Special Feature

Environmental Benefits of an ElectronicBidding System
Masakazu Urata†, Seiji Takahashi, Hisanori Matsuzawa,
Hiroaki Kuroki, and Yoshihiko Adachi
Abstract
NTT Service Integration Laboratories is developing a secure (encryption-based) electronic bidding
system to enable local governments to replace their paper-based procedures for public works bidding byelectronic ones based on personal computers and the Internet. This article explains how the introductionof this electronic bidding system can reduce the effects on the environment.

1. Introduction

2. Electronic bidding system

In January 2001, the government announced the eJapan strategy and presented “the realization of egovernment/e-local government” as one of four toppriority policies. Well before this date, in 1999, NTT
Service Integration Laboratories started to study
ways to achieve e-government/e-local government.
We have developed an electronic bidding system andan electronic application system. The bidding system
was first introduced by Yokosuka city in 2001. Now
30 local governments and about 9000 bidders areusing this system (including shared use), and thenumber of installations is increasing with the penetration of e-government/e-local government. Moreover, the application scope of this system is not limited to public works, but is spreading to purchasing,subcontracting, and public works tenders under thecontrol of the waterworks department [1].
Using the know-how of electronic bidding system
introduction/operation gained through supporting
local government, we quantitatively evaluated theeffect that introducing the system had on reducing theenvironmental burden. This article introduces theresults of the evaluation.

2.1 Configuration and features of electronic
bidding systemThe electronic bidding system consists of threecomponents—a Web server, tendering application
server, and database server—used in conjunction
with a trusted third-party (TTP) system consisting ofan electronic authentication system and an electronic
notary system (Fig. 1). This system has two main features:(1) electronic bidding procedure using hashing toachieve fair bidding(2) third-party certification utilizing the electronic
notary system
As shown in Fig. 1, we can construct a shared electronic bidding system center that can be shared bymultiple local governments [2],[3]. Municipal
employees and bidders can easily conduct the bidding
using personal computers (PCs) via Internet accessfrom their offices or homes, so the efficiency of bidding is vastly improved. Moreover, the system candeal with a large number of bidders, so bidding can be
more competitive. This will lead to greater price competition and hence lower contract prices. In addition,
electronic bidding reduces paper consumption andthe amount of travel required for attending meetings,
so the environmental burden will also be reduced.

† NTT Service Integration Laboratories
Yokosuka-shi, 239-0847 Japan
E-mail: egov@lab.ntt.co.jp

Vol. 3 No. 3 Mar. 2005

2.2 Conventional bidding flow
The main flow of public works managed by local
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Web serverCity A bidder- Refers to project details
and bid results- Sends various application
forms- Receives various notices

City B bidder- Refers to project details
and bid results- Sends various application
forms- Receives various notices

Electronic bidding system
Tendering
Databaseapplication server
server- project- receives application forms - user info.
announcement (bidding forms etc.)- city A project info.
- bid opening- sends selection notices- city B project info.
- handles bid opening

City A municipal employee- Manages project details
and various application
forms for city A items

Open info.
Application forms/notices
Encrypted channel
InternetOpen info.
Application forms/notices
Encrypted channel
Trusted third party (TTP)
Electronic
Electronic
authentication server
notary server - content
certificate- delivery
certificate
User authentication Certification of various documents

City B municipal employee- Manages project details
and various applicationforms for city B items

Fig. 1. Configuration of electronic bidding system.

Local government

BidderBulletin board(1) Announcement ofpublic works project

Travel to get information

Qualification
check

Participation form
(2) Selection of bidders

Announcement

Travel to submit documents

Evaluation report
Presentation(3) Description of work
Presentation
document copies(4) Tendering

Travel for meeting

Bidding form

Tendering
Travel to tender/check results(5) Opening of the bids

Opening of the bids
Biddingresults(6) Public disclosure ofbidding results

Public disclosureof bidding results

Fig. 2. Flow for conventional bidding.

government is: planning (design), tendering, bidopening, contract issuing, work management, anddelivery (completion). The scope of the electronic
bidding system is the bidding process. By using PCs
and the Internet, the system implements all bidding
processes from the initial distribution of information,
through tendering and the opening of bids to public
disclosure of the bidding results. An example of theconventional bidding process is shown in Fig. 2. Each36

step requires meetings, which involve travel and consume a lot of paper.
2.3 Bidding flow in electronic bidding
Electronic bidding digitizes the conventional system of paper bidding documents and replaces the distribution of paper (by hand or mail) by data transmission via the Internet. NTT’s electronic bidding system implements channel encryption and user authenNTT Technical Review

