SPSE
National Public Procurement Agency

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
Situation before the initiative began LKPP officially introduced the SPSE in 2008 and is a key instrument in the Country Procurement System ever since, with the Presidential Regulation No.54/2010 stipulating its use by all government procuring entities in Indonesia. By 2012, all 731 government entities have used the system. One key mandate the SPSE has been effective in delivering is the mandate towards public financial reform, which is a culmination of a reform process that started since 1999. The ongoing reform is a response to a lack of good governance in the management of public finances, particularly on the transparency, accountability, effectiveness and efficiency of budget execution that exacerbated Indonesian economic recession in 1998. The SPSE has been effective in ensuring transparency, accountability and market access that helped proper execution of fiscal expenditures particularly in public capital investments. It has caused systemic efficiency on the use of public budgets between 10-15 percent (2008-2014). In 2013-2014, SPSE received the Asia-Pacific FutureGov Awards for two consecutive years on Technology Leadership, the SPSE has deployed e-Tendering and e-Catalog systems – both making significant impact on ensuring better transparency and accountability. Why an innovative solution was (still) required With standardized systems, process, and practice in procurement; transparency and accountability and a culture of professionalism was introduced into the country procurement system. What was then demanded from the SPSE is to help accelerate implementation of projects and facilitate better public investment decisions. This was urgently needed to support the National Development Plan (2015-2019) that sees the need for more inclusive economic development by accelerating public infrastructure development in the outer reaches of the archipelagic nation. By 2015 the SPSE needed a major system upgrade to meet this challenge as the focus is now managing public budgets in a productive manner with quality outcomes. The 2015-2019 national budget was ambitious in that it has a record target of tax revenues to finance the national development plan (US$ 157 billion in FY 2017 alone). Furthermore, it is estimated that 60-70 percent of the budget would be spent through public procurement processes to support infrastructure development acceleration and expansion. Consequently, the public concern is on how effective the revenues are being disbursed and their impact to the delivery of quality public investments and services. Public trust with its government is dependent on how the government can prove that it manages public budgets efficiently creating tangible and quality outcomes. A mechanism that makes it easier for the people to monitor public budget execution through the procurement of public goods and services is needed both by taxpayers, policy-makers and program managers alike. An enhanced SPSE is positioned to fill this gap and bridge silo cultures that prevent data sharing among sectoral agencies.

B. Strategic Approach

 2. What was the solution?
• A National e-Procurement System that is used as a standard nationwide by all 731 government entities in Indonesia; • The system integrates a variety of methods of procurement as an online procurement toolbox available for public procurement practitioners from e-tendering, e-catalog, e-purchasing, e-reverse-auction (piloted in 2017), e-tendering that allows for international competitive bidding, and competitive catalog. • The system is enhanced with e-General Procurement Planning, e-monitoring and evaluation, e-vendor management system, integrated datawarehousing and big data analytics capabilities.

