# EUR-Lex - 52010DC0571 - EN

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# 52010DC0571

**GREEN PAPER on expanding the use of e-Procurement in the EU /* COM/2010/0571 final */**

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EN

|| EUROPEAN COMMISSION

Brussels, 18.10.2010

COM(2010) 571 final

GREEN PAPER

on expanding the use of
e-Procurement in the EU

SEC(2010) 1214

GREEN PAPER

on expanding the use of e-Procurement
in the EU

1. 
Why a Green Paper on e-Procurement?

E-Procurement refers to the use of
electronic communications and transaction processing by government institutions
and other public sector organisations when buying supplies and services or
tendering public works. However, there is much more at stake than the mere
changeover from paper based systems to ones using electronic communications for
public procurement procedures. E-Procurement has the potential to yield
important improvements in the efficiency of individual purchases, the overall
administration of public procurement and the functioning of the markets for
government contracts.

The phasing-in of e-Procurement forms part
of the ambitious e-government agenda which can fundamentally transform the
delivery and performance of public administration. The Commission's European
Digital Agenda foresees the adoption of a Commission White Paper outlining
steps that the Commission will take to establish an inter-connected e-Procurement
infrastructure[1].

The present Green Paper constitutes a first
step towards completion of this action and the definition/implementation of an
ambitious but realistic programme to harness the potential of ICT for better
public procurement across the single market.

The present Green Paper also constitutes a
first step towards a co-ordinated, ambitious and comprehensive review of the
existing EU Public Procurement framework that will inform proposals for the
reform of EU legislation. It will be followed by a second Green Paper
addressing other issues related to the modernisation of the existing EU public
procurement framework.

In 2005, EU Ministers voiced the hope that "by
2010 at least 50% of public procurement above the EU public procurement
threshold will be carried out electronically"[2]. To
achieve this, the Commission has modified legislation and implemented the
(2004) e-Procurement Action Plan[3].
Despite this, actual take-up lags far behind initial aspirations, reflecting
the technical, logistical and administrative complexity of the changeover. The Commission's
evaluation[4]
suggests that less than 5% of total procurement budgets in the first-mover
Member States[5]
is awarded through electronic systems.

The Commission considers that the time is
right to refocus Community action to support the deployment of e-Procurement by
national, regional and local public administrations. The technology is now
mature. Successful e-Procurement platforms are well-established in many regions
and Member States. Traffic through these systems has reached a critical mass
and is growing strongly. There is an opportunity to disseminate best practice
and correct shortcomings in the EU legal and policy environment which might
otherwise stifle these developments.

In addition, there is a window of
opportunity to align developments and processes to ensure that key components
of the emerging e-Procurement infrastructure support cross-border participation
in procurement procedures. Unchecked proliferation of technical solutions and
applications could lead to unnecessary barriers to participation by economic
operators in procedures that are organised on partner country systems. While
cross-border participation in e-Procurement remains anecdotal, the Commission
believes that it is wise to act now in order to avoid technical or operational
barriers becoming endemic in the emerging e-Procurement landscape.

What is e-Procurement?

E-Procurement is a catch all term for the replacement of paper based
procedures with ICT based communications and processing throughout the
procurement chain. E-Procurement involves the introduction of electronic
processes to support the different phases of a procurement process –
publication of tender notices, provision of tender documents, submission of
tenders, evaluation, award, ordering, invoicing and payment.

Processes linked to invoicing and payment (post-award) are not
procurement-specific and solutions developed for the wider (B2B) market can be
put to work in e-Procurement[6].
However, some phases (notification, submission, evaluation and ordering)
require customised solutions. The phases of submission, evaluation and ordering
are the most challenging as they require an agreed set of protocols and
standards for organising the exchange of complex documents and interaction
between the public purchaser and suppliers.

Some aspects of procurement activity will continue to require
non-automated handling. For example, certain phases of complex procurements
(designs, works) may be difficult to reduce to standardised formats and may
require human intervention. Nevertheless, there is potential for large parts of
procurement activity to be shifted to an electronic basis. The experience of
Korea is instructive: over 9O% of all government procurement in that country is
mediated through the centrally administered KONEPS platform.

Often, parts of the procurement procedure can be conducted
electronically with others being operated on a non-automated basis. Many public
administrations have built portals for the publication of procurement notices
and provision of access to tender documents. Progress in the use of automated
systems for the submission, processing and evaluation of tenders and ordering
is less widespread. The ultimate prize is 'straight through e-Procurement' with
all phases of the procedure from notification to payment being conducted on an
automated basis, through the medium of electronic procedures. Such
possibilities are available – usually provided by specialised e-Procurement
platforms which provide all relevant support to individual contracting
authorities in running electronic procurement procedures.

2. 
Why is e-Procurement important?

The Commission sees the following
advantages in the wider use of e-Procurement:

a)           Increased accessibility and
transparency: by automating and centralising the
flow of information about individual tender opportunities, e-Procurement can
improve the access of businesses to public procurement. Searching for
opportunities on-line is much quicker and cheaper than screening individual
publications. E-Procurement systems can also be configured to alert suppliers
to particular opportunities and provide immediate access to tender
documentation. Transparency is also improved as the procurement process is more
open, well-documented and communicated. As a result the monitoring and overall
efficiency of public procurement improves, opening up markets to more
competition and deepening the pool of competing suppliers.

b)           Benefits for individual
procedures: compared to paper based systems,
electronic public procurement can help contracting authorities and economic
operators to reduce administrative costs and speed up individual procurement
procedures. In the current financial climate, such efficiencies could be very
welcome, maximising the potential which can be obtained from constrained
resources. E-Procurement systems have also proved very useful in speeding up
the expenditure of public procurement budgets.

c)           Benefits in terms of more
efficient procurement administration: where Central
Purchasing Bodies (CPBs) exist, the use of electronic procedures can contribute
to centralise costly procurement back-office functions and reap scale economies
in procurement administration. The switch to e-Procurement also provides a
wider opportunity to rationalise and review the procurement process – moving to
e-Procurement does not have to mean copying in electronic form the paper based
procedures which may have existed for many years. E-Procurement can be
integrated within the other (electronic) activities of an organisation (e.g.
inventory control, contract management and audit) ensuring consistency and
wider efficiency.

