Policy Context and Legal Framework

At EU level, the use of telematic systems for the management of procurement processes by public Bodies is a strategic issue, starting with the Lisbon Strategy (2000) that mentioned public procurement as in important tool to promote innovation and competitiveness.

With the eEurope Action Plan 2005, the EC indicated e-procurement as the solution to simplify, reduce costs and increase transparency in public administration's purchasing processes. In fact,  on line tendering may produce up to 5% savings in terms of expenditure and up to 50-80% on transaction costs for public administrations as well as suppliers. This trend has been confirmed by a series of Directives - in particular 2004/17/EC and 2004/18/EC – which defined a new legal framework for electronic tendering.

In line with the growing relevance which the European Union has assigned to innovation in public tenders, in 2006 an additional impulse to the adoption of e-procurement was given with i2010 eGovernment Action Plan, according to which 100% of public tenders should be made available on line by 2010, and 50% should be actually awarded  through electronic means.

In April 2009, the EC mentioned the promoting of public e-procurement and the cutting down of delay payment as one essential tool to relaunch EU competition and growth across Members States – stressing the importance of what already mentioned in the Broad-based Innovation Strategy for the EU regarding procurement.

At national level, the importance of e-procurement has been understood in view of the streamlining of public spending and simplification processes, the dematerialisation and transparency of tenders. The Finance Bill of 2000 introduced the system of framework agreements and promoted the creation of a national central purchasing unit. Italy was also the first European country to enact a specific regulation on telematic purchasing procedures, through the DPR n. 101/2002, which introduced the electronic marketplace and telematic tenders. Later on, Community Directives have been incorporated to the new Code for tenders, following the single text of measures concerning procurement. In 2007 the Finance Bill specifically recognised the role and the importance of regional central purchasing, and further fostered the setting up of a network system between regional and national purchasing units, in order to pursue the goal of managing together the processes of streamlining and centralising public spending. In particular, the law identified the regional dimension as the most suitable to govern healthcare expenditure and local administrations spending. In early 2009, the national Plan E-gov 2012 has been adopted which, in line with the Lisbon Strategy, outlines the guidelines for the development of an information society for all, and stresses the importance of some e-procurement services (i.e., electronic invoicing).

At regional level, Emilia-Romagna Region is at the forefront in Italy in terms of innovation and dissemination of new technologies. In 2004 the regional law "Sviluppo regionale della Società dell'informazione" (regional Development of Information Society) was enacted, for the promotion of innovation in the administrations and the companies of its territory, and pursuing the ambitious project of streamlining the purchase of goods and services at regional level, thanks to e-procurement. The law established the Intercent-ER Agency, with its objectives and mission. Intercent-ER is part of the process of modernisation and innovation taken by Emilia-Romagna Region, especially with reference to the territorial development of information society. Within this framework a Regional Telematic Plan (PITER) is defined every three years, representing its main planning tool. Intercent-ER, already envisaged in the first PITER, holds a relevant place in PITER 2007-2009 too, which pursues the goal of creating a community network  for local authorities in the territory.

Implementation and Management Approach

Before creating Intercent-ER, Emilia-Romagna Region has conducted analyses and studies on the procurement systems of the public administrations of the Region. Specific areas of investigation have been:

- Organization of the procurement offices of the public administration, with particular reference to the number of people involved in the purchasing procedures, to IT systems  and the typology of skills involved;

- Procedures followed for the tenders, analysing the number and type of procedures used and if they are below or over the European threshold;

- Typology of goods and services purchased, determining the value of each category and the most relevant characteristics (possibility of standardization, market composition and competitiveness, etc.).

In this phase a strong dialogue has been established with all the actors involved, public administrations (municipalities, health case entities, regional agencies, universities, etc.) and suppliers, to deeply understand their needs and expectations.

These analyses have allowed the designing of all the relevant aspects of the initiative:

- Legal framework to enable the initiative;

- Organizational model and relation between the different actors

- Services to be activated

- E-procurement  system specifications

- Business plan containing an estimation of the costs and the potentially attainable results.

The detailed definition of all these aspects has permitted to create a strong political commitment on the project, to shorten the decision making process and to complete the entire project in one year.

