When we think about flashy, exciting technological change, Government procurement is probably not the first thing that comes to mind.

Typically thought of as a back office function, the purchasing process of a government is often conceived of as bureaucratic, slow, and inefficient.

However, public procurement is also incredibly impactful – across countries, government contracting represents approximately 10-15% of total GDP and on average 29% of all total public expenditures according to OECD [1]. Given its reach, it becomes extremely important for government to carry out the procurement process efficiently and effectively.

In the late 1990s, the Government of Chile saw an opportunity to utilize technology to improve the way it purchased goods, services, and works.  In 1999, Chile launched a first-of-kind electronic procurement portal that would transform the way that companies do business with government moving forward [2].

Chile’s procurement portal has been continuously iterated over time. However, it has consistently featured a number of key improvements to the traditional contracting process, including:

• An electronic public market and bidding platform, which connects procurement entities and suppliers from the call for tenders to the award offers. Instead of searching through newspapers or many sources for bidding opportunities, companies could now find all opportunities listed in one place. [3]
• Central location for publishing of all public contracts and evaluation criteria. By publishing contracts online for public view, the government enhances transparency and accountability for its citizens and reduces corruption risk. [4]
• National registry of providers- official, centralized electronic registration of all contractors and subcontractors.
• Online observatory – monitors and analyzes the procurement data to provide stakeholders with information about procurement processes.
• Online forum for question and answer- in advance of a tender deadline, potential suppliers can ask questions about the bid [4]. A key advantage is to encourage businesses far away from the capital to participate.

Chilecompra demonstrates how technological advancement can improve the efficiency of public  spending. By moving this core government function online, the Government of Chile was able to accomplish significant results for its citizens. In 2014 alone, ChileCompra was directly linked to single year financial savings of about US $693 million for the government and taxpayer [6].

ChileCompra also helped to enhance competition in public markets. One particular beneficiary were small and medium enterprises, who, through free access to the online marketplace, increased their exposure to and knowledge of bidding on public tenders. In the first three years after the launch of the platform, SME participation, measured by sales participation per company size, increased from 20% to 47% [7].  By 2013, 90% of Chilecompra purchases, totaling US$3.9bn, were from companies with less than 60 employees. Since SMEs make up 80% of all companies in Chile, this portal also translated into significant benefits for employment and job creation [8].

In terms of rollout, ChileCompra has been impressive both in its scope and scale. In 2003, ChileCompra began with 33,451 suppliers and 350 public entities.  By 2006, after ChileProveedores (“Chile Suppliers”) had launched, the numbers had increased to 76,466 suppliers and 600 public entities.  Today, around 900 government agencies representing billions of dollars in contracts participate, and there are hundreds of thousands of suppliers on the platform [9].

Implementing this kind of technological change in the context of a large and sprawling government bureaucracy was no easy task.  The government invested significant resources to bring its employees on board. As of 2015, over 180,000 civil servants in Chile had received training on ChileCompra, and 15,350 had received certification as procurement officers [10].

Training the public sector side is not enough, however. In order to ensure the success of the platform, the government also has to ensure that the suppliers could effectively utilize e-procurement to its full advantage. Moving public tenders from paper to online has represented a complete mindset change. If the companies did not understand how to use ChileCompra, the entire exercise could actually translate into higher prices and lower quality, due to less competition.  While the government has already invested in some supplier training, this aspect of implementation cannot be neglected. Agencies need to continue to raise awareness amongst suppliers, both domestic and internationally.

In addition, the government should continue to look out for new functionalities that can enable the delivery of goods and services even more quickly, at higher quality for citizens. Framework agreements are becoming increasingly common in contracting in Chile.  Moving forward, Chilecompra will require frequent updating and enhancements to make sure the platform is compatible with advances happening in the procurement field.

 

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[1] OECD. Government at a Glance 2015. http://www.oecd-ilibrary.org/sites/gov_glance-2015-en/09/01/index.html?contentType=%2fns%2fChapter%2c%2fns%2fStatisticalPublication&itemId=%2fcontent%2fchapter%2fgov_glance-2015-42-en&mimeType=text%2fhtml&containerItemId=%2fcontent%2fserial%2f22214399&acc.

[2] Asia-Pacific Economic Cooperation. ChileCompra. http://www.we-apec.com/directory/chilecompra

[3] Oreggo, Claudio. “Chile’s Government Procurement E-System.” http://unpan1.un.org/intradoc/groups/public/documents/other/unpan022121.pdf

[4] “Why Reform Public Procurement?” The World Bank. http://www.worldbank.org/content/dam/Worldbank/document/MNA/Why_Reform_Public_Procurement_English.pdf

[5] Country case: Consultation with suppliers by the Chilean central purchasing body ChileCompra. OECD. https://www.oecd.org/governance/procurement/toolbox/search/consultation-suppliers-chilean-central-purchasing-body-ChileCompra.pdf

[6] Patrick Nixon. ” ChileCompra sees US$10.2bn in transactions in 2014 ” 20 May 2015. BNAmericas http://subscriber.bnamericas.com/en/news/technology/chilecompra-sees-us102bn-in-transactions-in-2014

[7] Felipe Goya. “ChileCompra Public Procurement for Development.” ChileCompra. http://www.oecd.org/governance/ethics/37864543.pdf

[8] Patrick Nixon. “Govt procurement portal Chilecompra to move US$10bn in 2013, says director.” 19 June 2013. BNAmericas. http://www.bnamericas.com/en/news/technology/government-procurement-portal-chilecompra-to-bill-us10bn-in-2013

[9] Trinidad Inostroza,  Implementation of an e-public procurement system. Chilecompra. http://ec.europa.eu/DocsRoom/documents/10921/attachments/8/translations/en/renditions/native

[10] http://ec.europa.eu/DocsRoom/documents/10921/attachments/8/translations/en/renditions/native

[11] http://ec.europa.eu/DocsRoom/documents/10921/attachments/8/translations/en/renditions/native