9 TH P UBLIC P ROCUREMENT K NOWLEDGE E XCHANGE P LATFORM S KOPJE 28-31 M AY 2013 Centralized Public...

9TH PUBLIC PROCUREMENT KNOWLEDGE EXCHANGE PLATFORM

SKOPJE 28-31 MAY 2013

Centralized Public Procurement in Croatia - Experiences and Challenges -

Ivančica Franjković Central Procurement Office Croatia

Content

Public procurement system in Croatia

Legal background and establishment of CPO

Goals, results and challenges

Performance measurement in the context of the CPO

Lessons learned

9TH PUBLIC PROCUREMENT KNOWLEDGE EXCHANGE PLATFORM - SKOPJE, 29 MAY 2013

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PP system in Croatia - legislative framework

• Public Procurement Act (OG 90/11) - entered into force on 1 January 2012

• Public Private Partnership Act (OG 78/2012)

• Concessions Act (OG 143/2012)

• Act on State Commission for the Supervision of Public Procurement Procedures (OG 18/2013)


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PP system - Institutional framework• Ministry of the Economy – Directorate for PP system

• Ministry of Finance

• Agency for Public Private Partnership

• State Commission for Supervision of Public Procurement Procedure

• State Office for the Central Public Procurement


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One of the key aspects of the PP system today

• Continuous training in the field of PP

• Certificates– “Training Programme” of 50 hours – carried out by

authorities approved by ME

• Issued to more than 2700 persons

• Renewing of certificates - 2012 upgrade of training system


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The value of public procurement in the Republic of Croatia


(Source: Directorate for Public Procurement System, www.javnanabva.hr)

Year 2005 2006 2007 2008 2009 2010 2011

In millions HRK 26,085 29,483 44,953 35,773 40,597 24,786 30,982

% GDP 11.39 11.77 16.34 10.37 12.19 7.41 9.04

http://www.javnanabva.hr/

Establishment of the CPO

6/2008 7/2009 9/2009 11/2009 12/2009 1/2010

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CPO in 2010 and 2011

Number of civil servants: 17 /42Number of procurement categories: 17 Number of clients: 35

www.sredisnjanabava.hr

• Established by the Regulation on CPO (Official Gazette 138/09 and 78/10)

• Mission: The Office shall set up an effective system of central public procurement with responsibilities towards taxpayers, the State Budget, persons subject to central procurement, and all economic operators involved in the environment of public procurement with a view to creating savings in public consumption, while bearing in mind an optimum relationship between quality and the price of procured supplies, works and services, respect of ecological and socially acceptable principles, sustainable procurement and the encouragement of SME."


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http://www.sredisnjanabava.hr/

CPO structure / internal organization

Head of CPO

Department for Procurement

Categories Planning and Management (9)

Legal Affairs and Contracting

Department (4)

Department for control of the

execution of contracts and FA (4)

Deputy Head of CPO


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CPO in 2012 and 2013• State Office for Central Public Procurement (OG 31/2012)• New structure; same goals


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European vs. Croatian practiceVarious examples regarding to: 1. Institutional set up

Department within the ministry/ Gov. Office / State office– Agency– L.t.d.

2. Financing Budget– Service fee (vendor/client)– Mixture of previous

3. Participation Manadtory – Voluntary


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Procurement categories

1. OFFICE FURNITURE

2. OFFICE SUPPLIES

3. EXPENDABLE MATERIALS

4. OFFICE EQUIPMENT

5. COMPUTERS AND COMPUTER EQUIPMENT

6. TELECOM. SERVICES -MOBILE

7. TELECOM. SERVICES -LANDLINE

8. VEHICLES

9. REPAIR AND MAINTENANCE SERVICES OF VEHICLES

10. CAR TYRES

11. FUEL

12. ELECTRICITY

13. POSTAL SERVICES

14. INSURANCE SERVICES

15. SOFTWARE LICENCES

16. CLEANING

17. MAINTENANCE OF OBJECTS IN THE OWNERSHIP OF THE REPUBLIC OF CROATIA


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Key stakeholders


Tasks of the CPO • planning the implementation of procurement procedure;• establishing procurement requirements for products and services;• coordinating the activities among the clients;• market research;• implementing procurement procedures;• contracting; • setting up and managing the database of awarded contracts and

framework agreements;• monitoring the execution of contracts and framework agreements;• analysing the efficiency of central procurement through continuous

monitoring of savings made;• drawing up proposals of decisions, specifying products and services

purchased through central procurement.


