Presentation by Ivana Franjkovic, Croatia, at the SIGMA regional conference on public procurement which took place in Beirut on 2-3 June 2015. Also available in Arabic and French.

1. © OECD
AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
SIGMA Regional Conference on
Public Procurement
Centralised purchasing in a decentralised
procurement environment – a new EU
Member State’s practical experience
Ivana Franjković
State Office for Central Public Procurement, Croatia
Beirut, 3 June 2015

2. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Content
• Centralised purchasing for products and
services commonly used within the public
administration – the Croatian example
• Value for money considerations in setting
up a centralised purchasing body –
economic benefits
• Potential risks of centralisation and how to
mitigate them
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3. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Establishment of the CPO
Established in 2010 by the Regulation on CPO (Official Gazette 138/09)
Mission: The Office shall set up an effective system of central public
procurement with responsibilities towards taxpayers, the State Budget,
persons subject to central procurement, and all economic operators involved
in the environment of public procurement with a view to creating savings in
public consumption, while bearing in mind an optimum relationship between
the quality and the price of procured supplies, works and services, respect of
ecological and socially acceptable principles, sustainable procurement and
the encouragement of SME."
Number of civil servants: 16
N° of procurement categories: 17
N° of clients: 34
N° of clients under the Reform
measures (5 categories): 600
www.sredisnjanabava.hr
All bidding documents, FAs available
on-line
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4. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
PROCUREMENT CATEGORIES
1. OFFICE FURNITURE
2. OFFICE SUPPLIES
3. EXPENDABLE MATERIALS
4. OFFICE EQUIPMENT
5. COMPUTERS AND COMPUTER
EQUIPMENT
6. TELECOMMUNICATIONS SERVICES
–MOBILE
7. TELECOMMUNICATIONS SERVICES
–/ LANDLINE
8. VEHICLES
9. REPAIR AND MAINTENANCE
SERVICES OF VEHICLES
10. CAR TYRES
11. FUEL
12. ELECTRICITY
13. POSTAL SERVICES
14. INSURANCE SERVICES
15. SOFTWARE LICENCES
16. CLEANING
17. MAINTENANCE OF OBJECTS IN
THE OWNERSHIP OF THE REPUBLIC
OF CROATIA
In addition, Government may appoint the CPO for a specific
procurement category, or specific users  Under the intervention
measures of fiscal consolidation in 2014, the Government adopted
Decisions related to CPO clients/mandate (additional 600 users for 5
categories)
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5. AjointinitiativeoftheOECDandtheEuropeanUnion,
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Tasks of the CPO
• planning the implementation of procurement procedure;
• establishing procurement requirements for products and services;
• coordinating the activities among the clients;
• market research;
• implementing procurement procedures;
• contracting;
• setting up and managing the database of awarded contracts and
framework agreements;
• monitoring the execution of contracts and framework agreements;
• analysing the efficiency of central procurement through continuous
monitoring of savings made;
• drawing up proposals of decisions, specifying products and services
purchased through central procurement.
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6. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
CPO in numbers
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Total number of framework agreements or
contracts 133
Number of currently active FA or contracts 47
Current number of vendors 49
Number of inactive FA or contracts 86
Total value of all current FA (in HRK, without
VAT) 1.367.232.450
Number of appeals in 2013 and 2014
(15 rejected, 9 dismissed, 1 withdrawn, 6
canceled decisions )
29
(in 11
procedures)

7. AjointinitiativeoftheOECDandtheEuropeanUnion,
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VALUE OF ACTIVE FRAMEWORK AGREEMENTS
CONCLUDED BY CPO
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OFFICE SUPPLIES
8.61%
CLEANING
SUPPLIES
1.88%
MOBILE PHONE
SERVICES
0.96%
VEHICLES
16.01%
TYRES FOR
VEHICLES
2.71%FUEL
25.95%
ELECTRICITY
9.27%
POSTAL SERVICES
18.46%
INSURANCE
3.27%
LICENCES
12.33%
CLEANING
SERVICES
0.56%

8. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Other results
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• Tender documents of the CPO is used as a
template by many CA
• Model of technical consultations
• For most of 600+ new beneficiaries of central
public procurement this is the first time to use
framework agreements concluded through the
central procurement procedure.
• Help desk at the CPO - Support for clients/sharing
of experience

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principallyfinancedbytheEU
Reorganization & administration
capacity
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• Regulation 3/2015

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principallyfinancedbytheEU
Value for money considerations in setting up
a CPB – economic benefits
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 better prices and economies of scale together with time
savings in public authorities.
 lower organisational / transaction costs
 professionalisation of the implementation of procurement
procedures
 increased efficiency by creating value-added supply chain
management in the public sector
 greater use of framework agreements and modern
electronic means

11. AjointinitiativeoftheOECDandtheEuropeanUnion,
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Economic benefits in the context of CPB
• How to measure sucess of the CPB?
• Potential savings based on EU experience…
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Procurement
category
Potential savings
(%)
Fuel 5-7%
Cars 10-15%
Car Maintenance 5-10%
Cleaning Services 20-30%
PC / server 10-20%
IT accessories 7-10%
Land-line, Internet 10-20%
Telecom mobile network 6-9%
Telecom hardware 5-15%
Office Supplies 14-22%
Furniture 10-15%
Source: Action plan for the establishment of the central purchasing body and introducing a
system of central procurement; the Government and the Ministry of Economy

12. AjointinitiativeoftheOECDandtheEuropeanUnion,
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Potential risks of centralisation
and how to mitigate them
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• the risk of market concentration and the development of a
monopolistic position in the market of an important and powerful
bidder
• position of SMEs  facilitating and encouraging the participation of
the subcontractors or participation in a consortium
• Lack of professional and specialised knowledge regarding the subject
matter of procurement of the clients  profesionalisation of
procurement officers (the CPO and clients)
• Lack of communication with and between the stakeholders causing
delay in the implementation of procedures  Communications
strategy, Advisory Commitee

13. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Potential risks of centralisation
and how to mitigate them
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• Lack of standardisation / catalogues of supplies
• Slowness in implementation of other Strategies (for example Internet
for all central state)
• Fluctuations of employees
• Inability for timely completion of procedures (within 50 days of the
start of the procedure) due to repeated appeals
• Justifying certain procurement categories
• Complaints
• Lack of modern IT infrastructure for the central procurement system

14. AjointinitiativeoftheOECDandtheEuropeanUnion,
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Development of a CPO IT system
• 3 modules:
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Phase before
conducting
the
procedure:
Procurement
Planning and
aggregation
of demand
Tendering
phase
Publication of
tender,
submission
of tenders,
analysis,
conclusion of
a framework
agreement
Phase after
the
conclusion of
the FA
Monitoring
the execution
of contracts

15. AjointinitiativeoftheOECDandtheEuropeanUnion,
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Conclusions & Lessons learned
• Preparation phase might take longer (depends on the
quality of input data, way it is organised etc…)
• Specialised knowledge connected to subject matter
of procurement / PPA
 Include external civil servants (from the ministries) to
consolidate requirements and participate in
preparation of tender documentation
 Increase the involvement of external experts and
consultants in order to compensate the lack of
necessary knowledge;
 Involve different relevant institutions (Audit office,
regulatory agencies etc...) and academic institutions
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16. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Conclusions & Lessons learned
• Good communication with clients/bidders
• Knowing the market/needs of clients
• Introducing standards & IT support
• Simple FA to use, better contract conditions,
guidelines for clients
• Adopt/Revise Strategy; Code of conduct
• Flexibility of FA
• Introducing standards & IT support
• Step by step approach
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