e-procurement in the public sector

by Tina Yule, Head of Business Change and Improvement Perth & Kinross Council

E-procurement makes use of the capabilities of the internet to conduct transactions between buying organisations and suppliers. E-procurement is not about driving down suppliers' prices. The business case for public sector organisations implementing e-procurement mainly involves transaction process savings and increased contract compliance rates - which can benefit both buying organisations and their suppliers.

The Scottish Executive's eProcurement Scotl@nd Service (ePS) was procured as a common technical platform for all Scottish public sector organisations to use - and is now being used by 60 Scottish public sector organisations across central government, local government and the NHS.

ePS is an internet based service and a key principle is that it is appropriate for all suppliers, small, medium or large, and caters for their differing requirements and varying capabilities. It has been designed so that no particular technological sophistication is required - suppliers can continue to receive purchase orders and send invoices via post, fax or e-mail if they wish. At the other end of the spectrum, the service is engaging with suppliers who have, or who are developing, electronic catalogues or who have 'punch-out' enabled web sites (where buyers can link directly from the service to view and order approved catalogue content on the supplier's web site), or who are exploring XML or electronic data interchange links.

A vitally important attribute is that suppliers do not have to pay to transact through the service and hence there are no joining fees, subscription or transaction charges of any kind to suppliers for using the ePS service. However, increasingly suppliers are choosing to develop electronic catalogues and web based commerce including cXML links to back office systems. Costs will occur with cXML developments, but can be offset by the potential for significant benefits for suppliers. The options can be explored as part of the supplier adoption process. The contractual relationship between a buyer organisation and a supplier will remain a matter for the two parties. The service ensures that contractual confidentiality is respected and that users of the system are only able to access the contract which their own organisation has with a supplier. However, the programme encourages participating buying organisations to co-ordinate their approaches to common suppliers. The intention is that once a supplier is on the system for one buying organisation, it is there for all buying organisations which are entitled to trade with it, while reflecting any variations in contract terms and conditions and prices agreed with particular buying organisations.

ePS now has a track record of successful connection and ongoing e-trading with suppliers across the country from Brora to Bracknell - total throughput was £210million in the last 12 month period; there are over 9000 registered users in buying organisations; over 4000 unique suppliers with 15,000 connections across Scotland are trading with the public sector through ePS and 3000 invitations to tender have been issued electronically. Suppliers from multinational organisations to local SMEs have responded positively to ePS particularly about the opportunity to interface with only one technical platform and standard.

Perth and Kinross Council, in partnership with both Angus and Dundee City Councils, are currently evaluating the business case to join ePS and implement their e-procurement system. Funding to support the initiative is being sought from the Scottish Executive Efficient Government Fund.