United Nations Public Service Awards Case Studies

Before establishing the Central Procurement Agency every governmental department performed its own tenders. This inconsistent procedure discounted substantial savings as well as the optimization of products und services and was susceptible for venally behavior.

Decentralization of public procurement leads to:
• differing methods, procedures & standards
• loss of synergies
• market power of public demand used inadequately

The consequence is a substantial loss of public resources!

What is the initiative about? (the solution)
The objectives of the Federal Procurement Agency are: • Demand Aggregation • Standardisation • Optimization of Purchasing Conditions • Process Simplification • Transparency • Broaden Competition This leads to an improvement of the efficiency of public procurement and reduction of public expenditure. The taxpayer benefits from a reduction of procurement costs by 15 percent. The benefits for the bidders consist in fair and transparent tenders. The public servant benefits from improved goods and services procured by the experts of the Central Procurement Agency. The public savings are measured by a comparison with the procurement costs of tenders accomplished by public departments. The calculation is based on historic figures or a virtual comparison with today’s procurement costs. The satisfaction of the public servants is measured by a survey conducted every year.

Who proposed the solution, who implemented it and who were the stakeholders?
The Central Procurement Agency was founded in 2001 by law based on an initiative of the government. The establishing of the agency was enforced by the cabinet “Schüssel I” (2000-2002). Responsible for the implementation was the ministry of finance, which represents the owner of the Public Procurement Agency. The supervisory board is also determined by the minister of finance. In addition an advisory board consisting of customers gives recommendations to the executive board.

Describe how and when the initiative was implemented by answering these questions
a. What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
The Public Procurement Agency was founded by law (“Bundesbeschaffung-GmbH-Gesetz”) on April 27th 2001, which obliged the federal departments to use the service of the agency. The minister of finance defines the sectors, in which the Agency establishes its activities (Building projects and munitions are generally excluded from the mandate of the agency). Main segments are energy, hardware, software, telephone and postal services.

b. What were the key development and implementation steps and the chronology? No more than 500 words
The act was amended twice (September 1st 2002, June 21st 2006) for increasing the clientele of the agency. All administrative levels of the Austrian public sector (provinces, communities, outsourced organizations) have the opportunity to use the services of the Public Procurement Agency. Today 28% of all procured goods and services are demanded by these clients.

c. What were the main obstacles encountered? How were they overcome? No more than 500 words
The public departments for procurement activities felt threatened by the foundation of the agency. But most of the purchasers remained in their departments, buying goods with specific requirements, which can’t be bundled. The fear of worse products contributed at concentrated tenders has been overcome by a longtime high quality level of products and services. Therefore the cooperation with the public departments achieved a professional and amicable level.

d. What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
The enterprise started with a small team of about 10 employees. Corresponding to the increasing procurement volume and the greater areas of responsibility the amount of employees enlarged to 70. The ministry of finance covers the expenses for the procurement activities for federal departments. All political subdivisions, which use the services of the Public Procurement Agency voluntarily, have to contribute a cost recovery.

Is the initiative sustainable and transferable?
Six years after establishing the Public Procurement Agency the volume of purchased goods and services is still increasing. In 2006 the public authorities have bought goods and services to the total amount of 720 Million Euro via the Central Procurement Agency. The forecasts for 2007 are round 800 Million Euro. Especially the voluntary use by political subdivisions is strongly increasing, which demonstrates the low prices und the high quality of the purchased goods. An e-Shop was introduced to optimize the ordering procedure and saving process costs of ordering. Approximately 100 Mio Euro are ordered via this shop and catalogue system. The European Union founded a platform called “EU Learning Lab” for a serious exchange of experiences and ideas. Within the EU there are several types of procurement agencies with different structures und duties. The Austrian Public Procurement Agency belongs to the bodies with the greatest range of responsibilities and is therefore role model for further developments in other countries. As fellow in “Twinning Projects” the Public Procurement Agency advises new member states of the EU in establishing professional procurement activities.

What are the impact of your initiative and the lessons learned?
The obligation for federal departments to use the Public Procurement Agency was the precondition for demonstrating the possibilities of bundled procurement activities. The intense preoccupation with the needs of the public customers provides the essential confidence. Achieving the best products at the best price is the main condition for the survival in an open competition with public procurement departments. Incorruptibility, fairness and transparency are vital issues for a procurement body. In 2007 no single tender was reversed by the “Federal Public Procurement Office” (court for public tenders).


Institution Name:		Bundesbeschaffung GmbH
Institution Type:		Organization Performing Outsourced Public Service Functions
Contact Person:		Florian Unterberger
Title:		Press Relations Officer
Telephone/ Fax:		+43/1/245 70/601
Institution's / Project's Website:		+43/1/245 70/99
E-mail:		florian.unterberger@bbg.gv.at
Address:		Lassallestraße 9b
Postal Code:		1020
City:		Vienna
State/Province:
Country:		Austria

The Problem

Solution and Key Benefits

Actors and Stakeholders

(a) Strategies

(b) Implementation

(c) Overcoming Obstacles

(d) Use of Resources

Sustainability and Transferability

Lessons Learned

Contact Information