Policy Context and Legal Framework

SMEs play a crucial role in the EU as they represent 99.80% of all European enterprises and 91% of SMEs are micro enterprises from 1 to 9 employees (see pictures published in “MEPA Description and Data” as additional document uploaded). Through the Small Business Act EU policy makers invite all member states contracting authorities to “Think Small First” as the new way of thinking!

Italy hosts the highest fraction of SMEs in Europe (19%), although the Italian average size of 3,19 employees, is well below the EU-27 (see additional documentation).

Consequently, awarding a fair share of procurement contracts to SMEs is likely not only to benefit a sizeable fraction of the labour workforce, but also to spur innovative activities that will ultimately have a positive impact on innovation and growth.

So Consip set up the MEPA with the specific aim of facilitating public procurement access to SMEs. But it could not face this challenge on its own.

Several partners (suppliers’ associations and key public institutions) were involved in the creation of the MEPA project, since the beginning, in order to put in place a network able to locally support SMEs.

According to the EU eprocurement action plan:

…..”If online procurement is generalised, it can save governments up to 5% on expenditure and up to 50-80% on transaction costs for both buyers and suppliers. While it is difficult to quantify competition and efficiency benefits for the EU as a whole, greater competition and efficiency in public procurement markets can impact - directly and indirectly - on the whole economy and play an important role in achieving the Lisbon objectives.

MEPA somehow responds to Lisbon’s strategy main objective of:

- unlocking the business potential, especially for SMEs, by reducing administrative burden and simplifying the procurement procedures

- investing in knowledge and innovation, fostering sustainability, creating well functioning markets and fostering technology diffusion.

The “openness” of the MEPA for every qualified supplier, makes this emarketplace a negotiation environment where real competition is at work.

The qualified suppliers, comparing their own catalogues with their competitor’s ones, can update their offers every time the market conditions require (or suggest) a quality or a pricing update.

Before the introduction of the MEPA the Italian public procurement system was disadvantageous for the SMEs had no digital system to manage purchases below the EU threshold with consequent significant lack of transparency, market openness and competition.

The traditional paper-based purchasing procedures were very inefficient compared to the low value of this range of transactions.

Each administration followed its internal rules when performing purchases below the EU threshold, with different operational procedures.

After the introduction of the MEPA the Italian public procurement system is characterized by the following new scenario:

Innovation: more and more PAs and suppliers use a fully digital purchasing procedure through the MEPA (using online negotiations, eOrdering, digital signature and electronic communications).

Market development: MEPA has resulted to be a system suitable to SMEs allowing them to participate in the public market at low costs, gaining - at the same time - greater visibility. More than 80% of the awarded suppliers, in 2008, were small, medium and micro enterprises.

Process efficiency: the use of the MEPA, as a digital tool, has enabled a wide range of suppliers to strongly streamline the procurement process producing a complete tracking of each order issued.

Legal framework: PAs adopt the same, standardized, purchasing legal procedure

Implementation and Management Approach

The MEPA was designed and developed by Consip SpA, a limited company entirely owned by the Italian Ministry of Economy and Finance. The idea was supported by a legal framework, established in 2002 (Law 101/2002), as part of the national e-government plan defined by the Ministry of Innovation and Technology. The launch and diffusion of the MEPA was - and still is - strongly supported both by a wide range of PAs (Ministries, municipalities, universities, health care administrations…) and suppliers’ associations. Due to the successful use of the MEPA,  in 2007 the Italian Government contributed to its further growth through the introduction of a mandatory use of the tool on behalf of central administrations (State Administrations and Ministries), for their purchases below the EU threshold. The strategy adopted was based on the idea that the introduction and development of an electronic marketplace requires the stimulation of  a “network effect”, meaning the creation of an initial usage level - by both the supply and demand side - capable of activating and supporting a virtual circle in order to foster further usage from a growing number of buyers and sellers. The overall objective was the steady growth of the active users (PAs and SMEs) and of the number/value of the transactions so as to digitalise a wider and wider share of public procurement.

In order to implement the MEPA, Consip adopted a step-by-step model, starting from a testing phase, in 2003, which involved a limited number (50) of PA and suppliers. Starting from 2004, the service was made available to the entire Italian PA and market, involving a growing number of users.

Suppliers’ associations and key public institutions were involved in the project, since the beginning, in order to put in place a network able to locally support SMEs.

The overall costs (financial, technical and human resources) for the setting up of the MEPA were – and still are – totally covered by the budget of the Ministry of Economy and Finance.

