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Commonwealth Electronic Procurement

Implementation Strategy

Contact details

For further information, contact the ICT Procurement Team by emailing ictprocurement@finance.gov.au

© Commonwealth of Australia 2000
ISBN Print: 0 642 75103 X Online: 0 642 75002 S
DOCITA 11/00

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth Department of Communications, Information Technology and the Arts. Requests and inquiries concerning reproduction and rights should be addressed to ictprocurement@finance.gov.au

Acknowledgment

This Implementation Strategy was developed by the Office for Government Online (OGO) in conjunction with a high level inter-departmental Electronic Procurement Steering Committee, supported by two large inter-departmental working groups (Electronic Purchasing and Electronic Payments) representing large, medium and small Commonwealth agencies.

CONTENTS

1. FOREWORD

The information economy is a powerful driving force in world trade today. The speed and effectiveness with which Australian consumers, business and government take up e-commerce will directly affect our competitiveness and prosperity in the 21st century. All of us have a role to play in the transition to the 'new' economy. For its part, the Commonwealth Government is committed to being a leading-edge user of technology, and bringing all appropriate government services online by 2001.

By adopting e-commerce for its own business, the Government will be more efficient, encourage cost effective procurement decisions and deliver better value to Australian taxpayers. The Commonwealth Government looks forward to adopting these opportunities in concert with suppliers-who will also experience reduced transaction costs, increased access to markets and enhanced revenues-as we move to an electronic business environment.

This document sets out the Commonwealth Government's strategy for implementing e-procurement in its agencies. It provides agencies with a framework to build and enhance their capabilities to trade electronically, and is intended to encourage suppliers to the Commonwealth to consider their own directions for e-commerce.

The strategy sets two goals for Commonwealth agencies:

• to pay all suppliers to Government electronically by the end of 2000; and

• to be able to trade electronically with all 'simple procurement' suppliers who wish to do so, using open standards, by the end of 2001.

The strategy employs enabling actions-including establishing a single supplier registration process and a standard remittance advice-and demonstration and pilot projects. These initiatives will focus on providing a platform for full-scale implementation of electronic trading.

The Government will continue to work toward best practice with its suppliers and industry, and strive with State and Territory Governments for interoperable systems. I am confident the rewards will amply repay the efforts involved, and this strategy will contribute to the general adoption of e-procurement by Government across the nation, as well as contribute to the development of business-to-business e-commerce.

IAN CAMPBELL

Parliamentary Secretary to the Minister for Communications, Information Technology and the Arts

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2. INTRODUCTION

In the Investing for Growth statement of December 1997, the Prime Minister announced a number of initiatives to encourage innovation, boost investment and help Australian industry to capture new export markets. Recognising the importance of the information economy, the Commonwealth Government aims to encourage business and consumer confidence, get Australia online and foster the development of the information industries.

The Government also undertook to provide leadership by becoming a 'leading-edge user' of e-commerce, by bringing all appropriate government services online by 2001 and by adopting electronic payments as the normal means of payment to its suppliers.

E-commerce-essentially business using electronic methods and processes especially over the Internet-has the potential to create new efficiencies for business and government, provide better product and pricing choice for consumers, and contribute substantially to economic growth. A study recently commissioned by the National Office for the Information Economy (NOIE), using the Monash model of the economy, indicated that the net impact from
e-commerce implementation could be a 2.7 per cent increase in the level of GDP by 2007, and an increase in consumption of about $10 billion. This study showed that every State and Territory will obtain net benefits from greater use of e-commerce.

The Government's vision and national direction for Australia's future in the information economy was set out in A Strategic Framework for the Information Economy released in December 1998. The Framework identified key issues and priorities for action, including increasing significantly the use of e-commerce by Australian business.

The key elements of the Government's approach to e-commerce are:

• facilitating industry and consumer take-up;
• getting the legal and regulatory framework right; and
• leading by example through Government initiatives by providing appropriate services online.

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GOVERNMENT LEADERSHIP IN ONLINE PROCUREMENT

E-commerce and particularly e-procurement-the purchase and payment of goods and services-can assist the Government improve the way it does its business by reducing transaction costs, making smarter decisions, and getting better value. It can reduce red tape for small businesses and help them get better access to government marketplaces.

The primary role of the private sector in driving the transition to e-commerce is well recognised. The Government can also influence uptake of e-commerce for its own transactions with business and achieve flow through effects to influence the environment in which business-to-business transactions take place.

