Electronic Quoter: A purchasing tool for efficient market research in Peru

"Electronic Quoter"" is a Peruvian purchasing innovative tool which consists of the implementation of information service aimed at public entities that contract through the Electronic Catalogues of Framework Agreements. It allows them to estimate the price of the goods contained in their purchase request and has allowed them to reduce the time of the preparatory actions of the procurement process from 68.1 calendar days to only 1 day, for the benefit of 2,000 public entities and the citizens they serve.

Innovation Summary

Innovation Overview

Public procurement is the most relevant direct economic activity carried out by a government, and it has a significant impact on the economy and society. Indeed, faced with the challenge of making public procurement efficient, the Public Procurement Central - PERU COMPRAS (Central de Compras Públicas - PERÚ COMPRAS) came into operation on March 18, 2016, with the aim of optimizing public procurement. PERÚ COMPRAS, within the process of continuous improvement, annually develops satisfaction studies that seek to identify opportunities for improvement in the contracting tools it manages, among them, the Electronic Catalogs of Framework Agreements, and to allow us to collect from our direct users (public entities and suppliers), the problems and initiatives for the best use of this special contracting method. In this context, in the satisfaction study with public entities carried out at the beginning of 2018, the lack of information on the prices of the goods included in the electronic catalogs was identified as a recurring problem to process the budget certification, a document necessary to start any purchase process. We can highlight the following comment: "The prices of the goods offered in the Catalogs should be displayed in the application, to avoid setbacks with the Budgetary Credit Certification (CCP)". Indeed, after analyzing the problem and the initiative proposed by the user in detail, it was verified that this activity, which corresponds to the preparatory acts, could take an average of 68.1 calendar days in a selection procedure, which corresponds to the consultation of various sources of information; such as quotes, specialized web pages, physical catalogs, historical prices, among others. In other words, the almost 2,000 Public Entities that have been contracting through this special method were affected by this lack of information.

Faced with this, we verified that according to the rules contained in the regulatory documents of the framework agreements, the confidentiality of the information of the offers (price of the goods before being contracted) should be maintained, however, once the contracting was formalized through a purchase order, this could be made public. After an analysis of the available information (historical purchase orders), on April 11, 2018, a proposal was made to the Headquarters of PERU COMPRAS for the development of a web application that in a friendly way estimated the price of the goods contracted through electronic catalogues. The service, "Electronic Quoter" began operations in a pilot version (minimum viable) for Lima and Callao on December 21, 2018 and has reduced the term of the preparatory actions to one day. However, there was still the challenge of offering the service nationwide (scaling it) and also implementing the improvements collected from the users of the first version, mainly showing all the products contained in the electronic catalogues, since by using only the orders of purchase as a source of information, this limited to showing only the contracted products (leaving out the products that were offered, but had not yet been contracted). For this reason, the new design also incorporated the information from the offers in a summarized manner, that is, using statistical algorithms to guarantee the confidentiality of the information indicated in the documents that regulate the Framework Agreements. Finally, and after incorporating these improvements in the design, on February 12, 2020, the "National Electronic Quoter" was launched for the benefit of 1,969 public entities and as a consequence also for the benefit of citizens who make use of their services.

Innovation Description

What Makes Your Project Innovative?

Our project is innovative because it optimises the activities that make up the preparatory acts stage of the public procurement process (when usually the improvement actions are oriented towards the selection and contractual execution stages). This project was inspired by the needs of users and the characteristics of the information available in the Electronic Catalogues (historical prices and registered offers). The Electronic Quoter makes use of statistical algorithms to estimate in less than a day the price of goods required by public entities. It uses a product search tool, with a user-friendly presentation and filters that optimise the search time, because it is based on artificial intelligence technology components. As well as blockchain, which allows us to preserve the immutability and transparency of the information.

Innovation Development

Collaborations & Partnerships

The main allies were the logistics operators of the entities who, through their participation in the surveys, contributed with ideas to improve the pilot service of the Quotation System as well as multiple internal allies within PERÚ COMPRAS. These included its leadership, the Office of Information Technology and the Communications Office.