As for the design phase, in the operational phase the most  critical factor is the involvement of all the actors; to face this issue specific actions have been taken:

1. Creation of two lead teams one composed by the managing directors of public health care entities and one dedicated to the municipalities. These teams participate to  the taking of strategic decisions like Intercent-ER action plans and express, annually, their opinion on Intercent-ER results

2. The deployment of the purchasing initiatives of Intercent-ER is assigned to specific multifunctional work teams involving a representative of the public entities;

3. The commissions established to evaluate the tender offers, always include representatives of the public administrations;

4. A multi-channel communication system (web, email, fax, call centre) guarantee the continuous flow of feedback and information from the end users.

Moreover, to facilitate the use of the innovations introduced by Intercent-ER in Emilia-Romagna public administrations, a new management strategy has been defined, including training and consultancy on the usage of the new procedures and tools.

On the supplier side too, Intercent-ER has made a big effort to guarantee the sharing of the project’s objectives and the understanding of the needs and expectations, especially from the point of view of the local Small and Medium Enterprises (SME’s) through:

- Periodic updatings with the supplier associations, in order to share plans and objectives;

- Meetings with the suppliers to understand the evolution of specific markets;

- Training and communication initiatives on e-procurement procedures and tools and, in general, on the public procurement system. 

As better detailed in the section 9 of the part 2, a strong methodology has been established to ensure the governance of the project and the achievement of the results. In particular, Emilia-Romagna Region and Intercent-ER formally agree each year on the activity to be developed, the level of the services to be guarantee and the objective to be achieved.

The objectives assigned to Intercent-ER are than split on all the agency organization, thus guaranteeing the commitment of all the personnel to the results achievement. 

To summarize, the success factors of the initiative are:

-  Strong political commitment;

-  Deep involvement of all the actors;

-  Project management based on concrete results.

Technology solution

To ensure the service supply to the regional public administrations, Intercent-ER has developed an e-procurement platform. Its main functionalities are:

- E-tendering: possibility to run tenders via web, avoiding the use of paper based documents;

- Market place, that allows to carry out direct orders or requests for quotations for the purchasing of goods and services below the European threshold;

- E-ordering, out of framework contracts that allows public administrations to adhere to the initiatives of Intercent-ER through documents electronically signed ;

-  A knowledge sharing system, containing all the documents on the initiatives carried out by Intercent-ER;

- Goods and services demand consolidation tools, that support the gathering and standardization of the needs of the different public administrations;

- Price monitoring tools, providing information on the purchasing conditions of regional administrations.

The platform is based on Oracle Data Base; the e-procurement functionalities are guaranteed by Oracle Exchange application.

Intercent-ER platform has several points of contact with many other Information Technology systems;

In this field technical interoperability has been established with the following systems:

1. Enterprise Resource Planning (ERP) systems of the regional health care public entities. The interoperability consists in the automatic transfer of the orders made in the e-procurement platform on the ERP systems; this allows to avoid duplication of activities and eliminate the possibility of human errors in the data transfer.

2. Other e-procurement platforms. A “single sign on application” – unique identification system -  has been realized with other public e-procurement platforms, allowing to surf the electronic catalogues jumping from a platform to another one.

To achieve this technical interoperability, semantic and organizational standardization projects have been developed, especially about public administrations and supplier identification; in the field of goods and services classification and codes several projects aiming at achieving a common vocabulary at regional level are ongoing

Intercent-ER is also participating to PEPPOL project and it is working, in particular, to achieve the standardization of the format and content of the e-catalogue to be used in the tendering phase and as basis for e-ordering.

Impact

In only four years, Intercent-ER Agency has reached highly relevant results, becoming one of the most consolidated experiences of e-procurement at national and European level. Between 2005 and 2008 the Agency activated Framework Contracts – FC (a purchasing tool to bind companies to supply PAs with goods and services under established economical and technical conditions) exceeding 1 billion Euro with Public Administrations of Emilia-Romagna Region. Via Intercent-ER, these PAs signed contracts for the acquisition of goods and services for an amount closer to 700 million Euro. PAs using Intercent-ER’s platform experienced relevant savings, not only from the perspective of lower prices for supplies (with an average 19% savings), but also regarding the procedures’ simplification and the reduction of administrative burden. Procedural savings amount to ca. 5 million Euro and 180 person-years.

