SGPVE - Management of the State Fleet
Entidade de Serviços Partilhados da Administração Pública, IP

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
State fleet has traditionally been one of the major expenditure areas in public administration in Portugal, and given its complexity and dimension, there was little control in fleet-related expenditure and it was virtually impossible to have a clear picture of how public money was being spent and thus assess its efficiency. Secondly, with such high level of decentralization in procurement procedures, it was difficult to guarantee the required harmonization in the fleet typology across Public Administration. Historically, the car make one drove has been a very strong sign of status, so by clearly relating user categories and car typology and by centralizing the procedure, this willingness to have a car of a certain make for nothing but status reasons was disciplined by the criteria now used to evaluate proposals: the most advantageous economical proposal for each user category. On top of this, fleet procurement and fleet management require very specific know-how, which naturally was, and still is, lacking in public offices, generally speaking. So by centralizing these time-consuming operations in a department with deep know-how in the area and whose only focus is state fleet management and fleet procurement, better results and higher efficiency in procedures can be expected (and are delivered). From a procurement point of view, 100 public bodies should buy better together than if each one bought individually. This model generates synergies by aggregating needs, by sharing experience and by creating volume, thus decreasing unit purchasing price. Before this new centralized model, there was lack of discipline and also lack of technical know-how amongst public entities in procuring vehicles. Quite often the vehicles procured, based on the users requirements, turned out not to be suitable to the users actual needs and the expected usage for the vehicles.

B. Strategic Approach

 2. What was the solution?
In 2007, as a result of a reorganization of public administration entities in Portugal, it was decided to act over shared services and to change some strategic approaches towards certain particular services. The management of the State Fleet was one of those services, as no real centralized or integrated data existed and information about acquisitions or disposals was scarce and inconsistent. So, as part of the reshaping of public procurement, it was decided also to centralize the management of the State Fleet in a new entity, Agência Nacional de Compras Públicas, E.P.E. (ANCP), the Public Procurement Agency, with a dedicated area to supervise the all life cycle chain associated with the vehicle. In 2012, ANCP merged into the new Entity for the Shared Services of the Public Administration, ESPAP, I.P., the entity that is currently in charge of managing the State Fleet (PVE - Parque de Veículos do Estado, in Portuguese). To facilitate the application we will refer to PVE as the area responsible in ESPAP, I.P. for the management of the State Fleet. A whole new management concept was designed and implemented, based on rationalization of resources, environmental objectives, system dematerialization and a new legal framework. The new law, which adopts a policy of a mandatory centralized and integrated management of the fleet for all public bodies that compose the central administration - government offices, general public offices and institutes, universities, specialized public sectors like police, military, health care entities and medical emergency, gave this responsibility to a single entity, ANCP. Nowadays, the scope of the management entity reaches almost 500 public entities and almost 27.000 vehicles whose typology ranges from light to heavy vehicles, from motorcycles and tailor-made vehicles like those for medical emergency or police. This new management model was supported in three major pillars: 1. Revision of the legal framework, with the publication of the new legal regime of the PVE (Decree-Law nr. 170/2008), the respective regulatory documents (Ordinance nr. 382/2009 and nr. 383/2009 and Dispatches nr. 7378/2009 and nr. 7382/2009, actually Dispatch nr. 5410/2014) and the Order of centralization nr. 13478/2009, which defines the conduct of procurement procedures of acquisitions in the categories of motor vehicles and motorcycle and car insurance as an exclusive competence of ANCP; 2. Launch of public tenders for framework agreements, selecting suppliers for vehicles, motorcycles and car insurance; 3. Definition, implementation and availability to the entities users of PVE management system (SGPVE), which is the single information system to support the State fleet. In this new model, ANCP took the following responsibilities: a. Manages the PVE; b. Defines policies and acquisition criteria for the categories of motor vehicles and motorcycles and car insurance; c. Analyzes and checks for availability of vehicles; d. Prepares the documents for each contracting procedure and conducts the procedure from launch to awarding stage in the ePlatform, being responsible also for contract celebration, taking into account the financial and environmental criteria defined; e. Manages the administrative processes of acquisition and disposals of vehicles; f. Centrally manages and provides the SGPVE, implements mechanisms for gathering and processing up to date information so as to provide indicators for management, planning and control that can assess the level of efficiency and effectiveness of the contracting processes and management of vehicles in PVE. Just like in any other model that requires changes of mindset, which was in particular what the implementation of this model meant, there are always those taking longer to embrace the benefits and thus more reluctant to change. However, on the bottom line, the outcome has been by far very positive and encouraging, at every level. The main stakeholder, the taxpayer, will have every reason to keep the model and improve it. Delegations from different countries (not only in Europe) have shown interest in knowing better this model, given its uniqueness and the highly positive results that have been achieved.

