E-GOVERNMENT PROCUREMENT

(E-PROCUREMENT) STRATEGY OF

ETHIOPIA AND ACTION PLAN, 2018

Prepared by Dr. Rajesh Kumar Shakya, e-GP Specialist

Federal Public Procurement & Property Administration Agency, Ethiopia

FOREWORD FROM THE MINISTER OF FINANCE

The Federal Public Procurement and Property Administration Agency (FPPA) has been given the

responsibility to lead the introduction of the use of electronic means in the procurement of our goods, works and services and it has been working behind the scenes to ensure that this process is successful. In

order to guide the introduction of the electronic-Government Procurement (e-GP) System, a strategy

document and roadmap has been developed. The e-GP

Strategy and Roadmap covers a period of five years from 2018 to 2023.

The introduction of the e-GP System is also a part of the broader Government objectives of e-Government. We see that the implementation of the e-GP fits in very well in the broader Government initiative of working towards smart governance through digital transformation which is aimed at achieving four objectives:

1. Bringing the Government closer to the people by increasing awareness levels of the

services offered by the Government and making customers aware of their rights and

making it easy for customers to influence and participate in design of Government

policies and schemes;

2. Effective governance through integration and information sharing amongst various

government entities and actors;

3. Improved service delivery through electronically enabled services which are faster,

easier to demand and have pre-defined and published service levels thereby leading to

a visible enhancement in quality of service delivery; and

4. Socio-Economic growth through participation of the private sector and deployment of

its resources, entrepreneurship and competence. At the same time, the private sector

would also benefit through the e-Government programs as government services will

be delivered faster and at a lower cost to the customers thereby resulting in lower cost

of doing business.

The e-GP Strategy and Roadmap is designed to achieve all the broader e-Government objectives mentioned above with regards to public procurement. The preparation of the

Strategy required a significant level of reflection and consultation, on the challenges and the focus and priorities for public procurement in Ethiopia. As a result, the Strategy has set out an ambitious vision for public procurement. Achieving this vision will involve a significant level of change and flexibility to proactively respond to issues as they arise and I urge all

stakeholders to be determined so that together we can realise our dream. The process of

implementing the e-GP System will be challenging particularly for the FPPA but it will also present itself with opportunities in skills and capacity development, increased competition

and transparency, greater efficiency in the delivery of public services among others.

This Strategy is designed with a focus of active engagement with stakeholders to during the process of Implementation and I take this opportunity to thank all stakeholders for their

contribution to the development of this Strategy. We believe that this Strategy has also struck

the right balance in maintaining what we do well and responding to future requirements and opportunities. I commend all the staff of the FPPA for their continued efforts, dedication, and commitment to reforming public procurement. The publication of Strategy signals only the

first step in a long journey through implementation. I would also like to extend my sincere gratitude to the Steering and Technical Committees for providing oversight and technical responsibilities, respectively on the Introduction of the e-GP. The implementation of this Strategy therefore has the full blessings of both Committees. I look forward to its successful

execution.

Hon. Ahmed Shide

MINISTER OF FINANCE

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FOREWORD FROM THE DIRECTOR GENERAL

We at FPPA are pleased to be the ones to drive the

process of introducing the electronic Government

Procurement (e-GP) System in Ethiopia. In

delivering a System as big as the e-GP, strong

leadership is critical at various levels. Government

has provided unwavering leadership in this regard

and I am committed to provide the leadership that is

required so that this project is successfully executed

and I call upon all the members of staff of the FPPA

to embrace this initiative, from the onset.

The strategy document has given us a clear direction to take in the introduction of the e-GP system. It has highlighted some of our strengths as a country and in public procurement and we are determined to build upon what we are already doing best so that we become a beacon of pride in Africa. The strategy also brought to the fore the areas in which we are not doing

well! For us we take this as an opportunity to engage and find solutions to the challenges that we encounter in public procurement. I know that introduction of new ways of doing things requires upgrading skills of the people charged with the responsibilities to execute those

duties and I want to assure you that a comprehensive capacity building programme has been

incorporated in the strategy to ensure that people are ready for the tasks.

We are clear in our minds in terms of the change we would like to bring in public procurement, and this goes beyond the use of computers in undertaking procurement. We would create an environment in public procurement which focuses on good governance through the digitalisation of procurement practices and ultimately offering improved service delivery to the public.

The implementation of the e-GP system will deliver the following broad strategic objectives:

i. Improved Governance through enhanced transparency and accountability; ii. Effectiveness through management information and efficient processes; and

iii. Socio-economic development through competitiveness and improved investment climate.

It is the above objectives which are expected to be delivered by the introduction of the e-GP

system which give me the motivation to push and ensure that the country benefits. I now extend this call to my management and staff to see the bigger picture of the implementation of this system. I understand the responsibility charged on the Agency is huge and I invite all our

stakeholders to partner with us as we embark on this ambitious programme. Together we will succeed!

The delivery of this system will require engagement with stakeholders, teamwork and effective communication. I pledge to provide inspired leadership as we move forward with this process.

Hon. Marta Luwigi

DIRECTOR GENERAL

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EXECUTIVE SUMMARY

Background

1. The government of Ethiopia has initiated several steps to reform public financial management to assure good governance particularly value-for-money, transparency and accountability in public procurement. This is now further strengthened with the Directive issued by the Ministry of Finance and Economic Cooperation (MOFEC) Pursuant to Article 78/2 of the Ethiopian Federal Government Procurement and Property Administration Proclamation no 649/2009 and Article 19 of the definition of powers and duties of the Executive Organs of the Federal Government of Ethiopia Proclamation No 471/2005/6 (as amended). The Federal Public Procurement and Property Administration Agency (FPPA) is established and functional as a regulatory body for procurement and property management. Regional states have established similar regulatory bodies. Recently, the new draft proclamation was prepared following the UNCITRAL Model law and international best practices and is in the process of finalization.

2. The Government of Ethiopia has realized the challenges in the public financial management and has taken up initiations for the introduction of e-Procurement system strengthening the Public Financial Management systems. Financial governance is the purpose of the Public Finance Management Reform. Good governance in the public procurement sector plays a significant role in the success of the public expenditure Management as about 65percent of the Government of Ethiopia’s (GoE) annual budget is expended through procurement, mostly in transport, energy, water, agriculture and education; this represents an annual expenditure of about US$3.5 billion. Introducing e-procurement is expected to help manage the expenditure of the huge public fund through public procurement with greater transparency, efficiency, and effectively enhancing compliance, providing a procurement platform with equal treatment to all bidders, applying same rule of law, maintaining integrity of the government buyers as well as private sector, and at the same time raising awareness of the general public about the expenses of the government. Ethiopia may save a huge amount of money with the efficiency gain through the standardization and automation of the procurement processes through e-Procurement. There will be a $35 million saving annually even if the saving is taken conservatively at just one percent (1%) of the annual budget (including lower administrative costs, less paper and travel time, and other). This saving is a lot more than the planned expenditure to design and implement e-procurement system. The cost-saving impact of e-procurement will be observed in the medium term (if not sooner), suggesting that supporting e-procurement is well justified. Countries around the world have the experience of saving from 5% to 20% in different procurement settings.

3. The FPPA is mandated to lead the e-Procurement initiative in the country, and is working in coordination and collaboration with MOFEC and Ministry Communication and Information Technology (MCIT) as well as other stakeholders.

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4. An e-Procurement Readiness Assessment was carried out in March 2018 to review the readiness of the procuring entities, the private sector and other relevant stakeholders in public procurement sector with the focus on enabling drivers for the success of e-Procurement. Multilateral Development Banks (MDB) e-Procurement Readiness Assessment Survey Questionnaire was updated and used to capture the specific readiness environment of the Ethiopian context. As part of the readiness assessment, the mission made visits to ministries, local authorities, parastatals, private sector associations, professional institutions, and other stakeholders to assess the current procurement practices and readiness regarding the legislative framework, communications infrastructure, connectivity, ICT capability, etc. Stakeholders were consulted face-to-face in the field for the survey.

5. The e-Procurement Readiness Assessment identifies nine (9) key components for e-procurement readiness by the score range of minimum One (1) to highest four (4). The overall Level of Readiness (LoR) on nine (9) components was assessed as Moderately Satisfactory level with the score of 2.97 out of 4.

6. e-GP Readiness Assessment revealed that the MCIT and Bahir Dar University (BDU) have developed in-house and already using e-Procurement systems. BDU has been using the system for the last seven years internally for its procurement purposes. MCIT developed the e-Procurement system under the e-Government Strategy Implementation Plans 2020 and are also using the system since 2017 for the Ministry’s own procurement purposes. FPPA as the mandated authority for the procurement sector is going to establish a unitary end-to-end national e-Procurement system to be used across all government procuring entities. During the e-GP Readiness Assessment, both the systems from the MCIT as well as BDU were assessed going through the demonstration of the systems considering the feasibility of qualifying one of the systems to be upgraded as the national e-Procurement System. The assessment of the two systems concluded with the decision that the MCIT e-Procurement system is more appropriate to be used as the national system with required further enhancements. Gaps and enhancement requirements will be identified in the MCIT system to meet the business, functional and technical requirements of the FPPA, as well as make the system in line with the international best practices. An analysis of two systems was prepared based on the demonstrations made and is given in the subsequent sections.

7. The governance of public procurement is pivotal to public trust in Government and is a barometer for the quality of public administration, making it a priority target for strengthening. In Ethiopia, the procurement reforms were initiated, and implementation of e-Procurement is the major thrust to streamline the procurement procedures and practices, provide greater transparency, enhance efficiency and effectiveness, ensure accountability and integrity, provide equal treatment to the bidders, enhance compliance and performance in procurement transactions, provide a platform for citizen participation and greater value-for-money to achieve sustainable socio-economic development through the electronic procurement platform.

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8. The e-Procurement Strategy (2018-2023) has been developed based on Ethiopian country context and learning from the international best practices. The strategy assists the government to successfully plan and implement the enhanced e-Procurement system. The Foppish expected to implement the e-Procurement Strategy successfully in coordination and collaboration with the MoFEC, MCIT and other stakeholders following the right e-Procurement implementation framework.

Problem Statement

9. Problems in the public procurement sector in Ethiopia include: i. Challenges in procurement planning and implementing the plans; ii. Lack of transparency in procurement process; iii. Delay in procurement evaluation and contract award process; iv. Lack of accountability; v. Poor contract management; vi. Inconsistency in using procurement standards; vii. Poor data management and lack of access to procurement information;

and viii. Poor coordination between and among procuring entities.

Justification

10. Government seeks to continue strengthening the Public Financial Management systems by enhancing e-Procurement to provide a platform for:

(i) increased transparency in procurement procedures and practices; (ii) improved efficiency in procurement, by minimizing the procurement

cycle time, maximizing value for money, and fostering accountability through re-engineered procedures, and built-in process workflows and audit trails;

(iii) improved confidentiality, integrity and authenticity of transactions between the procurement entities and the suppliers;

(iv) streamlined procurement procedures across the government through standardization of processes and practices building in the e-Procurement system;

(v) enhanced procurement management information system a common procurement database and electronic trail of procurements to facilitate proper monitoring, evaluation, reporting and planning of public procurements.

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TABLE OF CONTENTS

FOREWORD FROM THE MINISTER OF FINANCE 2

FOREWORD FROM THE DIRECTOR GENERAL 4

EXECUTIVE SUMMARY 5

ABBREVIATIONS & ACRONYMS 10

CHAPTER 1: INTRODUCTION 11

1.1 Background 11

1.2 E-Procurement Implementation Status in Africa 12

1.3 E-Procurement Readiness Assessment 16

1.4 Feedback and Recommendations from the Stakeholders 18

1.5 Existing e-Procurement Systems in the Country 19

1.6 Comparison of MCIT and BDU e-Procurement Systems 19

CHAPTER 2: E-PROCUREMENT STRATEGY OF ETHIOPIA 23

2.1 Vision Statement 23

2.2 Mission Statement 23

2.3 Strategic Objectives 23

2.4 Strategic Arrangements of e-Procurement System Functions and Components 26

2.4.1 An Integrated End-to-End e-Procurement Platform 28

2.4.2 A Centralized User Register of all the users of e-Procurement System 28

2.4.3 An e-Bidding system 29

2.4.4 e- purchasing: e-Framework Agreements, e-Auction and e-Quoting system. 31

2.4.5 E-Payments System and e-Guarantee Management 31

2.4.6 Interface with other Supporting Systems 32

2.4.7 E-Procurement Management Information System (e-PMIS) 32

2.4.8 Workflow Management System 34

2.4.9 E-Contract Management System 34

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2.4.10 Help and Training 35

2.4.11 Procurement Frameworks 35

2.4.12 E-Catalogues 36

2.5 Upgrading State Procurement Portal 36

2.6 Implementation Framework for the Enhanced E-Procurement Platform 37

Step 1: Situational Analysis and Consensus Building 38

Step 2: Foundation Building 43

Step 3: Implementation and Adaptation 46

CHAPTER 3: E-PROCUREMENT IMPLEMENTATION ROADMAP 55

1.1 Action Plan 55

1.2 Implementation Timelines - Phases 58

ANNEX I: ETHIOPIA E-PROCUREMENT READINESS ASSESSMENT 59 1. E-GP Readiness Assessment Analysis 59 1) Component 1: Government Leadership 62 2) Component 2: Human Resources 63 3) Component 3: Planning and Management 63 4) Component 4: Policy 64 5) Component 5: Legislation and Regulation 64 6) Component 6: Infrastructure and Web Services 65 7) Component 7: Standards 65 8) Component 8: Private Sector Integration 66 9) Component 9: Systems (Current e-GP Systems) 67 2. List of Participants in the e-GP Readiness Assessment 67