 3. How did the initiative solve the problem and improve people’s lives?
How the Initiative solved the problem “SPSE is (expected) to help accelerate implementation of projects and facilitate better public investment decisions.” From the 2015 baseline, the system needed to address faster disbursements while not compromising accountability and transparency and at the same time ensure market access and competition. The baseline system provided a strong foundation, creating a single e-tendering platform that procurement professionals use when procuring with public budgets. The e-tendering system is ideal for complex construction works and goods and services with tailored specifications. It is not ideal for repeat purchases of standardized goods and services that are essential inputs for the delivery of public services. Repeat purchases of such nature would not be efficient if it goes through tendering every single time. What was needed is therefore a web-based procurement toolbox that is available for use by procurement professionals at their fingertips, who understand which method is most appropriate so that procurements can be done faster but still uncompromising in terms of accountability, transparency, open market access and encouraging competition. LKPP responded to the demands driven by progressive officials that wanted a more versatile SPSE. The latest iteration of the SPSE should offer a range of procurement methods that in the hands of procurement professionals provide solutions that help accelerate implementation of projects. CASE IN POINT: Indonesia embarked on providing universal health insurance coverage through the issuance of the Law No.40/2004 which wanted to have the universal health insurance coverage to be implemented. The main concern is on the fiscal sustainability of covering the health insurance for 260 million population of Indonesia – key to this is on securing the primary input and supply to enable the delivery of public health services and establish a reasonable price for these inputs based on the volume of spend. The e-Catalog for drugs and medical devices also shorten the procurement process as it is done through negotiated and cataloged framework contracts. By Q1 2017 there are 47 categories of goods and services with 77,643 items cataloged. Local governments are benefitted as they can quickly replenish necessary supplies to deliver public services from medical devices and drugs, agricultural machinery, and fishing vessels. These commodities selected help local communities across the archipelago obtain public health services, food security, and local economy-enhancing investments that are purchased by the government.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
The initiative is unique in that the business processes and systems developed from them created standardized web-based solutions that responds to the needs of government agencies to deliver better public services and investments nation-wide in such a vast geographic state with differences in infrastructure and capacity at reasonable costs. This solution can be emulated for emerging and frontier economies with geographic vastness and help develop local economic activity and digital literacy. The systems development of the national e-procurement system (SPSE) is recognized by key Ministries such as the Ministry of Public Works and Housing (MPWH), the Ministry of Finance (MOF), National Audit Agencies (BPK/BPKP), and the Ministry of Home Affairs (MOHA). The MOF acknowledges the need to link-up its e-revenue, e-Budgeting and e-Payment solutions with SPSE so that an end-to-end e-Government platform can secure the entire public finance cycle from revenue generation to budget execution. The Office of the President’s decided to use the SPSE and its database of procurements (from planning to tendering and purchasing) and vendor management as the basis to link-up national systems and databases to enable the monitoring and evaluation of budget expenditures.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
The LKPP as the sole regulatory agency for public procurement processes in Indonesia, also business processes of each solution, incorporating it to the SPSE system with required regulatory coverage and policies to enable its mainstreaming and nation-wide use. It has pioneered e-government solutions in Indonesia since 2008 and kept innovation to ensure the continuity and economic efficiency of public services delivery, quality and effective procurement budget expenditures, and the selection of better public investments. The SPSE has helped government entities figure out through their procurement professionals, on how best to obtain value from each procurement in terms of the delivery of: (i) Just-in-time delivery to reduce project implementation delays and ensure continuity of supply inputs to deliver public services; (ii) the best value-for-money; (iii) reduced wastage from failed procurements or specifications that do not match requirements. LKPP is a small government agency, with a chairman having equivalent to a ministerial position and reports directly to the President and the Parliament under coordination with the National Development Agency (BAPPENAS). Overall, those who benefit are the recipients of government services and projects. As Indonesia’s 2015-2019 national economic development priority is to make development more inclusive and reaching out to the outer islands to reduce poverty in marginalized communities not optimally benefiting from past development efforts. The SPSE is an instrument that ensures fiscal sustainability and effectiveness to reach its intended development targets particularly as procurement is taking a large proportion of fiscal spending.
 6. How was the strategy implemented and what resources were mobilized?
The LKPP has an SPSE versioning roadmap and the systems development of the SPSE suite is fully supported by the national budget (APBN). The systems development roadmap sees that the iteration post 2014 as requiring the SPSE to branch out from its core provision of solutions on e-tendering per se and enhance with more functionalities, pilot test them, and then disseminate these solutions through champions. The selection of which functionalities to develop is both through LKPP’s strategy and the feedback it receives from key partners who are big spenders. These big spenders, particularly the Ministry of Public Works and Housing, the Ministry of Health, and the Ministry of Education and Culture and local governments with large local budgets such as the Jakarta Special Capital Region, are the key drivers in piloting new solutions. With ownership from the sectoral agencies and big spenders, these partners act as champions on disseminating best practices nation-wide. LKPP is however also canvassing ideas from smaller but progressive government agencies, supporting political will from agencies and local government that want to deliver better and more efficient public services and investments. LKPP also looks to form partnerships with just about anyone that has know-how to share for piloting and modelling. This ranges from development partners both bilateral and multilateral agencies as LKPP currently has active technical assistances from Asian Development Bank and Millennium Challenge Corporation; to private sector best practices (such as applying vendor management systems and e-reverse auction) and partnering with key e-commerce platforms as well as Universities interested in modernizing public procurement. Largely developing the initial 4 iterations of the SPSE in-house (2008-2018), LKPP is looking to sustain its systems development and other services directly related to the public such as facilitating market access of private sector actors (from large companies to SMEs) to compete in the government procurement market. These direct services rendered by LKPP to the public would in the future be run as semi-autonomous public services agencies managed as an enterprising government agency so that LKPP can coordinate these agencies and move back into its core as a regulatory agency for public procurement. This is the future trend as the use of the SPSE will only grow and would require robust market research and intelligence functions as well as sector specialists to develop solutions. Key to enabling sustainability is on finding enterprising government models to supplement the APBN and deliver better services to the public.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
The design and implementation of the Initiative is lead by LKPP, particularly the three Directorates under the Deputy Chairperson’s office for MONEV and Information Systems Development in LKPP. These Directorates are: the Directorate for Procurement Planning and Monitoring Evaluation; Directorate for e-Catalog Systems Development; and Directorate for e-Procurement Systems Development. The mentioned MONEV and Information Systems Development Deputy Chairperson’s office works together with LKPP’s Strategy and Policy Formulation Deputy Chairperson’s office, the latter responsible for the creation of policy guidelines and regulations that enable the use of the systems solutions developed. These two Deputy offices works closely with technology leadership led by the Deputy Chairperson’s office for MONEV and Information Systems Development would engage with government procuring agencies to pilot-test solutions towards user-acceptability and work out together with Strategy and Policy formulation on how to reduce risks on implementation from a policy impact and procedural perspective. LKPP also works together with a variety of stakeholders, from government actors, industry associations representing private sector, and NGOs. Industry associations are key partners to ensure that market access to the government procurement market is in full sync with the distinct industry supply chain characteristics of each industry. Best practices in supply chain management has been transplanted into the country procurement system, particularly from the web-based procurement toolbox approach the SPSE brings to the public procurement professionals for their use. NGOs are frequently engaged through focus group discussions and LKPP, particularly NGOs interested in budget transparency and accountability, public procurement, as well as market access and competition.

