Best Practice Summary Surabaya, Indonesia

Country:

Indonesia

Local Government:

Surabaya

Type:

Municipality

Best Practice Title:

The implementation of E-Procurement in Surabaya City

Aspect of Governance:

Thematic Area 2: Institutional Governance

Contact person:

In Surabaya: 1) Agus Imam Sonhaji, ST, MMT (Head of Evaluation and Reporting Sub-Division in Development Division of Surabaya City Government) Jalan Jimerto 25-27 4th Fl. Surabaya Tel: 62-31-5312144 ext. 554 HP: 0811 311374 E-mail: sonhaji@surabaya-eproc.or.id 2) Ir. Antiek Sugiharti, M.Si (Head of Urban Sub-Division in Government Division of Surabaya City Government) Jalan Jimerto 25-27 5th Fl. Surabaya Tel: 62-31-5491024 HP: 0811 334442 E-mail: antiek_y@yahoo.com At APEKSI: Teguh Ardhiwiratno Address: Century Tower Lt. 10 R. 1006, Jl. H.R. Rasuna Said Kav. X-

2, No. 4, Jakarta 12950 Tel.: 021-5226773 Fax: 021-5226775 Hp.: 0818131433 Email: teguh@apeksi.or.id Teguh_ardhiw@yahoo.com

Start Date:

2003

Website:

http://www.surabaya.go.id/ver5/ (Indonesian only)

Description: Background

Surabaya is the capital of East Java Province and the second largest city and port in Indonesia, as well as one of the oldest cities in the country. It has a population of more than 2.5 million people and is experiencing fast growth as a city of culture, education, tourism, maritime, industry and trade.

However, Surabaya was suffering from old-fashioned government and procurement systems whereas the reform era required transparency and openness in the government system to realize the principles of good governance. There was strong demand for better public services to be provided by the regional government and the city government therefore decided to take a new approach to the procurement of goods and services in Surabaya to increase the effectiveness and efficiency of its budget management.

The lack of transparency was partly due to the fact that most providers of goods and services for the city government’s agencies were companies that had close connections to top officials within the local government. That meant that there was a lack of transparency in the awarding of contracts and that projects were often more expensive than had been budgeted for and not finished on time.

There was, therefore, a need for a system that made the procurement process more transparent and therefore fairer. An electronic system seemed to a good way forward.

In the beginning of 2003, based on the Presidential Decision No. 18/2000 on Guidelines on Procurement of Goods/Services of Government Agencies, Surabaya City Government facilitated a process of electronic prequalification. For that purpose, the www.lelangserentak.com portal was opened.

In the beginning of 2004, based on Presidential Decision No. 80/2003, Surabaya City Government refined the goods/service procurement system in the form of e-Procurement (e-Proc), which was known as Se-PS (Surabaya e-Procurement System). The system refinement was applied in www.surabaya-eproc.or.id portal.

Objectives

The main objective of the introduction of an e-procurement system was to increase public satisfaction with the procurement of goods and services by awarding contracts in a transparent and fair manner.

Specific objectives:

• To have a comprehensive system of electronic procurements in place throughout Surabaya local government agencies;

• To save on the costs of public procurement of goods and services; • To ensure faster and more efficient delivery of goods and services.

Results

• The tender service using the e-procurement system (Se-Ps) is used by 28 agencies (23 dinas and 5 badan), 4 offices and 9 divisions within the Regional Secretariat and the Council Secretariat of Surabaya City Government.

• Savings: Through competition in the bidding process, the city government has managed to save up to 25% of the original budget for public works and services. There are also savings through the fact that the process is now paperless.

• Accelerated service: The delivery of goods and services has become

faster and more efficient. Through performance-based budgeting, efficiency can be reached by increasing the performance target, i.e. more can be produced/delivered for the same amount of money. The time it takes for any project to be finished, i.e. goods and services delivered, has also decreased.

• A welcome side effect of the new process is that procurement

committees and budget officials can avoid allegations of corruption since the whole process takes place in an open and transparent manner.

• The site averages 50,000 daily hits and was visited by at least 85,000 people in the first year of operation.

• The project won numerous awards:

• Jawa Pos Institute of Pro-Otonomi for the category of Region in Leading Profile on Public Accountability on April 28, 2004.

• E-Government Award from Warta Ekonomi Magazine in 2004.

• Obtaining ISO 9001: 2000 certificate for Quality Management System on March 4, 2004.

• Jawa Pos Institute of Pro-Otonomi for the category of Region in Leading Profile on Public Accountability on May 4, 2005.

Main Activities

1. Preparation

a. Establishment of the Secretariat of E-Procurement Services of Surabaya City Government to provide supporting facilities and infrastructure to procurement committees and goods/services providers.

b. Preparing a decision from the Regional Head on technical guidelines and procedures on e-procurement implementation.

c. Conducting internal training for goods/services procurement committees.

d. Communicating the new system to goods and services providers.