For the development and management of the MEPA Consip created a dedicated Unit composed of more  than 30 experts. The annual cost to handle and develop the system corresponds to about 7 million euros.

The main tasks performed to run and develop the MEPA are: 

• Catalogue management

The MEPA is a “catalogue based” emarketplace and the quality of catalogues published by suppliers is a key success factor. In order to guarantee a high quality level of product and service information shown by suppliers, a dedicated team (about 10 people) daily interacts and supports suppliers to perform such a complex activity 

• System management

The number of business transactions performed every day qualifies the MEPA as a “mission critical” application. This requires a specific focus on system management tasks and business continuity facilities (i.e. backup and restore, help desk, system performance monitoring) 

• System development, based on new requirements

The MEPA, as most internet applications, is a dynamic system, that requires several changes based on the users’ new business needs. This makes crucial the ability to develop new functionalities to enrich and adapt the system. A team of highly skilled IT professionals is daily involved, in order to provide to the users the required functionality in the shortest lead time

• Communication, education and support actions versus users (PA buyers and suppliers)

This is the most expensive activity, in terms of time and headcounts, given the strong innovation content of the MEPA. Both public buyers and suppliers need to follow a complete educational path, to get skilled on how to use electronic tools (internet, digital signature, e-documents, etc.) to perform acquisition procedures and change their mindset to efficiently use e-procurement. Therefore a great amount of human resources (about half the total number) are involved in training activities.

Technology solution

The MEPA is a Web Based application running on commercial product and custom developed software.

The core of the MEPA is a product call Oracle Exchange, a B2B eCommerce platform developed by Oracle Company, and released as part of eBusiness Suite.

The platform works according to the three layer models, implementing a presentation layer, that displays to users the Web Interface, accessible by a standard browser, and an application and database layer that runs the business logic and data management.

The platform runs in a Java environment, in particular using the OC4J Oracle Application Server, and Oracle Database as data container.

The users authentication and authorization are carried out by Oracle Identity Manager module, operated through an Oracle Portal interface.

The main Oracle Exchange software modules are:

Catalogue -  a component that manages the MEPA electronic catalogue, and offers search, filter and products compare functionalities;

Orders – a component that manages selection on good/services from catalogues and sends an electronic order to suppliers;

RfQ – a module that manages Requests for Quotation, allowing the selection of invited suppliers, the preparation of commercial offers, the awarding of the best offer.

Those main software modules functionalities have been enriched with custom software, developed in order to add more features and to make the use of platform easier.

An example of  customized software is the platform integration with the digital signature functionality.

The running eProcurement platform is mainly based on proprietary standard, both on document format and technical solutions. It was launched in 2002, and its basic technical solutions are still the same, even though a lot of upgrading has been made in terms of optimization of  the architecture and infrastructure environment.

Impact

After 6 years of intensive activity, the results achieved in 2008 are strongly encouraging:

·   over 172 million euros of value of purchases

·   539.000 catalogue items offered by more than 2700 enterprises

·   over 63.000 transactions

·   ca. 4300  active public buyers

·   almost 3700 online catalogues of enterprises of which 97% are SMEs,  out of which 64% are micro enterprises

·   2.724 enterprises were qualified on the MEPA. Some of them qualified to more than one product category. 60% of qualified firms made business and 89% of them are micro enterprises (see additional documentation).

One of the major results achieved is represented by a stronger attitude of the PA and businesses in the use of digital tools

A big advantage for the supplier side is of not having to present any kind of paper documentation, thus completely avoiding the risk of being excluded from the tender due to missing documentation, delays or any other bureaucratic aspect (see reference letter uploaded).

Time saving and cost saving obtained by making an online presentation of a bid allows the supplier to make a more competitive offer. SMEs have no longer to bear the marketing costs for the promotion of their products or the travel costs to handle their usual and necessary meetings with public procurement officials. These actions are now made online in a transparent way and enable the SMEs to dedicate more time to the presentation of the “best bid” being more competitive and broadening their business with no extra cost.

The main goal of the MEPA is to foster the participation of SMEs to public contracts and to enable public buyers to perform small purchases in a digital environment.

This overall target can be detailed in a wide range of specific objectives, such as:

• Increase the number of registered (qualified) and active suppliers (a company that had made business on the MEPA during the year). In 2004 registered suppliers were 422 and active suppliers were 175. In 2008, 2.724 enterprises were qualified on the MEPA, 97% of which qualified as SME, and 89% qualified as micro enterprises. 2011 forecasts are: 5.000 qualified suppliers and 3.500 active suppliers

• Increase the number of registered buyers (allowed to buy and digitally sign the purchasing orders) and active buyers (public official who has issued at least one order per year). In 2004 registered buyers were 2237 and active buyers were 559. In 2008, they were respectively 8.237 and 4.288. 2011 forecasts are: 11.000 registered buyers and 7.000 active users.

