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Experience in performing electronic auctions

Marc Christopher Schmidt

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Agenda

• Experience in electronic auctions Which agencies? Which impressions? Conclusion

• The new public procurement law What changed and what not Outlook

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Experience

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Who made the experience

• Federal Ministry of Economics and Technology,

• Procurement Agency of the Federal Ministry of the Interior (BeschA),

• Federal Ministry of Defence,• German Cancer Research Center …• …and other federal agencies set up the

Task force Electronic Auctions from Feb 02 to May 04

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On which basis?

• Experimental clause• For selected tenders only• Below threshold value -> To avoid legal

aspects• For supply, service and works contracts• Commercial technology was used

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What EAs?

No. Institution Product

1 Defence Collapsible box, standard

2 Defence Collapsible box, water resistant

3 Defence Ropes

4 Defence Parts for engines

5 Research Center Computer Monitors

6 Defence Medical supplies

7 Defence Special gas

8 BeschA Cardboard folders

9 BeschA Cartridges for copiers

10 Defence Syringes

11 Defence Medicaments

12 Defence Couplers

13 Defence Straps

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Evaluation matrix of accomplished EAs

1 Criteria Price reduction – all 13

Other criteria - none

2 Procedure Open – 1 Restricted - 11 Negotiated - 1

3 Kind Supply – 13 Service – none Works - none

4 Lots No lots – 9 With lots – 4

5 Displaying Ranking – 11 Price – 2

6 Phases One phase – 13 More phases – none

7 Termination Fixed – 1 Flexible - 12

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highestΔ 242 €

lowestΔ 30 €

5%

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Results?No. Product Price Prior Price Δ %

1 Collapsible box, standard 41766 51900 -20%

2 Collapsible box, water r. 78300 86000 -9%

3 Ropes< 172000 192000 -10%

4 Parts for engines 66000 70000 -6%

5 Monitors 2194 2785 -21%

6 Medical supplies 84300 79000 +7%

7 Special gas 105447 105300 -0%

8 Cardboard file with prongs 50207 53494 -6%

9 Cartridges for copiers 33176 34809 -5%

10 Syringes 128272 175002 -27%

11 Medicaments 135334 112000 +21%

12 Couplers 38900 38900 0%

13 Straps 62400 69680 -10%

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Impressions

• Even SMEs could cope well with EAs especially if the tender was divided in lots

• No ruinous competition was noticed, although this might change if the contract lies above the threshold value

• The was a reasonable behaviour “between” the companies

• Technically and organisational the execution was unproblematic

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Conclusion - 1

• Although neither a work or service contract was tested it could be used for auctions as well

• The kind of procedure didn‘t had any impact on the outcome of the auction, the savings were similar

• It didn’t seem that if bidding steps had an influence on the outcome as well

• Complete bids before the auction was seen as very positive

• Even with one phase a high dynamic could be noticed at the end of the auction

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Conclusion - 2

• Kind of procurement: The greater the detail of the specification, the better it suits for EAs

• Market structure: Not suitable for monopolistic or oligopolistic markets

• Adequate competition intensity: Suitable if there are a great number of bidders

• High procurement volume: The greater the volume the more likely it is to have better savings

• Low costs for auctions: Compared to the savings, the costs for auctions are quite low

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Savings on federal level through auctions:

up to 1.5 bill. €

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Recommendations from the task force

Web based EAs are a very suitable and flexible way for tenders

The task force recommends EAs on a regular basis

The technology should be implemented into the eTender platform from the federal government

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The new public procurement law

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The last year was turbulent

• Usually decision on new public procurement law in autumn 2005

Only one directive for service, supply and works Electronic auctions included in new proposal

• Elections of the Bundestag Decision was cancelled In February 2006 only minor changes to comply to

EU directive April 2006 Resolution to make law easier

• Since November 2006 new law Still three directives for service, supply and works No electronic auctions

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An example: Threshold value

So far

Service and supply

• Federal agencies 130.000

• Others 200.000

• Works 5.000.000

New

Service and supply

• Federal agencies 137.000

• Others 211.000

• Works 5.278.000

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New Procedures from EU directive

• Included Competitive dialogue-> will be

implemented in our eTendering platform

• Not included – since it is optional Dynamic purchasing system Electronic auctions

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Outlook

When or if electronic auctions will be included in the German public procurement law is not clear.

Nevertheless we will keep an eye on this procedure to have it ready when it’s allowed

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Thank you for your attention!