1. Executive Summary. 2. Definitions

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2 1. Executive Summary The aim of this strategy is to explain the different facets of e-procurement and clearly set out how Procurement Lincolnshire will approach e-procurement. This document links with the Sustainable Procurement Strategy and other procurement policies and guidance. 2. Definitions a) Procurement Procurement is the process of acquiring goods, works and services, covering buying both from third parties and from in-house providers. The process spans the whole life cycle from identification of needs, through to the end of the useful life of an asset. It involves options appraisal and the critical 2make or buy2 decision. b) e-procurement The role of electronic technologies throughout the whole life cycle to streamline the procurement processes from identification of a need through to acquisition and payment, with the benefits of e- procurement generally seen as: Reducing paperwork Reducing supplier queries Reducing re-keying and errors Controlling spend through an approval process Improved management information Standardisation and rationalisation of process Sharing of contracts across Directorates and Organisations. E-Procurement covers five key areas: E-sourcing (including e-tendering) E-auctions Purchasing Cards E-Marketplace The purchase to pay (P2P) process (the process from e-ordering through to e-invoicing and e-payment).

3 3. Background and Context The Strategy is one of two supporting documents. The other document is the Sustainable Procurement Strategy The relationship is explained in the diagram below. National Legislation and Best Practice Sustainable Procurement Strategy E-Procurement Strategy Procurement Procedures (Putting the strategies into practice) BEST PRACTICE PROCUREMENT a) Internal Context (i) Partner Authorities Expenditure During the financial year 2008/2009 the Lincolnshire Local Authorities spent approximately 480 million with over 21,000 suppliers and processed over 200,000 invoices. (ii) Partner Authorities Policies b) External Context (ii) (iii) The National Procurement Strategy for Local Government (NPS) Launched in October 2003 this strategy was one of the main driving forces behind local government adoption of e-procurement tools, via the setting of e- commence targets for councils to meet. Most of these targets have been met, but a few remain outstanding. These will be addressed through the implementation of the E-Procurement Action Plan set out in Appendix 1. T-Government Initiative Formerly the E-Government initiative and now focussed on transforming government, this is a complementary stream to the national procurement strategy. T-Government endeavours to maximise the electronic interface opportunities between local government and its customers.

4 (iii) (iv) European Union (EU) Legislation Changes to the EU procurement legislation introduced in 2006 provided incentives for the greater use of electronic means through shortened timescales for electronic advertisements in the Official Journal of the European Union (OJEU) and the use of e-tendering. New procurement options such as Dynamic Purchasing Systems were also introduced in the new legislation and these rely heavily on the use of technology. E-enablement of supplier base Partner authorities must also have due regard of the e-capabilities of its supplier base. Whilst e-enablement can deliver significant efficiency benefits to both buyer and supplier, it can also be a costly exercise for both if inappropriate technology is chosen or implemented incorrectly. Councils should consider the cost to suppliers of e-enablement when developing an appropriate contracting strategy for their requirements. 4. Procurement Lincolnshire E-Procurement Objectives (i) e-sourcing This is the sourcing of goods and/or services by electronic means, which in some cases may include the use of e-tendering. In the first instance, the Council will ensure that all sourcing requirements will be via the Council s Central Contracts Register and the contracted suppliers listed on the Sussex e-marketplace. Where these requirements are not available from a contracted supplier, officers may use the wider e- marketplace to source suitable suppliers. Only if the requirements are not available through either of these routes should departments consider using other e-sourcing or traditional sourcing routes. The Council will support the use of e-tendering processes where these systems can make the process quicker and more efficient and deliver it in a cost effective manner for both the Council and the suppliers. Often the cost of these systems can be prohibitive for a Borough Council to purchase in its own right. As a priority area of this new strategy, discussions will be held with other councils in Sussex with a view to collaboration in, or joint purchase of, an e-tendering system. In the interim, and as a minimum, departments with a requirement to tender for particular goods or services will advertise their requirements as widely and transparently as possible to encourage bids from local suppliers and Small, Medium Enterprises (SMEs) in accordance with the Small Business (SME) Friendly Concordat, which the Council has committed to support. It is recognised best practice to publicise requirements on the Council s Selling to the Council web page and on the Government and Sussex Enterprise approved Supply2gov web site. Ability to supply interested companies with electronic copies of the tender documentation is also encouraged.

