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Dursun Ali DEMIRBOGA [email protected] Head of International Relations Department Strategic Approach to Centralized Purchasing in Turkish Public Procurement System (TPPS)
Dursun Ali [email protected] of International Relations Department
Strategic Approach to Centralized Purchasing in Turkish Public Procurement System (TPPS)
Agenda
•Introduction
•PPS in Turkey
•PPA
•Centralized Purchasing in TPPS
•Key Players of Centralized Purchasing System
•Integration of E-Procurement Tools with Centralized Purchasing System
•Benefits and Critical Views
•Strategic Perspective of Centralized Procurement
•Conclusion and Experiences
Introduction
• Value for money (VFM) is defined by business dictionary;‘A utility derived from every purchase or every sum of money spent.’
• On the other hand, value for money is based not only on the minimum purchase price (economy) but also on the maximum efficiency and effectiveness of the purchase.
• So that VFM determines central purchasing efficiency level.
Turkish Public Procurement System (TPPS)
Turkish Public Procurement Sytem has four historical background dates: 1) Auction, Contest and Tender Law no 661 dated 22 April 1925 2) Auction and Tender Act no 2490 dated 10 December 1934 3) State Tender Law no 2886 dated 08 September 1983 4) Public Procurement Law (PPL) no 4734 dated 04 January 2002
PPL has created an advanced model of
international procurement regulations.
Turkish Public Procurement System (TPPS)
Currently, Public procurement is regulated by Public Procurement Law No. 4734 which entered into force on January 1, 2003.
One of the objectives of preparing a new law on public procurement was adaptation to international instruments on public procurement (EU Procurement Directives, UNCITRAL Model Law on Procurement, World Bank Procurement Guidelines, etc.).
Public Procurement
Law no. 4734
Turkish Public Procurement System (TPPS)
• Main Principles of PPL are;
Transparency
Competititon
Equal Traetment
Reliability
Confidentiality
Public Supervision
Fullfillment of Needs
Efficient Use of Resources
Taxpayers’ Expectations
Public Procurement Authority (PPA)
• Public Procurement Authority which is administratively and financially autonomous was established in 2002.
• The main duties of the PPA are;
RegulationDispute
Resolution
Training E-Procurement
Gathering Information
and Statististics
International Relations
Centralised Purchasing• Centralisation is one of the key procurement
strategies.
Full Centralization• Procurement is
carried out by central purchasing bodies
Full Decentralization• Each contracting
entity carries out its own procurement
Hybrid Models• Some procurement
activities are carried out by central purchasing bodies/a group of contracting entities.
The optimal level of centralization is a challenging issue
Key Players of Centralized Purchasing System in Turkey
State Suppl
y Office
Public Hospitals Institutio
n
Economic
Operators
Contracting
Authorities+
Ministries
Public Procurement
Authority
Turkish Public Procurement System (TPPS) is a mixture of centralised and decentralised model.
Majority of public
procurement is conducted by the individual contracting authorities (currently more than 25.000).
State Supply Office
• The State Supply Office (DMO), which was established in 1926, is the national central purchasing body in Turkey.
• The State Supply Office is located in Ankara, and it has offices in different regions.
• The State Supply Office purchases some goods and services listed in its articles of association for other public institutions.
www.dmo.gov.tr
State Supply Office
Provided goods and services by State Supply Office includes:
Stationery, furniture, office equipment and machinery, IT products, cleaning products, medicine and medical equipment, automotive products, transportation service.
Total Amount Of Purchasing by State Supply Office
2010 2011
991.314.643TL (550.730.357 $) 1.516.650.102 TL (842.583.390 $)
Procurement procedures followed by DMO are as follows;
For above threshold contracts For below threshold contracts
Open procedure, restricted procedure, negotiated procedure, framework agreements
Sealed bid method, open procedure, restricted procedure, negotiated procedure, direct procurement, procurement via bailee
Public Hospitals Institution
• Public Hospitals Institution was established by Legislative Decree no 663 dated 11 November 2011.
• Public Hospitals Unions established in 52 cities under the Public Hospitals Institution conduct public procurement in health sector for all the public hospitals in the relevant city.
• Public Hospitals Unions have to obey PPL for their centralized procurement. In addition framework agreements provide an instrument to Public Hospitals Institution for their centralized purchasing.
www.tkhk.gov.tr
Public Hospitals Institution• The main duty of Public Hospitals
Institution is opening, running, monitoring, assessing and supervising public hospitals and health institutions and to ensure that the public hospitals provide health services properly.
• Public funds allocated to Public Hospitals Institution from general budget for health services is over 8 billion TL (4,5 billion $) in 2013.
Total Health ExpenditureMedicine
Treatment
Ministries and Contracting Authorities
• Needs of various contracting authorities subordinate to a Ministry may be procured by the central organisation of that Ministry.
• In addition, contracting authorities in a city may come together to procure their common needs through framework agreements.
Integration of E-Procurement Tools with Centralized Purchasing System
• Operations that can be performed in EPPP, include publication of contract notices, preparation of contract document by the contracting authorities, downloading of the contract document by economic operators, verification of tax liability, balance sheet and income statement information, social security premium debt information of the economic operators.
• Electronic Public Procurement Platform (EPPP) became operational on 1 September 2010.
Integration of E-Procurement Tools with Centralized Purchasing System
• State Supply Office and other contracting authorities are registered in EPPP to use the tools of EPPP.
• Framework agreements can be concluded by using EPPP. • In 2011, 465 framework agreements were concluded by using EPPP, and
1.887 contracts based on these framework agreement were awarded.• In 2012, 198 framework agreements were concluded by using EPPP, and
1.597 contracts based on these framework agreement were awarded.• One of the most important benefit of e-procurement is reducing the
costs.
Integration of E-Procurement Tools with Centralized Purchasing System
• E-Procurement tools’ functions as follows;
Transparency
SpeedCost
Saving
Standardizati
on
Public Superv
ising
Therefore, E-Procurement tools has a crucial role in centralized procurement
Sustainability
Effective Centralized
Procurement System
Benefits and Critical Views
• There are some benefits and also centralized purchasing system has critical views;
Benefits Critical Views
Strategic Perspective of Centralized Procurement
• Procurement is increasingly being recognised as a strategic function rather than an operative function.
• A long-term strategic approach should be adopted to achieve efficiency.• The level of centralisation and the scope of goods and services to be
procured centrally are important components of procurement strategy. Optimum approach should be decided by support from analytics.
Strategic Perspective of Centralized Procurement
• Strategic perspective has three pillars in TPPS;
Market Expectations•Competition•SMEs’ Concerns•Effective Procurement Sytem•Participation
Sustainability
•Effective Regulation•Review System•Competition•Environmental and Social Issues•Strategic Procurement
Contracting Authorities’
Expectations
•Economies of Scale•Professionalism•Procurement Policy•Bargain Power
Strategic Perspective of Centralized Procurement
• Strategic goals of centralised purchasing:
Competition
SMEs’ ConcernsEffective Dispute ResolutionMore local centralized Purchasing
Economies of Scale
Reducing CostManaging Supply Chain EffectivelyFulfillment of needs appropriately, promptlyValue for Money
More Participation
Effective Procurement SystemEnvironmental and Social PolicyIntegration with Global World
Sustainable Centralized
Procurement System
Conclusion and Recommendations (Experiences)
• How can the strategic goals be achieved:
Balanced interest between market and contracting entities,
Effective regulatory authority, Effective dispute resolution system, More local centralised purchasing, Sensitivity level of sustainability.
•THANK YOU…
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