ANNEX 2: STRATEGIC OBJECTIVES, KEY PERFORMANCE INDICATORS AND TARGETS 69

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ABBREVIATIONS & ACRONYMS

BOM Bill of Materials BOQ Bill of Quantities BPR Business Process Re-engineering CPV Common Procurement Vocabulary DRS Disaster Recovery Site e-GP e-Government Procurement e-PPMU e-Procurement Project Management Unit e-PSC e-Procurement Project Steering Committee e-PWG e-Procurement Working Group FPPA Federal Public Procurement and Property Administration Agency GoE Government of Ethiopia GDP Gross Domestic Product ICB International Competitive Bidding ICT Information and Communications Technology IFMIS Integrated Financial Management Information System KPI Key Performance Indicator MDA Ministries, Departments and Agencies MDB Multilateral Development Banks MCIT Ministry of Communications and Information Technology MoFEC Ministry of Finance and Economic Cooperation OCDS Open Contracting Data Standard PE Procuring Entity PKI Public Key Infrastructure PMIS Procurement Management Information System PPPDS Public Procurement and Property Disposal Service UNSPSC United Nations Standard Products and Services Code UNCITRAL United Nations Commission on International Trade Law WB World Bank

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CHAPTER 1: INTRODUCTION

1.1 Background

Financial governance is the purpose of the Public Finance Management Reform. Good governance in public procurement sector plays a significant role in the success of the public expenditure management as about 53 percent of the Government of Ethiopia’s (GoE) annual budget is expended through procurement, mostly in transport, energy, water, agriculture and education; this represents an annual expenditure of about US$3.5 billion. Introducing e-procurement is expected to help manage the expenditure of the huge public fund through public procurement with greater transparency, efficiency, and effectively enhancing compliance, providing procurement platform with equal treatment to all bidders, applying same rule of law, maintaining integrity of the government buyers as well as private sector, and at the same time raising awareness of the general public about the expenses of the government. Ethiopia may save a huge amount of money with the efficiency gain through the standardization and automation of the procurement processes through e-Procurement. There will be a $35 million saving annually even if the saving is taken conservatively just one percent (1%) of the annual budget (including lower administrative costs, less paper and travel time, and other). This saving is a lot more than the planned expenditure to design and implement e-procurement system. The cost-saving impact of e-procurement is to be observed in the medium term (if not sooner), suggesting that supporting e-procurement is well justified. Countries around the world have experience of saving from 5% to 20% in different procurement settings.

A recent study1 of 137 large contracts in Ethiopia found that it took, on average, 219 days-- from advertising to contract signature-- to complete the procurement process of a government-financed contract. Also, that 36 percent of the time was spent on administrative reviews and approvals. All processes are manual and most of them are repetitive for off-the-shelf goods. Market research and data management to monitor performance is weak, oversight over procurement activities is weak with low audit coverage (less than 50 percent at the Federal level, and only recently initiated at the Regional level). The study shows that there are significant delays in International Competitive Bidding (ICB) contracts for goods, works and consultants for government-funded contracts, as well as for Bank-financed projects. There is an urgent need to modernize and automate procurement practices. A priority for the GoE during the next five years is the introduction of an e-GP (e-Government Procurement) system – to improve efficiency and accountability in the procurement process and also reduce costs.

The GoE has initiated several steps to reform public financial management to

1

Procurement Value Chain Analysis of August 2015 by SPA Infosuv East Africa Ltd.

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assure good governance particularly value-for-money, transparency and accountability in public procurement. This is now further strengthened with the Directive issued by the Ministry of Finance and Economic Cooperation (MOFEC) Pursuant to Article 78/2 of the Ethiopian Federal Government Procurement and Property Administration Proclamation no 649/2009 and Article 19 of the definition of powers and duties of the Executive Organs of the Federal Government of Ethiopia Proclamation No 471/2005/6 (as amended). The Federal Public Procurement and Property Administration Agency (FPPA) was established and is functional as a regulatory body for procurement and property management. Regional states have established similar regulatory bodies. Recently, a new draft proclamation was prepared following the UNCITRAL Model law and international best practices and is in the process of finalization.

The GoE has realized the challenges in the public financial sector and taken up initiations for the introduction of e-Procurement system strengthening the Public Financial Management systems. GoE, therefore, plans to adopt the e-Government Procurement (e-GP) to provide a platform for:

increased transparency in procurement procedures and practices; improved efficiency in procurement, by minimizing the procurement cycle

time, maximizing value for money, and fostering accountability through re-engineered procedures, and built-in process workflows and audit trails;

improved confidentiality, integrity, and authenticity of transactions between the procurement entities and the suppliers;

streamlined procurement procedures across the government through standardization of processes and practices building in the e-Procurement system;

enhanced procurement management information system a common procurement database and electronic trail of procurements to facilitate proper monitoring, evaluation, reporting and planning of public procurements.

Introduction of an e-GP system is expected to incorporate and streamline end-to-end procurement processes and related functions (from planning to contract monitoring and payment) while applying tighter controls over spending and product preferences. Implementation of e-procurement automates the internal and external processes associated with the procurement process including supplier selection for different types of procurement and opens the way for new efficient procurement methodologies that can increase market access and competition. Besides the relevant internal and external process integration, the e-GP system is expected to bind all the stakeholders in the e-GP platform for collaboration, coordination and ensuring accountability of the transactions carried out in the system.

1.2 E-Procurement Implementation Status in Africa

The countries in Africa are at different levels of e-Procurement implementation stages. An e-GP Readiness Assessment in Ethiopia revealed that there are two e-Procurement initiatives already being used in isolation in two institutions to

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address some of their institutional procurement requirements. With that it can be considered that Ethiopia has already got some e-Procurement experience. At the regional level, Botswana, Rwanda, South Africa, Tunisia, and Zambia have already embraced end-to-end e-Procurement system as a tool for public procurement reform and already getting visible enhancements in public procurement sector and received benefits regarding socio-economic development. Tanzania launched e-Procurement in February 2018, and Uganda, Ghana, Zimbabwe, Ethiopia, and Malawi have completed few of the initial steps for starting e-Procurement.

Table 1 below shows the e-Procurement Initiation and implementation status in few of the countries in Africa:

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Table 1: e-Procurement Implementation Status in a few of the countries in Africa

SN Description Botswana Ethiopia Kenya Rwanda South Tanzania Uganda Zambia Zimbabwe Africa

1 e-Procurement

Readiness/Feasibility

✗

Assessment 2013 2018 2018 2013 2015 2014 2014 2015

2 e-Procurement ✔ ✔ ✔ ✗ ✔ X ✔ X ✔

Strategy

3 Procurement ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

Information portal

Legislative Support ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

4 on e-Procurement Amended New Public Public State level Regulation Amended Amended Revised

implementation act and proclamation Procurement Procurement legislations covers e- regulation regulation Procurement regulation facilitates the Act,2015 Law2011 supporting e- Procurement supports e- supports e- act and supports e- use of e- and supports e- Procurement. GP. Procurement regulation Procurement Procurement regulations Procurement Central supports e- facilitates e- government Also e- Procurement. Procurement policy to use Procurement Also e- e- Guidelines Procurement Procurement developed Guidelines mandatorily. developed 6 e-Procurement Annual Preparation Running End-to-End Partial e-GP End-to-end End-to-end e- End-to-end End-to-end Implementation procurement of scope and IFMIS based e- Systems TANePS. Pilot GP with open e-GP System system with Status plan, requirements e- Procurement since 2006, implementation contracting with Open Open

procurement for the Procurement will be Unified e-GP started in Feb, being Contracting contracting at

SN Description Botswana Ethiopia Kenya Rwanda South Tanzania Uganda Zambia Zimbabwe Africa

notice acquisition of system with launched in System since 2018 customized piloted the

publishing the e- e-Quotation July, 2016 2015 (since June acquisition

and bidding Procurement method. 2016) stage document System Revised e-

download,

Procurement

supplier Strategy and

registration scope of the

available. system is

End to end being

e- prepared for

Procurement the

being acquisition

planned. of the

enhanced e-

Procurement

system.

7 e-Procurement Commercial enhancement TBD Developed Commercial Commercial Commercial Commercial At the

System Acquisition off-the-Shelf of home- by SOE in off-the-Shelf off-the-Shelf off-the-Shelf off-f the- acquisition model product grown e- close product product product Shelf stage

Procurement

collaboration

procured, procured, procured, procured, product

customized system will with the

customized customized

customization

procured,

be done RPPA and

and new Ministry of and new and new underway customized

modules Finance and modules modules and new and new developed Economic developed developed modules will modules

planning be developed developed

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1.3 E-Procurement Readiness Assessment

An e-Procurement Readiness Assessment was carried out in March 2018 to review the readiness of the procuring entities, the private sector and other relevant stakeholders in public procurement sector with the focus on enabling drivers for the success of e-Procurement. Multilateral Development Banks (MDB) e-Procurement Readiness Assessment Survey Questionnaire was updated to capture the specific readiness environment of the Ethiopian context. As part of the readiness assessment, the mission made visits to ministries, local authorities, parastatals, private sector associations, professional institutions, and other stakeholders to assess the current procurement practices and readiness regarding the legislative framework, communications infrastructure, connectivity, ICT capability, etc. Stakeholders were consulted face-to-face in the field for the survey. List of the organizations participating in the e-GP Readiness Assessment is given

The e-Procurement Readiness Assessment identifies nine (9) key components for e-procurement readiness by the score range of minimum One (1) to highest four (4) as follows in Table 2 and relative radar is shown on Figure 1:

Table 2: e-Procurement Readiness Assessment Components

e-Procurement Readiness Components Level of Readiness

1. GOVERNMENT LEADERSHIP 2.8 2. HUMAN RESOURCE MANAGEMENT 2.7 3. PLANNING AND MANAGEMENT 2.7 4. POLICY 2.5 5. LEGISLATION & REGULATION 3.0 6. INFRASTRUCTURE AND WEB SERVICES 3.2 7. STANDARDS 2.3 8. PRIVATE SECTOR INTEGRATION 3.8 9. SYSTEMS (CURRENT E-GP SYSTEMS) 3.8 Overall readiness score 2.97

The overall Level of Readiness (LoR) on nine (9) components was assessed as Moderately Satisfactory level with the score of 2.97 out of 4.

Figure 1: Ethiopia e-Procurement Readiness Assessment – 2018

Numerous observations were made from the discussions with government officials and other stakeholders. The consulted stakeholders during mission and through the questionnaire response provided feedback and recommendations for the implementation of the e-GP system in the country. Several building blocks for the implementation of e-Procurement are already in place in Ethiopia, especially few of the achievements and experiences gained with the implementation of IFMIS and e-Procurement in Ministry of Communication and Information Technology (MCIT) and Bahir Dar University (BDU) are invaluable and has taken substantial time for many other countries to achieve, for example:

1. The seamless interface and integration with the Integrated Financial Management System (IFMIS)and its transactions when the systems are ready for the interfaces;

2. Classification of procurement items – Successfully using the United Nations Standard Products and Services Code(UNSPSC)and Common Procurement Vocabulary (CPV)classification standards;

3. Catalog of core set of common user items are already in the database, providing a facility for mapping with the economic code of IFMIS facilitating budget and expenditure planning;

4. System can be interfaced with external systems, IFMIS, Tax system and Business Registration system if those systems provide interfacing provisions.

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5. Transformation among users (procurement entities and suppliers) has taken place following extensive sensitization and training programs leading to acceptability;

6. A significant number of suppliers have been registered through the Supplier Database in FPPA; and

7. Repository database of procurement information and data from past procurements established.

Based on the assessments, Ethiopia is ready for implementing a full-fledged end-to-end e-procurement in both the public and the private sector with the Level of Readiness Score 2.97 out of 4. The public and private sector, are both enthusiastic about the benefits of e-procurement and are ready embrace the new e-Procurement platform.

An analysis of each of the components is given in Annex 1.

1.4 Feedback and Recommendations from the Stakeholders

During the e-Procurement Readiness Assessment, stakeholders were asked to provide their feedback on the procurement environment, existing e-Procurement Systems. Most of the respondents provided their candid feedback and recommendations, which should be considered in the new e-Procurement system. Stakeholders’ feedback is provided below:

Feedback and Recommendations from the Respondents:

1) All procurement invitations should be accessible on the e-GP system. 2) All Procurement and Contract administration should be regulated by FPPA

with full capacity and resources, as currently the capacity and resources are not adequate for comprehensive monitoring of the procurements and contracts.

3) The e-GP strategy should recognize and consider existing initiatives started to modernize government procurement.

4) The system is expected to be supportive rather than rigid. 5) Awareness creation for suppliers & subject to use skilled Professionals. 6) Internet Network infrastructures should be easily accessible and affordable to

all as the cost for Internet is high and access to Internet outside Addis Ababa is challenging.

7) New e-Procurement system should follow open architecture and use open source software tools, database and system software.

8) Proper standards, regulations and procedures are required 9) If it is possible to have a system that can integrate all the processes at both

Ministries, Departments and Agencies (MDAs), and other Government Affiliated Agencies, it would be ideal instead of having many stand-alone systems.

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1.5 Existing e-Procurement Systems in the Country

e-GP Readiness Assessment revealed that the MCIT and Bahir Dar University (BDU) have developed systems and already using e-Procurement systems. BDU has been using the system for the last seven years internally for its procurement purposes. MCIT developed the e-Procurement system under the e-Government Strategy Implementation Plans 2020 and also using the system for its own procurement purposes. FPPA as the mandated authority for the procurement sector is going to establish a unitary end-to-end national e-Procurement system to be used across all government procuring entities. During the e-GP Readiness Assessment, both the systems from the MCIT as well as BDU were assessed going through the demonstration of the systems considering the feasibility of qualifying one of them to be upgraded as the national e-Procurement System. An analysis of two systems based on the presentations made by the MCIT and the BDU during the mission are given below.

