The Portuguese Public Procurement System | Developing and implementing an eProcurement solution
Entidade de Serviços Partilhados da Administração Pública, IP

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
Every government procures goods, services or works and Portugal is no exception. The traditional paper based procurement system in Portugal worked, as in every other country in the European Union, but neither efficiently nor effectively. It was an expensive, complex and slow process that required multiple levels of bureaucracy and caused unnecessary public spending. Besides, it was widely perceived as lacking transparency and not fully promoting equality of opportunities for economic operators. Datawise, due to the lack of a detailed reporting system on public purchasing, it was very difficult to know what each contracting authority (CA) bought per year in each category of goods and services. All it was possible to know was how much, and it was thus possible to identify the categories which accounted for the largest amounts of public spending. Not only this, but there was a clear lack of planning in purchasing procedures in Public Administration and each CA launched a procedure on its own according to specific purchasing needs, in a totally decentralized way. With 17% of its GDP related to public procurement, it was clear that Portugal needed a major change in this field.

B. Strategic Approach

 2. What was the solution?
In order to promote cheaper, easier and faster ways to deliver goods and services through public procurement while satisfying the goals of increased accountability, transparency and competitiveness necessary to sound public policies, Portugal started a major reform of its overall public procurement system in 2007. The adoption of eProcurement was part of a broader reform in the legal, regulatory and economic aspects of the Portuguese Public Procurement (PPP) model. However, at the same time, eProcurement was one of the central elements of the reform and, eventually, the more significant and powerful one. The change was not only driven from the inside of the public administration, which was lacking new concepts and ideas, but it was also demanded from outside stakeholders, like the civil society, general public opinion or the economic operators, as there was a wide consensus that public markets were too closed, too difficult or too complicated to cope with. In addition, the public procurement reform was developed side by side with a new eGovernment strategy, designed in the second half of the first decade of this century, aimed to deliver a better and leaner public administration. This political ambition was a very important driving force and it was relevant for the correct implementation of the new Portuguese Public Procurement concept. The reform of the PPP was supported in three major pillars: 1. The new Public Procurement Law of 2008, the Code of Public Contracts, aiming to transpose the EU Directives 2004/17 and 2004/18 but also to consolidate, modernize and adapt the legal building for public procurement; 2. The creation in 2007 of a new entity, ANCP, currently eSPap, as a result of a reorganisation of public administration entities in Portugal, which acted as the management entity of a mandatory public procurement system, (SNCP) for the central administration, and also as a Central Procurement Body (CPB); 3. The introduction of mandatory eProcurement for all public bodies as of Nov. 1, 2009. Regardless their origin or dimension, the type of procedure or the system under which they procured, Portuguese public entities at any level, either central, regional/local or state owned companies, were committed to the usage of electronic means, mandatory for tendering and awarding all public procurement procedures above 5.000 Euros. The combination of these 3 main factors was fundamental in the design and implementation of a correct eProcurement strategy for Portugal. And the fact that they were set up at the same time, with each pillar driving force and strengthening the others, was the appropriate arrangement to support the reform. Also, the top-down approach and the empowerment given to the creation of ANCP, its mandatory role and the connections established between SNCP and the usage of eProcurement were quite relevant for the consolidation and for the wide establishment of the Portuguese eProcurement reform. ANCP’s mission and principles were inspired in other European experiences, and therefore its key values were aligned with EU and international standards: 1. Transparency, equal treatment, fair competition 2. Compliance with National and EU Legislation 3. Achieving Sustainability (priority to economic and environmental elements) 4. Promoting SME's access to public markets