Results• By the end of April of 2013, CPO has concluded FA at the amount of approx. 1.5

billion HRK & savings of 150 mil HRK in following categories / sub-categories:• Electricity,

• Fuel,

• Postal services (universal and courier services),

• Cars (operational leasing of cars, purchase of vehicles for police-interceptor and operational leasing of commercial and off road vehicles),

• Office supplies (toner and ink, paper);

• Expandable material

• Telecommunication services (mobile)

• Cleaning services

• Internet access service

• Comupter and computer equipment

• Office equipment9TH PUBLIC PROCUREMENT KNOWLEDGE EXCHANGE PLATFORM - SKOPJE, 29 MAY 2013

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Value of FA concluded by the CPO in 2010 and 2011


Procurement categoryEstimated value of procurement

in HRK

Estimated savings

in HRK

% of estimated

value

Toners and inks 50,000,000.00 10,200,000.00 20.40Vehicles 180,000,000.00 39,000,000.00 21.67Fuel 640,000,000.00 22,500,000.00 3.52Electricity 165,000,000.00 1,000,000.00 0.61Telecom. services (mobile) 47,000,000.00 35,400,000.00 75.32

Cleaning services 57,880,000.00 12,500,000.00 21.60Office supplies 43,000,000.00 8,200,000.00 19.07Insurance services 26,000,000.00 500,000.00 1.92Expendable supplies 20,000,000.00 500,000.00 2.50

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Key challenges

• Lack of standardization / catalogues of supplies

• Slowness in implementation of other Strategies (for example Internet for all central state)

• Need for profesionalization of procurement officers (the CPO and clients)

• Fluctuations of employees

• Lack of modern IT infrastructure for the central procurement system

• Inability for timely completion of procedures (within 50 days of the start of the procedure) due to repeated appeals

• The legal status and financing of the CPO

• Justification for the certain procurement categories9TH PUBLIC PROCUREMENT KNOWLEDGE EXCHANGE PLATFORM - SKOPJE, 29 MAY 2013

Performance measurement in the context of CPB• How to measure sucessfullnes of the CPB?• Potential savings based on EU experience…

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Procurement category Potential savings (%)Fuel 5-7%Cars 10-15%Car Maintenance 5-10%Cleaning Services 20-30%PC / server 10-20%IT accessories 7-10%Land-line, Internet 10-20%Telecom mobile network 6-9%Telecom hardware 5-15%Office Supplies 14-22%Furniture 10-15%

Source: Action plan for the establishment of the central purchasing body and introducing a system of central procurement; the Government and the Ministry of Economy, 2009

Performance measurement in the context of CPB

• Measuring the Economic Efficiency – based on price• Measuring the Economic Efficiency – based on processes• Measuring the Quality of the Procurement Procedures • Measuring the Standard of External and Internal Relations and

Collaboration


• Cashable savings• Problem with calculating cashable savings – baseline price • Some of the examples of the “baseline” prices are:

– regulated prices in some markets (in the case of fuel, electricity etc.), – prices paid by other authorities (need for an access to other contracts

concluded in parallel procurement procedures - for example, contracts concluded on the local levels).

– prices of “older” contracts, (if regulations on central purchasing allow the CPB to gather information on older similar contracts, it is possible to ask for information about prices and quantity of goods /services procured earlier, together with new needs expressed toward CPB).

– average market prices –the most common baseline price.


Savings based on price

• Unit price analysis

– Example of price comparisons of office supplies – for 5 most sold items– The comparisons showed significant economies of scale in the central

FA. – The savings between different individual products tested were: 8%

(toner cartridges), 19% plastic folder, 29% copy paper, 33% ballpoint pen and 37% stapler.

– If the average savings across all the products within the office supplies is assumed to be 25%, the price savings from these purchases might be calculated in the same way, based on the purchasing value of the central framework agreement for this category.


Savings based on price

• Annual cashable efficiencies in the procurement function – Transaction cost– Administrative cost

• Utilization rate of the existing frameworks in regard to its application /usage (typical for voluntary use)


Savings based on processes

• Examples of possible indicators:– The average period for planning and preparation should not

exceed X days;– Competitive procedures, such as the open and restricted

procedures, should be used in no less than X% of the total number of procedures;

– The average participation rate in connection with open invitations during a calendar year should not be fewer than X tenderers or applicants;

– The number of contracts awarded to SMEs should normally not be fewer than X% of the total number of contracts awarded during a calendar year;


Measuring the Quality of the Procurement Procedures

• An annual Supplier Satisfaction Survey – to ensure that the majority of suppliers are satisfied with the

collaboration with the contracting authority.

• An annual Internal Customer Survey – to ensure that the majority of internal clients are satisfied with the

services of the procurement organisation.

• Reporting tools in order to avoid additional costs/quantities


Measuring the Standard of External and Internal Relations and Collaboration

Conclusions &Lessons learned

• PREPARATION might take longer time (depends on the quality of input data, way how it is organized etc)

• Good communication with clients / bidders

• Knowing the market / needs of clients

• Simple FA to use, better contract conditions, guidelines for clients

• Flexibility of FA

• Specialised knowledge connected to subject matter of procurement / PPA

• Introducing standards & IT support

• Step by step approach 9TH PUBLIC PROCUREMENT KNOWLEDGE EXCHANGE PLATFORM - SKOPJE, 29 MAY 2013

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Thank you for your attention!

[email protected]


9 TH P UBLIC P ROCUREMENT K NOWLEDGE E XCHANGE P LATFORM S KOPJE 28-31 M AY 2013 Centralized Public...

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