Presentation
E-procurement in Germany (Legal Basis Pilot Projects and Practical Experience in Germany)

Dr. Kirstin Pukall
Head of Section, Public Procurement Policy, Economic Policy Division, Federal Ministry of Economics and Technology, Germany

The German Chancellor launched the D-21 Initiative two years ago, after the Lisbon Summit of the EU. This initiative called for the modernization of rules and procedures in Germany, as well as an undertaking to improve efficiency and for the government to become more "user friendly." The aim is that Germany should be completely online by 2005, including the e-registration of persons and cars, electronic signatures, virtual city governments, and e-procurement.

E-procurement is seen in three different ways in Germany: electronic portals supported by the administration; reverse auctions; and e-marketplaces, which can be horizontal or vertical. It is understood that vertical e-marketplaces, in which one customer is provided with all types of goods, are the most preferred among suppliers. The intended aim of e-procurement is to provide large savings benefits and be easily internationally accessible. It is estimated that Germany could save 10% of its budget with a move to e-procurement.

For Germany, the EU Directives are decisive in creating a legal framework for e-procurement, supplemented by national rules for public procurement. The main objectives under the EU Directives are that procedures must be transparent and non-discriminatory, and that the tender must be given to the lowest-priced bidder or the most economical bid. Below the EU thresholds are the national rules for public procurement, which, in Germany, were updated in February 2001 with the Award Directive, allowing for electronic tenders and electronic bids.

There are a few pilot projects in Germany, with different projects at the federal and regional levels. Two projects are underway at the federal level. Experiments are being carried out by the Ministry of the Interior on e-procurement methods that are outside the current German law, such as e-purchasing and reverse auctions, the results of which will help in modifying the existing legislation. And the Ministry of Defence is currently conducting reverse auctions for "C-Products." In addition, two research studies have been launched, one on procurement platforms, and one on reverse auctions.

On the regional level, an initiative labeled media@komm is being sponsored by the Federal Ministry of Economics. A problem facing regional-level pilot projects is that it is difficult to ascertain what exactly each project is implementing and the compatibility of these projects cannot be easily established.

Reverse auctions were a common practice in Germany in the 19th century but were abolished at the beginning of the 20th century, due to the poor quality of goods and services exchanged and the high rate of bankruptcy the practice caused among SMEs. Reverse auctions could be a good method for new projects, but there are risks inherent, including the abuse of the dominant market power of the buyer, the risk of receiving poor quality for low price, and discrimination toward SMEs. These are the questions that are being worked on and results are expected by the middle of 2001, after which the federal government will decide whether or not to change the legislation.