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The Question
What does e-procurement mean to you?

compiled by David Newman

Marc Trepanier, director general, Electronic Supply Chain, Public Works and Government Services Canada, says, "Look at procurement in its simplest form; it's not merely an exchange between two parties, but an extremely complex endeavour. You have to form a contract, establish obligations and other considerations, arrange proper exchange and many other variables. Even the jurisprudence says this is not a simple exchange. Rules have to be set.

"In public sector procurement, not only do you deal with business complexities but with the Financial Administration Act, trade agreements, contracting policies on green or Aboriginal procurement, government contract regulations and the obligation to be open, fair and transparent. It is a fishbowl environment creating a different world. The framework is different at federal, provincial or municipal levels of government. Government cannot do what Amazon.com does. They operate on commercial rules without government's obligation to protect public interest or taxpayer's money or to meet international or internal trade or policy obligations.

"The end result may seem the same: point, click, order, and receive. But it cannot be based on the same processes. Federal e-procurement is not simply getting the best price electronically - which is still important - but so is respecting all of the social, economic, trade and legal backdrop. E-procurement is doable and there is a reward. When we succeed, all that context will be in place, but in the background. The complexity will be transparent. The user will be able to procure electronically with full confidence, within the legislation framework and still point, click, order and receive."

Mark Boudreau, vice president of the Certified General Accountants Association of Canada, sees e-procurement as a key initiative for small and medium-sized business in Canada. "At the basic level, e-procurement means being able to perform the full procurement process electronically on the Internet. That includes identifying buying requirements and requisition processing, soliciting and receiving bids of all sorts, negotiating and establishing contracts and processing overall purchases. Clearly it must also include e-payment, fulfillment and catalogue ordering."

But he also sees the focus of e-procurement extending well beyond e-buying and selling. "From a financial management perspective, e-procurement really means the electronic automation of associated financial management processes to support practical procurement functions. Asset management is key along with accounting and analysis processes and core business management systems. And we certainly cannot forget about financial accountability and auditing systems. All of these functions must be compatible and interactive. We're talking overall business process.

"Technology may not be an impediment, but business process re-engineering could be," says Boudreau. He is also well aware of the unique implications for e-procurement inherent in e-government. "E-procurement is daunting enough in the private sector. For government, the challenge is absolutely massive. Tax systems are a key consideration. Add to that the responsibilities involved in public interest protection, social equity, fair competition and domestic and international trade and legal obligations, let alone the sheer volume of transactions, and you begin to see the real scope. It makes you wonder if it is doable by the federal 2004 e-government targets."

Ed Van Mierlo, purchasing manager for the City of Winnipeg, says of e-procurement, "The term initially means all the activities described in many articles on business-to-business, including ordering from online catalogues and accommodating the acquisition of items one would normally find on stock room shelves, books and certain service requirements. In public sector organizations, such as municipalities, e-procurement takes on a broader scope. We need to provide access to the business community to bid on projects such as capital works projects, construction services, maintenance contracts and others. It covers internal policy considerations and often compliance with trade agreements.

"I see an e-procurement system starting with the development of the needs definition in an electronic application. Once that document is complete, it is posted to a website where prospective bidders can pull up the information they need to prepare their bids. The pre-formatted price sheets, which mirror the evaluation spreadsheets, allow bidders to complete the bid document online and send it electronically to a secure mailbox until the closing date and time for final receipt of bids. Upon bid opening, the prices can be transferred to the evaluation spreadsheet eliminating any requirement for duplicated input of data. The evaluation would be done in the electronic file, the successful bidder determined and a contract awarded electronically. Once supplies are received or services performed, payment would be made without an invoice from one organization's bank account to the other's bank account. All the information is then maintained in electronic databases for use in estimating future projects, document development or supplier performance ratings."

The next Question
What is your opinion of the government outsourcing trend? 
Do you think it will continue?

Send your answer to:

David Newman, Contributing Editor
Summit: The Business of Public Sector Procurement
180 Elgin St, Suite 800
Ottawa ON K2P 2K3
Fax: (613) 688-0767

All published respondents will receive a free subscription.



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