1.6 Comparison of MCIT and BDU e-Procurement Systems

The e-GP Readiness Assessment revealed that there are other e-Procurement initiatives being carried out at different levels and by different organizations, primarily MCIT has developed an e-Procurement system under the e-Government initiative, and BDU developed the system to address its internal procurement requirements. During the World Bank mission on e-GP readiness assessment and fact finding in March, 2018, the mission had the opportunity to see the demo of the systems and review the systems in-line with the International Best Practices, and Ethiopia country procurement context. A comparative chart was prepared on different factors as follows:

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Table 3: Comparison of the Existing Systems

SN Factors MCIT BDU 1. Scope The MCIT’s system was designed by the MCIT with BDU’s system is also a localized system designed to

an intention to make the National e-Procurement solve internal procurement challenges at the BDU and system as outlined in the National e-Government has been used for the last 7 years in BDU. As the Strategy Implementation Plans 2020 covering all system is focused to automate internal processes and procurement methods of the procurement legislation, fulfill the BDU’s internal requirements, customizing the and using latest technology platforms. User interface system to the national level will definitely require more looks intuitive. time and resource. Furthermore, as per the demonstration, the BDU’s system is fully based on the current paper-based procurement laws and procedures of FPPA. 2. Functionality In the MCIT’s system contract management is one of Although it was reported that this is end-to-end system,

the main modules of the system with contract it was not apparent during presentation that BDU’s administration and closure, and procurement system covers contract management. Besides, bid documents exchange including issuance of bidding submission and evaluation are not fully automated and it documents and bid evaluation are fully automated. was learnt that there is a practice of accepting manual e-Payment framework is there. bid submission which leads to undertake evaluation e-Reverse auction is also there. manually. E-Catalog - suppliers are not at the level of using e-

Catalogs

KPIs for monitoring and evaluation of the end-to-end

procurement process /balance score card system is

integrated.

System has got Rule Management Engine (RME) -

Multiple Rule set management.

Workflow and Decision Support System (DSS) is one

of the powerful tools in the system.

Considers part of GRP/ERP Ecosystem.

Interoperability framework of Microsoft is followed.

The System also included Management Information

System. (MIS), which should be enhanced.

Currently it asks for bidding document uploads.

Document should not be uploaded, should be web-

forms. But system should be able to generate the

PDF document for reference and archival. Bid

document is copyright issues, so, should not be

allowed to download by evaluators, only view on the

screen.

3. Database The MCIT system has data set for CPV – European The BDU’s system provides 287 data base tables that Standard, and national suppliers registration data set includes UNSPSC.

4. Interoperability The design of the MCIT system has considered There is no clarity that such level of interoperability has interoperability with the other government systems been considered or possible with the BDU’s system. particularly IFMIS. The Demo has also indicated that

the system has design capability to interface with

other systems including Bank’s and financer’s

systems.

5. System The MCIT system uses WoredaNet which is the e- Similar security functionality has not been observed or Security government platform used across all government not presented related to the BDU’s system. agencies and functions. As a result, the system is

considered to be more reliable with the necessary

security tools and monitoring capability. Besides, the

developed e-procurement system at MCIT has inbuilt

security functionality that protects confidential

procurement information like bid documents through

encryption and decryption keys.

6. Operation and e-GP is part of MCIT’s core responsibility of It is not clear on how after sale technical support from Maintenance modernizing government functions through digital the side of the BDU system as it relies more on processing and communication. Hence, the ministry individuals who are limited in number and the service has the legal responsibility and assumed to have the has no direct relevance to the core function of the required resources to provide the necessary university.

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operation and maintenance service. But we also learnt that the MCIT system has been developed by a vendor and it is appropriate to confirm that MCIT continues to have full ownership of the system including the codes so that it could be able to provide the required operation and maintenance services and modification based on changes in user requirement.

Recommendation: A detailed evaluation of the MCIT system has to be carried out against standard specifications and international best practices. The MCIT System is recommended to be upgraded and used as the national e-procurement system. The MCIT e-procurement system should address the gaps identified and incorporate all additional requirements to meet the business, functional and technical requirements of the FPPA.

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CHAPTER 2: E-PROCUREMENT STRATEGY OF ETHIOPIA

2.1 Vision Statement

The vision statement for the adoption of enhanced e- Procurement is as follows:

Good governance in the public procurement sector through the digital transformation of

procurement procedures that contributes to the Socio-Economic Development of the

country.

2.2 Mission Statement

The mission statement is as follows:

To attain value for money, transparency, accountability, efficiency and competition in

public procurement by leveraging Information and Communications Technologies

2.3 Strategic Objectives

The e-Procurement system is expected to facilitate in the following aspects of procurement:

a) To enhance decision-making capabilities of procurement officials by providing meaningful and comprehensive procurement information;

b) To improve financial planning and budgeting; c) To improve transparency and accountability in procurement procedures

and practices; d) To bring efficiency throughout the procurement process and minimize the

procurement cycle time; e) To foster and encourage participation and promote competition among

suppliers; f) To harness economies of scale through demand aggregation and

maximize value for money in government procurement; g) To enhance citizens’ and businesses’ confidence in the government

procurement process and the utilization of public funds; h) To ensure confidentiality, integrity and authenticity of all transactions and

data between/and among the procurement entities and the suppliers; i) To enhance the management of procurement records and information;

and j) To bring in control and financial discipline in the public procurement saving

cost through administrative efficiency

The objectives are summarized as three broad and high-level objectives as shown in Figure 2: namely iv. Improved Governance through enhanced transparency and accountability. v. Effectiveness through management information and efficient processes.

vi. Socio-economic development through competitiveness and improved investment climate.

Figure 2: Objectives for E-Procurement

These objectives form the basis of the performance indicators set out below. Several aspects of these benefits are also set out in other terms and partially quantified in the business case.

The following benefits are expected to arise with implementation of the enhanced e-procurement:

a. Transactional benefits: The Organization for Economic Cooperation and Development (OECD) estimates savings from implementation of e-Procurement to be in the range of 5-20% of the procurement value. The GoE spends approximately 65% of the budget annually through procurement. This implies that with e-procurement implementation, even if 1% savings is made, the amount of saving will be significant per year (approximately $35 million USD), which can be utilized for the implementation of other socio-economic programs.

b. Value for Money

i. E-procurement allows for increased quality supplies, because larger markets are made accessible, and bidders compete not only on cost, but also on quality.

ii. Further Savings arise from: Savings made due to reduced cost of procurement stemming

from more efficient use of innovative procurement methods as well as simplification of internal administrative processes.

Reduced transactional costs on bidders, which translate into

lower prices quoted.

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Increased competition amongst bidders since the bidding process is open to all potential providers.

c. Efficiency Gains: Efficiencies will be for both Government and the private sector.

i. Reduction of the procurement cycle time due to the reengineering and automation of certain phases.

ii. Since the manual processes are eliminated, there is easy access to the market and tender opportunities, easier bidding processes etc.

iii. Timely payments to suppliers using electronic payment of invoices. This leads to better control of cash flow and efficient contract management, which can lead to lower price quotations.

iv. Standardization - since e-procurement is majorly template-driven, it makes all transactions standardized and traceable. In addition, there are reduced errors in process and documentation for buyers.

v. Dematerialization – reduction in archival and storage costs, paper consumption due to use of electronic platform and reduced need to use hard copies thus providing environmental and financial benefits.

d. Accountability

i. E-Procurement strengthens Accountability by enhancing transparency and improves access to management and audit information from a central source.

ii. Administrative workflow together with audit trail makes the officials more responsive and accountable to their responsibilities.

iii. Tender documentation and outcomes of the procedures (winning suppliers, rankings, and final offers) are automatically posted online and available to all.

e. Transparency

i. Eligibility criteria and evaluation parameters for the technical and qualification of bidders are clearly parameterized and published in advance, this leads to an increased strategic accuracy of the offers.

ii. Performance Measurement: E-Procurement also provides more significant and timely procurement information that creates the potential for regular analysis and reporting for many stakeholders on different aspects.

iii. The low cost-efficient access to accurate, timely and comprehensive management information in e-procurement provides intelligence on spending patterns, inventory, performance and compliance enables strengthening of control, oversight, efficiency and planning capabilities as well as competition.

iv. Incorporation of Open Contracting Data Standard (OCDS) in e-Procurement system encourages citizen engagement in public

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procurement through the access and use of the procurement data from different stages of procurement cycle.

f. Governance i. E-procurement can improve public governance, as it allows to

implement the key principles of public procurement effectively in synergetic balance enhancing all facets of good governance.

ii. Provides automated governance of all procuring entities through innovative procurement tools of collaboration like framework agreements in the same way despite if any procuring entities may be geographically remote.

iii. It is also easier to share best practices, due to the availability of information and documents online.

iv. The data collected in e-procurement systems will assist with mandatory reporting obligations, audit and accountability requirements, as well as internal reporting to assist with on‑ going development of its procurement strategy.

The strategic objectives and indicators are presented in Annexure 2.

2.4 Strategic Arrangements of e-Procurement System Functions and Components

Around the world, governments have been traditionally embracing ICT to improve the efficiency and effectiveness with which they deliver services to their citizens and provide timely and accurate access to information. These initiatives span the entire spectrum of government responsibilities and are generically termed e-Government initiatives (or e-Governance). One of the most successful applications of ICT is in the area of public procurement, known as Electronic Government Procurement (e-GP).

E-Procurement is made up of various functions that, as concepts, are largely stand-alone, but need to be integrated to serve procurement management of the Government. It should cover end-to-end processes and practices of public procurement and should be compliant with the prevalent procurement arrangements, in case of Ethiopia, Federal Government Procurement and Property Administration Proclamation no 649/2009 and Article 19 of the definition of powers and duties of the Executive Organs of the Federal Government of Ethiopia Proclamation No 471/2005/6 (as amended), practices and based on the lessons learned from the international practices. The stakeholders of e-Procurement have to fully understand the scope of the e-Procurement system to leverage the electronic platform. The mere use of incomplete functions and processes does not give desired benefits. For the sake of strategic alignment of the proclamation in the electronic environment the following definition provides a comprehensive understanding of the e-Procurement Platform:

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"An e-Government Procurement (e-Procurement) is the collaborative use of information and communications technologies by government agencies, bidding community, regulatory, oversight agencies, other supporting service providers, and civil society in conducting ethical procurement activities of the government procurement process cycle for the procurement of goods, works and service, and management of contracts ensuring good governance and value-for-money in public procurement, and contributing to the socioeconomic development of country” (Shakya, 2015, p. 141)2.

The e-Procurement platform shall be developed incorporating all the provisions as prescribed in the prevalent legislation and fulfilling the requirements of e-Procurement platform as given by the definition embracing all key principles of procurement. The e-Procurement system shall be a single platform for all procurements funded by the government fund as well as the procurement under the fund of development partners. The e-Procurement system will be a web-based system that encompasses the total procurement lifecycle, all procurement modalities, and record all procurement activities. Figure 3 below depicts a conceptual model of the e-Procurement Platform perceived to be implemented in Ethiopia.

Figure 3: Conceptual model of interaction of End-to-End e-Procurement Platform

The e-Procurement architecture shall provide procuring entities, bidders and other relevant stakeholders like Auditors, Banks and their branches, e-Payment

2

Shakya, R. K. (2015). Good governance in public procurement: An evaluation of the role of e-procurement system. Available at

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https://figshare.com/articles/Good_governance_in_public_procurement_An_evaluation_of_the_role_of_e_Procurement_System/1549718

service providers and development partners with secure access to an integrated range of procurement systems and services. The general public shall get access to all the public information, i.e., Annual procurement plans, Invitation to Bids, Best Evaluated Bids Notices, Contract award details, Contract execution status and completion reports, debarment/blacklisting/suspension lists, procurement performance statistical and analytical reports, and other information of public interests.

The standard modules and functionalities to be included in the end-to-end e- Procurement System are briefly described below:

2.4.1 AN INTEGRATED END-TO-END E-PROCUREMENT PLATFORM

The e-Procurement Platform shall act as a one-stop information and procurement transaction platform on all public procurements carried out by the public entities in the country. All procurement notices published by the procuring entities in the country shall be accessible from the Portal. The Portal should have transaction capabilities developed, which should be available for use by all public agencies. Functionality on the portal may include annual procurement plans of all Procuring Entities, Centralized user registration (bidders, procuring entities, oversight agencies, banks, and other users), a list of bidding opportunities, easy search facility, procurement guidelines and manuals, circulars, details of awarded contracts, list of blacklisted contractors, secured bidding document preparation and submission, built-in workflow and audit trail, complaint handing, contract management, and Procurement Management Information System (PMIS), and other procurement information through visualization of Open Contracting data for the citizens.

2.4.2 A CENTRALIZED USER REGISTER OF ALL THE USERS OF E-PROCUREMENT SYSTEM

In the registration modules, profiles of Suppliers/Contractors/Consultants registration, and also registration of Procuring entities and their users/officers, and their e-Procurement system access rights and authentication information are stored. Additionally, the central register stores the user credentials of all other users including MOFEC,FPPA, Regional level agencies, PPPDS, Auditor General, Attorney General, Review Board, Development Partners, System Administrators, and others (Figure 4). The concept of single sign-on shall apply and the same information can be used across all procurement activities while its validity is current. Therefore, the registration module shall support the register for the users:

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Figure 4: Users of E-Procurement

a. A Bidder Register, which will record basic details of bidders interested in doing business with any part of the public sector. The need for a common registry of suppliers has already been recognized by governments, to avoid a situation where firms black listed in one area continue to work in other areas of government.

b. A Procuring Entity Register, which will host the details of

procurement entities participating in e-Procurement and their designated procurement officers.

c. Other users register, which will host the details of users from FPPA,

PPPDS, Ministry of Construction, Auditor General, Attorney General, Review Board and Panels, Regional Agencies, Development partners, Banks, Insurance companies, Ethio Telecom, other oversight agencies, public agencies, and departments.