In 2008 Intercent-ER has shown an additional development of its activities in the field of Administrations' participation in the system, the volumes of managed expenditures and the supply of e-procurement services. The use of FC by PA.'s grew relevantly, with a growth of the value of supply orders from 189 million Euro in 2007 to 419 million Euro in 2008. Healthcare spending represents Intercent-ER's main area of intervention: Health Enterprises are the main users of FC, having made procurement orders for more than 260 million Euro.

Last year, the 22 implemented FCs, together with the ones already operative, enabled to  deal with an expanded range of commodity categories (45) and cover 25% of yearly spending of territorial PAs. Only In 2008, thanks to Intercent-ER, savings reported by Emilia-Romagna Administrations amounted to 67.5 million Euro (+102.7% from 2007). These new available resources, have been used to develop and strengthen services for citizens and companies. For the year 2009, Intercent-ER has forecasted new increases: the value of contracts signed by Administrations has been estimated around 1 billion Euro, while savings will reach 100 million Euro.

At a qualitative level, Intercent-ER's initiatives have shown important results. Throughout the years, the Agency has introduced and consolidated a system-based strategic approach in procurement policies by regional PA.'s, promoting technological and cultural innovation in the sector of public bidding. On the one hand, the widespread participation of territorial actors, Intercent-ER's high technical-strategic skills and the consequent aggregation of demand have enabled a relevant cost reduction and standardisation of  goods and services demands. On the other hand, the provision of the most advanced e-procurement services has further expanded the use of ICT applications, de-materialisation, simplification and transparency of tenders. On line services provided by the platform www.intercent.it represent the state-of-the-art and are constantly expanding.

The electronic marketplace, i.e., is a full-fledged virtual shop where P.A.'s can choose suppliers – especially SME’s – and make purchases below the required EC threshold. Moreover, on line bidding, where the exchange of documents and procurement awarding take place entirely via the web, is a tool which has increasingly been adopted by the Agency, for its own tender procedures as well as for others actors. In May 2009, i.e, an on line call for tender has been launched for the procurement of drugs for Health Enterprises from Area Vasta Romagna: this tender comprised more than 900 batches, for a value of ca. 250 million Euro. Finally, Intercent-ER provides also electronic auctions, through which companies can raise the biddings (lowering the price) in real time.

In 2009, in order to increase its scope of action and benefits for Administrations and companies,  Intercent-ER will expand its provision of e-procurement services. Besides, in developing new procedures established by the recently-enacted code on national tenders (“Framework Agreement” and “Dynamic Procurement System”), a module will be implemented through which P.A.'s will be able to purchase on line public works under European threshold. This year, in cooperation with Emilia-Romagna Region, Intercent-ER has started two very important projects. The first refers to electronic invoicing to complete the simplification and streamlining process of purchasing cycle. The second refers to the introduction of a payment card to be used by P.A.'s when purchasing goods and services of a small amount. One of the main benefits of this tool is the relevant reduction in administrative burdens associated with transactions and, above all, the cutting down of the payment delay.

This is a huge benefit for companies: faster, simpler and more transparent tenders, sure payment delay and more competition about the quality of provided goods and services. Intercent-ER, therefore, is a great opportunity and a privileged access channel to the marketplace of public procurement both for large companies and SME's.

In all initiatives for the streamlining of public spending, Intercent-ER mixes together lower spending and higher qualitative standards. One of its main quality criteria is represented by the attention paid to the environment and therefore eco-sustainability of chosen supplies: in recent years, the Agency has developed many actions of Green Public Procurement, by introducing precise parameters of environmental compatibility in its calls for tender. These initiatives have produced results which in 2008 alone resulted in a drop in CO2 emissions exceeding 6,200 tons.

The Agency is a flexible structure counting on thirty staff-members, with a yearly managing costs equal to 1,5 million Euro. In a single year it can produce savings for the public system for more than 67 million Euro. Its activity is not only fully sustainable, but also quite profitable.

Track record of sharing

Assets and skills developed by the Agency throughout the years have made Intercent-ER a national reference point for similar initiatives established (or to be established) in other Italian Regions. Many administrations have shown a strong and concrete interest in the application of the Intercent-ER model, its technological solution and its organizational model – starting forms of cooperation.

At extra-regional level, in 2007 CNIPA (National IT Centre for Public Administrations) published a call for the funding of projects for the “reuse” of best solutions developed after the e-government Call for P.A.'s innovation. Campania and Lazio Regions have applied for the reuse of Intercent-ER technologies, processes and methodologies. The Agency has provided support to the mentioned regions in the definition of technological, methodological and organizational aspects of the presented projects, in the designing of development phases and in the projection of expected results. At the moment, procedures for the operational start-up of the above mentioned projects - already targeted for funding - are taking place.