d)           Potential for integration of
EU procurement markets: in a paper based
environment, lack of knowledge and concerns about bidding for contracts some
distance from a business' place of establishment may have limited or
discouraged suppliers from competing in certain tenders. E-Procurement has the
potential to reduce these distance barriers and information gaps and encourage
greater participation, widening the pool of possible suppliers and potentially
enlarging markets. Although it cannot change the relevance of distance or
physical proximity in terms of actually performing the underlying business
transaction, it does offer a way to overcome distance-related costs to
participation in the procurement procedure itself. The resulting transparency
is not just a cross-border benefit; the advantages of this greater transparency
can be felt even within the borders of a country, as suppliers in one region
take advantage of opportunities in another. Easier access to information about
tender opportunities and streamlined tender processing will make it easier for
foreign suppliers to participate in on-line procurement opportunities.[7]

All of the above benefits help the desired
procurement outcomes to be achieved more effectively. In particular, e-procurement
can help to source inputs for public services on terms that are better value
for tax-payers. These savings are particularly valuable now in the context of
pressure to manage public expenditure.

These benefits do not come for free. The
ability to perform procurement electronically requires investment throughout
the procurement chain to build the necessary capacity and manage the
change-over. Investment costs in national and regional e-Procurement facilities
– spanning e-portals to more comprehensive solutions – range from 0.5m€ to 5m€.[8] Maintenance costs vary
from several thousand euros to several million, presumably depending on the
size and sophistication of the system. Experience suggests these investments
can be recouped in administrative savings within short time-frames. However,
the bigger barrier to the use of these systems lies in encouraging contracting
authorities and supplier communities to work with these new systems. Successful
e-Procurement initiatives often include extensive support for training user
communities and continued efforts by sponsors of e-Procurement to promote and
develop their systems.

Examples of savings and
improvements

· 
Italian Emilia Romagna's agency Intercent ER
offers e-Procurement services including e-Marketplace, e-Catalogues and
e-Auctions and is now the reference point for 539 administrations (90% of local
agencies). In 2008 it processed transactions amounting to some € 419 million,
delivering efficiency benefits of € 67.5 million and time savings of 45
man-years.

· 
The Austrian Federal Procurement Agency
centralises purchases for federal authorities through e-Procurement
functionalities. In 2008 it reported savings of €178 million against a
procurement volume of €830 million. Benefits seem to significantly outweigh the
annual maintenance costs of €5 million, which are less than 3% of the savings.

· 
As of 1 February 2005, all contracting
authorities in Denmark may only accept electronic invoices. This reform affects
approximately 15 million invoices a year, and applies to the entire public
sector, from ministries to nursery schools. The use of e-Invoicing is expected
to save the public €100 million every year, on top of savings in internal
administrative processes.

· 
In Norway, the Ehandel platform is helping
authorities to achieve 20-40% reductions in the time taken to handle orders,
receipt of goods and invoicing and delivering price savings in the region of
2-10%.

· 
In the UK, the Buying Solutions site reported in
its 2008/09 annual report that it had facilitated sales of over £5 billion,
delivering £732 million in savings. The UK also
reported savings frequently exceeding 10% (and even up to 45%) through the use
of e-Auctions and recently announced plans to use e-Auctions to save the
taxpayer up to £270 million by the end of 2011.

· 
A Portuguese study compared the best bids for
public works contracted by 50 Portuguese public hospitals in 2009 (using paper
based systems) and 2010 (using e-Procurement). It concluded that a cost
reduction of 18% had been achieved in 2010, due to the increase in competition
generated by e-Procurement.

3. 
What role can the EU play in promoting e-Procurement?

Most of the required investment in e-Procurement
must be undertaken at national or regional level, as this is where the needs
and resources lie. Moreover, EU procurement legislation leaves contracting
authorities the choice as to whether to use electronic or other communication
methods for above threshold procurement. Therefore, EU policy towards e-Procurement
needs to recognise the bottom-up and decentralised nature of the change-over.

However there is still an important role
for EU initiatives to unlock the potential of e-Procurement and to avoid the
pitfalls of an uncoordinated and decentralised switch-over to e-Procurement. In
particular, EU legal and policy efforts have in the past and should continue
to:

(1) 
Enable contracting authorities to undertake
procurement electronically. EU legislation needs to be configured to allow e-Procurement
systems and processes to be used (for above threshold procurement);

(2) 
Ensure that e-Procurement is undertaken in a way
that complies with the core principles and provisions of EU public procurement
legislation (for above threshold procurement) and relevant Treaty principles
(for below threshold procurement);

(3) 
Encourage the development and use of convergent,
secure but commercially viable solutions and disseminate examples of
best-practice. This should speed up the switch to e-Procurement, avoid wasteful
duplication and avoid repetition of mistakes.

(4) 
Permit economic operators to participate in
electronic procurement procedures across the single market. E-Procurement
provides the possibility to reduce distance barriers and information gaps. E-Procurement
capacity in the different Member States should – to the greatest extent
possible – build on common models and approaches. Solutions which improve and
enhance interoperability between local, regional and national e-Procurement systems
should be encouraged. This will avoid unnecessary technical barriers to
cross-border participation in e-Procurement systems.

EU policy may therefore play an important
and complementary role in support of national or regional efforts to put
procurement on an electronic footing. It also has a wider co-ordinating role, ensuring
consistency with developments in other related areas – for example legislation
relating to electronic signatures or electronic invoicing and which may
eventually lead to some harmonisation of approaches within the EU. If the EU
level dimension is not taken into account, the switch-over may be hampered,
there may be wasted resources as the wheel is constantly reinvented, and the
potential of e-Procurement to widen supplier bases may go unrealised. This
Green Paper and subsequent work aim to define a realistic and effective basis
for the EU to accompany and facilitate this important process.