Special Feature

tication by an electronic authentication system/electronic notary system, protection against tampering,and certification by a third party to prevent fraud. In
addition, it incorporates a hash function to ensure thatthe bidding procedure is fair. The bidding flow isshown in Fig. 3.
2.3.1 Bidding procedure with hash function
Phase 1 (tendering):
The bidder sends both a plain text bid value and ahash value of the bid. All bids (plain text) are held at
the notary system until the tendering deadline, but thehash values are immediately forwarded to the local
government, which publicly discloses all the received
hash values.
Phase 2 (bid opening):
When the tendering deadline arrives, no more bids
are accepted. The notary system sends all the bidding
forms (plain text) to the local government, which calculates the hash value of each and checks whether itmatches the hash value received in phase 1. If it does,
the local government regards the bidding form as
being valid. It opens all the bids and determines thewinning bidder. Then it publicly discloses the bidding
results.
The procedure for phase 1 (tendering phase) keeps

the value of the bids confidential until the tendering
deadline and prevents this information leaking toother bidders. The values are read for the first time inphase 2 (bid opening phase). The local government
validates each bid by matching it to the hash value
received in phase 1 to ensure that no substitution has
taken place. This leads to fair bidding among bidders.
Although strictly speaking the bidding procedure
involves two operations, the second operation in thebid opening process (step (5) in Fig. 3) is performed
automatically by the electronic notary system, which
stands between the bidders and local government.
3. Environmental burden evaluation model
To quantitatively evaluate the effect of the electronic bidding system on reducing the environmental burden, we modeled its introduction and operation andcompared the energy consumption and CO2 emissions of the conventional and electronic bidding
processes.
3.1 Introduction model
When they introduced the electronic bidding system, many local governments shared it with others toBidder(1) Announcementof public works
project

Local government
Internet
Refers to project details
Announcement
Internet(2) Selection ofbidders

Sends participation form

Electronic
notarysystem Sends participation form

- Checks participation form

Visits Web page to see examination result
Internet(3) Descriptionof work

Work description, open Q&A

Presentation
Sends hash value of bid(4) Tendering

Internet
Electronicnotarysystem

Sends bidding form (plain text)
Single operation (system
automatically sends both hash & plain text)
Internet(5) Opening of
the bids

Sends hash value of bid
Hash value isimmediately sent tolocal government
Bidding form (plain text) is kept
at notary side until bid opening

Electronic
notarySends bidding form (plain text)
systemCalculation

Hash value- Opens hash value- Validates bidding form
- Open bids and determine
the winning bidder
Comparison

Internet(6) Public
disclosure ofbidding results

Sees bidding results
ResultFig. 3. Flow for electronic bidding.

Vol. 3 No. 3 Mar. 200537

Special Feature

Table 1. Models for introducing the electronic bidding system.
Model A(exclusive use)

Model B(partial sharing)

Model C(full sharing)

Bidding system

exclusive use

exclusive use

shared use

Electronic authenticationand notary systems

exclusive use

shared use

shared use

No. of local governments

1591

No. of registered bidders

10005000(1000 per local government)

15,000No. of bidding items(per year)

2002500(500 per local government)

18,000reduce the cost of system development/operation.
Therefore, we evaluated the reduction in environmental burden using three models:(1) Model A (exclusive use)(2) Model B (partial sharing)(3) Model C (full sharing)
The number of local governments, registered bidders, and bidding items for each model are shown inTable 1.
3.2 Operation model
We assumed that the bidding system was “the general competitive bidding process” and the number ofbidders per item was 20. In models A and B, the bidders submit bids only to their own local government.
In model C, they submit bids to all local governmentsin their prefecture. For models B and C, we designed
the local government operations to balance the loads
on the shared servers.
3.3 Conditions for environmental evaluation
In calculating the environmental burden, we considered the following conditions based on an analysis
of conventional business.
(1) travel distance: We assumed that a bidder visits
the local government four times per bid and approximated the area of a local government as a circle withradius R, so the average travel distance is R/2.
(2) paper consumption: We assumed that the local
government uses 20 pages of paper per bid toannounce a public works project and disclose the bidding results and that bidders use 60 pages to submit abid.
(3) power consumption: We estimated the required
hardware configuration (server, PCs, and networkequipment) based on number of bids to be handled bysystem and calculated the power consumption. We
assumed 24/7 operation for the servers handling theelectronic bidding, i.e., they are available all the time38

every day. We calculated the energy consumption andCO2 emissions for each item and evaluated themassuming that the period of use was one year.
4. Evaluation results
The reduction in environmental burden achieved byusing the electronic bidding system in the case ofmodels A, B, and C is shown in Fig. 4, where the values are normalized by those for the conventional system.
In model A, the energy consumption exceeds 1,
meaning that introducing the electronic bidding system leads to an increase in energy consumption compared with conventional bidding. In model A, about
85% of the energy consumption of the electronic bidding system is attributable to the power consumptionof the servers. The 24/7 operation provided for user’sconvenience produces very high energy consumption. In addition, as the system is designed to handle
peak loads, the overall system utilization is low,which also worsens the energy efficiency.
In model B, the electronic authentication andnotary systems are shared by multiple local governments, and the system operation is designed to balance the loads. As a result, the system utilization ishigher and the energy consumption lower, below
60%; the CO2 emission is below 40%.
In model C, the local governments share not only
the electronic authentication and notary systems, butalso the electronic bidding system. The system utilization factor is even higher, so the environmental
burden is much lower. In addition, electronic bidding
eliminates the need for travel and hence its environmental burden.
Thus, the electronic bidding system decreases theenvironmental burden by increasing the system utilization factor. We calculated that over the lifecycle ofsystem equipment, model C would lead to a 2300-ton
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Special Feature

