ARMENIA:

Armenian E-Procurement System

(ARMEPS, www.armeps.am)

8th Regional Public Procurement Forum (Tirana, Albania) May 22-25, 2012

“Electronic Procurement – A big step towards transparency”

COUNTRY OVERVIEW The Republic of Armenia is a sovereign, democratic, social, rule of law state. The state power is administered pursuant to the Constitution and the laws based on the principle of separation of the legislative, executive and judicial branches.Official Name: Republic of Armenia - Hayastany Hanrapetoutyun (Hayastan)Capital City: YerevanOfficial Language: ArmenianCurrency Unit: Armenian Dram, introduced in 1993Population: 3,285,000 (as of 2011, Census)Ethnic Breakdown: Armenians - 96%. Minorities: Russians, Yezidis, Kurds, Assyrians, Greeks, Ukrainians, Jews and othersTerritory: 29.74 thousand square kilometersNeighboring Countries: In the North: Georgia; in the East: Azerbaijan; in the South: Iran; in the South- West: Nakhijevan (Azerbaijan); in the West: Turkey.

PUBLIC PROCUREMENT IN ARMENIA Public procurement of goods, works and services in Republic of Armenia (RA) constitutes a major proportion of the total government expenditure. Centralized procurement is organized through Central purchasing bodies (CPBs) which are entities that procure on behalf of other public bodies, meaning that the actual beneficiary of such procurement is not its contracting authority. Decentralized Procurement is an arrangement in which certain purchasing authority or functions are delegated to smaller units of management by a central authority which retains policy and direction and responsibility. After adoption of new Law on Procurement (LoP) Armenia has transferred its semi-centralized procurement system into decentralized one.Armenia has adopted strategy of developing unified Armenian Electronic Procurement System (ARMEPS).

Legislation framework The first LoP has been adopted in 2000. It has been replaced with new version in December 6, 2004. The last modification of LoP has been signed by President of Armenia in December 22, 2010 and is effective from January 1, 2011. Considerable work has been done to bring the procurement legislation of Armenia in conformity with the UNCITRAL Model Law, GPA (WTO General Procurement Agreement) and EC Public Procurement Directives. WTO Committee on Government Procurement adopted (December 7, 2010) a decision that invites Armenia to accede to the Agreement on Government Procurement. Armenia is the only and first CIS country that joined GPA.

HIERARCHY POLICY

Gov. of ArmeniaMinistry of Finance

(Public Internal Financial Control and Public Procurement Methodology Department)

Guiding

IMPLEMENTATION«Procurement Support Center» State Non Commercial Organization

Consultation; ARMEPS Servicing and Maintenance; Training; Statistics and Analysis

-Free Training

- Supporting

- Maintaini

ng- Training

- Training(Paid)

CLIENTS/BUYERS- Government bodies- Local authorities- Enterprises with more than 50% state share- Monopolies of public utilities

BIDDERSLocal and foriegnPROCUREMENT

- Paper-based (till 2012)

- eProcurement (from 2012)

MONITORING-Control Chamber of Armenia

-State Commission for the Protection of Economic Competition-Civil Society Organizations

-Procurement Complaint Review Board

E - PROCUREMENT IN ARMENIA E-Procurement (EP) is the use of Information Technology by Governments in conducting their procurement relationships with suppliers for the procurement of works, goods and consulting services required for the public sector. EP involves the introduction of electronic processes to support the different phases of a procurement process – publication of tender notices, provision of tender documents, submission of tenders, evaluation, award, ordering, invoicing and payment.

PRE-AWARD PHASES POST-AWARD PHASES

eNotification→eAccess→eSubmission→eEvaluation→eAwarding eOrdering→eInvoicing→ePayment

Contractual module: eTendering and ePurchasing

Infrastructure module: Contract Management, e-Certificates, e-Signatures, Vendor Management, Statistics

Chronology of EP Reforms is as follows:

1. GoA Decree #137 on «Strategy for Introducing the System of Electronic Procurement» - Jan 26, 2006

2. «Strategy of Improvements of the Procurement System» - April 23, 2009

3. Decree N862-A on «Time schedule for the activities derived from the Strategy of Improvement of the Procurement System» - Oct 12, 2009

4. eTendering system Technical Requirements development and RFP announcement for the system acquisition with financial support of the Public Sector Modernization Project I (World Bank) - Jan 21, 2010

5. Foreign Financing Projects Management Center (FFPMC) of MoF selected an appropriate company for eTendering System provision - Mar 17, 2010

6. Law on Procurement – Dec 22, 2010 7. GoA Decree #168-N on «Organization of

procurement procedures» and PSC establishment - Feb 10, 2011

8. MoF provided PSC with the Timetable of eTendering official launch and training of buyers and bidders - May 26, 2011

9. eTendering system is to be launched officially by PSC - Sep 01, 2011

10. GoA Decree #1916-N on «Approving of Procedures for eTendering organization » - Dec 29, 2011.

eTendering system deployment schedule

Stage 1 – eTendering system deployment

1 Development of Technical Requirements for eTendering system acquisition

2009

2 eTendering system vendor selection and contract signing 2009

3 eTendering system development 2009

4 Hardware acquistion 2010

5 Testing of eTendering system 2010

6 Training of Procurement coordinators 2010

7 Official start of eTendering system 2011

Timetable for eTendering official launch

and training of buyers and bidders

eTendering system official launch and training deadlines

1. Registration of Clients (Buyers) and their appropriate Procurement Coordinators who will utilize the eTendering system: State bodies - June 20, 2011; Local Authorities - September 01, 2011.

