BACKGROUND

  1.  We welcome the Government's initiative (see "Efficiency in Civil Government Procurement" HM Treasury, July 1998) to encourage its Departments to embrace electronic purchasing. In the purchasing arena government is seeking to optimise efficiencies, and there is now a golden opportunity for the UK to lead the world in this area.

  2.  From our experience, the main opportunities to be exploited are threefold:

(a)  Further implementation throughout departments of Electronic Data Interchange (EDI) for high volume supplier partnerships (this could dovetail well with recent work being done throughe centreUK's Business on the Internet Interest Section and on SIMPLEDI and the use of EDI over the Internet);

(b)  A strategic and controlled rollout of the Government Purchasing Card (GPC) throughout departments where the sourcing of Maintenance, Repair and Operation (MRO) ad-hoc items are devolved away from purchasing centres to user staff. Further work on automatic data capture for automatic reconciling of invoices would be an added bonus;

(c)  The early development, in concert with industry and centres of excellence such as e centreUK, of a cross-government, browser-based ordering system(s) which will:

  (i)  Capture the necessary accounting information for the Department's core system (including Goods-In, receipting information);

  (ii)  Allow payment by GPC, smart card, BACS or self-billing, and subsequent fund transfer through BACS;

  (iii)  Automatically allow capture of the necessary accounting information for the supplier's core system;

  (iv)  Have a multiple catalogue facility for those suppliers who are business partners.

CATALOGUES

  Over the last few years an interest in electronic catalogues of products, services and locations has increased mainly due to the expansion of electronic commerce. This broadening of electronic commerce has led to the need for the efficient exchange of quality information between trading partners.

  The problems due to lack of data alignment have been intensifying as more and more companies trade electronically. One possible solution is the creation of an electronic catalogue/database. This is a repository of neutral data where trading partners can obtain, maintain or exchange information about any product, service and/or location in standard format and by electronic means. The main purpose is to assist customers to use the same product information in their databases in order to increase the efficiency of the entire supply chain and the quality of product data exchanged. This is achieved by using the EAN (international article number) system, which aims to create a global, multi sectoral standard providing a common language for trade.

  The development of product catalogues is a specific requirement of the public sector for access to information as part of the procurement process. The EU directives have a big influence on this procedure. However, the rapid growth of Internet-based solutions has meant that the rules are changing quite quickly.

  EAN (The International Article Numbering Association) has had an International Electronic Catalogue Project Team working on the definition of a Production Catalogue based on the international product numbering standards. We believe that it is important for Government to actively adopt these standards in its work, to improve efficiency and to offer a level playing field to all its suppliers.

OBSTACLES

  There are some obstacles present in government purchasing practices which need to be overcome, as well as the technical difficulties in the development of the systems.

  3.  The National Audit Office has had involvement in the Competitiveness paper. Early guidance from the NAO to departments, setting clear guidelines for the avoidance of paper evolutions is imperative. eg It needs to state that electronic traceability is sufficient to allow self-billing and electronic payment transfer. A manual signature on an invoice is not required. All internal requisitions and purchase instruments can remain online electronically: they should not be printed out and filed.

FUNDING

  The levels of funding current in government departments do present difficulties. Historically, Purchasing has not always been viewed with prime importance, and funding for this area often suffers from the "Cinderella syndrome", with funding being allocated to other areas viewed more as core. Amongst the topics for possible further work in e centreUK's groups are "Boiler plate Business Case for Corporate Electronic Purchasing" and "Boiler plate Functional Specification for Corporate Electronic Purchasing System". With slight modification these can be modified as the outline template for Government Departments to use to obtain internal funding for the required systems.

  4.  Building on this idea, one e centreUK has worked further on the technical problems of electronic purchasing, we feel that the Government's Public Private Partnership (PPP) scheme—developing on the earlier Private Finance Initiative (PFI)—could provide a solution to the funding and early implementation problems.

  5.  Simply, there are two ways in which an IT system can be installed in a department under the PPP banner. One is to provide the required performance system and the necessary skilled staff (in this case purchasing staff) to operate it. The other is to provide the required system, with the supplier providing and maintaining the system, while day to day use is carried out by the department's own in-house staff.

  6.  This latter way could be utilised to overcome several inherent problems. The risk of providing a system capable of performing is transferred to the supplier, thus satisfying one of the basic tenets of PPP. The capital cost of the system is borne by the supplier, who is repaid on an ongoing performance basis. Therefore the government would not need to find multiple amounts of capital across the departments—they would be funded from recurrent budgets, with the required amounts earmarked through the above mentioned business case. Hence an early roll out could be achieved.

  7.  The system supplied, by Industry, would carry the recommendation of e centreUK and would be similar in specification, features and operation to the systems used by industry. Accordingly, for the first time, industrial and government purchasing in the UK would be working similarly—possible now that government departments are moving to accrual accounting. Immediately the UK would have electronic purchasing across industry and government working in harness, and be in a strong position to be ". . . the best place in the world for doing electronic commerce by the end of this Parliament".

  8.  The PFI/PPP initative is one of the main opportunities to develop stronger links between industry and government. It has been successful in building and civil projects, and some very large IT projects. By extending it into the area shown above—small and medium sized IT systems—it gives the PPP initiative a welcome shot in the arm and provides a much needed vehicle to promote cross fertilisation of purchasing techniques and ideas between skilled industrial and government buyers.