1.6
Energy consumption

Environmental burden

1.4

CO2 emission

Environmental burden
increases

1.210.8

Environmental
burdendecreases

0.6
0.4
0.20

Model A

Model B

Model C

Fig. 4. Reduction of environmental burden by using electronic bidding system. (normalized by conventional system)

5. Conclusion

3000
Due to:Paper incineration
Equipment disposal
Business travel
Equipment power consumption
Paper manufacture
Equipment manufacture

CO2 emission (tons)

2500
2000
1500
1000
5000

Conventional bidding

Our analysis shows that our electronic bidding system will be convenient for users like bidders andmunicipal employees and will increase the efficiencyof business processes. It will also reduce the environmental burden. In future, we will improve the system
to make it more flexible to match the processing volume and operating conditions present not only at thetime of introduction but also later on. We will strive
to reduce the environmental burden even further.
References

Electronic bidding

Fig. 5. Reduction of CO2 emissions in model C.
(result of manufacture/use/disposal life
cycle evaluation)

[1]

[2]

decrease in CO2 emissions per year (Fig. 5). This corresponds to the annual CO2 emissions from 450 family homes.

Vol. 3 No. 3 Mar. 2005

[3]

Y. Kamei, Y. Adachi, H. Kuroki, K. Morimura, and H. Kitou, “NTT’sR&D Approach to Electronic Government/Electronic Local Government,” NTT Technical Journal, Vol. 14, No. 7, pp. 6-12, 2002 (inJapanese).
S. Takahashi, M. Urata, and Y. Adachi, “Design and Construction ofElectronic Bidding System Allowing Third Party’s Certification,”
Information Processing Society of Japan, 61st National Convention,
6R-9, 2000.
S. Takahashi, K. Morimura, M. Urata, and H. Kuroki, “Design andConstruction of ASP Type Electronic Bidding System Using Electronic Notary System,” IEICE General Conference 2002, D-17-4,2002.

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Masakazu Urata

Hiroaki Kuroki

Research Engineer, Smart Card Service Promotion Project, NTT Service Integration Laboratories.
He received the B.E. and M.E. degrees in electronics engineering from Osaka Prefecture University, Sakai, Osaka in 1990 and 1992, respectively. He joined NTT Network Information Systems Laboratories, Kanagawa in 1992 andengaged in the development of network application systems. He is a member of the Institute ofElectronics, Information and Communication
Engineers (IEICE) of Japan.

Senior Research Engineer, Supervisor, Smart
Card Service Promotion Project, NTT ServiceIntegration Laboratories.
He received the B.E. and M.E. degrees in electrical engineering from Osaka Prefecture University, Sakai, Osaka in 1980 and 1982, respectively. In 1982, he joined the Electrical Communication Laboratories, Nippon Telegraph and Telephone Public Corporation (now NTT), Tokyo,
Japan. He has been researching and developing
software development environments and more
recently smart card services. He is a member ofIPSJ and IEICE.

Seiji Takahashi

Yoshihiko Adachi

Researcher, Smart Card Service Promotion
Project, NTT Service Integration Laboratories.
He received the B.E. and M.E. degrees in information engineering from Ehime University, Matsuyama, Ehime in 1997 and 1999, respectively.
In 1999, he joined NTT Service Integration Laboratories, where he was engaged in model designand systems development for an electronic bidding system. He is a member of the Information
Processing Society of Japan (IPSJ) and IEICE.

Senior Manager, Smart Card Service Promotion Project, NTT Service Integration Laboratories.
He received the B.E. and M.E. degrees in electrical engineering from Keio University, Yokohama, Kanagawa in 1981 and 1983, respectively.
In 1983, he joined the Electrical Communication
Laboratories, Nippon Telegraph and Telephone
Public Corporation (now NTT), Tokyo, Japan.

Hisanori Matsuzawa
Producer, Smart Card Business Development
Department R&D Strategy Department.
He received the B.E. and M.E. degrees in software engineering from Tokyo University of Science, Tokyo in 1988 and 1990, respectively. In
1990, he joined NTT Information Communication Laboratories, Tokyo, Japan. He engaged indevelopment research of an online transaction
processing system and an electronic administration system until 2002. He is currently researching smart card systems.

40NTT Technical Review