ChileCompra: A public policy to enhance transparency and efficiency

The Public Marketplace in Chile Outcomes A Public Management Reform Key considerations for a successful implementation Agenda

The Public Marketplace in Chile

Procurement system overview Supported by a web-based marketplace.

Procurement system overview Contracting agencies are accountable for their procurement process ChileCompra is agency responsible for operating and regulating the market Stakeholders provide the check & balance structure Supreme Audit Institution Public Procurement Court

5.3 Bids Per Process 2,000,000 Visitors Per Month 15,000 Contracting Officers 900 Public Agencies 1,650,000 Purchase Orders 500,000 Business Opportunities Transactions worth 3.5% of GDP 90,000 Businesses Placing Bids 2009 ChileCompra Performance Mio USD 100% of all Agencies 4.8 in 2008 Chile Population: 16 million

Outcomes

CPAR IDB 2008 OECD/DAC In terms on Integrity

Suppliers’ Opinions: Transparency in the market place ¿Half Empty? ¿Half Full?

Leaders’ Opinions: Transparency in the market place Source: Feed Back Public Sector Trade Unions Judicial Power Opposition Political Parties Government Political Parties Public Sector Workers Congress and Members of Parliament Citizens International Organizations

2009 savings up to USD 180 MM Hospital Fully Equipped Cataract Surgery Post Degree Scholarship Computers for Children Police Cars

Methodology Using Surveys we estimate if the marketplace attracted or deterred bidders: Delta N=1,3 We assume price are distributed log normal We use the first order statistic as the awarding price. We calculate this price with N and Delta N bidders This difference represents the savings

A Public Management Reform

Politics Solutions Problems 2003: Window of Opportunity Kingdon (1995) Problem: “Regardless of the degree of development, public procurement is a risk area for corruption” (Thai, 2001). Politics: Transparency and corruption scandals in Solutions

ChileCompra was a project in a broader agenda aiming to reform the State. a Strategy Participation Other examples: Quality services for the citizens Improvement the planning and control management Electronic Government Improve cooperation between privet and public sector Decentralization of the State New Ministry of Energy and New Ministry of Environment

Political Support The Ministry of Finance leads the Reform No restriction on resources “Sticks and carrots” Objectives are steady, well-understood and shared by every stakeholder Officials are well-paid and have sound professional records. Top-Down Implementation

Waissbluth, 2006, “La Reforma del Estado en Chile ” (The State Reform in Chile ) The Role of Leadership

Key considerations for a successful implementation

The relevance of data BI Business Intelligence CRM Customer Relationship Management Customers

Threat: Small & Medium Enterprises perception of further market concentration

18% 24%18% 35% 18%24% Source: Chilecompra Response: Having more suppliers is a strategic goal National Economy ChileCompra 2006 ChileCompra 2007 Transactions by Company Size

Threat: Resistance to change

Improve contracting officers capabilities Response

Operations Initial Investment in SW: USD 2 MM ChileCompra’s budget: USD 11 MM Goods and services: USD 6 MM Data center : USD 2,8 MM Customer support : USD 0,5 MM Software : USD 1,5 MM Training: USD 0,3 MM Others: USD 0,9 MM Internal HHRR: USD 5 MM All figures in USD millions per year + Service Level Agreements

José Miguel de la Cuadra Head of Public Procurement Division of ChileCompra Ministry of Finance Thank You