4. 
What has the EU done to date?

The Commission is not a newcomer to this
policy area. It has already taken a number of steps in recent years to achieve
the objectives introduced above. In particular, it has:

(1) 
Proposed modifications to the EU Public
Procurement Directives permitting the use of electronic procedures for
procurement and introducing techniques and tools which were thought to be
relevant for e-Procurement. Previously, EU legislation did not recognise the
possibility for the use of these methods. The Commission also introduced new
techniques and tools (e-auctions, DPS) to allow contracting authorities to make
fuller use of electronic communications to improve procurement outcomes. These
proposals were adopted and implemented in the modified Public Procurement
Directives of 2004;

(2) 
Conceived and implemented a programme of over 30
non-legislative initiatives to clarify and encourage the use of e-Procurement
(the Action Plan). The policy vision underpinning the Action Plan was ambitious
– that "...any business in Europe with a PC and an internet connection
can participate in a public purchase conducted electronically."[9];

(3) 
Co-financed research and developed other practical
tools to overcome administrative and technical barriers to cross-border e-Procurement.
These include initiatives such as PEPPOL[10],
the newly launched e-CERTIS tool and open e-PRIOR. These projects are still in
development or only recently introduced.

In parallel with this Green Paper, the
Commission services have undertaken an evaluation of EU measures to support e-Procurement.
The main conclusions of this evaluation are that on the whole, the Action Plan
correctly identified the relevant challenges and priorities to be tackled. It
also recognised that the primary impetus for progress had to come from Member
States and regions. It identified a number of actions to steer national and
regional investments in ways that were consistent with EU legislation and a
single market.

The Action Plan achieved some notable
success in the creation and use of a common infrastructure for electronic
publication of tender notices. There is now a single, accepted and well used
system for the publication of above threshold notices across the EU, supported
by compatible infrastructure at national level. In 2009 just over 90% of forms
sent to TED (Tenders Electronic Daily) were received electronically and in a
structured format. The electronic publication of notices for below threshold
procurement has also advanced at national or regional level.

Many Action Plan measures consisted of
guidance or pilot studies which sought to test or promote certain solutions.
They have raised awareness of problems, pointed towards solutions and provided
common points of reference for the wider market. However, they did not seek to
impose particular solutions or outcomes at a time when technology and business
models were still evolving. More concrete projects in the area of
standardisation have not yet crystallised. In summary, although priorities were
generally identified correctly and much of the Action Plan has been implemented
as foreseen, it has not yet created a situation where every EU business can
participate in every procurement procedure via its own computer.

The bottom-line is that many of the
priorities identified by the Action Plan, correctly identified in 2004, remain
priorities today. The "soft law" approach was appropriate to the
evolving e-Procurement environment and encouraged the development of creative
solutions. With the benefit of hindsight, there are some areas which might have
benefited from a more pro-active and/or directive approach. The evaluation of the
Action Plan has identified a number of challenges and weaknesses which, if not
addressed, will prevent the realisation of a wider take-up of e-Procurement and
cross-border participation in on-line procurement.

Commission financed and steered
actions to support e-Procurement

PEPPOL: run by public-sector
organisations from various EU countries and co-funded by the European
Commission, PEPPOL is a major cross-border e-Procurement project intended to
provide large-scale, standards-based IT infrastructure and services to set up
and run on-line pan-european public procurement operations. At the heart of the
PEPPOL architecture is a transport network, enabling e-Procurement business
partners to connect their own IT resources to perform secure and reliable
exchanges of business documents. The project will also deliver solutions to e-ordering
and e-invoicing and provide building blocks towards the creation of systems for
e-catalogues, signature validation and the Virtual Company Dossier (VCD).

Open e-PRIOR: the
European Commission has developed and deployed e-PRIOR to allow the exchange of
structured e-Catalogue, e-Ordering and e-Invoicing documents between the
Commission and its suppliers. Open e-PRIOR publicly provides this solution in a
re-usable open-source format. Furthermore, Open e-PRIOR
includes an integrated PEPPOL Access Point that enables document exchange via
the PEPPOL Network.

e-CERTIS: launched at the same time as
this Green Paper, e-CERTIS is a free, on-line information tool which provides
details of the different certificates and attestations frequently requested in
procurement procedures across the 27 Member States, two Candidate Countries
(Turkey and Croatia) and the three EEA countries (Iceland, Liechtenstein and
Norway). E-CERTIS has been designed to help both economic operators and
contracting authorities, first to understand what information is being
requested or provided and secondly to identify mutually acceptable equivalents.

5. 
The state of e-Procurement

a)           Availability of technical
solutions

E-Procurement is now possible in practice –
not just in theory. The technology exists and is being used in several
countries to permit all the phases of the procurement transaction to be
completed on-line.

Technology has not provided the expected
(high tech) solutions to all procedural steps. In some cases, progress has
resulted from a more pragmatic approach – in the form of practical
'work-arounds' involving less technically demanding solutions or combining
on/off-line communication e.g. the approaches adopted to the provision of
evidentiary documents for exclusion and selection criteria; the use of user
name and password solutions to authenticate a bidder. Nonetheless, these
solutions are valid – they simply provide alternative ways to reach the end
result. Certain limits to "straight through" e-Procurement have been
identified e.g. difficulties in using automated evaluation approaches for complex
purchases; absence of a time-stamping system which is accepted EU wide.

b)           Investment in and availability
of e-Procurement capacity

E-Procurement is beginning to make its
presence felt in Europe. The success of a number of platforms demonstrates the
business case. Significant efforts and progress have been made by some
contracting authorities, economic operators, Central Purchasing Bodies and
Member States. Great progress has been made in developing electronic
applications capable of supporting most/all phases of procurement procedures.
Some Member States or regions have put in place e-Procurement systems which can
support 'straight through electronic procurement' processes – at least for
purchases of standard supplies and services. Other systems concentrate on
providing the first elements of procurement – in 25 Member States it is
possible to publish notices and make tender documents available on-line.

A number of successful systems have adopted
an e-Procurement model provided by 3rd parties over a network. Such
platforms often offer their e-Procurement services to several organisations.
Individual procurers are given a private web space where they can remotely
define their own users, processes and deliverables. Some are run by public
agencies, while others are provided by private sector companies; contracting
authorities then pay on a flat-rate or per-use basis.

c)           Actual use of e-Procurement

Overall take-up, both within most countries
and across the EU as a whole, remains low and is estimated to be less than 5%
of total procurement by value.