 8. What were the most successful outputs and why was the initiative effective?
Output 1 – Full adoption as national e-procurement platform. The most successful output is on the adoption and use of the SPSE as the national system. Before 2015, the Ministry of Public Works and Housing (MPWH) had its own sectoral e-Procurement platform. Now MPWH, has become a strategic partner for LKPP as it fully embraces the SPSE while providing feedback improvements based on its best practices. SDG Goal 12 – of sustainable consumption and production patterns is promoted as the government procurement market has a single business model intent on creating sustainable consumption and production patters through the efficient and effective use of public finances. Output 2 – More Accurate Procurement Plans, Owner Estimates, and Improved Procurement Outcomes. General procurement planning is now based on feedback received on better spend analysis and better records on market prices, these are facilitated through functionalities such as the e-General Procurement Planning, e-Monitoring and Evaluation, as well as price lists at the e-Catalog. With more accurate procurement plans and owner estimates, procurement can be delivered more efficiently and effectively with monitorable improvements in procurement outcomes and this relates also to Goal 12. Output 3 – Ability to maintain savings. Consistently generating 10-15 percent of procurement budget savings is difficult as this requires consistent innovation. The initial innovation may spur savings, but as the innovation becomes adopted as business as usual, the savings and efficiency become systemically incorporated and without further savings-inducing innovations, further savings tend to taper down. By maintaining consistent savings, local governments are known to immediately use the savings into further public investments particularly in health and education. This is an example of the multiplier effect of practicing SDG Goal 12 which contributes to Goal 3 and 4. Output 4 – Potential in Promoting Sustainability of Fiscal Resources to support Essential Public Services. Fiscal resources are under strain to deliver public services, particularly on providing universal health insurance coverage. While the lifting of oil subsidies has diverted resources to cover universal health coverage, keeping the cost and supply availability of key inputs to deliver public health under control is key to sustaining the viability of the universal health cover. Other necessities to supply essential public services such as vehicles for public transportation, street lighting, disaster response equipment, standardized primary and secondary education materials are also sustainably sourced. Goal no.12 demonstrated by efficiency facilitated using the enhanced SPSE has multiplier effects to a range of other SDG goals.

 9. What were the main obstacles encountered and how were they overcome?
The main difficulty is establishing partnerships across institutions and mainstreaming an otherwise unsexy subject. Procurement is oftentimes seen as an inhibiting additional paperwork burden that is accused of being a bottleneck. In 2009-2014 when the masterplan for infrastructure expansion and acceleration was initiated and experienced delays in implementation, procurement processes was often singled out as being the culprit for delays as there was an increasing demand for direct selection to take place. LKPP resisted the pressure to oversimplify procurement processes if it is at the detriment of reducing transparency, accountability and ensuring fair competition and market access. Instead, LKPP embarked on establishing constructive partnerships with progressive government agencies and big spenders and create solutions. Having done such engagements by 2015, LKPP was in the position to inform that efficiencies need to be made in the entire public financial management process and procurement is just a small process of selection and contracting in the entire acquisition cycle. LKPP promoted the concept of procurement ecosystem, where the public financial management system needs to be conducive to create an enabling environment for best practices and efficiency to thrive. This created better trust capital and paired by the creation of innovative new functionalities in the enhanced SPSE which holistically addresses emerging concerns of government agencies, the SPSE succeeded in earning the trust of key public financial management authorities such as the Ministry of Finance, audit agencies, and the Ministry of Public Works and Housing as the largest public capital investment spender and finally gaining approval by the office of the President to use the enhanced SPSE suite as basis for the monitoring system for budget execution (SISMON TEPRA).

