wayan Suasta, Mr. Agus Rahardjo, the Honorable Kyu Yun Choi, distinguished guests, ladies and gentlemen. I am delighted to be in Bali this morning to speak at this conference on Electronic Government Procurement for effective Public Procurement. I wish to personally thank LKPP and their team for assisting ADB with the arrangement of the conference in this beautiful location. My speech today will cover the many potential benefits of eGovernment Procurement, how it can help in procurement reform programs, and the fight against corruption. I will also talk about how we could accelerate these programs and increase the wider development effects of eGovernment Procurement by sharing knowledge. For those of you who are unfamiliar with ADB, we are a results orientated multi-lateral development bank. Our approach is best described by the three pillars of our development strategy, which include: 1. 2. 3. regional integration and cooperation; inclusive economic growth; and environmentally sustainable growth

Much of our work is focused on catalyzing an investment with innovative business and financing solutions. In the area of public procurement, we fund national reform programs, capacity development, studies, surveys, research papers and conferences such as this one. II. The benefits of effective eGovernment Procurement

I am sure you will recognize that in many countries public procurement activities are under-valued and under-resourced. ADB believes that public procurement plays a fundamental role in economic and social development programs. Procurement should be a high quality, professional, pan-government core capability. Poor public procurement practices can lead to misappropriation or sub-optimal use of taxpayer or donor funds. Many infrastructure programs and essential public services are delivered via consultants, contractors and suppliers. When contracts are awarded to
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less qualified suppliers, the quality and timeliness of delivery suffers. More importantly, this places an additional cost burden on taxpayers and the poor who have the most need of public services such as health, education, transport, justice and social security. The good news is that appropriate electronic tools can improve the efficiency and transparency of public procurement and also increase economic development. Throughout the world there are many examples of effective implementation of electronic Government Procurement. Ill mention a few of these: - Koreas Koneps system transfers transactions electronically to payment, budgeting and accounting systems; - Chilecompras trading platform offers the Chilean public easy access to information regarding public purchases; - Singapores GeBiz system allows registered users to receive, free of charge, many countries tender notices to increase access to trade opportunities; - Brazils large scale public awareness campaigns have led to its Compraset platform capturing over 67% of total public procurement; - The European Union facilitates trade between member states by electronically publishing all public tender notices above certain value thresholds; - In August of this year, the Sigma project, which is funded by EU and OECD, indicated that EU public procurement agencies in Italy, Austria and Portugal had reported very impressive savings of between 16-20% for certain items which were procured or auctioned electronically1. ADB has itself benefited from using electronic procurement tools. ADBs Consultant Management System handles the entire recruitment and selection process online from registration and advertising of opportunities through to contract award. Since implementing the system, ADB receives three times as many expressions of interest, and our time to recruit consultants has reduced by more than 50%. III. Effective implementation

Our own experience has mirrored the conclusions of many studies of effective systems programs; they cannot be implemented effectively without clear executive ownership, adequate resources and strong stakeholder support. It is important to avoid too much focus on technology when seeking ministerial support and funding. I like to remember that there is a small e and a big G and P in eGovernment Procurement. The technology should be presented as a tool to improve underlying processes; not as an end in itself and often implemented as part of wider public procurement reform. Five types of benefits can justify the required investment in eGovernment Procurement systems and any accompanying regulatory changes. These are:
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Italian Intercent ER e-Procurement services provided 16% cost savings to Italian local agencies in 2008 and time savings of 45 man-years. The Austrian Federal Procurement Agency reported savings of 20% for electronic purchases Portuguese study compared best bids for public works contracted by hospitals in 2009 (using paper) and 2010 (using eProcurement) concluded that a cost reduction of 18% had been achieved in 2010, due to the increase in competition.

