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e-Procurement is ready for the big time


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August 1, 2013 by Jacob Stoller

After years of discussion and preparation, government procurement is poised to become paperless; ending an era of sealed envelopes, couriered submissions, lock boxes, and yes, last-minute drives through rush-hour traffic to submit tender documents on time.

“The Government of Canada decided about four or five years ago that there’s a tremendous amount of savings involved if they [move to an] online electronic bidding process,” says Lorice Haig, president of Toronto-based software and services
provider Xenex Enterprises Inc.

This August, the first fully-automated bidding system is being launched by the British Columbia Construction Association (BCCA). This will enable a completely paperless process that encompasses subcontractor and general contractor submissions. Other provinces, and the federal government, are expected to follow suit, and the trend is expected to spread to municipalities and the private sector. All told, e-procurement could be the rule rather than the exception by 2015.

Contractors are familiar, of course, with partial implementations of e-procurement, such as the availability of tender documents online. “A lot of people think e-procurement is going to a municipal website, downloading a document, and filling it out on paper, and then driving it back to the municipality,” says Stephen Bauld, president and CEO at Purchasing Consultants International Inc. “True e-procurement is when you download the document, fill it out without leaving your desk, and send it back electronically.”

Bauld sees the trend as a win-win. “I think this will be a tremendous boost for the contractors and the owners,” he says. Contractors will be able to avoid those last-minute drives to submit tenders, and will gain the freedom to submit tenders to
far-away jurisdictions.

The electronic process also provides error-proofing. If a required item on a form isn’t filled in, the program will prevent the bidder from moving on to the next page. For contractors, this significantly reduces the risk of disqualification for technical reasons. “By using the online bidding apps, we have seen a significant reduction in the number of non-compliant bids,” reads the BCCA website.

Many contractors and government owners, however, are reluctant to move forward. Bauld cites two major factors: doubts that electronic documents are in fact legal, and a mistrust of the technology to keep the documents secure.  

These concerns have been addressed. The Electronic Commerce Act has removed the uncertainty around the legality of electronic documents, and has raised the bar for the security of documents used in bonding situations. In order for a document to be legally binding under the Act:

It must bear an electronic signature that is traceable to a signatory who has the power to bind the corporation.
There must be evidence of intent to sign by that individual.
The document must be certified to be unaltered after all the requisite signatures have been entered.
Xenex, Adobe, and other software companies have been working closely with governments in Canada and the US to develop technology to comply with these stringent requirements. As Haig explains, the newer technology provides a higher level of security than previous methods of signing pdf documents.

Preparing for e-Procurement
In order to meet the challenges of e-procurement, contractors should be prepared to invest time in understanding the technology and ensuring that internal procedures are adequate. “This is a process change as much as anything,” says Claudiu Popa, president and CEO of security consultancy Informatica Corp. “There will be some change management activity, and people should assume that there is a bit of a task there.”

The first step is getting a corporate resolution to use an electronic signature or seal. Then comes setting up the infrastructure to submit electronic bids, or forming a relationship with a third-party provider like Xenex.

Submitting electronic bids raises the bar for the security of the corporation’s IT systems, and Popa recommends doing a security audit to ensure the systems aren’t subject to breaches or tampering.
If outsourcing to another firm, Popa recommends significant due diligence.
“If you don’t understand what you’re outsourcing, it increases the risk to your organization. And that means not just financial risk, but reputational risk,” he says.

e-Procurement shouldn’t be seen as bad news. It is an opportunity for contractors to reduce costs and bid on more projects.

Jacob Stoller is principal of Toronto-based consultancy Stoller Strategies. Send
comments to editor@on-sitemag.com.


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