The Government is aware that the commercial environment in which business is conducted will evolve in parallel with the convergence and use of information and telecommunications technologies. Government agencies need to operate flexibly to take advantage of the efficiency gains likely to result from the evolution of new business models.

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STRATEGY DEVELOPMENT

This implementation strategy for Commonwealth Electronic Procurement forms part of the Investing for Growth statement's commitment to bring all appropriate services online by 2001, and is a key component of the Commonwealth's overall Government Online Strategy.

It has been developed following a broad-ranging consultation process involving Commonwealth agencies, the Australian Procurement and Construction Council (APCC) and industry bodies such as the Council of Small Business Organisations of Australia (COSBOA), the Australian Information Industry Association (AIIA) and many others. Details of this process are at Annex A.

The implementation strategy is designed to satisfy a number of Government policy objectives including:

• accelerating the uptake of electronic purchasing and payments by Commonwealth departments and agencies;

• encouraging the uptake of electronic purchasing and payment by suppliers to Government by demonstrating the benefits to suppliers, especially small-to-medium sized enterprises (SMEs);

• maximising consistency, particularly of standards, across agencies to minimise the costs and inconvenience to suppliers who deal with more than one agency;

• capitalising on other Commonwealth Government initiatives e.g. the Business Entry Point and the Australian Business Number Digital Signature Certificates (ABN DSC); and

• promoting consistency with other electronic purchasing and payments initiatives within other Australian jurisdictions, in accordance with the Framework for National Cooperation on Electronic Commerce in Government Procurement issued by the APCC.

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ELECTRONIC PURCHASING

In January 1999, the Government announced changes to arrangements for implementing e-procurement. Up to that point, Transigo, the e-commerce service established by Telstra on behalf of the Commonwealth, was to be the primary vehicle for the implementation of electronic purchasing. However, agencies had been using Transigo mainly for the Government's 'mandatory reporting requirements'-to publish open business opportunities as well as contracts and standing offers with a value of $2 000 or more in the Commonwealth Purchasing and Disposals Gazette on Transigo.

Under the new electronic purchasing arrangements the Office for Government Online (OGO), in conjunction with the Department of Finance and Administration (DOFA), has replaced the Transigo arrangements for the mandatory reporting requirements. The Government Advertising website, www.ads.gov.au, now satisfies the publication of business opportunities. For the contracts and standing offers requirement the Gazette Publishing System (GaPS), www.contracts.gov.au, was launched in December 1999.

For all other electronic purchasing services (i.e. services which enable the Government to trade electronically with its suppliers) agencies have the freedom to select an e-commerce service provider that best suits their needs taking into account interoperability, security, registration (such as the Australian Business Number (ABN)) and product code considerations.

Key facts relating to purchasing transaction volumes undertaken by business and Government agencies are:

• there were 111 753 purchasing transactions of goods and services of value greater than
  $2 000 reported by Commonwealth Government agencies, totalling $7.9 billion in
  1998-99;
• over 30 000 suppliers are awarded contracts of value greater than $2 000 by the Commonwealth annually;
• the total number of operating businesses in Australia was 778 258 in 1996-97; and
• approximately 10 000 Australian firms use Electronic Data Interchange (EDI) for business-to-business transactions.

The procurement process includes activities ranging from discovery by purchasing officers of availability or capability of industry to supply goods and services, to delivery, contract management, invoicing and payment. Annex B provides more information about the generic stages of this process.

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ELECTRONIC PAYMENT

To meet the Investing for Growth commitment to adopt electronic payment, this strategy aims to develop a framework to meet the needs of the Government and its suppliers and to promote electronic payment within the public and private sectors.

This approach will operate within the devolved transactional banking arrangements which apply from 1 July 1999 and will allow agencies freedom to use the service provider of their choice.

Key facts relating to payment transaction volumes undertaken by business and Government agencies are:

• the majority of the approximately 1.5 billion electronic transactions conducted each year in Australia, worth around $1.6 trillion, are electronic funds transfer of the ATM and EFTPOS type;
• there are approximately $150 million worth of Commonwealth Government credit card purchases annually; and
• the ratio of processing costs for cheque versus direct entry payments varies between
  10:1 and 5:1.

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3. STRATEGY FOCUS AND GOALS

FOCUS OF THE STRATEGY

The intention of the strategy is to automate the purchasing of, and payment for, simple procurement by agencies through their approved suppliers. This strategy sets the direction against which agencies and businesses might implement electronic purchasing and payment. It provides a framework to accommodate evolution in technology and progress by agencies towards procurement of goods and services using electronic arrangements. It is intended to accommodate complex procurement in later implementation phases in accord with agency needs.