2.4.3 AN E-BIDDING SYSTEM

E-Procurement system shall fully comply with the prevalent procurement legislation and other approved practices incorporating the facilitates including the preparation and publication of Annual Procurement Plans (APP), e-publishing/e-advertisement, preparation of e-bidding documents by procuring entities, bid preparation by bidders, online clarification to e-bidding documents for different types of procurement methods for goods, works and services procurement types,

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and also including project procurements under the fund from the development partners, e-bidding document amendments, secured e-bid submission, automated e-bid opening, e-evaluation, complaint handling, e-contract award, e-contract management, publication of document and data in compliance to the Open Contract Data Standard (OCDS). The procurement process shall be supported by e-Payment, e-Guarantees and Securities, e-Authentication, and seamless interoperability with the IFMIS, tax, banks, mobile networks and other relevant government services.

The e-Procurement system shall support all procurement methods as:

Table 4: Procurement Methods

SN Procurement methods

1 Open bidding 2 Restricted tendering

3 Request for proposals 4 Two-stage tendering

5 Request for quotation 6 Direct procurement

7 Electronic Reverse Auction 8 Procurements under the PPP

10 Framework Agreements

E-bidding is a relatively simple set of functions. The technically most demanding element of this function is the security demands of online bid lodgment, although potentially all elements have strong security requirements. The establishment of e-Bidding procedures is usually accomplished through the re-engineering of the Standard Bidding Documents (SBD), procurement processes following security protocols and security at the different level of procurement processes. All the SBDs prepared for the all above procurement methods should be re-engineered and converted into web forms and digital documents so that all procurement data can be captured in a structured format, and the data made available for analysis and decision-making purposes.

e-Procurement system shall be a single platform for all procurements funded by the government fund as well as the procurement under the fund of development partners. The operations and qualities of the e-Bidding service shall be consistent with the standards set by the Multilateral Development Banks (MDB) so that the development partners also use the e-Procurement system for the project procurements funded by the development partners. The World Bank, AfDB, and other development partners have set minimum standards and qualities that must be met if e-Procurement systems are to be applied to the loans, grants or credits that it provides3.

3 See http://siteresources.worldbank.org/INTPROCUREMENT/Resources/E-Tendering_Requirements_for_MDB_Loans-Grants_and_Credits_November_2009.pdf

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2.4.4 E- PURCHASING: E-FRAMEWORK AGREEMENTS, E-AUCTION AND E-QUOTING SYSTEM.

This component is important for value-for-money, efficiency gains, and comprises of e-purchasing, including e-framework agreements, e-auctions, e-quotations. E-purchasing is more important than e-bidding for small businesses. The acquisition of low value, high volume, and commonly used goods, works and consulting services by a direct quotation in the open market or from pre-qualified suppliers, and payment for the purchase constitutes the e-Purchasing activity. E-Purchasing functionality is relatively complex because there is a need to integrate workflows and transactions, as well as manage a wide variety of catalog for purchases and information flows including banking for many buyers and many sellers. E-Purchasing requires greater involvement of the Supplier community in working with online catalogs. E-Purchasing brings ease of purchase and reduces the transaction costs significantly; without which many framework agreements cannot be implemented. The e-Auction module (forward) also should provide the functions for the disposal of assets or sell-off excess from government entities or award licenses or permission through real-time online auction. It should also facilitate the aggregation of assets for disposal. E-Reverse Auctions are used for the competitive purchase of highly standardized commodity items.

2.4.5 E-PAYMENTS SYSTEM AND E-GUARANTEE MANAGEMENT

e-Payment is one of the challenges that the GOE should be fixing for the e-Procurement system to work all in automated manner. The e-Payment module facilitates online payments for the suppliers for the goods, works, and services procured through the e-Procurement system by the public procurement entities, and also payments by the bidders for registration, documents, and other services. All payments in the procurement process should ideally be handled electronically. This includes payments made by Bidders to the government and contract payments from the government to Suppliers.

E-Bid Security and Guarantee module works with the financial institutions, state and commercial banks for issuing bid securities, advance and performance guarantees and their management (validity tracking, the release of security and guarantee, forfeiture, extend validity and value of guarantee, etc.). For any financial transaction related to e-Procurement, bidders use bank service. Bid and Performance Securities should be prepared by banks with the negotiation with the bidders, and the banks themselves submit, update and manage the guarantee information in the system.

The e-Procurement system shall develop Application Programming Interfaces (API) and web services for the banks to integrate with the e-procurement system. The selected bank can be required to integrate its e-Payments and e-Guarantee solutions with the e-Procurement system or use the banking module of an e-Procurement system. There should be provision for contractors to transact such funds through a set of banking instruments approved and specified such as:

a. Credit card / purchase card / debit card b. Internet Banking c. Electronic Funds Transfer (EFT)

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d. Over the Counter.

The e-Payment system design should ensure that contractors are not required to open an account with a particular bank and they may receive and make payment in whichever bank they have their accounts. Other modes may also be considered provided that the following requirements can be met without manual intervention:

a. Payment acknowledgement: A unique irrefutable reference number is generated as acknowledgement for the payments made by contractors.

b. Payment reconciliation: The reconciliation process reconciles the payment received in the central pooling account with that specific service request for which the payment was made (using the reference number for the service request).

c. Payment timelines: The e-Procurement system should be able to ascertain that the payments have been received, within a reasonable period of time (maximum 2 working days).

2.4.6 INTERFACE WITH OTHER SUPPORTING SYSTEMS

Many e-Government Servicers are initiated and few of the systems are already in operation, but still lacks the maturity in terms of robustness and interoperability. The interoperability of the e-Procurement system with other government systems is an important part of gaining full benefits from the technology. There are close relationships between procurement activities and budget management and planning, including terms of progress payments, forward scheduling and contract commitments, inventory, and performance assessment and reporting. The efficient exchange of information should not be obstructed by differences in platforms or standards between the leading government entities. Interoperability of the critical systems with the e-Procurement system brings substantial efficiency in carrying out transactions and standardize the communication among the government agencies through standard data and information exchange.

An efficient interface should be built between the e-Procurement System and IFMIS, Tax system, Business Registration system, and other supporting systems when such government services are stable and available for integration or interfaces, which should facilitate automatic validation of budget allocation, availability, and payment; requisition creation, purchase order issuance, verification and validation of bidders’ credentials about registration and tax clearance and provides authenticity of the transactions. The e-Procurement needs to be accessible with two-way data exchange between many buyers and many sellers and includes the numerous operational considerations and authorizations for procurement that are likely to change on a daily basis.

Interfacing and integration with the external systems should follow the accepted interoperability frameworks at national and international level.

2.4.7 E-PROCUREMENT MANAGEMENT INFORMATION SYSTEM (E-PMIS)

While the initial e-Procurement strategy has often been regarded as the center-piece of e-Procurement, it adds relatively little value until accompanied by the

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information and management systems associated with procurement workflow, control, and budgeting. The work that is undertaken to consolidate the e-PMIS is closely related to the management systems for procurement in each agency.

The development of the e-PMIS becomes a central part of the e-Procurement agenda with all standardized documents as well as guidelines and polices, legislation being available online in real-time to the internal management activities of departments and interacting with the workflow processes of contract construction and contract management and with reporting. E-PMIS should be operational from the very beginning of e-Procurement Implementation.

The e-PMIS shall include workflow and permission / authorization trails, and all information transactions in any part of the procurement process including contract management, contract planning, and interactions between stakeholders. Standard documents are required. All important events and data shall be linked to the Audit log module and e-PMIS for analyses, reporting and performance assessments.

Importantly, the e-PMIS is essential for comprehensive spend analyses, which should be undertaken monthly or quarterly or at least annually on a departmental/ministerial and whole-of-government basis. Spend analyses reviews what is bought, who are the buyers, and the transaction values, volumes and trends. This analysis provides the basis for the implementation business case and a list of baseline measures from which Key Performance Indicators (KPI) shall be developed. Areas of such analysis should be flexible by the user but shall be guided by the FPPA and could include:

a. Analysis of attainment of e-Procurement Strategic objectives by a set of well- defined performance indicators.

b. Procurement Performance of procuring entities through a set of indicators classified to cover all areas of core principles of good governance in public procurement (Efficiency, accountability, value for money, Equity, Fraud and Corruption Control, compliance, etc.)

c. Transaction analysis - the number & value of transactions. d. Requisitioning activity - identification of the main buyers e. Supplier analysis - the number of transactions per supplier f. Off-contract spending – the number of suppliers used for the provision of

similar goods/services, and if a local and/or central contract is in place for specific supply.

g. Payments – the current payment methods. h. Payment errors – a measure of potential cost savings. i. Late interest payments – a measure of potential cost savings.

Although a consistent architecture applies, some e-PMIS functionality needs to be readily customized department by department because they reach into mainstream management delegations and processes.

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2.4.8 WORKFLOW MANAGEMENT SYSTEM

The Workflow Management System contains the workflow engine in its core and workflow rules stored in an Authority register. All the procuring entities modules will have an intelligent link with the workflow engine. The workflow automation module handles the flow of documents while preparing a tender, or a contract. The authorized personnel should use a workflow module for transferring draft tender documents and other documents through the document approval processes in each procuring entity with comments/ changes, and to seek approvals. All the activities in the workflow will be stored in an audit log. Workflow activities will be based on an Authority Register, which stores the user permissions to carry out authorized procurement activities. If a user lacks authority to perform an activity, the workflow engine will automatically refer the activity to a higher authority.

Audit trails of all user activities under the defined workflow shall facilitate the accountability of the users, officers and others which carrying out procurements using e-Procurement system. Audit trails could be assessed by the authorized users for system audit to ensure smooth operation of e-procurement system and its functions, and also could be shared with the court, auditor general and other relevant authorities with proper authority and purpose of access certified by the government.

2.4.9 E-CONTRACT MANAGEMENT SYSTEM

With the contract management module, a government agency is able to maintain an overview and track the works in progress, goods supplied, any contract variations, services rendered, payment processing, administration of advance and performance guarantees and performance appraisal of the contractors. Once part of a contract is completed, then payment to the supplier is more quickly arranged and transacted. The system will have automated bring-ups according to the contract schedule. These bring-ups will trigger quality and delivery verifications, bank transfers, and any re-scheduling of the bring-ups. When in place for a period of time, the system also collects a repository of knowledge that can be used to measure the performance of a contractor as well as the performance of procuring entities in public procurement. Contractor ratings, debarment, de-listing, dispute management and other functionalities can also be linked. Contract Management should be start from the very beginning of e-Tendering. The system will also have the following capacities:

a. Contract Variations and Supplementary Contracts – to record and publish price variations to the awarded price per line item or quantity purchased. A full audit trail of the contract and price variations is recorded. In addition to the contract variations, a provision of supplementary contracts should be available in the system, as the supplementary contract is allowed in Ethiopia.

b. Contract Extension – the system should manage the contract extension process. Many contracts are let for an initial period with the option to

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exercise extensions for further periods. The system should provide an early warning report of contracts that are due to complete their current term. There can also be an automated report to show multiple extensions of the contract (this may arise for legitimate reasons or may reflect poor practice).

c. Contract Cancellation – the system should manage the contract cancellation process and maintain an evidence trail for future review and legal proceedings.

2.4.10 HELP AND TRAINING

The Help & Training module provides the entire e-procurement system with consistent training content in user-friendly graphics, navigation, presentation, localization and context-based video. It should also provide user manuals, videos and FAQs for assisting users on using the e-procurement system efficiently.

2.4.11 PROCUREMENT FRAMEWORKS

New proclamation has introduced few of the modern, trending, and efficient procurement methods. One of the major changes in procurement framework would be the introduction of e-Reverse Auction.

a. e-Framework Agreement

Currently popular micro procurements and repetitive common user items can be procured through the use of strategic competitive method of procurement – the framework agreements, which are entered into after a competitive method of procurement under defined terms and conditions over a period of time. An increase in the percentage of framework contracts will lead to a decrease in number of micro procurements, and hence decrease in excessive use of administrative process, time, and money.

Framework Agreement conducted and managed electronically adds significant contribution to the aspect of strategic procurements for the government and its taxpayer citizens.

b. E-Reverse Auction

E-Reverse Auctions are used for the competitive purchase of highly standardized commodity items. Usually, the reverse auction is carried out online over the period of fixed set time in real-time. Bidders lower their bidding price each time they compete with other bidders allowing them to bid till the set time is completed. This method requires more resources regarding processing and computing servers, and high Internet speed as the transactions should be refreshed and seen by the bidders in real time. The e-reverse auction shall be operationalized at the later stage of e-Procurement implementation when such resources will be available.

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2.4.12 E-CATALOGUES

e-Catalogues play very important role in e-Procurement. E-Catalogues are built under the classifiers and identifiers. Classifiers for goods, works and services are required for e-Procurement as well as for budget organizations. Classification codes are required to allow analyses to roll-up data into summary form for reporting and analysis. For example, a financial report may present procurement expenditure in terms of ten broad categories of items, such as Fuel, IT, vehicles, etc. Thousands of line items are summarized and drilled into in as much detail as necessary. The UNSPSC® and the CPV are two most widely used catalogue classification standards in e-procurement systems in different countries.

In e-Procurement systems, e-catalogue is required for all of its processes, i.e. bidders choose their category of business during registration, procuring entities use e-catalogue for preparing bidding documents (especially preparing BOM, BOQ) in all of the procurements including framework agreements, preparing requisitions, call-off requests, and reporting purposes to make right strategic procurement. Catalogues are a basic standard for this type of procurement. The process goes from the publication of items online by suppliers, to the electronic selection, order, receipt and payments by the purchasing entity.

A framework agreement catalogue should contain the item name, item code, a description of the item, unit of measurement, supplier name, supplier part number (if any), etc. The framework agreement catalogue may allow for differential pricing by further specifying the freight charges (proximity-wise), taxes, discounts for specific users, etc. for delivery in various locations.