The exception to this
low use is Portugal, where the use of electronic means to conduct the
procurement phases up until contract award has been mandatory since 1 November
2009 for most public purchases (some small value contracts are not conducted
electronically and the evaluation of certain purchases may be conducted by a
mix of electronic and more standard means). As a result, contracting authorities
are now procuring more quickly and administrative savings of €28 million per
annum are expected. Other Member States have also made the use of certain e-Procurement
phases or tools mandatory at a national level e.g. Cyprus, Belgium and the
Netherlands have made or plan to make the notification of contract
possibilities mandatory via certain platforms. Other countries have introduced
mandatory requirements for certain levels of government e.g. Austria has made the use of framework agreements mandatory for
federal authorities for specific goods and services.

Wider anecdotal evidence suggests that many contracting authorities and
economic operators have made the switch-over to e-Procurement and would not
contemplate a return to paper based procedures.

d)           Cross-border accessibility of e-Procurement
systems

Little commonality is currently visible in
the different systems which exist – individual island solutions have been
developed and if action is not taken quickly to create bridges between these
systems, there is a strong risk of market fragmentation. The existing business
processes, document standards and formats and ways to communicate are not
sufficiently standardised. The more pre-defined and re-useable components for e-Procurement
become available, the easier it will be to ensure an interoperable e-Procurement
environment which encourages wider take-up and eventually, cross-border use.
Whilst convergence on one monolithic system is neither desirable nor intended,
it will facilitate participation if there is some common core functionality
across systems.

As a result of some of these problems, in
today's market, economic operators wishing to participate in on-line
procurement procedures in other Member States will be faced with practical,
technical and administrative obstacles. National/regional e-Procurement
procedures are designed by reference to local administrative or technical
practices which may differ significantly. Although the availability of
infrastructure has increased significantly since 2004, little concrete progress
has been made towards unhindered, cross-border electronic procurement. Up until
now, these issues have not come strongly to the fore because of limited demand
by partner country suppliers to take part in on-line procurement. However,
attention should be focussed now on these issues, if we are not to face a new
generation of technical barriers to cross-border (on-line) procurement.

6. 
Challenges

The following section identifies the main
challenges that prevent the successful transition to e-Procurement and which
may be creating unnecessary obstacles to cross-border participation in on-line
procurement procedures. Many of these issues are inter-linked and can not be
addressed in isolation if they are to be successfully overcome and the policy
objectives achieved.

(1) 
Overcoming inertia and fears on the part of
contracting authorities and suppliers: the
technology and capacity to conduct procurement electronically is increasingly
available. However, it is not a case of "build it and they will come".
Contracting authorities are slow in making use of these possibilities. This can
be attributed to the costs of reorganising internal systems, and low awareness
of the advantages. Equally suppliers do not always see the benefits for them in
making the transition. Many contracting authorities and suppliers are willingly taking a “wait and see” approach
because of the perceived risks in investing in e-Procurement. In addition to
technology-related risks, they are concerned with risks associated with the integration
of these technologies with existing information systems, with the business
model that these technologies impose on supplier-contracting authorities
relations, and with the security and control mechanisms required to insure
their appropriate use. Some, particularly SMEs, are
also concerned that they will be edged out of the market by trends towards
aggregation and centralisation. If speedier transition to e-Procurement is
desirable, it will be necessary to strengthen incentives to switch to e-Procurement
where available – and possibly to impose the use of e-Procurement in certain
circumstances (e.g. for certain purchases).

(2) 
Lack of standards in e-Procurement processes: for the foreseeable future, suppliers will be confronted with an e-Procurement
landscape consisting of different e-Procurement platforms and arrangements.
Each system may contain different technical features and functions,
complicating the task of suppliers who seek to participate in multiple systems.
This could increase learning costs for procurement suppliers and reduce
participation in e-Procurement systems. Many of the most challenging issues
manifest themselves in the submission and processing of tenders phases. The
market needs to identify mature applications with appropriate levels of
functionality. More concerted EU level efforts to encourage alignment or
standardisation in these crucial parts of the process are needed. Common
reference points and standards are needed to permit the development of
replicable and interoperable systems. Efforts should be concentrated in the
areas of document exchange, authentication, e-invoicing, e-catalogues and
product classifications.

(3) 
No means to facilitate mutual recognition of
national electronic solutions to critical
procurement phases and tools (e.g. authentication of suppliers by the use of electronic
signatures, national proof of eligibility documents). Solutions need to be
found which reduce the burden on contracting authorities and suppliers wishing
to operate in a wider European market.

(4) 
Onerous technical requirements, particularly
for bidder authentication: a wide range of
requirements and solutions have been adopted across the EU to deal with issues
relating to authentication and identification. Some of these solutions are
technologically very simple e.g. the use of username/password combinations;
others are more sophisticated, requiring specific types of electronic
signatures, including qualified signatures (requiring a digital certificate
issued by supervised/accredited Certification Service Providers). The decision
to promote qualified e-signatures within the Action Plan may have set the point
of reference for e-Procurement applications too high and increased the cost and
burden of submitting tenders electronically. The choice of the security level
of an electronic signature should be based on a risk assessment of failed
identification/signature solutions in the context of procurement. Finally, the
lack of cross-border interoperability of electronic signatures poses another
difficulty. There are hopes for progress based on the establishment of national
trusted lists of the providers of qualified signature certificates[11]; the forthcoming
rationalisation of the electronic signature standards; and PEPPOL pilot
solutions). Similar high tech expectations for other elements of the e-Procurement
process have been addressed by more pragmatic solutions – for example the use
of declarations of compliance/eligibility, accepted in the initial tendering
stages rather than the development of complex e-Documents. E-Procurement
solutions need to be proportionate, mutually recognisable and widely available
at reasonable cost.