• Increase the number of transactions. In 2004, transactions were equivalent to 3.143 and to 63.245 in 2008. The 2011 transaction number forecast corresponds to 200.000.

• Increase the overall value of transactions. The value of purchases (or transactions) was equivalent to 8,3 million euros in 2004 and to 172, 3 million euros in 2008. The 2011 forecast is around 250 million euros. The annual average number of transactions per buyer was 5,6 in 2004 and 14,7 in 2008. The 2011  average number of transaction per buyer forecast is 28,5.

• Increase the number of available items. 113.000 items were offered by sellers in 2004; they were 540.000 in 2008. The 2011 forecast is of about 1 million items.

Consip uses its huge Datawarehouse for the collection and analysis of data deriving from the use of electronic procedures such as MEPA and so far supported third parties impact measurement methodologies such as “Public Healthcare: Changes Introduced When Implementing eProcurement”, implemented by the University of Tuscia and the Local Healthcare Agency (LHA) of Viterbo (attached as additional document).

MEPA also meets one of the requirements expressed by the COM 2007/803 from the EC concerning the achievement of sustainable consumption and production.

More specifically, being the MEPA an entirely digital procedure it avoids the use of paper. The entire process is dematerialized and allows for energy savings for printing, consumable savings (toner, inkjet…), paper use savings, storage space savings in addition to time saving and to more efficient procurement process (including time for searching for documents and their storage). According to an analysis made by Cnipa (Italian authority on IT) a three page document costs 20 euro per year to Italian public administration.

Furthermore, using the electronic marketplace, the Italian PA may save up to 53 million euro per year (avoiding the use of toners) and 9000 tons of CO2 by reducing 20% of the total amount of printed paper.

At the same time MEPA offers goods and services containing “green criteria” such as: office furniture, stationary and office supply, electric material, office equipment (PC, printing and copy machines….), with a particular attention to energy efficiency standards and ecolabels criteria.

On www.acquistinretepa.it a specific guideline is available, to all public buyers, containing green criteria that can be specified, in each RfQ sent to the invited suppliers, in order to foster the greening of products and services.

In 2009, three additional marketplaces will be launched concerning the use of Renewable Energies (photovoltaic, solar, geothermal, heolic, etc.), Sustainable Mobility (electric vehicles, bicycles, cars, etc.) and Waste (products and containers for differentiated waste disposal).

The new, scenario in which the relationship between buyers and sellers has become entirely digital and transparent, had a great echo on the Italian media (press, internet, workshops….), creating more awareness among all stakeholders involved (media, citizens, institutions, buyers and suppliers).

Such an awareness has lead to a general greater level of accountability not only towards the MEPA and the eprocurement system itself,  but towards the everyday practices of the Italian public administration, thus increasing trust in the practices of the Italian Government.

Track record of sharing

The scenario that has been traced highlights the strategic role that the MEPA has acquired in the area of below-threshold public purchases and  the investment (financial and human resources) that Consip – as the Italian central purchasing body - put in this initiative having acquired a specific expertise after several years of activity. 

In order to capitalize on this huge investment a dissemination and cooperation program is advisable, at a national level, instead of a replication of the system.

In fact, Consip is strengthening partnerships and signing agreements with other Italian territorial purchasing agencies in order to support their usage of the MEPA as the unique eprocurement system managing the entire national purchases below the EU threshold, thus increasing the number of buyers as well as encouraging interoperability with regional eprocurement platforms.

MEPA has also obtained an international recognition as more and more foreign governmental delegations visit Consip in order to be acquainted with this electronic tool and study ways of replicating it in their Countries. Delegations representing governmental institutions and/or homologous procurement agencies from Finland, Netherlands, Austria, Bulgaria, UK, Russia, China, Korea, Vietnam, Japan, Colombia, Ecuador, Iraq, Qatar, South Africa, Jordan, Egypt, Morocco, Tunisia, Lebanon…, have made study visits to Italy in order to learn more from Consip’s best practice in the use of MEPA.

MEPA is well known in Europe, as it  represents a unique experience.