Commendably, MCIT e-Procurement is already successfully using the CPV classification standard and the users, i.e. procuring entities and suppliers are already learning to use the system.

e-Catalog of core set of common user items are already in the database, and it should provide a facility for mapping with the economic code of IFMIS facilitating budget and expenditure planning.

2.5 Upgrading State Procurement Portal

Federal Procurement Portal shall be managed and owned by the FPPA. The portal shall maintain the following information for the bidders and other relevant stakeholders:

Information Section Procurement Legislation, regulations, circulars, directives

Procurement Guidelines, manuals

Standard Bidding Documents

Publication of Annual Procurement Plans

Publication of Contract Awards

Publication of Debarred bidders Publication of resolution of complaints and appeal reviews

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Market benchmark prices of common user items

KPI based procurement analytics published for general public

Tender Opportunities List of registered suppliers

Price indices (reference prices) Training Information and schedule

Interactive Section Procuring Entity and other users Registration Invitation to Procurement Opportunities, bid document, addenda entry for

open tendering by Procuring Entities

Access to Complaint Lodgment Review Board and Review Panel investigators access

Monitoring and Evaluation Module with KPIs Report generation in line with prevalent legislation and other statutory

requirements

Federal Portal will have its working dashboard and carry out its procurement related data and information updating and communicate with bidders and procuring entities. Information on Federal Portal-related Tenders, contract awards, black listing, monitoring and evaluation and complaint and appeal handling through Review boards shall be updated automatically through e-Procurement system in real-time. The functions built in the Federal Portal also will have its workflow inter-linking all units of FPPA to operate in an automated manner using the electronic environment.

More comprehensive functional requirements shall be prepared and incorporated when new proclamations are promulgated.

2.6 Implementation Framework for the Enhanced E-Procurement Platform

With the provisions in the prevalent legislation, implementation of an enhanced e-Procurement platform, it is expected to improve the situation in the governance of procurement and finance management, achieve better value-for-money and support the socio-economic development of the country. Also, as a result of the implementation of the e-Procurement system designed around the spirit of the key principles of public procurement, it is expected to improve transparency in the procurement process, ensure accountability, rule of law, equity and competitiveness, improve corruption control, and increase civil society awareness in regards to the public procurement.

A comprehensive e-Procurement Implementation Framework (e-PIF)4shall be followed for the implementation of the e-Procurement system in Ethiopia. The e-Procurement implementation framework includes a comprehensive set of steps to be taken and interventions to be considered for the introduction, implementation, and adaption of the e-Procurement system. The framework covers the challenges to be addressed at the political level, administrative level, the private sector and

4Shakya, R. K. (2015). Good governance in public procurement: An evaluation of the role of e-procurement system. Available

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at https://www.scholars-press.com/catalog/details//store/gb/book/978-3-639-86235-5/e-procurement-for-good-governance-in-public-procurement

public community levels, as well as legal, technical, and institutional level.

The e-Procurement implementation framework is divided into three broader phases (see Figure 5): (a) Consensus Building, (b) Foundation Building, and (c) Implementation.

Figure 5: E-government procurement implementation framework

(Copyright © 2015. Dr. Rajesh Kumar Shakya)

STEP 1: SITUATIONAL ANALYSIS AND CONSENSUS BUILDING

Step 1.1: Leadership/Sponsor

The first step in the country's e-Procurement implementation strategy is securing ownership of the political, top government level ownership, and designate a dedicated leadership with the proper sponsorship of the program. Once there is a political and executive leader, that leader plays a key role in marshaling the rest of the forces. If that leadership is not on board, the whole initiative may be uncontrollable or, at the least, very difficult. So, the first thing in initiating the e-Procurement would be identifying who that key sponsor was going to be and working hand-in-hand for the initiative.

The FPPA is mandated to lead the e-Procurement initiative going hand-in-hand with the MOFEC which shall provide the hosting for the primary data center for the e-Procurement system. The FPPA shall collaborate and coordinate with all other stakeholders, relevant ministries, departments and private sector institutions.

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The Governance structures with clear management model delineating roles and responsibilities of the various institutional players will play a critical role in guiding successful implementation and managing the mandated interests of the key stakeholders equally plays a significant role in the sustainability of the e-Procurement System.

a. E-Procurement Implementation Governance and Administration

The effective implementation of e-procurement hinges on establishment of appropriate and participatory institutional arrangements and governance structures involving key stakeholders to manage coordination, and policy development.

e-Procurement Steering Committee (e-Procurement SC)

The e-Procurement system implementation shall be carried out by the coordinated set of committees and members including the e-Procurement Steering Committee (e-PSC). The Steering Committee shall be chaired by the State Minister of the MoFEC, and representations shall be from the FPPA, PPPDS, Private Sector Association, Civil Society, MCIT, and others if required. The Steering Committee shall be reporting to the Minister of the MoFEC. Key responsibilities of the Steering Committee will be the following:

Provide policy guidance. Approve e-Procurement strategy and Roadmap. Validate and approve high level plans for the e-Procurement Program. Mobilize and secure resources required for successful implementation of

e-Procurement. Provide advocacy and visibility of the program.

e-Procurement Project Management Unit (e-PPMU)

e-PPMU will have a project manager to coordinate all activities of design and implementation including technical team coordination, monitoring of project progress, capacity building and change management activities, contract management of consultants and experts, and will be the principal liaison with the e-Procurement System Developer. The mandate of the Project Manager is as follows: a) Ensuring that the e-Procurement project is clearly defined for all phases of the

project b) Identifying the project risks and developing strategies to manage those risks c) Determining the project requirements and budget accordingly d) Effective management of all contracts related to the project e) Effective coordination of Government Agencies and other stakeholders

involved in e-Procurement Implementation f) Support and facilitate the design and development of e-Procurement System g) Develop and update roadmap and strategy to guide project implementation. h) Develop Project Charter to outline the project objectives, scope, identify the

main stakeholders and specify their roles.

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i) Review the project schedule and resources j) Review supplemental plans including risk management, communication,

project quality and change management plans k) Prepare the terms of reference for major Consultants who will be engaged

during the project. l) Advise on policy changes that may be required to implement the e-

Procurement.

The e-PPPMU will handle planning and preparation activities at the beginning and will later become a technical support team to provide guidance, technical assistance where required. The skill mix of the e-PPMU may include:

Strategic procurement management and accountability, user support, training and liaison;

A business manager who will manage the contractual relationship between the government and the service provider if the service is provided by a third party and will monitor performance.

Procurement support staff-administration of process and clerical work; E-Procurement system manager/analyst; Data Centre, network and security specialist; Database specialist-data management, procurement reporting; Web Programmer; Help Desk support; Support staff.

e-Procurement Technical Committee (e-PTC)

At Technical level, it will have a separate e-Procurement Technical Committee (e-PTC) involving a number of selected users of agencies or departments that are key to e-Procurement implementation like FPPA, PPPDS, MCIT, Central Bank of Ethiopia, Business Registration, Representation from pilot Agencies, and e-Procurement/IT Systems Analyst/Director of data center and others required. The team will be involved from the initial stage of project implementation providing input on design, testing the new system, acquiring knowledge of the new system, and further use the knowledge on the capacity building and support the implementation of the e-Procurement system.

Following project team and organization structure will be put in place for the implementation of e-Government Procurement:

b. Organization Chart

Figure 6: e-Procurement Implementation Organization Structure

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The e-Government Implementation Team will have 20 members including 1 Project Manager, 1 procurement expert, Communication Specialist, 1 Business Process Reengineering and Change Management Experts, Trainers, Developers, IT experts on Application, Database, System and security, Helpdesk staff and support associates as required. Number of ICT related staff depends on the e-Procurement System acquisition model. This will later evolve into an e-Procurement Unit to be established as a permanent unit for the sustainability of e-Procurement system management, support and rollout functions. Positions and numbers of the administrative and technical workforce will be adjusted according to the pace of progress and requirements on the implementation process.

To guide and oversee the technical systems planning and implementation as specified above national and international technical consultants shall be engaged.

Step 1.2: Situational Assessments

A procurement performance baseline study shall be carried out to assess the current procurement status and setting benchmark of the current procurement performance of the public procuring entities, and regulatory/oversight agencies as well as bidding community can be carried out at the beginning of the e-Procurement implementation.

Step 1.3: e-Procurement Readiness Assessment

An e-Procurement Readiness Assessment based on a set of survey questionnaire prepared by the MDBs was carried out in March 2018 to assess the readiness of the public, private and other stakeholders of the e-Procurement system. The e-Procurement readiness assessment provides the status of the country against nine key dimensions essential for the introduction of e-Procurement in the country. The results of the e-Procurement readiness assessments indicated that the country has moderately satisfactory level of preparedness or supporting programs for such readiness.

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Figure 7: e-Procurement readiness assessment.

The assessment concluded to a favorable alignment of essential factors to support a successful transition to enhanced e-Procurement platform.

Figure 8: Radar diagram of Ethiopia e-Procurement Readiness Assessment 2018

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The existing system, private sector integration, and legislation in Ethiopia appear to be firmly established and recognized. ICT infrastructure and web services established by the MCIT have progressed significantly over the last couple of years and are now poised to successfully support a range of e-Government services including e-Procurement. Other dimensions need significant considerations and improvements.

Step 1.4: Define e-Procurement Strategy and Roadmap

The e-Procurement strategy shall envision value-for-money and establish good governance in public procurement implementing the enhanced e-procurement platform throughout the country with a set of objectives against which the e-procurement program can be monitored. The objectives could be summarized as three broad and high-level objectives, namely (a) improved governance through enhanced transparency and accountability, (b) effectiveness through management information and efficient processes, and (c) economic development through competitiveness and improved investment climate. Key performance indicators are identified under each of the strategic objectives and targets are set for three (3) years for monitoring the progress.

The e-Procurement strategy also shall address policy issues about legal, technical, administrative, capacity building, governance model, sustainability model, human resources model, authentication, third-party services, operations and maintenance models, and a roadmap with a clear action plan for the implementation. Cabinet of Ministers endorses the e-Procurement strategy with full ownership and commitment to the implementation of e-Procurement in Ethiopia.

Step 1.5: Sensitization

Public awareness on e-Procurement and its benefits, challenges, the purpose of implementation, role of stakeholders shall be communicated to the general public, and especially the political level, top-level administrator, policy makers, and civil societies for the maximum utilization and sustainability of the e-Procurement system. These activities shall be implemented through organizing sensitization programs like workshops, seminars, audio-video programs in radio and TV, and in paper media.

STEP 2: FOUNDATION BUILDING

Ethiopia has already built some of the foundations required for the development and adoption of an enhanced end-to-end e-procurement platform, some other activities remain to be carried out. A version of e-Procurement system, which is expected to be used as the national e-Procurement system is to be reviewed for identifying the gaps and required enhancements, and business process reengineering should be carried out, wherever possible, for enhancing the efficiency in procurement process.

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Step 2.1: Securing Budget

Securing the funding to ensure implementation happens as scheduled plan instead of piecemeal is an important element of the preparatory process of e-Procurement system implementation. Implementation of the e-Procurement platform shall be funded under the ―Public Investment Management Project‖ funded through the IDA credit. The budget covers preparatory works, e- Procurement system acquisition, datacenter enhancements, pilot implementations, system audits, and capacity building. Nationwide roll-out is not covered by the current IDA credit.

Step 2.2: Business Process Reengineering (BPR)

Mere automation of the paper-based procurement system does not give the desired efficiency and leverage the available technology. It is important to streamline the manual process and practices by business process reengineering first, which help improve the efficiency gains benefits because of the streamlined procurement process. The business processes should be based on the new legislation and should be re-engineered to make the processes more simplified, efficient, and get the benefits of modern technologies. This will require changing the way the procuring entities prepare the bidding documents, bidders prepare the bids, fees are collected for the bidding dossier purchase, bid securities are handled, processes of evaluation and communication with the bidders and other stakeholders is managed, contracts are managed, and complaints are handled.

Simplified/reengineered procurement processes and practices will allow the stakeholders to operate in a transparent, efficient, cost-effective, and timely manner and reduce administrative burdens on procuring entities and bidding communities leveraging the e-Procurement. BPR should be carried out by the e-GP System developer before e-GP System enhancements and implementation.

Step 2.3: e-Procurement Guidelines or Regulations

The transition from a paper-based procurement system to an electronic system entails significant reengineering in process, practices, and means as well as brings up a new relationship with existing and new stakeholders. When most of the requirements of compliance with the procurement acts and regulations are automatically addressed by the e-Procurement system, new areas of performance-based roles of organizations, departments, and units emerge.

Automation of processes and practices under the e-Procurement will generate new relationships between stakeholders-regulatory/oversight agencies, bidding community, banks, and with others, and new roles to be performed by different agencies. For example, the e-Procurement system would have to be linked with different government e-services for accessing, verifying, and validating the authenticity of the data to be used in e-Procurement. Also, the different laws and regulations governing electronic transactions (e.g., information and communications technologies, e-transaction, and e-signature acts) as well as national e-government strategies, e-procurement strategies and other master

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guidelines, would have to be synchronized and harmonized with the Public Procurement regulations, guidelines, manuals, and circulars.

For making the implementation of the e-Procurement system well-accepted and free of ambiguities while the majority of procuring entities are still following the paper-based procurement practices, introducing the e-Procurement system shall be supported by the introduction of a section on e-Procurement in the Public Procurement and Assets Disposal Regulations. In addition to the regulations on e-Procurement, the standard bidding documents also shall be reengineered making friendly with the e-Procurement system requirements. This requires that e-Procurement regulations govern the operation, use, validation, performance monitoring by defining procurement performance monitoring framework, and scope of the e-Procurement system in the country. The e-Procurement regulations shall serve as the governing principles for the operation of the e-Government Procurement platform.

