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Government Moves Closer To Online Purchasing

Cap Gemini Ernst & Young have entered into a contract with the government regarding the provision of E-procurement services, State Services Minister Trevor Mallard announced today.

Trevor Mallard says the e-procurement project is designed to shift government agencies to buying consumables on-line, which provides a more streamlined and cost effective method of interacting with businesses.

Seven consortia responded last year to the Government’s call for proposals to provide the service. Cap Gemini Ernst & Young are the successful service provider, using software from Oracle. The system will be hosted by Datacom, who are also hosting the new Government internet portal.

A $250,000 pilot is to be run between April and September 2002. The pilot phase involves testing the functionality of the system, and working with each government agency to demonstrate the abilities of the system and how it could be implemented in their agency.

Potential users include government departments, Crown entities (including district health boards, tertiary education institutions and Crown research institutes) and local authorities.

If the pilot is successful and agencies commit to use the e-procurement service, it will be made available from October 2002 for operational use.

The operational phase of the e-procurement project has a contract cost of $7.5 million over 5 years. The State Services Commission’s E-government Unit estimate that the annual spend likely through the e-procurement system is $250 million and benefits of at least $20 million over 5 years are forecast.

Trevor Mallard says 14,000 public servants could have access to the e-procurement system and 350,000 purchase orders per annum could potentially be processed through the system.

“This will encourage New Zealand companies to go on-line in order to serve government agencies, which will be a big step forward for New Zealand e-commerce,” Trevor Mallard said.

Ends

E-procurement

Questions and Answers

What does the e-procurement pilot involve?

The pilot runs for six months at a cost of $250,000. The pilot phase will involve testing the functionality of the system, and working with each government agency to demonstrate the abilities of the system and how it could be implemented in their agency. The pilot will also reveal the business benefits and any barriers to implementation of the system.

What does the operational phase involve?

The operational phase will go ahead if the pilot is successful and enough agencies commit to use the system to cover its costs ($7.5 million over 5 years). The contract cost includes:

- Configuring the system to meet agency needs

- Enabling agencies and suppliers to use the system

- Hosting supplier catalogues

- Interfacing to allow transactions to be transferred to agencies internal systems

- Operating the system for five years.

What are the benefits for government agencies from e-procurement?

Streamlining the procurement process from order through to payment will reduce process costs. Better procurement information will allow better purchasing decisions, and supports syndicated procurement where group of agencies come together to improve purchasing power with suppliers, and reduce the costs of tendering.

What are the benefits to suppliers?

A greater visibility of government tendering and procurement will lead to greater opportunities for a range of businesses to supply to government agencies. In addition, suppliers should achieve net efficiencies from the automation of their supply processes. The adoption of e-commerce by Government will encourage New Zealand businesses to go “on-line”, and thus compete for other business opportunities in New Zealand and overseas.

What goods will be brought via E-procurement?

The system suits the purchase of a range of goods and services. Items as

diverse as ballpoint pens, toilet paper, air travel and uniforms can be

purchased on-line. These areas cover many of the high volume purchases by agencies. One-off items such as large fixed assets or

consultancy services are unlikely to be purchased on-line.

Further tender information?

The Request For Proposal documentation and information about the

E-government programme is available at www.e-government.govt.nz.


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