 3. How did the initiative solve the problem and improve people’s lives?
Before the model of centralization, purchases of vehicles in Portugal were done directly by entities, lacking harmonization or consistency in the type of vehicle to purchase or the amount of additional equipment that can in some cases be considered superfluous. The major innovative aspects of this project lie specially in the complete change achieved in the management of the State Fleet. In fact, the new approach allied with the effort to promote the change of mindset across public administration in Portugal, allowed first ANCP and now ESPAP to present a system that is unique in terms of the dimension of the fleet centralized and on the different services provided by the Agency in Portugal, based on the expertise and know-how of the PVE team. The positive strong and sound results are available to all public entities in Europe and key stakeholders prefer this model. In the case of automotive suppliers, the benefits are very significant as significant reductions in processing costs can be achieve when suppliers have only one buyer, using one model to procure, instead of 500.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
Within PVE, significant progress has been made with the implementation of a new centralized management model which hosts not only the centralized procurement process and the state fleet management, but also the principles of separation of contracting-related functions (although ANCP/ESPAP is the entity running the contracting procedures, the expenditure comes from the budget of the entity who made the request for the vehicle, and who will be the end user), but also the responsibility of the user entities, the expenditure monitoring and budget control and the usage of green criteria in the procurement procedures for the state fleet. To design, implement and communicate the new model for the State Fleet, the endorsement of the Minister of Finance played a key role, especially in what concerns the evolvement of its peers. In turn, each Minister, with competence to guide on transverse issues, endorsed this model and became responsible for promoting its usage by each of the entities under his/her umbrella. The communication of this model was also done via direct contact with nearly 500 user-entities, focusing on the potential benefits of the new paradigm. There was also a formal written communication to all public bodies explaining the new fleet management centralized model and the implications of the new model, the most visible of which being the fact that public entities were no longer allowed to launch contracting procedures for vehicles on their own, even if under a framework agreement created by ANCP/ESPAP. PVE team developed and set up flowcharts and manuals on each of the new internal processes related to the buying process, which were shared with all public entities. The whole process included several stages, ranging from the entities formal request to its validation by ANCP (eg. compliance with maximum values defined per category of user), the aggregation of needs to increase the contracting volume and therefore get lower prices until the launch of the call off, ensuring the monitoring process to the delivery and registration of vehicles in SGPVE. Above all, this centralized model required a change of mindset across public administration, and the implementation of these new management mechanisms, the new contracting and fleet management-related processes, the new framework agreements supported by the new Code of Public Contracts and PVE-related legislation were just the visible part of it. And, like in every process of change of mindset, had its adversities. Resistance towards the model was made by large contracting authorities, like the police, justice or the Ministry of Defence, and a huge effort in explaining the benefits was put in place. This effort included a roadshow in 8 of the country’s major cities with an attendance of over 2.000 key stakeholders. Also, during the last two years a special training program was designed to the largest users of SGVE in order to address specific needs. When PVE received a request for contracting a vehicle, always via SGPVE, different contracting alternatives are analyzed by PVE (Acquisition? Leasing?), taking into account the expected usage and typology. By doing this, PVE aims to assure the solutions provided to the end user will be the most economical advantageous.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
The stakeholders of this model have played a key role in its successful implementation. For a start, the endorsement of the 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, at every level. The centralized management could not run without the suppliers nor their commitment to its success and compliance with the rules of the framework agreement they belong to. Also, they have on several occasions shown their support to ANCP/ESPAP promotional activities and public events. There is also a set of public and private entities which provide specific support to ANCP during the design and preparation of each of the framework agreements, so as to assure that its rules comply with every legal and/or technical rule in that sector or category. One of the most important groups of stakeholders is the civil society and taxpayers. By decreasing the size of the State fleet and thus reducing State fleet-related public expenditure, taxpayers are, ultimately, those who benefit the most from this huge change in the management system. Adding to this reduction, the savings generated by aggregated purchases are very relevant.
 6. How was the strategy implemented and what resources were mobilized?
Setting up and implementing such a model and the managing structure required both specialized human and technological resources. For a start, the team members, all recruited with deep knowledge on a specific area of fleet management (contracting procedures, ePlatform procedures, vehicles registration processes, car insurance, dismantling of vehicles, etc.). This specialization was crucial to assure efficiency in the processes, a fast and accurate support to entities and the possibility of several contracting processes running smoothly and simultaneously, each for a different typology of vehicles. Another key area that involved important resources lied in the structure and development of the technological tool to collect vehicle-related information from the entities, and to manage the state fleet system: SGPVE. This is nowadays a very powerful database, with different levels of information for each of the 27.000 vehicles of the state fleet. Available information for each vehicle ranges from vehicles characteristics (Made/Make and model, plate number, registration data, detailed technicalities, and any specific features it may have) to usage data (fuel consumption and mileage data, car insurance data, entity it is allocated to, just to mention a few examples). Mileage data for each vehicle is entered by the entity it is allocated to, on a regular basis, and then validated by PVE team. For most state fleet vehicles, fuel consumption data is entered directly by PVE based on monthly reports received from fuel suppliers. The total cost of setting up the technological system (SGPVE) and the business process model amounts to around EUR 400.000 (internal and external costs).