Step 2.4: Development of e-Procurement Business, Functional and Technical Specifications

The government initiative towards the introduction of an enhanced e-Procurement in the country can generate significant efficiency gains in public procurement sector. The enhanced e-Procurement system is expected to improve transparency, accountability, procurement management, strengthens documentation, compliance and performance audit capabilities around the procurement function and improving good governance in public procurement sector.

The e-Procurement specification shall be based on the provisions of the new legislation, and e-Procurement regulations and at the same time taking leverage of the information and communications technologies to make the public procurement transparent, efficient, effective, and cover the end-to-end procurement processes for all procurement methods with adequate reengineering. It shall clearly indicate the business, functional, and technical requirements of e-Procurement system providing functional facilities to all the major users.

It shall define the complete scope of the e-Procurement system and then define the deliverables by the software supplier and prepare the bidding document for national or international competitive bidding for the acquisition of an e-Procurement system.

Major functionalities to be supported by the e-Procurement system are listed as follows:

Centralized registration system for procuring entities, Bidders, and all other users of e-procurement system (oversight agencies, Attorney General, monitoring agencies, Development Partners, banks, and others)

User-specific administrative dashboards E-bidding (covering all processes and procurement methods for goods,

works, and services supported by public procurement guidelines and

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manuals of the country from annual procurement plan preparation, e-advertise, e-Clarification, e-Amendment, e-submission and modifications, e-evaluation, e-complaint handling, e-notice to signing of contract, Visualization of procurement performance based on Open Contracting Data Standard (OCDS),

Complaint and dispute management E-catalog All procurement methods prescribed by the prevalent procurement

proclamation E-contract management E-Procurement performance measurement and Monitoring E-invoicing, payment, bid security, advance and performance

guarantees (through banks and other options) Interface with Integrated Financial Management System (IFMIS),

company registrar’s office, banks, tax, and other e-services relevant to e-Procurement

User activities under administrative workflow and system audit trails

Online help with visual presentations

STEP 3: IMPLEMENTATION AND ADAPTATION

Step 3.1: Acquisition of e-Procurement System

In implementation, acquiring e-Procurement system is pivotal. Selection of right procurement system acquisition approach affects the sustainability and the success of the e-Procurement systems. There are different options for acquiring the e-Procurement application:

1) Enhance the Home-grown e-Procurement System to National e-

Procurement System filling all gaps and following the International best

practices. (recommended)

2) International Competitive Bidding for the Off-the-shelf fully open

source-based e-Procurement application with customization

In the Ethiopian context, MCIT and BDU e-Procurement systems were assessed. Use of home-grown system help enhance the local capacity and will be cost-effective not only at the beginning but also in long run leveraging the local content and local technical capacity. Refer to sub-section 1.6 for an analysis of the MCIT and BDU e-Procurement Systems based on their system demonstration. MCIT’s e-Procurement system is agreed to be enhanced for use as the National e-Procurement system. MCIT shall transfer all the Intellectual Property Rights (IPR) of the e-procurement system software to the FPPA for using as the National e-Procurement System.

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Step 3.2: Data Center Preparation

Building the data center involves installation of power solutions and power backup, precision air-conditioning, fire alarm system, digital closed-circuit television, surge suppressor, access control system, water detection system, dehumidifier, pest repellent, data rack, raised flooring, electrical and civil works, and passive components like network cables, patches, and so on, procurement of data center and mirror center servers, network equipment, storage, power solution, Internet connectivity, and required system software and licenses.

FPPA shall use the data center at the MOFEC as the primary data center and temporarily, backup will be hosted at the National Data Center operated by the MCIT. Operation, maintenance and any enhancements of the e-Procurement System are the responsibilities of the FPPA and shall be carried out in coordination with the MOFEC and MCIT. FPPA shall ensure the hosting environment, e-Procurement system and data to be highly secured, and available for access around the clock.

Establishment of the Disaster Recovery site is a critical factor. The FPPA shall develop a policy on risk, reliability and performance requirements for such hosting primary and disaster recovery environments.

Step 3.3: Capacity Building and Change Management a. Change Management

Automation of the paper-based procurement system is not panacea and does not give desired efficiency and leverage the available technology. Change Management (CM) is intended to provide a holistic framework to manage the change in the functional, technical, organizational or regulatory aspects. Change management is one of the important activities to be carried out at all levels of user environments for the successful adaptation of the e-Procurement system. For public procuring entities, the new rules and practices in the electronic environment will require changes to the way they work, for example, in use of new procedures, as well as the technology mandates. For some, the appropriate technology will already be in place. For others, that are operating public procurement in a purely manual manner, there is a need to take necessary change actions in a short time to ensure e-Procurement system can be properly implemented.

An extensive level of change has to be made for the smooth implementation of the e-Procurement system, which will be fully automated and cover the end-to-end processes and practices.

The scope of the change management extends to the people, process and technology as these relate to the e-Procurement system. Changes envisaged are enterprise-wide and span the following areas:

a) Design and acceptance of new business processes and practices

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b) Re-structuring shaping of institutions c) Work ethics d) New performance measures e) Changed roles and responsibilities f) Training g) Changed policies and procedures h) New services and information flows to clients i) Devolved power management j) Regular communication k) Emotional change management—Emotional readiness is very

important for success. Developing leadership at political, social, different levels of

government bureaucracy, private sector bidding community

Managing resistance in public procuring entities and bidding community

b. Capacity building

An important requirement for the implementation of e-procurement system involves provision of sensitization programs to political and top-level authorities, training to government managers, staff and suppliers. Failure to address this issue may lead to a lack of confidence in adopting e-Procurement and could result into delayed implementation.

The training and capacity building programs shall be designed for all categories of personnel including Executives, Policy Officials, Procurement professionals, auditors, bidders, and other players in the procurement function. FPPA shall coordinate with Ethiopian Chamber of Commerce and Sectorial Association for providing capacity programs to bidding community.

For capacity building, the following activities shall be carried out:

Benchmark study visits for the selected key users in few of the countries where e-Procurement system is already implemented shall be conducted for gaining knowledge and learn the best practices from the experience on the implementation of e-Procurement system. Such visits will be carried out at the preparatory stage of e-Procurement implementation process, so that the knowledge gained from other countries could be used for the success of the e-Procurement implementation in Ethiopia.

Different levels of training program shall be conducted to address the capacity needs of different users involved in the procurement processes (i.e., training programs for procuring entity procurement users, bidders including professional association members, evaluation committee members, accounting officers, bank users, oversight agency users, etc.). Training programs will be in the form of regular courses as well as ad hoc trainings on demand basis. Training programs shall be conducted at the all-administrative levels of public procurement.

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For the effective adaptation of the e-Procurement system by its key users and make the e-Procurement system successful, initial support on its operation, maintenance, implementation management is very important. For this, a helpdesk with adequate resources under the project management team shall be established.

3.4: Pilot and Full Rollout Across All Public Entities

Implementation of e-Procurement system shall be adopted in phased rollout model as opposed to the traditional phased module activation model. This means that the initial system developed shall cover all methods of procurement and stages of the procurement process and all the required functionality to enable piloting of a complete system. Procuring entities will chose which procurement method to start with based on their availability of procurement packages under the annual procurement plan.

Phasing shall be standalone, i.e. e-procurement processes should be complete for any procurements. Options of parallel submission of hardcopy bids and also online submission for the same procurement shall not be encouraged. If options provided, it will only delay the adaptation of the e-Procurement system and support the procurement reform in true sense. All the procurement methods shall be developed and available for use from the very beginning. Procuring entities using e-Procurement system should completely carry out all procurement processes and procurements from the system itself, no manual and electronic system shall be carried out in parallel. If systems run in parallel, it does not improve efficiency of the agency but adds more burden for capacity requirements as well as resources for both types of procurements. It will only promote systemic corruption.

Phases of rollout shall be divided into two phases:

1. Pilot in selected agencies

2. Wider rollout throughout the country

The e-procurement system implementation shall be in phased manner selecting few key public procuring entities, which provides an opportunity to reduce the e-procurement system failure risks, test the functionalities and processes in e-procurement system, and extend the demonstration effect in rolling out the system in other procuring entities based on the success during pilot implementation. It helps enhance the rollout plan based on the lessons learned during pilot implementation.

Pilot implementation should serve as a credible demonstration model for other procuring entities to follow the success. Pilot implementation should not fail due to common reason resistance which include the fear of loss of skills, loss of power and absence of personal benefits.

Success of the implementation of e-Procurement depends on many factors. Some of the major factors are the readiness of the agencies in terms of

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willingness and commitment of leadership in the organization to take up e-procurement, the level of use of information and communications technologies by the procurement-process-related personnel, and diversity of procurements carried out by those agencies.

Number of pilot agencies could be up to ten (10), considering their willingness, commitment to drive e-procurement initiative, volume and value of procurements carried out annually, and information and communications technologies readiness:

representative pilot agencies could be chosen from among the key spending agencies focusing on volume and value of goods, works and services procurement

Procuring entities having procurement packages with specific nature of procurements (i.e., medical, information and communications technologies, rations, etc.)

Procuring agencies already doing some forms of procurement automation

Procuring agencies representing geographical reach and including at least two local governments (only agencies passing the readiness requirements)

Wider rollout implementation will be carried out based on further assessment of the procuring entities on their readiness. Government of Ethiopia expects to complete the pilot implementation of the e-Procurement system carry out all procurement through the e-Procurement system in those procuring entities by 2020.

3.5: Operations and Management

Regular system maintenance, updating e-Procurement portal content, updating procurement rules and processes, supporting e-Procurement users, and ensuring availability of e-Procurement system to its users all the time shall be addressed through a well-designed operation and management policy. The operation and management are the responsibility of the FPPA, and the O&M arrangement shall be made in such a way that the e-Procurement system is up and running all the time 24/7/365 for procurement transactions, all users are supported by a helpdesk, and the e-Procurement portal remains always updated with its content and processes. The FPPA shall coordinate and cooperate with the MOFEC and MCIT for these operations.

3.6: Third-Party e-Procurement System Audit

Third-party audit provides confidence to the stakeholders using the e-Procurement system and provides authenticity of the transactions in the system. An independent third-party e-GP System audit consultant shall review, verify and validate the e-Procurement system to confirm its security arrangements, provisions of confidentiality, compliance with the Procurement legislation and e-

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Procurement guidelines, and other international best practices. The audit should be carried out at the last stage of pilot implementation and before the operational acceptance of the e-Procurement system, so that the software developer delivers the fully robust system. Nationwide roll-out should be carried out only after the third-party audit and fixing all the issues encountered and identified during the pilot implementation and through the audit.

3.7 Key Strategic Decisions

1. Fees and Charges on using e-Procurement system for its sustainability

One of the most contentious areas of application is in relation to fees and charges. It is common in some countries for fees to be attached to online registration, downloading of bidding documents, and digital certificates, etc. In these cases, the preferred position is for document download to incur no charge while bid submission may incur a fee – this is a superior approach because it does not weaken transparency (anyone can access the bid documents for no charge), and it probably does not inhibit competition, recognizing that suppliers incur costs for paper bid submissions regardless.

Following options may also be mandated to raise revenue to fund the operations, maintenance, and support of the sustainability of the e-Procurement system through:

a) Transaction or service fee from awarded Bidders, b) Forfeited security and guarantee amounts, c) Other Value-Added Services (VAS) like classified Bid notifications through

email or mobile alerts, additional storage for documents, fees for duplicate contract completion certificate, delivery of paper copy of bidding documents, trainings on request, etc.

d) Bidders registration and renewal for the use of e-Procurement System, e) Bidding document download f) Subscription on number of categories from the e-catalogue, etc.

Fees if charged for the use of an e-Procurement system shall be reasonable in order not to deter bidders.

2. No Parallel Systems Allowed

A common issue is where the government keeps the door open to paper bids even while it is implementing e-procurement. Allowing parallel option of traditional hardcopy bidding process only slows the rate of take-up of the systems and can defeat the purpose of promoting e-procurement. The case for parallel bidding options shall be at best discouraged in bidding process. At the beginning, procuring entities may indicate the procurements to be carried out electronically or manually in the Annual Procurement Plan, but it should also be noted that not all items can be subjected to e-procurement at the time of pilot implementation.

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3. Fit-for-purpose e-Authentication shall be allowed

There are different options for providing authenticity of the users in e-Procurement System and validating the e-Procurement transactions. A secured and easy to implement authentication tools, technologies and methods based on the international best practices shall be used across the e-Procurement system. Current e-Authentication policy is based on PKI technology which requires technology neutrality. MCIT is responsible for establishing PKI infrastructure for the government, which is underway.

4. e-Procurement shall be via a Central Unitary System

In some instances, e-procurement has not proceeded in a coordinated fashion across a government but is fragmented between ministries, authorities or departments. A centralized coordinated approach is greatly superior in terms of cost, efficiency and interoperability. For example, fragmentation multiplies security costs and weaknesses, and also requires suppliers to deal with multiple sites. An end-to-end and nationwide unitary e-Procurement system shall be used for all public entities. Any parallel e-Procurement system in the government entities shall not be permitted.

5. Standardization Policy for e-Procurement Implementation

One of the weak dimensions among nine dimensions of the e-Procurement Readiness Assessment was the Standards. Respondents to the questionnaire on e-Procurement Readiness candidly expressed that there is lack of standards at different levels and for different essential processes. Government of Ethiopia shall take policy to use the same procurement methods and processes across the whole-of-government. Similarly, standards shall be applied in case of e-Standard Bidding Documents, e-bid templates, methods of evaluation of e-bids, Contract templates, e-Catalog of common use items, e-Authentication and other items as felt required for the facilitation of the e-Procurement implementation.

