The Czech Republic's eMarket for Public Tenders and Procurement, an electronic marketplace, is a web application that allows electronic procurement within the stipulated procurement procedures. The case study provides a comparison of several eMarketplaces, showcasing their capabilities and summarising developments.
Policy Context
What Is an Electronic Marketplace?
In the Czech Republic, an electronic marketplace is a web tool that meets the requirements of the national Public Procurement Act and is included in the list of electronic marketplaces maintained by the administrator of e-marketplaces (Ministry for Regional Development of the CR). Using defined rules, contracting authorities use electronic marketplaces to award public contracts that fall into any of three bands:
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minor (below an expected amount of CZK 2 million excluding VAT, or CZK 6 million excluding VAT for construction works);
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below threshold (contracts from CZK 2 or 6 million, respectively, up to a defined limit);
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awarded under a framework agreement with several bidders.
As a part of the government’s implementation of its anti-corruption strategy, a new system of e-marketplaces was established on the basis of a government resolution. Use of this system of e-marketplaces has been compulsory since July 1, 2012. Under the new system, e-marketplaces are implemented as a component of the NIPEZ (National Infrastructure for Electronic Procurement) system, which aims to simplify, standardize, and make transparent the system for awarding public contracts. Five e-marketplaces have so far been launched within NIPEZ.
Description of target users and groups
Main Benefits of E-marketplaces
Simplification and automation. E-procurement can be used for rapid, efficient purchasing of commodities in specified procurement procedures. E-marketplaces are fully electronic systems, so they replace existing paper-based method of procurement.
Increased efficiency and savings. The main aim of the new regulation of electronic marketplaces is to increase efficiency and savings in public spending. Marketplaces allow contracting authorities to get the best suppliers through auctioning.
Removing suspicions of cronyism and corruption. Thanks to an automated system which does not feature personal contacts, the risk of corruption and cronyism is reduced. Suppliers can compete for each contract on equal terms.
Stable, lawful environment. Processes taking place in e-marketplaces must comply with legal requirements, and all entrants are bound by the rules. This regulation of the marketplace ensures stability and predictability.
Technology solution
Operation of E-marketplaces
The e-marketplace system has two basic modes: mandatory and voluntary. The mandatory mode applies to listed contractors, listed commodities, and listed procedures. The voluntary mode is designed for contractors who are not obliged to use e-marketplaces.
The new e-marketplaces work on the principle of PPP (public-private partnership) – the operator invests in the creation of software, and operates the e-marketplace at its own expense. State funds are therefore not needed to establish the system of e-marketplaces. These commercial operators accept the business risk, while the existence of multiple operators creates a competitive environment and motivates them to develop and refine their business strategies. All e-marketplaces must satisfy the same basic conditions set by the Ministry for Regional Development.
Mandatory users are, according to the government resolution, two basic types of entities:
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central government authorities; and
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various subordinate organizations of the central government authorities.
Starting from January 1, 2014, these organizations must use e-marketplaces for all their spending on listed commodities.
Voluntary users
Contracting entities that are not subject to the obligations described above may use e-marketplaces on a voluntary basis. They are:
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local governments (municipalities, regions, cities, and the capital, Prague);
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state-funded organizations created by local government;
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other legal entities as defined by the Public Procurement Act;
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sector contracting entities;
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contracting authorities who award contracts in connection with the exercise of relevant activities; and
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subsidized contractors.
Local governments at the level of regions and towns, and municipalities and other legal entities defined by the Public Procurement Act, are recommended to use e-marketplaces now because the obligation to use them may be imposed on them in the future.
E-marketplaces offer so-called basic services, for which the operators receive payment from the Ministry for Regional Development when the services are used by contractors and suppliers. Then there are so-called additional services, which are paid for by the contractors and suppliers who use them. The pricing of additional services is set by each operator.
Basic services allow contractors to implement all the necessary actions in the tender process. They include, for example, basic reports and statistics, and monitoring of procurement procedures. For procurement procedures with an estimated value of over CZK 5 000, the e-marketplace operators pay the fees for basic services directly, rather than reclaiming them from the Ministry.
Additional services are those operations that are not directly necessary for proper and efficient public procurement. E-marketplace operators offer additional services to their users within the boundaries set by their concession contracts. Providing additional services is at the discretion of e-marketplace operators, and the range of additional services may differ for each e-marketplace.
Technology choice: Proprietary technologyMain results, benefits and impacts
Functional Electronic Marketplaces
For the period from April 1, 2012 to March 31, 2017, the Ministry for Regional Development has chosen five operators – Czech Post, Czech Market, eTenders, Syntaxit, and Vortal – to create and operate e-marketplaces.
Czech Market
At the time of writing (end of September 2015), the Czech Market list included only eight contractors and had awarded only one public contract, whose value of just CZK 25 000 places it outside the regime of the Public Procurement Act. The web site looks unkempt and unattractive. This leads to the conclusion that the this e-marketplace is non-operational.
eTenders
The eTenders portal is run by the Association Tender Systems, s.r.o., ample.cz, s.r.o., and Seznam.cz, a.s. (Seznam.cz plays an important role in the Czech Internet, with some of its services able to compete with Google). At the time of writing, the portal featured over 520 contractors and nearly 5 000 active contracts. Information on the site is current, and the system is functional and actively used.
Syntaxit
Syntaxit has an attractive appearance and a large amount of data – a total of nearly 27 000 contracts, of which about 9 000 were entered this year, with a total of 300 contractors. The portal looks lively and up-to-date, and it is obvious that it is used by various contractors.
Formerly Functional Electronic Marketplaces
Centre for Public Contracts (Czech Post)
Operation of the Czech Post e-market, and its concession contract, were terminated on July 17, 2014.
Vortal
Vortal ceased operation due to lack of profitability on January 6, 2015. The concession contract was terminated on August 31, 2015.
Marketplaces outside the Regime of the Public Procurement Act
In addition to the listed licensed markets, there are other systems that do not operate under the Public Procurement Act – in other words their operators do not hold concessions. These systems offer their customers information on public procurement of various kinds. They operate as regular businesses, usually on an annual subscription basis. They include https://www.vhodne-uverejneni.cz, http://www.uredninastenka.cz, and https://gem.b2bcentrum.cz.
Software for Managing Contracts
Software that drives electronic marketplaces or provides functions prescribed by the Public Procurement Act includes EZAK, Tender Arena, Xtender, CENT, ELZA, and more. As with e-marketplaces themselves, competition has grown in this segment, making the management of procurement and related processes simpler for contractors.
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In e-procurement, only electronic instruments that meet the requirements of the following laws can be used: Act no. 137/2006 Coll. On public procurement and the implementing regulations – especially Decree no. 9/2011 Coll. The decree sets out detailed conditions relating to electronic tools and related operations. Compliance with the requirements for electronic instruments can be proven using a certificate of conformity issued by an independent certification body. The number of e-marketplaces is regulated to a maximum of five.
Interoperability of individual instruments is subject to competition between vendors, so it is possible to find different types of APIs, connections to records management, export, import, or data synchronization with other systems. These functions are focused on the customer, i.e. usually the state or public organizations. There is also a public-facing web interface, through which an adequate amount of information is available.