By setting up and handling the MEPA, Italy has acquired a highly skilled experience and expertise in the eCatalogue. Experts from Consip participate in several EU technical working groups on electronic public procurement such as the ePWG  (EU DG Internal Market) and the IDABC (EU DG Informatics).

Equally important is the role played in the Peppol Project (Pan European  Public Procurement On Line), a EU project started in 2008 with the goal of setting up a European interoperable framework for eprocurement by 2011. Peppol is articulated into work packages and Italy (Consip) is leading work package 3 on the eCatalogue.

Consip participates in the most important European eprocurement networks and working groups such as: Eulab, Steppin, Public Procurement Network, in which MEPA is often debated on. MEPA is well visible on the epractice portal, it is more and more often presented at international meetings dealing with eprocurement issues.

Moreover, in June 2008, the European Commission drafted a Code on the “Best  practices  facilitating access by SMEs to public procurement contracts”. In the Code’s section dedicated to  member states’ best practices to ensure SMEs  access to  relevant information  and training, Italy and Consip are quoted with the “Sportelli in Rete” project, the training desks that Consip started opening in 2004 at the local SMEs associations headquarters, delivering free support to SMEs in order to increase their participation in public award procedures and to improve their familiarity with eprocurement tools, especially the MEPA.

Training desks were fundamental to “spread” the MEPA throughout the Italian territory.

Today 143 desks are operating. They represent a very efficient and effective public-private partnership. Consip, in fact, trains employees from the desks that, in turn, will train the local SMEs of the region, in a training to trainers approach. Consip is investing in its know-how on the use of ICT tools while the desks invest in their knowledge of the local market needs and potentialities and in the fact of being considered trustful and accountable by local SMEs.

Lessons learnt

Among the critical factors, it is important to underline the fact that, apart from the technological obstacles, there existed other typical problems strictly connected to the complex change management program that was taking place within the PA.

More specifically:

1.   the absence of a public eProcurement strategic vision clearly and effectively communicated

2.   the absence of both an adequate level of training and recognition of new professional qualifications among civil servants (e.g., the e-buyer)

3.   the absence of a monitoring and assessment activity, as well as of a rewarding system for PAs and managers making use of these tools

4.   the existence of a digital divide not only as a concept, but also as a real technological barrier

5.   the fact that  eProcurement platforms may not be stable and are often not really simple and user friendly

6.   the fact that the supply side was resistant to joining in, especially at the local level, fearing  greater competition

7.   the prohibitive costs for each single administration concerning the development of an eprocurement platform

As a general approach to overcome the above listed obstacles, Consip put in place a comprehensive action plan containing  training, communication and support activities devoted both to suppliers and PAs.

Other specific actions consisted in:

-     continuous platform development and implementation with the goal of making the process more user friendly and more respondent to the needs of the users;

-     legal amendments in order to increase the use eprocurement tools by PAs and suppliers (such as mandatory usage of MEPA for central administrations)

-     strong cooperation with suppliers' associations through the opening of training and support desks, scattered all over the country, offering free assistance to SMEs in the use of MEPA and other eprocurement tools

-     introduction of a yearly national award (“MEPA Award”) to reward suppliers and PAs that distinguished their selves through the innovative use of the MEPA. The mail goal of the award is to raise and revitalize the image of the public buyer (e-buyer) and small innovative enterprise (e-seller) and to provide examples of best practices

The main lessons learnt after 5 years of experience may be summarized in:

-  the need for a strong commitment from the Government who has to be the first stakeholder to believe in the usefulness of the initiative and adopt, if needed, the necessary measures to support it;

-  an appropriate legal framework providing clear guidance to all stakeholders;

-  to ensure the project is co-owned and that each single player feels its role as fundamental and strategic;

-  to be able to provide a continuous and reliable service (no gaps due to discontinuity!) during the entire life-cycle of the project;

- to carry out intensive communication and training activities aiming at transferring the benefits of the initiative and the total availability in providing support to users in any kind of problem or difficulty incurred;

-  to establish a transparent and collaborative partnership/relationship with the major stakeholders and commit them since the beginning of the project;

- to involve existing local groups, but without expecting immediate approval

Benefits from e-procurement are considerable in the presence of a clear strategy and commitment, of intensive training and change management actions towards public users and of a suitable communication activity vis à vis the supplier market (see reference letter from supplier in attached documentation)

Indeed, the introduction of a revolutionary way of handling the procurement process would have been accepted only if the benefits were immediately perceived. So the sharing of as much information as possible on the positive effects of e-procurement represented and still represents one of our major concerns and the area in which we concentrate our major efforts.