2. Training of Procurement Coordinators of Clients: State bodies - July 20, 2011; Local Authorities - April 01, 2012.

3. eTendering system testingby Procurement Coordinators of Clients: State bodies - August 01, 2011; Local Authorities - May 01, 2012.

4. Official launch of eTendering system: State bodies - September 01, 2011; Local Authorities - June 01, 2012.

eTENDERING SYSTEM

The model that Armenia has chosen for the development and operation of its eTendering system is based on the public model. Procurement made by this method accounts for more than 85% of GoA procurement expenditure. eTendering is relatively easy to start for both state bodies and suppliers, low cost to implement and maintain, and provides significant value to businesses, enhances transparency and strengthens management. Functionality can be increased incrementally. MoF along with support of Public Sector Modernization Project I funded by World Bank developed functional requirements to EP. MoF`s Foreign Financing Projects Management Center (FFPMC) issued eTendering System RFP on January 21, 2010 and selected European Dynamics (Greece) on March 17, 2010. European Dynamics tender offer was 290.168,00 Euro for eTendering module of its Electronic Public Procurement System (e-PPS).

The project source code will be the property of the GoA. The GoA will have the right to provide it to the third parties for improvement, updating and solving of other issues thereof, with no right for its resale without Consultant‟s prior consent. European Dynamics supports open source software (OSS) initiatives and distributes a wide range of OSS solutions free of license fees to public administrations. European Dynamics offers its services to the public and private sectors, in 27 countries world- wide. Customers include government institutions, multinational corporations, public administrations and multinational companies, research and academic institutes.

ARMEPS DESCRIPTION e-PPS is an open, secure, interoperable and re-configurable e- Procurement modular platform, addressing the full lifecycle of e-Procurement. e-PPS complies with both National and EU legislation on public procurement. e-PPS platform has the following diagram:

Procurement PortaleAttestation → eNotification → eTendering → eAwarding or

eAuctions → eContract → eCatalogue & eOdering → eInvoicing & ePayment

e-PPS is in full compliance with ISO 27001 and has received Impact Level 3 accreditation according to the HMG Information Security Standards.

e-PPS supports “One-off Procurements”, such as Open, Restricted, Negotiated, Accelerated and Competitive Dialogue Procedures, as well as “Repetitive Procurements”, such as Framework Agreements / Contracts and Dynamic Purchasing Systems. System access is open, free, equal and unrestricted to all prospective bidders/consultants and members of the public. Supported Electronic Procurement Procedures: Open / Restricted / Negotiated (with advertisement) / Negotiated (without advertisement) / Competitive Dialogue / Framework Agreement / Simplified / Electronic Auctions. Framework requirements: There are no particular operational requirements needed. The platform is fully implemented using J2SDK/J2EE framework, MVC (Model View Controller) and Orbeon X Forms.

Procurement process workflow

EFFECTIVE IMPLEMENTATION OF E-TENDERING SYSTEM The efficient implementation of e-Tendering system is evidenced by the degree of availability of strategy plan, implementation plan, change management, training program, stakeholder identification and management, identification of the barriers to EP and several other organizational aspects. GoA adopted in 2006 Strategy Plan for EP and in 2009 Strategic Plan for overall public procurement procedure reform. A comprehensive assessment of the management, technical, business, and governance capability of the existing procurement environment was preceded in terms of Country Procurement Assessment Report (CPAR) done by World Bank in 2009. The Public Internal Financial Control and Public Procurement Methodology Department of MoF has adequate human resources to provide its leadership role. In its turn, PSC is equipped with power to implement the policy, service and maintain eTendering system. GoA adopted time schedule for the activities set forth in Strategy Plan. This time schedule is more general and focused on legal framework improvement (currently is changed), training of Contracting Authorities (in the process) and official launch of the ARMEPS (in testing period).

Armenia has adopted new legislation and decree in 2011 which are in conformity with the UNCITRAL Model Law, GPA (WTO General Procurement Agreement) and EC Public Procurement Directives. Other supportive legislation is also existing (e.g. Law of the RA "On electronic document and electronic digital signature", Law on Electronic Communication, etc.). ARMEPS access is open, free, equal and unrestricted to all prospective bidders/consultants and members of the public. Citizen groups and other CSOs can maintain pressure on GoA to deliver on infrastructural commitments, and to reduce corruption in the tendering process. CSOs and academic groups could also help spread awareness about the system, and disseminate information drawn from the system. Strategy of Improvements of the Procurement System (2009) suggests MoF to construct the structure of the database which is to be filled with the information appropriate to quantitative indicators.

CURRENT STATISTICS

453 buyers/clients are registered in the E-Procurement system (ARMEPS).

300 economic operators/bidders are registered in the E-Procurement system (ARMEPS).

121 specialists of buyers/clients are trained.

21 specialists of economic operators/bidders are trained.

29 E-Procurement procedures are announced.

3 E-Procurement procedures are evaluated.

2 E-Contracts are awarded.

THANK YOU! ARTUR GHAZARYAN Head of Department of Procurement Organization and Analysis. PSC RA.

ARTUR SARGSYAN Head of Division of E-Procurement Coordination. PSC RA.

Tirana, Albania - 2012