As we compare the two main competitive procurement models employed in Canada, not only at the municipal level but at the federal and provincial levels as well — the request for tender and the request for proposal.
The assumption is that the municipality is using an essentially paper based system, perhaps supplemented with electronic distribution of information, as paper based tendering continues to predominate in municipal procurement at the present time. Moreover, although there is considerable evidence of movement in the private sector towards electronic procurement, the fundamental principals and concepts apply irrespective of whether a paper based or electronic system is in use.
Electronic procurement (“e-procurement”) is the sourcing of goods and/or any other service such as construction by electronic means, which in some cases may include the use of e-tendering. We have all been talking about this process for the last decade. I would have expected by now that a process would have been developed to create a major shift to this form of procurement for the public sector. In reality, e-procurement remains largely a work under development. Nevertheless, there has been considerable and growing interest in the subject of electronic procurement in all sectors of the industry.
In general terms, e-procurement involves using information technology and telecommunications to source goods and services, place orders, and otherwise carry on procurement activity. Although it has yet to be completely developed to its full potential, e-procurement has begun to transform the trade partner relationship. The rapidly evolving technology of the internet and the emerging supply and distribution options that this technology is permitting, make this field of e-procurement a moving target.
Nevertheless, despite the growth in the use of electronic forms of contracting, up to and including electronic tendering, e-procurement has not yet emerged, as a comprehensive solution to all procurement needs. This picture of using electronic tendering for the future is rapidly changing.
Virtually all municipalities now operate websites, and provide some tender-related information over those sites. However, very few municipalities have yet converted to a total e-procurement approach.The term “electronic tendering” means: “the use of a computer-based system directly accessible by suppliers irrespective of location that provides them with information related to bid solicitations.”
At the present time most of the larger municipalities have begun to make significantly more use of e-tenders, by having government documents downloaded by vendors form various websites. A number of events and obstacles have delayed the extent of the shift towards e-procurement, and in particular e-tendering, from which was expected to take place only a few years ago. One of the biggest concerns raised is the security of the documents. Further issues that have delayed widespread adoption of e-procurement in the public sector include the differing extent to which centralization and decentralization of the purchasing function prevail within government as opposed to the private sector.
Potentially, e-procurement may save municipalities billions over the long-term. Since larger municipalities often are highly sophisticated purchasers in highly specialized markets, e-procurement may open up the prospect of sourcing goods, services and construction requirements from a wider range of suppliers than has ever been the case in the past.
It had been suggested that e-procurement could significantly improve the efficiency of procurement in the areas of maintenance, repair, and operation supply of all services including the construction of major capital projects. I hope that 2012 is the year that an expanded use of a completed working system of true e-procurement is solved.
Stephen Bauld, Canada's leading expert on government procurement, is president and CEO of Purchasing Consultants International Inc. He is also the co-author of the Municipal Procurement Handbook, published by LexisNexis Canada. He can be reached at email@example.com.