In the Case Studies section:
Success/Failure Case Study No.14
eProcurement by Mexico's Federal Government
Case Study Author
Santiago Ibarra Estrada ( santiagoibarra@hotmail.com )
Application
This is a government e-procurement system (Compranet), set up by the Unit of Electronic Government Services within the Mexican Ministry of the Controllership and Administrative Development (MCAD). The system is a Web-based on-line procurement system using a variety of hardware and software.
Application Description
Compranet has managed to funnel through its Web site information and communication aspects about the majority of government procurements. Around 3,000 procurement units within various government agencies post their requirements online, and government suppliers can submit their proposals via the Web site. These phases of the procurement process are visible on the Web site. Online transaction of procurement is much more restriced, but is growing.
Application Purpose
In the midst of the 1995 currency crisis the Mexican Federal Government had little or no information concerning government suppliers, procurement prices, and acquired items. No consistent controls on government purchases were available; procurement processes were costly and plagued by corruption; acquisitions were overpriced; and suppliers were concentrated in the Mexico City area. The economic turmoil in the aftermath of the Mexican peso crisis called for deep budget cuts and stricter controls on all public expenditure. The crisis undermined the ruling party's credibility, strengthened the opposition, and spread the image of widespread government corruption. The Compranet system was introduced to try to address these problems.
Stakeholders
Federal Government agencies and organisations are key stakeholders, particularly MCAD and the Ministry of Finance. Individual government officials have been affected, for example in potentially curtailing their ability to engage in corrupt practices. Suppliers of goods and services to the Federal Government are also affected; perhaps particularly small and medium enterprises outside Mexico City, which have been drawn into the procurement process. Finally, citizens are involved through their ability to oversee some government procurements.
Impact: Costs and Benefits
By April 2002, information and communication aspects of 80% of all Federal Government acquisitions were being routed through the Compranet system. Online transactional activity is estimated to total around 2% of total procurement. Costs for administration of procurement and costs of items procured have been cut, with typical estimates of savings of around 20%. Around 25,000 suppliers make use of the system, and many state and municipality governments have joined the system. Participation costs for business appear to have fallen, and small/medium enterprises from outside the capital region have joined in the procurement process, although there has been no systematic analysis of this. No public estimates are available of the total cost of the system. In 2001, journalists trawling the site found that the President had ordered towels for his presidential palace costing US$500 each (around half average yearly earnings in Mexico). While not good for the ruling party's credibility, this was a visible demonstration of the increasing transparency delivered by Compranet.
Evaluation: Failure or Success?
The system has been largely successful, although evidence in the public domain on costs and on key objectives such as corruption or incorporation of new suppliers remains non-existent or weak. The system is likely to have cut prices and costs for government, and has increased transparency to some extent. In 1999, it was winner in the eCommerce category of the Global Bangemann Challenge. The system has also formed the basis for adoption in a number of other Central and South American nations.
Enablers/Critical Success Factors
- Political support inside government .
- Incremental introduction . The system was introduced in a scaled manner, with continuous user training.
- Participation and negotiation . MCAD successfully involved and negotiated with a series of key stakeholders.
Constraints/Challenges
- Cultural barriers : mainly to use of the Web and ICTs more generally.
- Legislative delays : caused by the need for new legislation and rules to allow for new forms of procurement.
- Resource constraints : particularly shortages of personnel.
Recommendations
- Obtain political support .
- Adopt an incremental approach . At each stage, this allows credibility for the next stage on the basis of what has been achieved in the last, and allows time and space for amendments to address shortcomings, and for all stakeholders to adjust to the new system.
- Provide constant support and training . In Compranet's case, this included a free national phone assistance service for suppliers and other users.
Further Information
http://www.wired.com/news/business/0,1367,50622,00.html
Case Details
Author Data Sources/Role : Web Site, Documents and Interview; No Direct Role
Outcome : Largely Successful. Reform : eSociety (working better with business).
Sector : General Services (Procurement).
Region : Central America. Start Date : 1996. Submission Date : August 2002