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
The results have been extremely positive. In the first 2 years, ANCP was responsible for contracting almost 1,500 vehicles (5.5% of the state fleet). ANCP purchased vehicles of all types, light and heavy, tailor-made and motorcycles, varying from members of the government to police vehicles with specific patrol equipment. This new model also allowed a significantly better assessment control of the State fleet, including on the number of vehicles affected to each public entity, vehicle typology, mileage, age, maintenance and fuel costs. Now it is possible to have aggregate information to support decision making in a rational and harmonized way. One of the main results was the reduction of the fleet which exceeded 5% comparing 2012 with 2009. The dismantlement of more than 1,500 vehicles alone had a significant impact in the decrease of costs in areas like maintenance, insurance, fuel and parking, estimated at around EUR 7.5 million. The assessment of the State fleet provided by SGPVE data and the new model allowed ANCP/ESPAP to better understand the reality of the State fleet. One of the first and major conclusions was that some public entities fleet outnumbered their actual needs, and in some cases the vehicles’ typology did not match the jobs’ requirements, or was so old that maintenance costs were virtually unbearable. In order to force entities to become more rational in their requests for new vehicles and to improve the match between State fleet vehicles and the users’ jobs requirements, PVE promoted new legislation known as 3 to 1 (actually and since 2013, the rule is now 2 to 1). This meant that for each new vehicle an entity wanted to contract, they had to promote the disposal of at least 3 that were allocated to that entity or Ministry they belonged to. Entities were therefore forced to look at their own fleet and promote a more rational and intensive usage of the remaining vehicles. In what concerns the centralized procurement of vehicles, we obtained savings of 26% on a total expenditure of EUR 4 million, between 2009 and 2012.

 8. What were the most successful outputs and why was the initiative effective?
Public entities named internal auditors that checked all processes related with the inputs of SGPVE, and the acquisitions by call offs or framework agreements. Besides, ESPAP is preparing, at this moment, a survey to be applied to all entities using SGPVE, regarding the daily usage and improvements of the system. All entities were contacted in order to provide information on the inventory of vehicles they had. All information was integrated on SGPVE and, on a daily basis, reports were extracted and compared to the entities records. Moreover, were made for several years a fleet analysis to the entities with more vehicles to assure the information’s accuracy between the records on SGPVE and reality of the vehicles. Besides this, data on the vehicles allocated to each entity is available online for each entity’s supervisor to monitor. Apart from this online information, formal reports are prepared and delivered every 3 months to each entity, with analysis on its own fleet, consumption and mileage data per vehicle, fleet age, etc. The main objective for delivering these reports is for PVE to provide each entity with a formal document to help monitor and, if necessary, promote the required internal adjustments, especially regarding high fuel consumption levels. The SGPVE also sends regular alerts to entities on coming deadlines for end of contracts, car insurance expire dates, among others. There has also been a huge effort from PVE team in what concerns the training provided to SGPVE users in the entities, with a training program design for the specific needs of the different types of users.