6. Choice of a Pragmatic and Consistent Strategy

It is important that there’s broad agreement on key ingredients guiding a pragmatic and consistent strategy. This will entail inter alia adoption of a phased rollout and implementation approach underpinned by some of the following endorsements:

a) Mandating the use of the e-Procurement system in agencies as per the appropriate phasing plan. The Parallel bidding (use of both manual and electronic forms) shall not be permitted for the bidding procedures carried through e-Procurement System;

b) That e-Procurement based procurement procedures shall be governed by the e-Procurement Guidelines, which regulates the electronic procurement

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procedures after necessary Business Process Reengineering (BPR) of the manual procurement processes and practices;

c) Amendments shall be made to standard bidding documents and conditions wherever required to suit e-Procurement;

d) Recognition of online procurement methodologies such as e-Bidding, e-evaluation, e-Framework Agreements and Contracts, e-Quotations, e-Auctions and e-Reverse Auctions, e-Catalog, e-Invoicing, e-Audits, and procurement contracts management using e-Contract Management functions of e-Procurement System;

e) Mandating centralized online bidder registration as a pre-requisite for participating in government procurement through the e-Procurement system, and submission and processing of bid responses through the e-Procurement system.

f) Protecting the rights and responsibilities of users, bidders, procuring entities, FPPA, PPPDS, oversight agencies, operation and maintenance agency, and other stakeholders while using e-Procurement system, e-Procurement system shall publish its Terms and conditions of use of e-Procurement system, Disclaimer of consequences of using e-Procurement system, policy of data protection and confidentiality, intellectual property rights, codes of practices, and authenticity of electronic transactions and digital records and documents as legal evidence, etc.

The above shall be codified in the regulations on e-procurement.

7. Private Sector Participation

Private sector participation in Ethiopia looks like it is working pretty well. Private sector consultation is carried out through the Public-Private Consultative Forum established that an MOU between Ministry of Trade and Ethiopian Chamber of Commerce, and interactions take place in regular frequency. Chamber of commerce is enthusiastic and interested to collaborate in the introduction of e-GP in the country. A business activation strategy shall be developed in collaboration with the Chamber of Commerce to incorporate existing suppliers and may also work with the service industry that supports business applications. The development of a viable business activation strategy is critical in getting the buyer community embrace the reform.

8. Risk Management

The e-Procurement system is to be delivered on the basis of a public sector-wide service, and as such has potential key risk issues from both an internal and from a client perspective. Active risk management will ensure that procuring entities and Providers are able to benefit from this service in the knowledge that the systems and the practices employed provide an appropriate degree of reliability, efficiency and security. The management of this project and a smooth implementation is essential to maintain public confidence and the integrity of the

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service. To this extent, the risk management framework provides a structured format that reinforces good management practices and aims to minimize unexpected outcomes. Implementation challenges for this e-procurement project will come from both inside and outside of government and can include, among others:

a) Lack of coordination among the key stakeholders, and contribution at the right time;

b) Misunderstanding by the developer of the true scope of the work, weak project management by the developer.

c) A developer that does not understand government procurement and presumes private sector purchasing procedures.

d) Assumptions that e-procurement is simply about technology. e) Weaknesses in Government contract management, divided ownership of

the program, rigid processes and regulations. f) Apprehension towards change by public sector staff. g) Confusion over standards or the emergence of competing environments

and limited interoperability.

There are also significant design and ownership risks. The scope of government procurement is extensive and varied, ranging from the acquisition of minor items such as office supplies through to major construction, telecommunications, defense, hospital supplies and complex services. This supply side, or government procurement, affects thousands of suppliers, thousands of line items and is usually managed by thousands of procurement stakeholders within government.

Categories of Risk

a) Compliance Risks: – These are risks arising from noncompliance with

laws, regulations, internal policies and procedures and ethical standards. b) Financial Risks: - These are risks that result from inadequate financial

management. c) Operational Risks: - These risks result from inadequate or failed internal

processes, people and systems or external events. d) Reputation Risk: – Is the possible loss of the reputational capital or

trustworthiness. e) People Risk: - Is the risk associated with inadequacies in human capital

and the management of human resources, policies and processes resulting in the inability to attract, manage, motivate, develop and retain competent resources.

f) IT/Systems Risks: Cyber insecurity and rapid technology changes.

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CHAPTER 3: E-PROCUREMENT IMPLEMENTATION ROADMAP

1.1 Action Plan

The Action Plan in Table 5 presents major steps for implementation.

Table 5: E-Procurement Action Plan

# Initiative Initiator Priority Action

1 High level High- Immediate Announce Government’s vision,

sign-off level key goals and objectives,

endorse

benefits

ment of Endorse and prioritize cross-

e- government coordination and Procure change management.

ment Establish objectives, Strategy performance targets and and oversight, budget. action

plan

2 Establish FPPA, Immediate Establish-Procurement Project

Project MOFEC Steering Committee (e-PSC) support and Establish e-Procurement implement Project Management Unit (e- structures PPMU)

Create e-Procurement Working Group (e-PWG) from pilot agencies

Initiate Change management Establish terms of reference for e-Procurement System, consultants, and meeting schedules

Develop business model if required

4 Engage FPPA Short term Finalize Business, Technical

developer /

and functional specifications

suppliers Finalize phases for rollout

Advertise for e-Procurement

system Implementation

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Consultant

Evaluate and award e- Procurement Implementation contract

Initiate change management in

pilot agencies

Establish training facility

Establish help desk / service center and advertise to public

and private sectors

5 Management FPPA Short term Engage e-Procurement

and Technical Project Manager

reporting Establish reporting formats, terms of reference and meeting schedules for e-Procurement, Steering Committee and Project Technical Committees

Establish project milestones and KPIs

Establish contract management oversight requirements

Establish risk management and reporting

6 Operational FPPA Short term Revise existing procurement

e- operational policies and Procurement harmonize with digital

regulations environment

or

Develop

new operational

guidelines regulations and guidelines as required for digital environment

Establish e-signature and e- document policies for the use in e-Procurement

7 Human Develope Short term Developer to bring procurement

Resource r, FPPA synchronize officials in batches through Enablement d with roll- training facility immediately out before rollout

activate Supplier Strategy

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8 Data Centre MOFEC, Medium If required, create an integrated

Disaster MCIT term Data Centre with additional

and

hardware, software and new

Recovery

FPPA

architecture

Site

Establish Disaster Recovery

Site (DRS) with same replication of the data center

9 Monitoring FPPA Short term Develop baseline indicators and

framework and e- gather current –state baseline PSC data on procurement performance

Private sector feedback system

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1.2 Implementation Timelines - Phases

The proposed implementation schedule is shown in Table 6. The implementation phases are a guide rather than a prescription and should be driven by the e-Procurement Steering Committee.

Table 6: E-Procurement Implementation Plan (2018-2023)

e-Procurement Implementation Plan 2018 2019 2020 2021 2022 2023

No. Project Task Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1 Draft e-Procurement Strategy and action plan development

2 Procurement Status Benchmark Study

3 Establishment of Institutional Structures

3.1 e-Procurement Project Steering Committee (e-PPSC)

3.2 e-Procurement Project Management Unit (e-PMU)

3.3 e-Procurement Working Group (e-PWG) 4 Decision on Business Model Including revenue options 5 Nomination of Pilot entities for e-Procurement 6 e-PSC to Finalize Strategy

7 High level government endorsement and policy announcement of e-GP Strategy

8 Business Process Reengineering

10 Development / update of e-Procurement Regulations

11 Issuance of e-Procurement guidelines

12 Development of e-Procurement Business, functional and Technical requirements

13 e-Procurement System Implementation

13.1 Acquisition / Handover of e-Procurement System to FPPPA

13.2 Primary Data Center establishement

13.3 e-Procurement System configuration, customization or development

13.4 Secondary Data Center establishment

14 Capacity Building

14.1 Benchmark Study visit to countries where e-Procurement in implemented

14.2 Building Capacity of key implementing agency Staff on e-Procurement System

14.3 Building capacity of bidding community and procuring entities

Sensitization and communication of e-procurement to civil society and also top

14.5 level bureaucrats and leaders

15 Development of Training Material and Video tutorials

16 e-Procurement in Pilot Entities

16.1 Formation of Task Teams in pilot entities

16.2 Change management in procuring entities

16.3 Registration of pilot entities

16.4 Imporing existing bidders and Registration of Bidders

16.5 Workflow creation for each of the procuring entities

16.6 Entry of Annual Procurement Plans

16.7 Pilot implementation of e-Procurement System

17 Third Party Audit and fix the issues of e-Procurement System

18 Roll-out of e-Procurement system in all other procuring entities

19 Integration with other e-Services

19.1 Integration or interfacing with IFMIS

19.2 Integration or interface with Tax system

19.3 Integration or interfacing with Company registration

19.4 Integration or interfacing with other services

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ANNEX I: ETHIOPIA E-PROCUREMENT READINESS ASSESSMENT

1. E-GP Readiness Assessment Analysis

The e-Procurement Readiness Assessment identifies nine (9) key components for e-procurement readiness as follows in Table 7:

Table 7: e-Procurement Readiness Assessment Components

STRATEGIC FOUNDATIONS COMPONENTS

Institutional Capacity (the capacity 1 Government Leadership (vision, sponsorship,

for government to set directions and resources, stakeholder support and

lead and resource the changes implementation support). required). 2 Human Resource Management (education,

skills development, expertise and career paths).

Governance (establishing the rules, 3 Planning and Management (strategic planning

management support, performance and re-engineering of management protocols,

monitoring and evaluation to business rules and processes). support e-GP). 4 Policy (setting intent and guidelines that can be

consistently applied). 5 Legislation and Regulation (supporting rules

and the external and internal monitoring of the

efficiency, performance and compliance).

Business Functionality and 6 Infrastructure and Web Services (reasonable Standards (sustainable access to, and quality of e-services and their

infrastructure, support services and sustainable development).

common standards to ensure 7 Standards (management, procurement and accessible, integrated and consistent technical standards to ensure consistency of the

procurement services can be approach to e-GP and interoperability across

established). the systems involved).

Private Sector Involvement 8 Private Sector Integration (suppliers are

(ensuring the private sector is enabled and have incentives to participate in e- enabled to participate and be GP).

involved in e-GP)

Application of Technology 9 Systems (the planning, selection, development, (appropriate, integrated, sustainable implementation and support of e-procurement and modifiable technology is phased systems).

in to provide tendering, contract management and purchasing services).

It is essential to appreciate that key issues within these components must be addressed regardless of how e-procurement is developed or acquired.

E-Procurement Readiness Assessment was based on four levels of readiness as outlined in Table 8.

Table 8: Scoring Standard for Subcomponent Readiness Levels Level of Readiness Description

1 to < 2 (Poor) No evidence that the subcomponent is in

place and no evidence it is supported.

2 to <3 (Moderately Little evidence that the subcomponent is Satisfactory) in place and little or no evidence it is

supported.

3 to < 3.5 (Satisfactory) Some evidence that the subcomponent is

in place and some evidence it is

supported.

3.5 to 4 (High) Adequate evidence that the

subcomponent is in place and adequate

evidence it is supported.

Numerous observations were made from the discussions with government officials and other stakeholders. Stakeholders also provided feedback and recommendations for the implementation of the e-GP system in the country. Several building blocks for the implementation of e-Procurement are already in place in Ethiopia, especially few of the achievements and experiences gained with the implementation of IFMIS and e-Procurement in MICT and Bahir Dar University are invaluable and has taken substantial time for many other countries to achieve, for example:

1) The seamless interface and integration with the financial management system and its transactions;

2) Classification of procurement items – Successfully using the UNSPSC and CPV classification standards;

3) Catalog of core set of common user items are already in the database, providing a facility for mapping with the economic code of IFMIS facilitating budget and expenditure planning;

4) System can be interfaced with external systems, IFMIS, Tax system and Business Registration system;

5) Transformation among users (procurement entities and suppliers) has taken place following extensive sensitization and training programs leading to acceptability;

6) A significant number of Suppliers have been registered through the Supplier database in FPPA; and

7) Repository database of procurement information and data from past procurements established.

The overall Level of Readiness (LoR) on nine (9) components was assessed as moderately satisfactory level with the score of 2.97 out of 4.

Assessment summary is listed in Table 9 and the corresponding relative visual picture is shown in the radar picture Figure 8.

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Table 9: e-Procurement Readiness Score Matrix

e-Procurement Readiness Components Level of Readiness

1. GOVERNMENT LEADERSHIP 2.8 2. HUMAN RESOURCE MANAGEMENT 2.7 3. PLANNING AND MANAGEMENT 2.7 4. POLICY 2.5 5. LEGISLATION & REGULATION 3.0 6. INFRASTRUCTURE AND WEB SERVICES 3.2 7. STANDARDS 2.3 8. PRIVATE SECTOR INTEGRATION 3.8 9. SYSTEMS (CURRENT E-GP SYSTEMS) 3.8 Overall readiness score 2.97

The overall Level of Readiness (LoR) on nine (9) components was assessed as Moderately Satisfactory level with the score of 2.97 out of 4.

Figure 10: Ethiopia e-Procurement Readiness Assessment – 2018

Based on the assessments, Ethiopia is ready for implementing full-fledged end-to-end e-procurement in both the public and the private sector with the Level of Readiness Score 2.97 out of 4. The public and private sector, both are enthusiastic about the benefits of e-procurement and are ready embrace the new e-Procurement platform.

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1) Component 1: Government Leadership

Almost all-international experience is that the foremost essential element for successful e-procurement implementation is government leadership, including high level government endorsement of the e-procurement strategy, a national vision and objectives for e-procurement, and authorisation and resourcing of the implementing lead agency to drive the required changes. The inclusion of local government should be considered optimal and is recommended, as the e-procurement strategy could be implemented in a more innovative manner to address the local needs through the leverage of popular mobile technology and procurement practices.