 3. How did the initiative solve the problem and improve people’s lives?
ANCP’s major objectives were defined in two sets: Economic goals, by increasing savings in public procurement (contributing to sound and better usage of tax payers'€money) and environmental goals (green public procurement), by gradually incorporating environmental requirements within the selection/qualification and award criteria in public tenders. At the same time, SNCP took in consideration the key stakeholders in the country and involved the major players into the reform. SNCP is a hybrid system, based on a CPB (ESPAP) which operates a network structure, with the Ministerial Purchasing Units (UMC), one set up in each ministry, acting as mini-CPB and focal points between ESPAP and the Contracting Authorities (CA) belonging to central administration and public institutes. SNCP is of voluntary use for other public bodies as defined in the Decree-Law that launched the system, like state owned companies, municipalities, regional and local authorities. In these cases the relation is established directly with ESPAP. The major features of the System are: - Definition of mandatory and voluntary CA by law; - Centralization of the purchasing role by ESPAP or the UMC; - Acquisition under framework agreements (FA) established by ESPAP, based in aggregation of demand, standardization and economies of scale in the acquisitions.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
In the setting-up and implementation of SNCP, a master plan was elaborated, with several actions: a. A roadshow in the major Portuguese cities intended to enlighten CA, public servants, economic operators or commercial associations, and to explain the mission and role of ANCP, the objectives and coverage of the System and the expected functions of each part. The roadshow started in Nov. 2009 and ended in Apr. 2010. 8 events were held in 7 cities, with around 1,200 participants from more than 500 public and private organizations. b. Training sessions and capacity building seminars to improve skills in the handling of eProcurement tools, for procurement officials, but also to improve the knowledge about SNCP and the use of FA. These actions are included in the annual action plan of the Agency, and some of them are targeted to a specific universe, for instance, Ministry of Education and schools. It is an ongoing process, started in 2008. c. Annual Conferences on Public Procurement, with national and international experts, aiming to present the status of the reform and the evolution of the System. These occasions allowed also the sharing of experiences and the gathering of feedback from the users. Two Conferences were held, one in July 2009 and the other in March 2011, on average each with around 1,000 attendants from 400 different organizations. d. Presence of ANCP directors and officials in several events, seminars and conferences, both at local and international level. e. Bilateral exchange of experiences with other European agencies, UMC's and counterparties, to relate common practices, processes and strategies, enlarging public procurement vision. Despite ANCP and UMC, other players were relevant in the change management plan, either in their organizations or considering their institutional role in the reform. It is now consensual that the result of the Portuguese eProcurement is largely due to the constructive commitment of all stakeholders, from public to private: Contracting Entities | Economic Operators | Public eTendering Platform Operators | External Auditors for Platform€'s compliance auditing | National Certification Office of e-Tendering Platforms | eSPap | National Portal for Public Contracts Portal Base and INCI |UMC, the Ministerial Purchasing Units | Lawyers | PP external consultants | Court of Auditors | Administrative Courts | Media | Political Institutions | EU. Working under the orientation of the Ministry of Finance, ANCP was responsible for setting-up SNCP, give guidance and orientation to the UMC and coordinate an Interministerial Advisory Committee (CIC), responsible for the approval of the National Purchasing Plan and the annual report on the Savings obtained by SNCP, upon ESPAP's aggregation of information and calculation. The endorsement from the Ministry of Finance from the first moment of the process was crucial to promote its implementation across Public Administration CA, at every level. Also, the legislation on public procurement and eProcedures published in the early times of the process forced its fast implementation pace, allowing Portugal to significantly climb in the international rankings for transparency and eGovernment.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
The stakeholders of the SNCP have played a key role in its successful implementation. For a start, the endorsement of every Minister of Finance has been crucial to raise awareness to the system, its features and its benefits among their peers, and to promote its set up and implementation across public administration. UMC have also been pivotal along the process, given this system is based on a net-type working design. Although ESPAP may contact directly with all contracting authorities that belong to the system (and actually provides direct support to them), UMC are responsible for running aggregated call-offs under ESPAP’s FA for all the entities under their umbrella. They are also in charge of collecting info on public purchasing and public expense from the entities that belong to their respective Ministry and send it to ESPAP, on request. The SNCP could not run without the suppliers and their commitment to its success and compliance with the rules of the FA they belong to. Also, they have on several occasions shown their support to ESPAP’s activities and public events, like the sponsorship of the Public Procurement Conferences held by ANCP in 2009 and 2011. The ePlatform service providers have also played a key role in the set up and implementation of the SNCP, allowing it to become a 100% paper free procedure. There is also a set of public and private entities which provide specific support to ESPAP during the design and preparation of each FA so as to assure their compliance with every legal and/or technical rule in that sector or category. Another important group of stakeholders is the Interministerial Advisory Committee, with members from every Ministry and from the Budget Commission who advise ESPAP on ground rules and SNCP and validate any report produced by ESPAP on Public Procurement.
 6. How was the strategy implemented and what resources were mobilized?
In order to support the eProcurement and the Public Procurement reforms, a legal framework was produced using principles governing public procurement and eProcurement in the EU and in multilateral organizations, like OECD, World Bank or EBRD. The legal regime was the ground for a trustworthy system and incorporated some specific features like eSignature; documents transmission, opening and warehousing or time and deadlines management with timestamps. In a short set of legislation focused on reliability, different instruments were created with different purposes, but aiming to produce an integrated package. This set of legislation was established between 2007 and 2008, and finally eProcurement became mandatory as of Nov. 1st 2009. In order to enforce the change, severe consequences were established for non-compliance: Contracts formed through a non-eProcurement tool ("paper-based procedure") were null and void and also disciplinary sanctions (i.e. fines) towards public entity management could be applied. From then on, all types of procurement performed by the Portuguese public entities in all levels of the administration, from central to local, no matter their nature, must be conducted through eprocurement tools. In the PPP Reform, eProcurement was a strategic tool for delivering envisaged results. From the definition of ANCP's top priorities to the regulations that supported the legislative pack, eProcurement was in the front line. eProcurement was considered one of the most relevant measures and a key driver to transform and rebirth public procurement in Portugal. In the definition of the eProcurement strategy, the main focus was to cover the central components of the procurement chain, namely tendering and awarding phases. Another major goal was to promote and enhance transparency and information to stakeholders and citizens. Following the reform, all public contracts awarded ought to be published in a web portal. Other components were also added to SNCP, like eAggregation and eCatalogue, or a reporting and monitoring system for obtaining savings and evaluating the performance of the FA. These additional tools are used by ESPAP for the management of the SNCP and made available to the entities in the SNC at no cost, namely an ePlatform for all CA to launch procedures under ESPAP’s FA. Also, as the system is financed by fees paid by the suppliers, these tools were necessary to calculate the turnover of acquisitions under the FA, allowing the validation of its usage and the invoicing to the suppliers.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
One of the most significant outputs that was crucial for the success of the implementation of the SNCP was the legal framework built in between 2007 and 2009. Part of it was based on European legislation but a significant part as national legislation, like the setup of the SNCP and the creation of ANCP. Among other benefits, this legal framework brought strict rules which led to a significant improvement in the levels of transparency in procurement procedures in Public Administration, increased levels of competition among suppliers and therefore allowing public CA to buy better, i.e, at better prices and improve buying terms, leading to an improved control of public expenditure. Report and monitoring systems were also key in the process. The focus on aggregated contracting procedures was also very important to improve the buying terms of public CA, as it allowed CA to enhance their negotiation power with suppliers. Also, the implementation of the SNCP and its environmental concerns promoted an change of buyers’ mindset towards an increased importance of using (also) green award criteria.