 9. What were the main obstacles encountered and how were they overcome?
The change was difficult in some cases because entities lacked the power of purchasing the vehicle they wanted. In some cases, users wanted to purchase a specific vehicle from a particular brand and to change this mindset has proven to be a tough task, despite the continuous effort to present the entities with the benefits of this system (internal fleet management is nowadays far less time-consuming than previously; all complex contracting-related procedures are conducted by ESPAP, contact value is in average considerably lower that if the procedure were conducted by each entity individually, given the synergies generated by the aggregation of demand). Nevertheless, the process of data collection from entities is on-going, but entering it in SGPVE database for the first time is time-consuming and depends, on a great extent, on the entities™ good-will in entering it or in providing it to PVE, depending of the type of information. Possible solutions to overcome this problem are being explored for future implementation.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
The new management model of the State Fleet was a radical and decisive step forward towards more transparency and accountability. Major changes introduced by new management model: 1. Strengthening the competences of ANCP through the centralization of procurement or lease, allocation, maintenance, disposal and dismantle of state vehicles, as well as the centralization of contracting procedures of goods and services related to State fleet. 2. The diploma is regulated by the following principles: - Centralization of procurement and management of PVE; - Burden of allocation of vehicles; - Responsibility of the user entities and end users; - Control of budget expenditure; - Preference for environmental-friendly car fleet. With the new approach towards the State Fleet, it is now possible to supply public information about the fleet’s evolution and to act in order to reduce its dimension and negative impact to the environment. In 2012, the fleet was 5% shorter, when compared to 2009, meaning a reduction of over 1.500 vehicles and savings of more than EUR 10 million. The savings generated by aggregated purchases are, therefore, very relevant. In these results, both direct and indirect savings must be taken into account. Direct savings are those directly resulting from the reinforcement of the negotiation power of the contracting entity (in this case PVE), who get on average significantly lower prices from suppliers. Also, if an entity who buys a product for a good value (low), all others can take advantage of those same commercial conditions if there is a central contracting entity. But indirect savings, though far more difficult to quantify, are guesstimated to account for an important share of the total savings. These are related to the administrative cost savings associated with the fact that, for example, instead of one single entity (PVE) launching one procurement procedure on behalf of 10 entities, those 10 entities launched, simultaneously, 10 similar procurement procedures, with the total number of the man-hours required multiplied by 10. Not to mention the know-how and negotiation skills existing in the PVE team, which alone force suppliers to lower prices.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
The centralized State Fleet model addresses sustainability in different ways. First of all, by including green criteria in all procurement procedures conducted by PVE, like level of CO2 emissions and fuel consumption levels. Besides, the model lies on a powerful technological tool, thus strongly promoting paper reduction. ANCP/ESPAP PVE’s procurement procedures are ruled by Directive 2009/33/CE, aiming the promotion and growth of the market for clean and energy efficient vehicles and improving the contribution of the transport sector to the environment, climate and energy policies of the Community. In fact, this Directive requires contracting authorities, contracting entities as well as certain operators to take into account lifetime energy and environmental impacts, including energy consumption and emissions of CO2 and of certain pollutants, when procuring road transport vehicles. The Directive’s scope lies on vehicles with categories M and N, not on motorcycles. By strongly contributing to the reduction of the State fleet-related expenditure, this model plays an important role towards a (more) balanced public budget. On top of this, voluntary entities that benefit from the services provided by PVE pay a symbolical fee, which helps finance the structure of the PVE and the SGPVE. PVE has other incomes, namely from the sale of vehicles that are no longer needed in the State fleet, or the dismantling of vehicles that can no longer be used nor sold. One of the main features of the centralized management model is related to the dematerialization of the procedures, forced by mandatory usage of ePlatforms for public procurement procedures in Portugal, as of Nov 30th, 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. 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 framework agreements where this is applicable), on their own or in consortium. Ecological issues also play a very important role in ANCP/ESPAP, as every procurement procedure conducted by PVE includes green criteria, like level of CO2 emissions and fuel consumption levels. Besides, the model lies on a powerful dematerialized technological tool, thus strongly promoting paper reduction. The social role of the model is also highlighted when PVE donates vehicles that are of no interest to any public entity (for being too old, or for being adequate for short distances, for example) to firemen associations, local authorities or other entities with a social role.

 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)
Being able to put together all those efforts described above, in order to achieve a more intelligent State, resulted on better practices on key areas of actuation, since, the state fleet, which includes vehicles of security forces, police, criminal police bodies, military, emergency medical and health care, was managed on a decentralized basis and individually by each public entity. Vehicles and motorcycles were purchased individually without aggregation, homogeneity and discipline which is intended with a category that has very high public awareness levels and accounts for a large share of public funding. ANCP also created legal obligations for public entities in order to control costs and its fleet inventory. The question "How many vehicles are there in the state fleet?" can now be answered almost instantly based on SGPVE data, and without the need of any survey to the almost 500 entities included in the system. This is, by far, an huge step to get an efficient management and control of public administration, and could be, as a matter of basis, replicated to other State services. In other words, it’s important to get trustable measures of the core activity of a service. The new State Fleet Management Model was designed to minimize bad expenditure resulting from ad-hoc and inconsistent management of a fleet of more than 29.000 vehicles at the time, geographically disperse, heterogeneous and aged (average of 11,6 years). The main objectives set for this change were to monitor and control State fleet-related budget expenditure, to reinforce the responsibility of user entities, to redefine processes in order to promote efficiency and reduce paper waste and significantly improve the quality of reporting. Environmental issues were also on top of mind, as pursuing a State Green fleet became a priority for PVE. On top of managing the State fleet, PVE also makes all its team’s experience and know-how available to other public entities, like municipalities, state owned companies and regional entities (voluntary entities). These entities, after signing a contract with PVE, which is free of charge and brings no obligations of usage, can thereafter mandate the Agency to contract vehicles on their behalf. By mandating PVE to do this, a voluntary gets the same service level as any mandatory entity. So, in the end, the services made available to voluntary are a strong manifestation of what could be make to get all public administration touched by efficiency standards.

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:  
E-mail:   jaime.quesado@espap.pt  
Address:   Av. Leite de Vasconcelos, 2 Alfragide
Postal Code:   2614-502
City:   Amadora
State/Province:  
Country:  

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