In early 2009 a MoU has been signed between Emilia-Romagna and Marche Regions aiming at optimising the institutions' savings on procurement, paying special attention on: health-care expenditure, promotion of telematic purchasing, fostering of synergies between local administrations. Following this agreement, Marche Region  – and especially its  Health Enterprise – will have the opportunity to use the platform managed by Intercent-ER, thus benefiting from its technical-strategic know-how and using e-procurement services, such as on line calls and tenders and electronic markets. A MoU between Intercent-ER and Centro Servizi Condivisi, the central purchasing body of the Health Enterprises of Friuli Venezia Giulia Region, is now in preparation, for the development of joint purchase initiatives for Bodies and Institutions of both regions.

The role acquired by Intercent-ER as best practice in Italy is confirmed by its active participation in projects for  the setting up of a network system of e-procurement bodies. The initiative, coordinated by the State-Regions Conference, intends to create a harmonized system of e-procurement at national level, in order to share acquired competences, to activate strategic cooperation and enhance partnerships supporting new central purchasing bodies. In particular, Intercent-ER has been assigned the coordination of the most relevant working group (the one related to purchase tools), which should define and streamline the adoption of different procedures for central purchasing entities.

Intercent-ER's participation in the European projects PEPPOL (Pan-European Public Procurement On Line) funded by the European Competitiveness and Innovation framework Programme (CIP) is extremely important, as it aims at developing a solution to make the e-procurement system of EU countries inter-operable and making the implementation of cross-border tenders possible. Intercent-ER has participated in the Consortium starting from the definition of the project plan, and plays a predominant role with respect to  the Work Packages related to electronic catalogues and electronic invoicing. The activities, started in May 2008, will be completed in 2010.

Moreover, Intercent-ER is sharing with the partners of Lisbon Regions Network (www.lisbonregionsnetwork.eu ) the possibility to promote a common project on a procurement card cutting payment’s delay and reducing administrative burdens.

Among the tasks attributed to Intercent-ER by Emilia-Romagna Region, there is the one on dissemination of innovative procedures in other Administrations of the territory, and the platform provision for the autonomous carrying out of procedure for telematic purchase. Other initiatives (6 telematic calls for tender) have already been carried out with the participation of several municipalities and Provinces of the region.

Lessons learnt

The long lasting experience gained by Intercent-ER demonstrates the benefits on savings that can be obtained from governments by rationalising goods and services purchasing procedures using e-procurement systems.

The main lessons learned from Intercent-ER experience are the following:

1.  The introduction of IT technology must be linked to the organization and the re-engineering processes. The success and the positive results obtained by Intercent-ER are not the result of the implementation of any IT system, but they come out of the implementation of a new and more efficient organizational model and of a re-engineering of the procurement processes.

2. Stakeholders involvement. A project  that implies deep changes into consolidated processes and systems must necessarily include a strong involvement of the subjects (in this case, firstly regional public administrations and secondly enterprises) to whom the project refers. The involvement model and tools, however, must be designed and managed in order to balance the need of representing all the different positions and guaranteeing a quick and efficient decision making process.

3. The level of the centralization of the procurement procedures is a critical factor to guarantee the efficiency of the processes. The results achieved by Intercent-ER show that the regional level is the most appropriate to promote efficiency driven by the larger scale of actors available compared to lower levels of government and the opportunity to better respond to local needs, understanding both PA’s demands and local enterprises potentiality.

4.  Intercent-ER experience has also a high potentiality to be transfer to other organizations:

- Firstly, the project set-up and the implementation process can be reapplied; Intercent-ER has been the first example in Italy of a regional purchasing office, providing services to a wide range of public administrations. The validity of Intercent-ER implementation approach is demonstrated by the fact that the Italian Government has financed similar projects to help other Italian Regions to set up similar experiences, imposing the condition to use the same methodology and the same project steps applied by Intercent-ER.

- The tools and services of Intercent-ER can be used by other regions; as mentioned in the previous section, many collaborations with other Italian Regions that are using / will use the e-procurement platform of Intercent-ER and the services have been set up. The sharing of the platform and of some processes allows a more efficient management and a decrease in the operational costs.