An essential element for successful e-Procurement implementation is government leadership, which will deliver the sponsorship, endorsement and authority for the vital ingredients of:

A vision and objectives for e-Procurement Lead agency role definition and coordination

Procurement management reform and implementation

Stakeholder activation and commitment (government, business, community) Resource support (funding & expertise) for implementation and sustainability

of e-Procurement

The effective operational translation of this leadership is crucial and the government will need to nominate a lead agency to implement its policy and manage the risks. A suitable agency may already exist (FPPA, for example, may be the most appropriate). Lead agency endorsement identifies an authority to lead and manage the development and operation of the transformations required for government e-Procurement.

The lead agency will define the need for management and technical expertise and funding as well as coordination and collaboration across government. The Cabinet-level sign-off and lead agency establishment are important first steps to establish leadership, coordination and effective outcomes as well as the mechanism by which the requisite expertise can be assembled. The lead agency will require resources and expertise not just in technical areas but also to undertake change management.

Key observations from the e-GP Readiness Assessment:

1) Government is keen to implement e-Government Procurement. 2) FPPA is leading the e-GP initiative in coordination with the MoFEC and

MCIT. 3) Procurement Proclamation is at the draft stage and allows the use of

electronic procurement Level of readiness in terms of Leadership is Moderately Satisfactory in: Score:

2.8.

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2) Component 2: Human Resources

In most countries’ experiences, computer access and computer training are crucial components of e-procurement implementation, both for the various layers of government and for the private sector. In jurisdictions that have successfully adopted e-GP, there have usually been significant government efforts to make provision for the education and training of executives, managers and staff with procurement responsibilities. Education and training should also target private sector.

Level of readiness in terms of human resources scores Moderately Satisfactory:

Score: 2.7

Key observations from the e-GP Readiness Assessment:

• The assessment feedback suggests that there is a reasonably good level of IT literacy in government.

• Procurement positions exist in most of the key spending procuring entities but challenged by a frequent staff turnover.

• Formalized education on procurement is available Staff preparedness for change is moderate confirming that the strategy for e-procurement will need to be phased.

3) Component 3: Planning and Management

Generally, planning and management of procurement should be governed by consistent legislation, informed procurement planning; standard data collection, processing, analysis, and feedback to national planning, reasonable performance and compliance indicators, standard bidding documents, and standard processes apply in procurement and contract management.

There is no adequate confidence that the procurement processes are well managed in the procuring entities, and there is no spend analysis undertaken on a whole of government basis because of lack of relevant data collection and its processing.

Level of readiness in terms of Planning and Management is moderately satisfactory in: Score: 2.7

Key observations from the e-GP Readiness Assessment:

• Budget Annual Procurement Plans prepared but publication is not consistent

• There are few sectors with consistent planning and management practices.

• Procurement data are not easily accessible and available.

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• Standard Bidding Documents (SBDs) for most of the procurement methods are available, but those documents are not consistently used across the government.

4) Component 4: Policy

The development of policy gives important direction to the procurement environment and its transformation. Policy should be applied to issues such as value for money, open competition, risk management, local business, economic development, public procurement performance, and integrity and ethics. It should also be applied to the development of e-procurement systems and their interfaces to other corporate systems. The development of e-Procurement regulation or guidelines gives important direction to the procurement environment and its transformation.

From the survey responses it was revealed that there are no widely publicized e-Procurement strategy and policy of the government in terms of e-Procurement to be made compliant to the prevalent legislation.

Level of readiness in terms of Policy is moderately satisfactory: Score: 2.5

Key observations from the e-GP Readiness Assessment:

• At the policy level, the government has made decision on the introduction of e-Procurement in the country.

• Ethiopian e-Governments Strategic Implementation Plan 2020 incorporates the implementation of e-Procurement.

• Open Contracting Data Standards (OCDS) policy is still not in place. • Governments have some level of policy on ICT and pharmaceutical

procurement.

5) Component 5: Legislation and Regulation

Ethiopia currently follows the Directive issued by the Ministry of Finance and Economic Development Pursuant to Article 78/2 of the Ethiopian Federal Government Procurement and Property Administration Proclamation no 649/2009 and Article 19 of the definition of powers and duties of the Executive Organs of the Federal Government of Ethiopia Proclamation No 471/2005/6 (as amended). A new proclamation is at the draft stage and expected to be issued soon.

Level of readiness in terms of legislation is satisfactory, but the procurement legislation should be enacted effectively: Score: 3.0

Key observations from the e-GP Readiness Assessment:

• New Procurement proclamation is still to be passed enabling e-Procurement in the country.

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• High enthusiasm shown under this category of readiness assessment is because of the New Procurement proclamation being drafted guided by the full decentralization of the procurement to spending agencies

• Cyber security policy and e-Transaction Policy are in place

6) Component 6: Infrastructure and Web Services

Ethiopia has coverage of network infrastructure with good accessibility that is quite adequate to support most functions of e-procurement. This coverage is mainly of major cities and is considered to be affordable in major cities.

Level of readiness in terms of ICT infrastructure and Web Services is High:

Score: 3.2

Key observations from the e-GP Readiness Assessment: • ICT scenario in the Ethiopia is encouraging. • IFMIS is implemented across the country, and online tax administration

system is gradually being adapted • There are already few government web-based e-services available, i.e.

Inter-bank ET Switch enabling http protocol, business registration, etc. • Most of the ministries and Public entities are well sourced with Internet

connectivity at central level, and challenges in regions. • Mobile penetration is high, and Mobile network is widespread across the

country, and Internet data service quality is good. • Most of the ministries have got their own web sites. • MoFEC and MCIT data centers are well set.

This assessment included preparedness in terms of legal and infrastructural arrangements, readiness of the stakeholders in terms of their access to ICT tools and technologies including organizations’ existing ICT initiatives, and the computing and software systems in place. This includes Internet connectivity, ICT skills among procurement and management staff, and their adequacy for the adoption of the e-Procurement. MCIT confirmed that Internet connectivity is adequate and connects to Counties. Additionally, Government Cloud is being established for online services like e-Procurement. 3G, 4G mobile data connectivity is getting cheaper.

7) Component 7: Standards

Of greater importance than the telecommunications network are the interoperability and middleware standards. A policy directive should require that application developments be in terms of consistent technical standards, e.g. Service-Oriented Architecture (SOA). There is already Government Interoperability Framework (GIF) in place, but that should be well communicated and used.

Standards for using government email accounts is not there. Symptomatic of this

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is the common usage of Gmail / yahoo business addresses amongst government officials.

Level of readiness in terms of Standards is moderately satisfactory: Score: 2.3

Key observations from the e-GP Readiness Assessment:

• There is standard authority and there are various technical groups working under the authority

• Government has published standard for government services interoperability.

• PPPDS and other agencies still do not use any procurement category and item classification standards like UNSPSC, CPV.

• E-signature policy is based on PKI infrastructure, but such infrastructure is not yet ready for use.

• There are recommended standards for ICT and some other common use items.

• Use of SBDs are not consistent across the procuring entities.

8) Component 8: Private Sector Integration

Within the private sector, there is extensive capability amongst larger businesses in the use of computers in their businesses, and they showed enthusiasm for the introduction of e-procurement.

Survey results reveal that the private sector is adequately consulted on procurement issues. There are training facilities available, which provide trainings to government and private procurement professionals.

e-Procurement generally receives positive support from the business community provided it is presented in a user-friendly fashion. The only reservation to this is that there may be resistance arising from system security credibility and enablement of e-Procurement for the MSMEs. The e-Procurement system should promote transparency and help support enhancing private sector trust in government and procurement system. Private sector support is very important in the success of e-Procurement system implementation, adaptation and sustainability.

The private sector is enthusiastic about the e-GP System and seems ready for the adoption of e-GP system including making the necessary investment to ensure connectivity, although there could be challenges to enhance the ICT capacity of the small businesses.

Level of Readiness in terms of Private sector integration is satisfactory:Score: 3.8

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Key observations from the e-GP Readiness Assessment:

• There is standard authority and there are various technical groups working • Private sector consultation is carried out through the Public-Private

Consultative Forum established that a MOU between Ministry of Trade and Ethiopian Chamber of Commerce, and interactions take place in regular frequency

• Capacity building initiatives in procurement is not adequate • E-Procurement is wholeheartedly welcomed by the business community

despite ICT access challenges in case of small business. • Chamber of commerce is enthusiastic an interested to collaborate in the

introduction of e-GP in the country

9) Component 9: Systems (Current e-GP Systems)

E-GP System should address the spirit and requirements of the public procurement based on new procurement law and international best practices. The assessment of this component is based on the use of e-Procurement systems developed and used by MCIT and BDU.

Level of readiness in terms of Existing system is High: Score: 3.8

Key Observations:

• The e-Procurement systems mostly comply with the prevalent procurement legislation.

• It is noted that two systems already exist in the country - one developed by the MCIT, and another by BDU. Initiation of the MCIT e-Procurement system was developed with an objective to be used, ultimately at the national level, which is currently used only to address the internal requirements.

• BDU system is matured and has been used for the last 7 years, and MCIT system is under pilot testing.

• Both the systems are web based. • More detailed analysis was prepared comparing both the systems for

recommending to upgrade for using at the national level.

2. List of Participants in the e-GP Readiness Assessment

Participating Public Entities

1. Ministry of Finance and Economic Cooperation 2. Ministry of Communication and Information Technology 3. Ministry of Construction 4. National Bank of Ethiopia

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5. Information Network Security Agency (INSA) 6. Public Procurement and Property Disposal Service (PPPDS) 7. Ethiopian Roads Authority (ERA) 8. Addis Ababa University 9. Bahir Dar University 10. Hawassa University 11. Mekelle University 12. Jimma University 13. Pharmaceuticals Fund and Supply Agency (PFSA) 14. Engineering Procurement Directorate, ERA

Participating Bidding Community

1. Ethiopian Chamber of Commerce and Sectorial Association (ECCSA) 2. Alta Computec 3. OMEDAD PLC. 4. Alsam PLC 5. Winner Industrial Engineering

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ANNEX 2: STRATEGIC OBJECTIVES, KEY PERFORMANCE INDICATORS AND TARGETS

Table 10: Strategic objectives, KPIs and Targets

No Strategic Key Objectives Key Performance Targets

. Objectives Indicators

1. Improved 1.1 To improve Users, Suppliers Currently the

Governance service delivery to and PEs baseline for the (Transparent Procuring Entities Satisfaction Levels satisfaction is ―not Processes (PEs), suppliers known‖.

and and users The specific targets

Accountabilit

involved in public

aimed at achieving

y)

procurement.

―moderately

Satisfied‖ by the end

of 2023.

1.2 To ensure Percentage of 100% of all transparency in all Invitation to Bids procurement ITBs procurement (ITB) published are published by opportunities through e- 2023 in e- Government Procurement portal Procurement for all Pilot PEs

1.3 To improve Percentage of 100% Procurement Accountability in Procurements with decisions are

procurement adequate authority approved with

completed adequate authority

by 2023.

2. Effectiveness 2.1 To minimize Average % reduction in (Informed the transaction Transaction Cost for average transaction management, costs associated goods, works costs by the end of efficient with procurement (repairs and 2022/23.

processes) of goods, works maintenance) and

and services services

calculated

separately

through Reduction in

standardization,

Transaction cost for transaction cost

streamlining

and

equal to % of total capital works

the use of e-

capital

works

Procurement in

expenditure by the

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the procurement end of 2022/23.

processes within,

and where

appropriate

across agencies

and sectors.

2.2 To maximize Percentage of total 50% of expenditure

value for money expenditure on on Goods works

for government Goods, works (repairs and

expenditure by (repairs and maintenance) and enhancing the maintenance) and Services in the Pilot buying power of Services procured PES procured under

the public sector. under e- e-Procurement

Procurement contracts by the end

contract of 2021/22.

Unit Cost Reduction

for Goods, works

Average Unit Cost

(repairs and

Reduction of % for

maintenance) and

Goods,

works

Services under e-

(repairs

and

Procurement

maintenance)

and

contracts

Services by the

end

Fee levels for tender of 2021/22.

management and

contract supervision

and administration Reduction of 0.5% of

for capital works

total capital works under e- expenditure under e-

Procurement

Procurement by the

end of 2022/23.

2.3 To improve Improvement in (i) % increase in the the auditability of audit ratings in number of public procurement procurements

procurement transactions audited that are rated expenditures. satisfactory

Timely completion of

(ii) Reduction in the audit cycle time by

procurement audits

x%

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Increase in audit Increase in the audit coverage coverage by x%

2.4 To make Reduction in 20% reduction in

effective use of Transaction Cost average transaction

human resources Savings for Goods, costs by the end of in the Works and Services 2019/20. procurement as a measure of the

process. human resources

being freed up for

deployment

elsewhere

3. Economic 3.1 To promote Percentage of 80% by end of Development competition Tenders and Award 2020/21.

(Competitive among suppliers Notices Published in

ness, while maintaining e-Procurement

investment reliable sources of Portal by the

climate) supply. agencies registered

in e-Procurement

System.

The average Increase of 50% in

bid numbers by the number of bids

end of 2020/21.

received

3.2 To be Percentage of 90% of tenders progressive in the Tender carried out adoption of e- Competitions carried electronically by the

Procurement. out electronically end of year three years (by the end of

2022).This should

be measured by comparing the number of tender competitions carried out electronically with the total number of tender notices published.

Percentage of 80% of all tenders

and award notices

Tenders and award

advertised, and

notices advertised

tender

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and tender documentation

documentation published, on the e- published procurement web site electronically by the end of two years (by the end of

2022). This should be measured by requiring PEs to

report annually to

FPPA on the total number of tenders issued and awarded.

10% of expenditure

Percentage of on Goods and

services should be

Expenditure on

supported by e-

common Goods and

Framework

Services supported

Agreements by the

by e-Framework

end of 2021. Agreements

80% of all Percentage of procurement

Payments made transactions paid through e-Payments through the e- under e- Payment mechanism Procurement provided by the e-

System Procurement System by the end of year

Three (by the end of

2021).

There are both financial and non-financial targets estimated. Targets and key performance indicators are defined for each of the strategic objectives identified.