 8. What were the most successful outputs and why was the initiative effective?
The monitoring of the system has always been perceived as crucial, as a way of evaluating to what extent it was matching its objectives, and the need to make any required adjustments, as well as to clearly understand its impact in Public Procurement and in Public Administration procedures. A set of reports was set up in order to allow cross-analysis. The main one was the National Public Procurement Plan (PNCP), a document prepared yearly by ESPAP based on data collected from UMC from the contracting authorities under the supervision of their Ministry. In this report, CA must provide data on the expected expenses per category, the procurement procedures they plan to launch in the following year, per category of goods and services, whether they intend to procure under any of ESPAP’s FA, and whether the procedures will be conducted by the respective UMC. This information is to be cross-analyzed with the data submitted to ESPAP both by CA after the award phase of any procedure under one of ESPAP’s FA – award value of the contracts – and by suppliers – Invoicing report. The fact that every procedure under a FA must be conducted in ePlatform regardless of the value of the procedure and that ESPAP makes available for free its own ePlatforms to every CA of the SNCP also provides further relevant data on public procurement. Based on the data collected from the report on the value of the awards contracts, ESPAP calculates the annual savings achieved within the SNCP and elaborates a report that is approved by the Interministerial Advisory Committee (CIC) and delivered to the Minister of Finance. Twice a year, ESPAP promotes a monitoring process within SNCP, analyzing actual procedures launched by UMC and major CA and associated public expenditure vs. what CA and UMC had planned and submitted in the PNCP. Last but not least, every public contract must be publicized at Portal Base thus strongly promoting transparency in public procurement. The permanent contact between CA and UMC with ESPAP also provide the latter with very useful insights on how the SNCP is working and on any obstacles / issues that need to be addressed.