Users, Stakeholders & Beneficiaries

The service is designed to serve all logistics operators of public entities at all levels of government (National, Regional and Local) and throughout the national territory (25 regions), therefore, it serves about 2,000 entities. Likewise, the indirect beneficiaries are made up of the entire population that makes use of its services, which is estimated at 31.2 million inhabitants, according to the latest INEI census of 2017.

Innovation Reflections

Results, Outcomes & Impacts

The overall result is to have reduced the time for preparatory acts from 68.1 calendar days to 1 calendar day, thereby simplifying approximately 155,822 annual procurements at the national level, for an estimated amount of $ 400 million dollars. According to a survey taken to measure the impact on users:

80.5% of users are satisfied with the service
88.6% confirm that the service has allowed them to reduce the time it takes to carry out market research
81.3% agree with the statement, "The Quotation Service has provided information to estimate the price of the requirements contained in the electronic catalogues and to manage the corresponding budget certification"
The Net Promoter Score (NPS) recommendation indicator was positive, i.e. we have a higher number of users who would recommend our service; the measurement was done through surveys and institutional statistics

Challenges and Failures

We had no major difficulties; at all times there was a willingness on the part of all the Institution's organisational units to collaborate with the initiative. Llikewise, the support and collaboration of the Head of PERU COMPRAS and of the entire team of the Information Technology Office, who were a key factor in the development of the project.

Conditions for Success

Teamwork
Human resources of the organisation competent in public procurement and/or contracting
Financial resources for the platform, dashboard and/or website that supports the service
Our motivation is to generate public value focused on the citizen, in our case, the logistics operators of public entities
Empathy, as a personal value, served to identify an alternative solution to the difficulties presented by the logistics operators in the long time it took them to carry out the preparatory actions in each contracting process

Replication

The service offered by the Electronic Quotation System is fully replicable, and as evidence of this, the OSCE took our experience as a basis for designing its Price Observatory service (https://portal.osce.gob.pe/osce/conosce/observatorioprecios.html), which is part of its CONOSCE portal. In addition, as part of the exchange of experiences with other international organisations, SERCOP of Ecuador requested, among others, technical assistance to learn the methodology for calculating the Price Quotation System, which was delivered in September 2022. (https://portal.compraspublicas.gob.ec/sercop/intercambio-de-conocimientos-entre-sercop-y-peru-compras/).

Lessons Learned

Public procurement is a fundamental means for public entities to fulfil their institutional purposes and to offer a quality service to all citizens, consequently, any action aimed at optimising this process ensures the good use of public resources, this reflection has been our motivation for the implementation of this new service, to simplify the work of purchasers in their arduous and sometimes misunderstood task
Our initiative is based on a modern public management approach, in fact, the service developed goes beyond the technical component, it responds to a problem raised by the users themselves and offers them a useful and efficient solution, i.e. it generates public value
This practice is replicable, in the sense that it teaches us that with a little creativity and initiative we can make use of information already available to offer our users simple solutions to major problems
Finally, the results of the survey of users of our Quotation System confirm that we are on the right track in the objective of optimising public procurement, and encourage us to continue to redouble our efforts to continue along the same lines, always having as the reason for our best efforts the well-being of the citizens to whom we owe our duty

Anything Else?

The experience is disseminated through various communication channels:

Diario Gestión: https://gestion.pe/economia/peru-compras-pone-marcha-cotizador-electronico-entidades-publicas-255911
Perú 21: https://peru21.pe/economia/peru-compras-pone-disposicion-cotizador-electronico-entidades-publicas-lima-callao-454068
RPP Noticias: https://rpp.pe/economia/economia/peru-compras-pone-al-servicio-de-entidades-publicas-el-cotizador-electronico-noticia-1176058
Noticompras: Edición N° 2, 6 de junio de 2019, https://cdn.www.gob.pe/uploads/document/file/523307/periodico_digital_2.pdf Edición N° 7, 28 de febrero de 2020, https://cdn.www.gob.pe/uploads/document/file/1205081/periodico_digital_N7.pdf Edición N° 9, 26 de noviembre de 2020, https://cdn.www.gob.pe/uploads/document/file/1464937/NOTICOMPRAS%20N%C2%B0%209.pdf Edición N° 10, 11 de diciembre de 2020, https://cdn.www.gob.pe/uploads/document/file/1482405/NOTICOMPRAS%20N%C2%B0%2010.pdf