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
Output 1 – Full adoption as national e-procurement platform. The most successful output is on the adoption and use of the SPSE as the national system. Before 2015, the Ministry of Public Works and Housing (MPWH) had its own sectoral e-Procurement platform. Now MPWH, has become a strategic partner for LKPP as it fully embraces the SPSE while providing feedback improvements based on its best practices. SDG Goal 12 – of sustainable consumption and production patterns is promoted as the government procurement market has a single business model intent on creating sustainable consumption and production patters through the efficient and effective use of public finances. Output 2 – More Accurate Procurement Plans, Owner Estimates, and Improved Procurement Outcomes. General procurement planning is now based on feedback received on better spend analysis and better records on market prices, these are facilitated through functionalities such as the e-General Procurement Planning, e-Monitoring and Evaluation, as well as price lists at the e-Catalog. With more accurate procurement plans and owner estimates, procurement can be delivered more efficiently and effectively with monitorable improvements in procurement outcomes and this relates also to Goal 12. Output 3 – Ability to maintain savings. Consistently generating 10-15 percent of procurement budget savings is difficult as this requires consistent innovation. The initial innovation may spur savings, but as the innovation becomes adopted as business as usual, the savings and efficiency become systemically incorporated and without further savings-inducing innovations, further savings tend to taper down. By maintaining consistent savings, local governments are known to immediately use the savings into further public investments particularly in health and education. This is an example of the multiplier effect of practicing SDG Goal 12 which contributes to Goal 3 and 4. Output 4 – Potential in Promoting Sustainability of Fiscal Resources to support Essential Public Services. Fiscal resources are under strain to deliver public services, particularly on providing universal health insurance coverage. While the lifting of oil subsidies has diverted resources to cover universal health coverage, keeping the cost and supply availability of key inputs to deliver public health under control is key to sustaining the viability of the universal health cover. Other necessities to supply essential public services such as vehicles for public transportation, street lighting, disaster response equipment, standardized primary and secondary education materials are also sustainably sourced. Goal no.12 demonstrated by efficiency facilitated using the enhanced SPSE has multiplier effects to a range of other SDG goals.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
The use of the SPSE system nationwide by all element of government apparatus was reiterated by the Presidential Instruction that stipulated the mandatory use of the National e-Procurement System (SPSE), which is linked with the anti-corruption action plan in addition to accelerating the process of public services delivery, it also prevents corrupt practices. The increasing number of products that have been catalogued in the national e-catalog indicates that there is increasing positive market response to participate in the government procurement market though the SPSE system. This system in addition to accelerating the procurement processes also provides process and pricing transparency. The SPSE is publicly accessible and it opens all element of government, NGO and the society to be able to monitor the public procurement process. A case in point is the Jakarta Provincial Government, which with the SPSE has been facilitated in the accelerated procurement of public busses essential to deliver mass rapid transit transportation through the busway in Jakarta to deliver public transportation services at a level of quality of service that tens of millions of Jakartans and those who commute to Jakarta benefit. With the SPSE, the public bus armada has been increased dramatically compared with manual tendering processes. As of 2016, the number of bus armada in Jakarta are 1,600 and by 2017, 3,400 busses are mobilized through the SPSE with a savings of IDR 230 billion or equivalent to US$17.25 million.

 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)
e-procurement is gender neutral and enables women to compete on equal footing. Indonesian government is conducting computer literacy training to women owned businesses particularly on SMEs

Contact Information

Institution Name:   National Public Procurement Agency
Institution Type:   Public Authority  
Contact Person:   Sarah Sadiqa
Title:   Ms  
Telephone/ Fax:  
Institution's / Project's Website:  
E-mail:   ssadiqa.aom@gmail.com  
Address:   Kompleks Rasuna Epicentrum Jl. Epicentrum Tengah Lot 11 B,
Postal Code:   12940
City:   Jakarta Selatan
State/Province:   DKI Jakarta
Country:  

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