 9. What were the main obstacles encountered and how were they overcome?
The Portuguese road towards eProcurement wasn't completely straightforward and without obstacles. In fact, the new legal framework, the mandatory use of electronic tools for tendering and awarding and the establishment of the SNCP were prevailing modifications that affected procurement officials, economic operators and public entities in a demanding new environment. The change to the new system caused disruption and changed habits and attitudes, especially when it comes to eProcurement and its set of tools. Change management played a key role in the deployment of the process as it was clear that users lacked skills and resources, and the majority of the situations was new to everybody. The Code of Public Contracts was new, the creation of the Agency and of SNCP was recent, the use of eProcurement was unknown, the process was about to change for all. The fear of loss of authority, loss of control of the procurement process especially when it related to aggregated procedures, the change of processes that had been running for many years, apparently in a successful and smooth way, all the new and strict regulations caused a very high level of resistant to the acceptance of the new procurement paradigm. Each stakeholder played their part in the construction of a common knowledge and understanding. Some change management plans and training were designed, mostly by the major players, like ANCP, the Government or the ePlatform operators. Also some ad-hoc actions like explanatory roadshows and training sessions were conducted to improve users' visibility over the system and to reduce concerns and fears.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
The success of the adoption of mandatory ePublic Procurement in Portugal was based on the commitment of all stakeholders, and in a clear changeover plan and market response. All stakeholders involved in Public Procurement trust the system and tools and see electronic Public Procurement as a value added improvement. In general terms, the introduction of eProcurement simplified the relation between suppliers/public entities in the tendering process, improved standard tendering documents and reduced consumptions and context costs. Also, it improved the monitoring and auditing of contracts and data above and below thresholds, and improved level of transparency in the contracting process from Public entities; The old model was replaced with a new paradigm, where: -All public contracting authorities and all public bodies use eProcurement to fulfill their needs; -All procedures are done through eTendering and eAwarding; -All proposals are opened at the same time; -All competitors know which proposal won and why. The new system allowed Portugal to: -increase transparency and security, through streamlined rigorous procurement processes and workflow management; -increase competition and access, reducing the barriers that SME face when competing for public sector contracts by promoting their participation via eProcurement and in the FA; -increase savings, by enabling faster transactions and paperwork reduction, which led to an overall gain in efficiency. Portuguese e-Public Procurement system is today a successful reality, as the most recent data show (2012). We have also reached an 89% e-procurement ratio, above the thresholds. Overall, according to the public procurement portal, in 2012, 77% of all Portuguese Procurement was done through eProcurement. In what concerns the SNCP, the evolution of key figures has been quite significant. In fact, ANCP managed to accomplish the strategic plan defined for 2007-2010, either in terms of frameworks launched and concluded, savings, or number of entities in the system. Also, there was a huge increase in categories covered, from the existing 5, prior to the reform, to the current 16. Since 2008 ANCP (and now ESPAP) has awarded 27 FA, some of which improved FA within the same category of goods or services. Currently 6 International limited tenders are being conducted, leading to as many FA when awarded, within the next few months. 10 other International limited tenders will be launched until the early months of 2015, so that ESPAP can achieve in 2015 the record figure of 22 FA in force. The number of suppliers and the ease of access of SME's to the public markets, also rose dramatically, reaching nowadays about 76% of the total contractors. The diversity of economic operators included as State suppliers under the FA also improved to a new standard. The perception of the system for voluntary entities has been increasing also, accounting currently for slightly over 41% of SNCP's turnover. The standardization of products under the FA or the simplification of procedures associated with the non-existence of thresholds, are some of the reasons for the increasing number of voluntary entities. The SNCP comprehends 13 UMC, about 1800 mandatory contracting authorities and 575 voluntary contracting authorities, ranging from municipalities (80% of the total municipalities in the country), public companies (both national and local), and regional authorities. Since 2010, these contacting authorities were responsive for the launch of over 21 500 electronic procedures in the ePlatform ESPAP has made available at no cost to the whole SNCP. The SNCP has generated an estimated total of € 204 M in Savings since 2008 (mandatory CA alone).