(5) 
Managing multi-speed transition to e-Procurement: different Member States or regions are moving at different speeds
to embrace the possibilities offered by e-Procurement. Some Member States have
imposed the use of electronic procurement procedures for some or all purchases.
Procurement procedures for these purchases have to be organised through the
available e-Procurement infrastructure. The challenge for the single market is
to ensure that partner country suppliers are not unnecessarily disadvantaged in
competing on these systems and that they have the tools to participate in
procedures organised on different systems.

Questions

1. 
Do the above challenges represent the
most significant obstacles to the take-up of e-Procurement and cross-border
participation in on-line procurement procedures? Please rank these challenges
in (decreasing) order of importance.

2. 
Are there other priority challenges not
identified here? Please comment.

7. 
Priorities for EU level action

The Commission believes that the following
avenues could be explored with a view to smoothing the way for wider use of e-Procurement
and supporting cross-border participation in e-Procurement procedures.

7.1. 
Carrots and sticks to accelerate take-up of e-Procurement

Now that the technology is there, the
challenge lies in convincing contracting authorities and suppliers to make use
of it. There may be a need for policy intervention to kick-start this process
and ensure that it gathers critical mass.

With this in mind, a number of Member
States have introduced obligations to conduct procurement procedures
electronically – either generally (Portugal) or for designated purchases
(France). For public purchases below the thresholds laid down in EU Directives,
Member States retain large discretion as regards the organisation of
procedures.

For above threshold procedures, the current
EU public procurement Directives do not explicitly address the scenario where a
Member States wishes to impose the use of e-Procurement as the relevant
communication medium. Clarification on this point could provide national
authorities with greater security when imposing the use of e-Procurement.

There may also be scope for using legislation
to incentivise contracting authorities to convert to e-Procurement. The current
EU Directives already foresee a reduction in publication deadlines (by seven
days), in the event of electronic notification of tenders and the reduction in
delays for tender submission (by five days) when unrestricted and full direct
access to the relevant documents is provided by electronic means. Further
reductions in deadlines could compromise the ability of economic operators to
prepare sound tenders. However, there may be potential for introducing other
incentives or preferential regulatory conditions to encourage contracting
authorities to migrate to e-Procurement.

For example, there may be scope for
transferring the responsibility for compliance with certain regulatory or
procedural requirements from the contracting authority to an e-Procurement
system which handles or manages all or part of the procurement procedure. Where
the transparency and procedural requirements of the Directive, and objectivity
and traceability of individual procedures are guaranteed by the e-Procurement
platform, the onus for ensuring compliance with the requirements of procurement
legislation could be shifted from the individual contracting authority to the e-Procurement
system. Such an approach would provide a 'safe harbour' for individual
contracting authorities which use these specialised facilities to run
individual procurement procedures. This shift in responsibility, from the
contracting authority to the e-Procurement system, could make the use of
on-line means more attractive and thus increase take-up. This approach might
require the definition of common requirements or principles for recognised e-Procurement
systems to ensure that they offer the necessary guarantees.

Questions

3. 
Is there further scope for the
introduction of regulatory incentives in EU legislation to encourage the use e-Procurement?
Please describe the incentives that could be effective.

4. 
Should EU legislation alleviate the
obligations and responsibilities of contracting authorities when procurements
are performed by e-Procurement systems? Would this make the use of
e-Procurement systems more attractive?

5. 
Should EU legislation permit the
imposition of electronic procedures for some procurement covered by the EU Directives?
What would be the advantages/disadvantages of such provisions? For which types
of procurement covered by EU Directives could the mandatory use of
e-procurement be successfully envisaged?

6. 
Alternatively, should EU procurement
legislation clarify the possibility for individual Member States to require the
use of e-Procurement under certain circumstances? Under which conditions would
this be useful or justified?

7.2. 
Facilitate cross-border participation in e-Procurement

Individual Member States and regions are
moving at different speeds to promote the use of e-Procurement. Care will be
needed to ensure that this does not give rise to unnecessary or
disproportionate barriers to cross-border participation in procurement. A
balance needs to be struck between encouraging authorities to invest in e-Procurement
capacity and avoiding fragmentation of procurement markets into pools of
operators connected to systems having their own unique functional
specifications. To the greatest extent possible, e-Procurement systems need to
be widely accessible. This means that the technical, legal and administrative
conditions for participating in procedures should be non-discriminatory,
proportionate and not create unjustified or arbitrary obstacles to
participation/registration by economic operators from other Member States.

To achieve this, EU level attention – and
particularly any steps to clarify the legal environment - should focus
principally on procurement procedures above the EU thresholds or those
conducted on an e-Procurement system where the total value of procurement
exceeds a certain threshold. A prioritisation of EU level intervention would
allow national and regional efforts to develop their e-Procurement capacity
organically and focus EU level attention on those segments or systems where the
potential for cross-border on-line procurement is greatest.

Under this heading, EU level action could
contribute in the following ways:

a)           Clarifying access conditions
that e-Procurement systems and procedures must satisfy. A common view of the requirements necessary for the wide
accessibility of e-Procurement across borders should be established, building
on the functional requirements already produced under the 2004 Action Plan.
This does not mean the creation of a single e-Procurement system, now or in the
future. It means defining an agreed minimum set of characteristics which should
be present in any e-Procurement system to ensure that it is widely accessible.
It would involve providing operational guidance to expand on the principles
laid down in Article 42 of Directive 2004/18/EC. Such guidance could take the
form of Recommendations, interpretative communications or other non-legislative
actions. Alternatively it could take the form of changes to the Directives (for
above-threshold procurement) or stand-alone legislative measures addressed to e-Procurement
systems.

b)           Facilitate
mutual recognition of electronic identifiers, evidentiary documents and other
conditions for economic operators to participate in on-line procurement
procedures. Most concerns encountered so far relate to problems linked to
authentication, such as the application of electronic signatures and
recognition of electronic identification. These problems are not specific to
the e-Procurement context but arise in any situation where
authentication/signatures are required. The Commission has adopted measures to
allow authorities to identify the origin/certification of partner country
signatures. The PEPPOL project is developing solutions which seek to provide
on-line tools permitting automatic recognition of electronic signatures from
other Member States which can be used in a procurement context.

