State is developing government procurement

In August 2014, the Ministry of Finance launched a project to develop central government procurement (HANKO). The project was stemmed from improvements that were recommended after an analysis of government procurement in 2013.

The HANKO project was divided into four development areas that covered procurement steering, planning, contract management, co-operation with suppliers, and competence development. The Ministry of Finance and Hansel were responsible for leading the project.

HANKO was promoted during 2015 and its actual development phase ended in January 2016. About 30 procurement experts from ministries, agencies, institutions and universities joined working groups to examine the various areas for development.

The analysis and suggested improvements did not cover the implementation phase of procurement (tendering, ordering and invoicing), as the Procurement Act will be amended during 2016. The State Treasury was also running a project called ‘From procurement to payment’ (HAMA), whose objective was to enhance the ordering and invoicing process.

HANKO’s main objective is to clarify the steering of central government procurement and put together models and best practices for agencies to use in steering, planning and monitoring their procurement, and in contract and supplier management. With the aid of these tools, government agencies’ and institutions’ procurement functions can be developed, procurement processes enhanced and procurement-related competence development supported.

The project’s recommendations for further research and action plan cover how the Ministry of Finance can develop and further study the steering of central government procurement, how ministries can develop procurement steering in their own administrative sectors; and how all agencies and institutions can develop their procurement functions. Units outside the State budget can also use the project’s results and materials.

The final report on HANKO was presented to those responsible for procurement functions in the Government Procurement Day held on 9 February 2016. The final report contains instructions and models, and also analysis tools (complete with instructions) to help agencies develop their procurement. These can be used to build a development path that will get procurement fully under control.

The annual value of central government procurement is about €5.9 billion, and the government has 64 bookkeeping units and over 200 performance-guided agencies. When developing agencies’ procurement functions, the key objectives are to increase efficiency, productivity, and effectivity. Benefits will be reached by centralising procurement, reducing process costs, taking advantage of economies of scale and making carefully planned purchases on the basis of actual requirements. The main issue is to launch the process by searching each procurement unit’s basic information and analysing key procurement indicators with the aid of, for example, budgetary resource and other reports.

Development path for agencies’ procurement processes