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
The SNCP is a sustainable initiative at different levels, from financial to social, from environmental to regulatory, from ethics to economic. One of the main features of the SNCP is related to the dematerialization of the procedures, forced by mandatory usage of ePlatforms for procedures as of Nov 2009. This led both to a significant decrease in paper consumption but, most importantly, to the promotion of transparency in all public procurement procedures. The transparency is also enhanced by the fact that every public contract must be published at Portal Base, thus made available for anyone to see. The financial pillar can also be explained in 2 ways. By means of the promotion of aggregated procedures run by the UMC, savings can be achieved by 2 means. First of all, as a result of the reinforcement of the negotiation power of the adjudicating authority, given that much larger volumes are at stake than if the procedure were run by each contracting authority on its own. Secondly, from the reduction in administrative costs, as overall there is a significant reduction in the number of people evolved in the processes of preparation, launch and running of procedures. In what concerns the system’s role to ensure economical sustainability, one must point out the promotion of the participation of SME, either in national or regional lots (in the FA where this is applicable), on their own or in consortium. In fact, 3 out of 4 suppliers in the current FA’s are SME. The SNCP is financed by the suppliers within each FA, who pay ESPAP a fee of on average 1% of their total invoiced to CA in the SNCP. Ecological issues also play a very important role in the SNCP. In fact, ESPAP took to itself the responsibility of defining, in a co-work with the Portuguese Agency for the Environment, a set of criteria to ensure public administration’s acquisitions are as environment-friendly as possible. Most FA have green criteria, some being established by ESPAP and others by the regulatory authorities of the sector. In order to achieve these objectives the UMC committed themselves formally with a Declaration. Based on their report, in 2009, over 41% of procedures and over 61% of the total value of purchases of goods and services that fall into priority categories defined in RCM 65/2007 made by procurement entities incorporated criteria or environmental requirements. In 2010, these percentages increased respectively to 56% and 60%, which represented a major achievement. The implementation process of SNCP and the results achieved have been widely shared with CPB from 4 continents and in international organisations.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
The results achieved so far with the implementation of the SNCP in Portugal show, beyond any shadow of a doubt, the strongly positive impact of the reform at different levels of the society and the economy. The process was all but smooth, which was expected given the deep changes that were meant to be implemented. The results would not have been these had not existed a clear, coherent and comprehensive setup and communication plan evolving every stakeholder and targeted, first and foremost, to those who would be the key users of the SNCP and the related eTools: CA, public servants responsible for procurement procedures and suppliers. The key was to show as clearly as possible the benefits to each and everyone of such a reform, not only from the potential savings resulting from aggregated procurement procedures but also from the reduction of the administrative burden and costs, allowing the rationalization of resources within each CA. Such a system can only work with a strong and well-coordinated set of eTools in order to allow it to work as easily and with minimum negative impact to its daily users. eTools should not, by any means, be perceived as a burden but rather a facilitator of the procurement processes, from planning to payment and execution stages. Also, communication and training are crucial to allow users of the SNCP to understand the benefits of the eTools made available (from the eCatalogue to the ePlatform, from eReporting systems to eSignatures). Monitoring at every level is also key, as it allows a permanent know-how of how the SNCP is working, what needs to be adjusted and improved. And, if need be, the required adjustments must be communicated and implemented. For the SNCP to be successful implemented, every stakeholder must understand clearly its role and be willing to play its part accordingly. Last but not least, such a reform could not have been set and implemented without the clear endorsement of every Ministry of Finance and their peers. This allowed not only a faster alignment across Public Administration but also the publishing of the required legal framework.

Contact Information

Institution Name:   Entidade de Serviços Partilhados da Administração Pública, IP
Institution Type:   Government Agency  
Contact Person:   Jaime Quesado
Title:   President  
Telephone/ Fax:   +351 214 723 100
Institution's / Project's Website:  
Address:   Av. Leite de Vasconcelos, 2 Alfragide
Postal Code:   2614-502
City:   Amadora

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