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Firstly, savings in the cost of goods, works and services. As the experience of some EU countries has shown, professional procurement activities, combined with eGovernment Procurement tools, may substantially reduce the total cost of acquisition and ownership of certain goods, works and services by ensuring that contracts are competitively tendered or auctioned, awarded fairly and highlighting differences in prices paid by different agencies. These cost savings can be re-allocated within local or national budgets to provide more or better quality public services, or even reduce taxes or government borrowing. Secondly, Public Sector Efficiency; user friendly eGovernment Procurement can reduce procurement transaction times, leading to faster provision of vital infrastructure and more responsive commissioning and personalization of public services. Some countries use eGovernment Procurement to underpin Public Procurement Shared Services. Shared services combine the procurement staff, systems and activities of different locations or agencies. Shared services allow expertise to be shared, lower administration costs and drive economies of scale from the aggregation of demand. Third, among these benefits is its role in increasing the economic development effects of the National Budget. Governments has choices on how, when and where they spend taxpayers funds and with which types of suppliers. eGovernment Procurement can be combined with economic development activities to increase Small and Medium Enterprises online trading capability to win public contracts, or even additional private sector business. This can help raise employment as SMEs often drive a large percentage of employment growth. Intelligent use of eGovernment processes can also reduce SMEs need for credit in times of economic crisis. For example, the UK government uses electronic systems to pay small suppliers within 10 days. Fourthly, electronic data sharing and integration. Standard Messaging protocols can drive integration within government systems, to supplier systems, and also increase regional co-operation. For example, procurement data links to customs single window processes can reduce border clearance times. A final benefit is, improved Governance and Accountability; transactional procurement systems can be designed to enforce users compliance with appropriate regulated processes and increase the level of detail and transparency of public expenditure data. IV. Reducing corruption and increasing public trust in Public Procurement

At this point, I would like to emphasize the strategic opportunity that effective implementation of eGovernment Procurement programs presents to create a fairer, more competitive and trusted national business environment, attractive to international suppliers, lenders and donors.

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Corruption remains a major global challenge. It devastates societies, harms economies, undermines the rule of law, distorts competition and weakens public trust. Weak governance and corruption hit the poor the hardest. Transparency Internationals annual Corruption Perception Index, which ranks countries on their perceived levels of corruption, reveals that corruption remains a serious problem in many countries. Strengthening public procurement is a key concern for ADB as we provide billions of dollars to our member countries for development programs, much of which is disbursed via public procurement or concession processes. eGovernment Procurement projects can involve the private sector, citizens, media and civil society working together to establish a more transparent and accountable public procurement system. Electronic reporting of procurement data, such as the history of the bidding process, strengthens the opportunity for civil society monitoring as well as oversight by internal and external auditors. V. Facilitating Knowledge Sharing

Throughout this speech, I have demonstrated that effective institutions, capacity and creating sustainable solutions are key to successful public procurement. To build such effective institutions and capacities, sharing knowledge and experiences is critical. ADB believes in facilitating a two-way continuing dialogue for and among our developing member countries. ADBs new Knowledge Sharing Program captures and shares knowledge more systematically, and includes increasing engagement with other private, public or international organizations. Events such as this one enable government agencies to participate on an equal footing and to learn from a broader set of experiences and approaches. Over the next three days, expert speakers from around the world will present their experience and good practices, including those within projects that ADB has funded. Knowledge sharing is more effective when knowledge seekers have the tools to identify needs and help with adapting knowledge to their circumstances. ADB has produced detailed case studies on different countries implementation, available on our web site. A summary of a recent ADB survey of 27 countries implementation plans will be presented during the conference proceedings. The MDB e-Government Procurement Toolkit, re-launched and sent to you before this conference, can provide you with practical guidance at all stages of the implementation journey. This toolkit was produced by ADB, in partnership with other Multi-lateral Development Banks, and we acknowledge their valuable contribution to its development. V. Conclusion I have outlined the part that eGovernment Procurement can play in generating savings and increasing the effectiveness of public sector services, whilst increasing transparency and accountability. We can all learn from the journey of government
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agencies here today in gaining ministerial sponsorship and monitoring the successful implementation of their reform programs. ADB will consider this conference a success if every delegate adopts or adapts one or more new ideas or tools gained from your participation over the next three days. Let me conclude by thanking you for your unrelenting commitment to improving Public Procurement.