2. Implementation

a. Establishing the Center for E-Procurement On-Line Data Services in Surabaya City Hall to have a meeting facility for goods/services providers. Access to the e-procurement site is provided there, as well as short training courses on the procedure of how to participate in e-procurement in Surabaya.

b. Setting up and operating the integrated on-line helpdesk for goods/services providers that need guidance for their participation in e-procurement.

c. Co-operating with groups of goods and services providers from small companies to build the E-Procurement Data Service Center. The system has been designed specifically to make access to procurement easier for small companies and to allow easy access 24-hours a day.

d. Coordination with stakeholders, particularly the association of goods/services providers as well as national and regional construction services provider associations.

3. E-Procurement system application

a. The e-procurement system application was developed from the tender procedure in the Presidential Decision No. 80 Year 2003 on the Implementation Guidelines of Government Goods/Service Procurement.

b. The system application was divided into three main menus, one for for goods/services providers, one for procurement committees and one for system administrator. Each menu has certain access code to maintain data and process secrecy.

4. Supporting infrastructure Supporting infrastructures that needed to be prepared were:

a. The provision of a special server for the e-procurement administrator. Various security facilities were placed in this main

hardware, including access control to the main server. b. Local Area Network across units of government agencies to support

the performance of procurement committees. c. Preparation of back-up data that is always identical with the mother

server in Surabaya City Government and is placed in IIE (Indonesian Internet Exchange) so that the security and speed of access are guaranteed (co-location).

5. Implementation management

a. To improve the quality of services of procurement committees and goods/service providers as the main customers and the general public who want to use information on the implementation of tender of work packages within Surabaya City Government, the Secretariat of e-Procurement Services as web administrator as well as coordinator of tender implementation supporting activity took the ISO 9001:2000 certification for Quality Management System.

b. In order to protect the implementation of e-procurement from problems with intellectual property rights, Surabaya City Government registered the right for the creation of the e-procurement application with the Ministry of Justice.

6. Functioning of tender process through the e-procurement system

The tender process stages in the e-procurement facilities in www.surabaya-eproc.or.id portal include:

a. The tender process is coordinated by the Regional Secretariat that has established a Secretariat of E-Procurement Services.

b. Working Units independently determine the work package that will be

tendered and conducted through e-procurement by using the portal. All document belong to that particular procurement will be put up on the portal.

c. Goods/services providers can register with the official e-procurement

portal by providing the e-mail address and the tax identification number of their company. The portal will automatically respond and send a password by e-mail.

d. The password allows users to participate in the further process of the

tender (filling in qualification data and the work package the provider is interested in) and constitutes one data security function in the tender process.

e. The goods/services providers may now download the procurement

documents.

f. The providers will choose between different work packages on offer and decide on the one where their qualifications meet the criteria and bid a price proposal that will automatically be encrypted by the portal

software.

g. The bidding documents can only be opened by the tender committee of each working unit. An evaluation is then conducted to determine the winner.

h. All tender participants as well as the public can see the results of the

evaluation on the proposed bids in the portal.

Lessons Learnt

• Openness and transparency has allowed all parties (small, medium and large companies) to participate in the tender of goods/service procurement.

• The more providers join the bidding, the more alternatives are available for the procurement committees/users.

• With an open tender, the providers will try to improve the quality of the goods/services offered with competitive prices. The benefit obtained by the city government is procurement of goods/services of good quality for relatively low prices, leading to budget efficiency.

Sustainability Once the e-procurement system had been set up, the running costs are relatively low (technical support and help-line), so that they can be covered within the existing local budget. The savings achieved trough the use of the system are such that it easily pays for itself. Plans to develop the service further to improve the performance and public confidence in the process include:

• Increasing public confidence in the information security system by ISO

BS: 7799 certification on Information Security Management System (ISMS).

• Adding facilities of tender information and transaction for goods/service

providers and the public through the media of cellular phone (GSM) or m-Procurement.

• Cooperating with the national government (Bappenas) in developing

electronic Goods/Service Procurement Services that can be integrated across government institutions.

Transferability

• This programme can easily be replicated by all government agencies at

both national and local levels as its operational procedures refer to the Presidential Decision no. 80/2003.

• The system has already become one of e-procurement service providers for regional government that assesses that organizing e-procurement independently is neither efficient nor effective.

• Since the end of the project phase in 2005, it has been agreed that the e-procurement system will later be installed for free in other places in cooperation with Surabaya City Government or other appointed parties. Regional governments will only have to provide hardware and personnel to be trained to manage the system.

Picture 1: Workshop on e-procurement system, September 2004

Picture 2: Acceptance of e-government award from Warta Ekonomi Magazine