Switch to e-procurement 'could save €100bn a year'
by Daniel Mason
More than €100bn could be saved each year if European Union member states and EU institutions fully switched to e-procurement when purchasing goods and services and tendering public contracts, it was claimed today.
The European Commission, presenting a strategy to achieve a complete transition to electronic procurement in the EU by 2016, said doing so would allow governments to save money without additional cuts to public services. It added that public bodies that already used electronic systems had reported savings of between five and 20 per cent compared with the printing, mailing and other costs associated with paper-based procurement.
Applied across the EU's €2.4 trillion public procurement market – which represents close to 20 per cent of the bloc's gross domestic product – it could lead to annual savings of at least €100bn and boost GDP by 0.1 to 0.2 per cent. The EU executive said e-procurement could create and safeguard jobs by widening access to public contracts and simplifying procedures for companies, especially small and medium sized enterprises.
The commission claimed it would "lead by example" and carry out all of its own procurement electronically by mid-2015, one year ahead of the deadline it has set for member states. Internal market and services commissioner Michel Barnier said: "It is time to act. E-procurement represents a significant untapped potential for the EU economy. It can simplify the way procurement is conducted, reduce burdens and costs, increase the participation of SMEs and deliver better quality and lower prices."
Plans to move towards full take-up of e-procurement by 2016 were adopted by the commission in December 2011. It said today's strategy was necessary because in recent years EU countries have failed to meet their targets – currently only between five and 10 per cent of public procurement is completed electronically. According to the commission, changing "ingrained habits" and the technical complexities of different online procurement systems were among the reasons for the slow progress.
The strategy urges the European Parliament and member states to adopt, by the end of this year, a legal framework for achieving the 2016 target. It adds that EU structural funds will be mobilised to invest in the infrastructure to launch e-procurement projects from 2014 onwards. Additional cash would come from the €2bn Connecting Europe Facility that the commission proposed in its draft multi-annual financial framework for 2014 to 2020, which has yet to be agreed with member states.
The commission also said it would closely monitor the take-up of e-procurement methods, hold an annual conference on the subject starting this summer, produce a report on best practice by mid-2013, and communicate the potential benefits to public authorities throughout Europe.
For many years, the private sector has been using e-procurement approaches to save millions on their spend as well as through efficiencies. It is great to see that there is widespread acknowledgement that such an approach is effective.