Other concerns arise from the requirement for
contracting authorities to assess evidentiary documents submitted by tenderers
to prove eligibility for selection. These documents are issued at
national/local level in accordance with the relevant conventions, formats and
languages. E-Procurement was expected to find ways to increase the efficiency
of this part of the process and more specifically, to reduce the burden the
repeated provision of such evidence places on an economic operator. Many of the
solutions developed to date go some way to fulfilling these objectives, but do
not rely on complicated high tech solutions. For example, in some countries the
economic operator provides a statement (often a simple electronic document
which may or may not be electronically signed) that they are not in breach of
any of the set criteria. Only the winning bidders are asked to provide the
actual documents and this may be done electronically or on paper.

The Commission has developed the e-CERTIS tool
to assist contracting authorities in recognising valid documents from other
Member States. It will continue to build on this tool, to develop practical
solutions to help contracting authorities to recognise partner country
attestations/certificates

c)           Simplification of
entry/participation requirements for economic operators. The Commission's evaluation of the e-Procurement Action Plan
reveals concerns that the preference for qualified electronic signatures may
constitute an unnecessary entry barrier to e-Procurement – particularly for
partner country suppliers in the absence to date of operational tools for the recognition
of different electronic signatures. Given this assessment, it may be useful to
revisit the presumption in favour of qualified electronic signatures that is
contained in EU procurement legislation. The Digital Agenda for Europe foresees
a review of e-signatures legislation and a stepping up of work in the area of
e-identification.

Questions

7. 
Is EU intervention needed to avoid the
emergence of unnecessary or disproportionate barriers to cross-border
participation in on-line procurement procedures or systems? If clarification is
needed should it take legislative or non-legislative form?

8. 
Do you consider that efforts to develop
the EU legal and policy environment should focus on:

– 
Systems which support procurement procedures
above the thresholds laid down in EU Directives (including systems with a mix
of above and below threshold);

– 
Larger systems dealing with a certain de
minimis level of procurement (by monetary value or percentage of total national
procurement).

9. 
Is there a need to modify or update the
current EU legislative framework on e-Procurement? If so, which provisions and
for what reason? (Please refer to Annex I for a list of provisions related to
e-Procurement.)

10. 
What authentication and identification
solutions (including e-Signatures) are proportionate to the risks encountered
in e-Procurement?

11. 
What are the main technical,
administrative or practical obstacles encountered by economic operators when
seeking to register or participate in partner country e-Procurement procedures
or systems (authentication, proof of eligibility, financial solvency etc:
please specify)? Do these barriers constitute an insurmountable obstacle or can
they be overcome at reasonable cost?

7.3. 
Building blocks for interoperable e-Procurement
infrastructure

Future work should again emphasise the creation
of re-usable tools and where appropriate, invest in developing infrastructure
solutions and standards.

A clear success of the 2004 Action Plan was
the creation of TED and the introduction of electronic standard forms for
above-threshold procurement procedures which have provided a single Europe-wide
point of reference for all above-threshold procedures using information
provided in a common format. However the EU can do more to facilitate
interconnectivity and interoperability within Europe's emerging e-Procurement
landscape.

a)           Encourage standardisation of
key processes and systems: a collaborative process
like e-Procurement, where independent systems belonging to independent parties
interact by exchanging business information, can only be supported if the
systems share a common view of the business process and the information that
needs to be exchanged. Standardised approaches and formats for the most
frequent e-Procurement processes would considerably improve the up-take and
re-usability of data. Operators would be able to take part in procurement
processes across an unlimited number of different systems at little effort and
cost, not needing to significantly re-work their submissions each time, other
than to tailor them to the specific bid. Important progress is being made in
some post-award phases (e.g. e-Catalogues, e-Ordering and e-Invoicing), although
this has not yet led to the adoption of European standards. Efforts in these
areas should be stepped up and the standardisation process should also be
extended to other key phases of e-Procurement. .

b)           Pre-Award: great strides have been made in the electronic publication and
dissemination of information about procurement opportunities. However, much
less progress has been seen in developing common approaches, standards or
templates for the on-line submission and processing of tenders. This is where
the real gains (and challenges) in e-Procurement lie. While solutions have been
engineered for individual e-Procurement platforms, no attention has been
devoted to aligning methods or approaches for submitting tenders
electronically.

c)           Providing common
building-blocks for e-Procurement systems: the
Commission is developing a suite of applications that will encompass all key
phases in the procurement cycle, building on the existing open e-PRIOR
solution. These systems were primarily intended for internal use, allowing the
Commission to develop an efficient e-Procurement capability but are now being
made available as free, open source components which could be integrated into
any e-Procurement system as desired.

d)           Give economic operators the
tools to overcome technical interoperability issues:
ICT is increasingly capable of delivering solutions to support communication
between systems and applications based on different technical specifications.
The PEPPOL pilot project is developing off-the-shelf software solutions to
overcome the most important technical incompatibilities that can prevent
economic operators from participating in partner country e-Procurement
procedures. PEPPOL solutions will be trialled in real-life situations over the
coming months. The Commission will promote and support the market take-up of
successful PEPPOL solutions.

Questions

12. 
What EU level standards are needed as a
priority to support e-Procurement?

13. 
Should the Commission encourage /
increase the provision of open-source solutions which can be integrated into
existing or developing e-Procurement systems on a piecemeal basis?

14. 
Should the Commission continue to make
its own e-Procurement solutions (e.g. building on open source e-Prior)
available to the wider public?

7.4. 
Making procurement more accessible (to SMEs),
sustainable and innovative

E-Procurement may, by its nature, be more
compatible with or facilitate the use of procurement budgets in support of EU
2020 objectives.

E-Procurement's potential to increase access
must be fully realised. This does not just relate to possible cross-border
participation, but also to attracting all interested and eligible suppliers,
big and small. Some countries have followed the recommendations of the Action
Plan and introduced strategies to encourage SMEs to adopt e-Procurement
practices. These strategies appear to have been successful, with a significant
proportion of SMEs registering on the various platforms and providing bids.
Other countries report concerns that moves to use e-Procurement to increase the
centralisation of purchasing or aggregation using framework agreements are
excluding SMEs. As further developments and refinements are made, it may be
necessary to ensure that all e-Procurement systems are SME friendly[12].