5 For requirements in excess of the EU Procurement Threshold an electronic notice should be published in the Official Journal of the European Union (OJEU) using the Council s preferred EU Notice provider, further details are available on the Procurement Intranet Site. (ii) e-auctions As the name suggests this is the process of bidding via electronic means. However, unlike traditional auctions the prices reduce, rather than increase, over time. These auctions are sometimes referred to as Reverse Auctions. The Council recognises that e-auctions can play an important part in the procurement process of appropriate goods and services. However the value of many commodities purchased at District or Borough council level is insufficient to justify the costs associated with the acquisition and use of e- auction software. Therefore the council will consider the use of an e-auction on an individual commodity/contract basis when the value of business (e.g. via collaboration with other councils) is deemed sufficient to generate savings in excess of the cost of running an e-auction. (iii) Purchasing Cards In broad terms purchasing cards are very similar to the use of a personal credit card. Purchase cards can be a cheap and quick means of e-enabling suppliers and could be especially useful when dealing with SMEs. Purchasing cards can streamline and speed up the procurement process, and can have preset monetary thresholds and authorisation levels built into them. Unlike an e-procurement system purchase cards cannot monitor commitment and the suppliers used prior to purchase. However, purchase cards can have an important place in the Council s overall e-procurement strategy being a useful tool particularly for one-off purchases, buying from the internet, buying from suppliers not currently e-enabled, purchases that would previously have involved a cheque with order or petty cash reimbursement and for use by field workers without access to a computer. The Council will consider implementing a purchase card trial during the term of this strategy. If successful the use of purchasing cards will be extended as required. iv) e-marketplace An e-marketplace is an internet based system that allows commerce between a purchasing organisation and a variety of suppliers. Customers can access the e-marketplace through a single point and potentially purchase frequently ordered goods more efficiently through the use of catalogues. Procurement Lincolnshire has purchased an e-marketplace from IDeA (Improvement & Development Agency) and this as an essential piece of the e-procurement jigsaw, providing access to contracted suppliers. The e- marketplace will ideally be fully integrated with the each Partners Financial Management System (FMS) with the aim of a seamless electronic procure to pay process. Procurement Lincolnshire will also use the implementation of the e-marketplace as a mechanism to rationalise the supplier base and cut out maverick (i.e. off-contract) purchasing. Measures will be put in place for

6 the creation of new suppliers on the FMS s and this will involve approval by Procurement Lincolnshire. As part of the e-marketplace development Procurement Lincolnshire will support fellow its Partners in the creation of a Lincolnshire Marketplace. The regional marketplace should assist identifying commonly used suppliers and provide opportunities for greater collaboration between the Procurement Lincolnshire Partners. (v) Purchase to Pay (P2P) This covers the whole process of buying, receiving invoices and paying electronically. There are two main strands to P2P, e-ordering and e-invoicing. The Council recognises the benefits P2P can bring in streamlining and speeding up the procurement function, with the checks and authorisation required by a manual purchasing system built into the e-procurement system. Procurement Lincolnshire is currently implementing the IDeA Marketplace and will recommend that Partners shall make it mandatory for departments to place orders through the Marketplace. The e-marketplace will ideally be integrated with the partners FMS e-invoicing module. e-invoicing is the means of electronic billing and payment as opposed to the issuing of paper based invoices. Procurement Lincolnshire recognises the efficiency benefits e-invoicing can deliver to both its Partners and the suppliers they trade with. Processes at both the Partners and their suppliers would be streamlined by the adoption of an e-invoicing system which should be able to automatically check an invoice against a goods receipt note and process payment, thereby guaranteeing each Partner will pay suppliers within 30 days. However, Procurement Lincolnshire also recognises that the speed of e-invoice adoption will undoubtedly be supplier led, and will therefore work closely in supporting and encouraging Partners key suppliers to trade electronically. Furthermore, once an invoice has been received an automatic invoice matching routine will take place, this will enable the Council to streamline the processes involved in paying an invoice if the relevant purchase order and goods receipt note has been completed.

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