E-Procurement can also decrease the
consumption of environmental resources. Finally, the traceability and
transparency of e-Procurement can make it easier to design, implement and monitor
policies to direct expenditure towards innovative, sustainable and inclusive
policy objectives.

Question

15. 
The Commission has already taken steps to
encourage the creation of strategies to improve access to e-Procurement markets
by SMEs. What further steps might be taken to improve the access of all
interested parties, particularly SMEs, to e-Procurement systems?

7.5. 
Benchmarking and monitoring ...learning from best
practice

As we move forward, it is vital that we
find a mechanism which allows all parties to profit more directly from existing
experiences, actively promoting the wider benefits of e-Procurement. This will
be particularly important given the current financial environment, where
resources are limited and proposals for IT projects (which have often had a
history of failure or overruns) may be judged more sceptically than before.

Better monitoring systems at both EU and
national level could enable progress to be tracked more closely and, provided
the appropriate indicators are introduced, facilitate timely action to address
issues as they develop rather than once they have become endemic.

7.6. 
International developments and co-operation

As part of the 2004 Action Plan, the
Commission has been involved in various initiatives intended to contribute to
the development of an international framework for e-Procurement. Although
negotiations are still on-going, the revised GPA text includes provisions on
e-Procurement and the Commission has worked with the United Nations Commission
on International Trade Law (UNCITRAL) to introduce revisions relating to
e-Procurement. Whilst progress to date has been limited, the Commission is
committed to furthering the adoption of e-Procurement and promoting European
solutions.

8. 
Conclusions

E-Procurement is no longer a pipe-dream –
it is increasingly a working reality in many regions and Member States. Where
it is used, it is delivering the hoped-for benefits. These systems have shown
their capacity to expedite public purchasing and to ease the flow of public
expenditure in the context of the current crisis.

However, use of e-Procurement lags far
behind the expectations set out in the Manchester Declaration. Rather than 50%
use of e-Procurement in 2010, with the exception of Portugal, the Commission
estimates that e-Procurement transactions do not account for more than 5% of
total procurement expenditure even in first-mover Member States. Leadership at
all levels of government – including EU - is needed to maintain and accelerate
the transition to e-Procurement. If contracting authorities are given the
option, they will stick to tried and trusted (paper based) practices rather
than invest in and make use of these promising new options.

This Green Paper has presented some new
ideas for overcoming inertia on the part of contracting authorities and
economic operators which is currently holding back the migration to e-Procurement.

This Green Paper also presents a number of
suggested avenues to ensure that the introduction of e-Procurement does not
lead to another generation of technical and administrative barriers to
cross-border participation in procurement procedures. Member States, regions
and sectors are moving at different speeds to take advantage of the
opportunities offered by e-Procurement. We must ensure that this 'variable
geometry' does not give rise to unnecessary or disproportionate obstacles to
cross-border procurement. This involves clarifying the obligations on the
organisers of e-Procurement procedures to avoid imposing conditions which would
unnecessarily or disproportionately prevent cross-border participation. It also
envisages a number of steps to equip contracting authorities and economic
operators to interact effectively in the context of on-line procurement.

The Commission has set out a series of
questions linked to its evaluation of the state of e-Procurement in Europe and
to its suggestions for possible avenues for overcoming key challenges to the
take-up and use of e-Procurement in the single market. The Commission invites
responses to these questions from all interested parties. The deadline for
receipt of responses is 31.01.2011 (e-mail address: markt-consult-eproc@ec.europa.eu)..

The Commission services will analyse all
responses and publish a synthesis of views in 2011.

ANNEX I: Provisions relating to e-Procurement
introduced by the 2004 Public Procurement Directives (2004/17/EC[13] and
2004/18/EC[14])

Subject || Reference || Description

Electronic means of communication || Articles 1.12 and 1.13 of 2004/18/EC and articles 1.11 and 1.12 of 2004/17/EC || It is clarified that written communication includes electronic means, i.e. 'using electronic equipment for the processing (including digital compression) and storage of data which is transmitted, conveyed and received by wire, by radio, by optical means or by other electromagnetic means’

e-Signatures || Article 42.5(b) of 2004/18/EC, and article 48.5(b) of 2004/17/EC || Member States are allowed to require that electronic tenders are accompanied by an advanced electronic signature in conformity with article 5 paragraph 1 of Directive 1999/93/EC (advanced electronic signature based on a qualified certificate)

Dynamic Purchasing System (DPS) || Article 1.6 of 2004/18/EC and 1.5 of 2004/17/EC || DPS is defined as a completely electronic process for making commonly used purchases, limited in duration and open throughout its validity to any economic operator meeting the selection criteria, after submitting an indicative tender.

e-Auctions || Article 1.7 of 2004/18/EC and 1.6 of 2004/17/EC || Defined as 'a repetitive process involving an electronic device for the presentation of new prices, revised downwards, and/or new values concerning certain elements of tenders', run after the evaluation of tenders and impacting the ranking of offers

e-Catalogues || Recital 12 of 2004/18/EC and recital 20 of 2004/17/EC || Defined as a tool to facilitate public procurement, specifically as a modality for participating in procurements under framework agreements or within a DPS

e-Notification || Article 36.2, 36.3 and 36.6 of 2004/18/EC and article 44.2 and 44.3 of 2004/17/EC || Notification should be made using standard forms but not necessarily using electronic means, but in accelerated procedures, notices must be sent by telefax or using electronic means. E-Notification allows shortened publication and increase the maximum permitted length of the notices.

Buyer profiles || Point 2(b) of Annex VIII of 2004/18/EC, and point 2(b) of Annex XX of 2004/17/EC || Defined as a collection of data regarding the procurement activities of a contracting authority which may include prior information notices, and useful general information such as a contact point

Electronic access to documents || Article 38.6 in 2004/18, (corresponding provision Article 45.6 in 2004/17) || The time-limits for receipt of tenders may be reduced by five days provided the contracting authority/entity offers unrestricted and full direct access by electronic means to the contract documents and any supplementary documents. The notice text should specify the internet address at which this documentation is accessible.

ANNEX II: Status
of Action Plan measures

Objective I: Ensure a well functioning Internal Market in electronic public procurement

Implement the legal framework correctly and on time

COM to issue interpretative document on the new rules on electronic public procurement || Completed

COM to make online training demonstrators available, allowing CAs and EOs to familiarise with new e-Procurement provisions and tools || Completed

COM to provide appropriate assistance to MS in transposing the new legal provisions || Completed

Complete the legal framework by the appropriate basic tools

COM to adopt new Standard Forms for procurement notices taking account of new procedures and the use of electronic means of communication || Completed

COM to present proposals for revision of the Common Procurement Vocabulary (CPV) || Completed

COM to present Blueprint for a fully electronic system for the collection and publication of procurement notices on Tenders Electronic Daily (TED) || Completed

MS to implement fully electronic systems at national level including appropriate tools for automated collection and publishing in TED || On-going

Remove/prevent barriers to carrying out public procurement procedures electronically

MS and COM test, refine and validate results of IDA (Interchange of Data between Administrations programme) common functional requirements for e-Procurement systems || Completed

MS to review whether all operational e-Procurement schemes have been adjusted to the requirements of the Directives || On-going

MS introduce national accreditation schemes to verify compliance of e-Tendering systems with legal framework || On-going

MS and COM consider through a feasibility study whether to introduce a European compliance verification scheme ||  Completed

COM proposes an action under IDABC (Interoperable Delivery of European eGovernment Services to public Administrations, Businesses and Citizens) programme to help MS co-ordinate implementing the use of advanced qualified signature to resolve interoperability problems, year 2005-2009 || Completed

MS apply, if required by national law, interoperable qualified e-signatures || On-going

Detect and address interoperability problems over time

CEN / ISSS (Centre Europeen de Normalisation/Workshop on Information Society Standardisation Systems) completes gap analysis on interoperability needs for effective e-Procurement || Completed

COM proposes to continue activities on e-Procurement under the IDABC programme for exchange and discussion on interoperability issues and monitoring of MS' developments || Completed (Work taken forward by IDABC/ISA)

COM and MS promote standardisation activities at European level and liaise with international standardisation bodies || On-going

Objective II: Achieve greater efficiency in procurement, improve governance and competitiveness

Increase efficiency of public procurement and improve governance

MS to prepare national plans for introducing eProcurement setting measurable performance targets, taking account of specific national needs || Partially completed

MS to encourage preparation of similar plans by individual national buyers and coordinate and monitor their implementation || Partially completed

COM to continue monitoring work on e-invoices by CEN/ISSS and propose continuation of XML activities undertaken in 2003-2004 on e-invoices and e-ordering under IDABC || On-going

MS to set up efficient electronic systems for the collection and processing of statistical procurement data || Partially completed

Increase competitiveness of public procurement markets across the EU

COM to consider proposing services for the electronic supply of business information and certificates in public procurement for implementation under the IDABC programme || Completed

MS and COM agree on a common set of frequently required electronic certificates for use in e-Procurement || On-going

COM proposes launching study on e-catalogues (in DPS and electronic framework agreements) using work by CEN/ISSS under the IDABC programme || Completed

Public Procurement Network to organise benchmarking on transparency, auditing and traceability of e-Procurement systems || Delayed

Public Procurement Network to organise workshops to promote exchanges on tender document standardisation || Delayed

MS to launch and support specific awareness campaigns and training for SMEs at national and regional level || On-going

Objective III: Work towards an international framework for electronic public procurement

COM to pursue negotiations on the review of the Government Procurement Agreement (GPA) || On-going

COM to take initiatives in the GPA to progress towards utilisation of a single common nomenclature for the classification of procurement goods and services || On-going

COM to promote the activities of and liaise with international standardisation bodies & fora to avoid emergence of interoperability barriers at international level || On-going

COM to cooperate with Multilateral Development Banks (MDBs) network in view of co-ordinating technical assistance to 3rd countries, supporting re-organising and computerising their Public Procurement regimes || On-going

COM to consider any adjustments necessary and feasibility of e-Procurement in context of EU external aid instruments || On-going

[1]               A Digital Agenda for Europe COM(2010) 245 (page 32)

[2]               The Manchester ministerial declaration of 2005

[3]               Communication on the Action plan for the
implementation of the legal framework for electronic public procurement
published December 2004.

[4]               See Commission's Evaluation of the 2004 Action Plan
for electronic public Procurement and supporting study published on DG Market
and Internal Services website.

[5]               This excludes Portugal, which has made the use of
e-Procurement mandatory for phases from notification to tender award since 1
November 2009.

[6]               Deutsche Bank Research published the paper
"e-Invoicing Final steps of an efficient invoicing process" in May
2010, which contained figures suggesting that "under certain assumptions
the automated processing of an electronic invoice can cost a total of over EUR
18 less than the unstructured processing of a traditional paper invoice."

[7]               They may still be deterred from participating by
structural costs or other factors linked to the underlying market which make it
unattractive for them to participate. Nevertheless, an increasing range of
procurements can be sourced remotely including services such as software,
design competitions and help-desks. E-Procurement should be well suited to
publicise, exploit and ultimately realise such opportunities.

[8]               Based on information available from the website
www.epractice.eu.

[9]               Page 10 of the Extended Impact Assessment COM
2004(841), annexed to the Action Plan Communication.

[10]             Pan-European Public Procurement Online (PEPPOL) - for
more information see website www.peppol.eu

[11]             Commission decision 2009/767/EC amended by Commission decision
2010/245/EU.

[12]             The Commission intends to make Open e-PRIOR more
accessible for SMEs through the development of a supplier portal.

[13]             Directive
2004/17/EC of the European Parliament and of the Council of 31 March 2004
coordinating the procurement procedures of entities operating in the water,
energy, transport and postal services sectors, see http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32004L0017:EN:NOT

[14]             Directive
2004/18/EC of the European Parliament and of the Council of 31 March 2004 on
the coordination of procedures for the award of public works contracts, public
supply contracts and public service contracts, see http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32004L0018:EN:NOT