Government purchasing is broadly categorised into three types:

• Simple procurement-the acquisition of goods and services that are commodities or otherwise easily described through simple purchase processes.
• Complex procurement-the acquisition of goods and services that are large, or difficult to specifically describe through multi-stage, managed selection and evaluation processes.
• Strategic procurement-the selection of a small group of suppliers through which all of a business' needs are acquired; the suppliers are guaranteed demand and volume, the buyer is guaranteed discounted prices and other value-add services.

The process to actually procure these goods and services tends to vary between the following types of procurement processes:

• One-off significant supplies, typically through a request for tender.
• Continuous supply, for example utilities, where there are regular bills and payments.
• Approved suppliers, whether on a whole-of-government (e.g. Endorsed Supplier Arrangement) or departmental basis, where capabilities are assessed and accepted for the provision of defined goods and services (the assessment can involve supplier pre-qualification to supply in specified industry sectors, or can be based on a tender process).
• Unapproved suppliers, petty cash or incidental items unavailable from approved suppliers (e.g. travel and accommodation).

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GOALS

This strategy sets two major goals to guide the implementation of electronic purchasing and payment by Commonwealth agencies:

• To pay all suppliers to Government electronically by the end of 2000.

• All simple procurement suppliers who wish to deal with Government electronically, using open standards, will be able to do so by the end of 2001.

It is the Government's intention to conduct 90 per cent of purchase-related simple procurement transactions through electronic means by the end of 2001. However, achieving this goal is dependent on suppliers' capacity to deal electronically. Accordingly the Commonwealth will continue to encourage and support suppliers to move online. The Commonwealth will also provide a single supplier registration process to facilitate secure electronic business transactions with the Commonwealth.

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PRINCIPLES

In seeking to achieve these goals, the Government will be guided by the following key principles:

• Build certainty and confidence with clear and consistent policy, legal and regulatory framework.
• Ensure appropriate security, confidentiality and reliability for business/government interactions.
• Ensure that terms of trading are fair to both parties.
• Minimise barriers of entry to Government markets for both small agencies and SMEs.
• Preference for easy to use system interfaces for all participants.
• Promote interoperability of systems through the use of open standards and protocols.
• Recognise the need for flexibility in design in the implementation strategy.
• Recognise Government, as a major purchaser of goods and services, can act as a positive force to promote national competitive advantage and to develop competitive Australian and New Zealand (ANZ) industry.
• Support devolved management accountability in accordance with the Financial Management and Accountability Act 1997.

• Maintain consistency with and support for relevant Government policies, particularly:

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WHERE DO WE WANT TO BE?

The precise arrangements adopted by agencies to achieve the stated goals will depend on a number of factors, such as agency size, areas of major procurement and financial management systems. The following canvasses a range of arrangements which are likely to be put in place to implement electronic purchasing and payment.

Buyer arrangements

This strategy will lead to the majority of transactions for simple procurement occurring on an agency desktop and being sent, after appropriate approvals, to the supplier-either directly, via a Shared Service Centre, or through trading communities and electronic marketplaces. Electronic marketplaces are electronic catalogues of goods or services hosted on electronic trading networks that link buyers and sellers, and are discussed in more detail below.

Tenders and tender responses will be handled securely using Government approved public key encryption. Agency purchase orders will be generated electronically. The receipt of goods or services will be recorded electronically. Payments will be made electronically through direct credit or credit card.

Possible trading scenarios

Eventually, and where appropriate, the complex procurement processes themselves will also be supported by electronic systems. However, this area of electronic trading is insufficiently mature for specific strategic directions to be established at this time.

Information system architectures

The system architecture that would support agencies' electronic purchasing includes:

• special purpose e-commerce modules for existing Financial Management Information Systems (FMIS);
• special purpose e-commerce extensions to existing supply management systems;
• specialised procurement solutions; and
• combinations of best-of-breed systems.

Integration of any electronic purchasing system should support the existing FMIS and ensure the consistent application of agency business rules. Agency financial management will remain within the existing FMIS. Procurement decisions and business rules will remain at the discretion of each agency's Chief Executive Officer.

The implementation of any electronic purchasing system (in whatever architecture) could occur within the agency, in an outsourced procurement unit, or in a Shared Service Centre.

Procurement management approaches

The strategy allows for the use of existing management approaches within Government agencies. The four approaches identified below are flexible in their application, and agency business processes will determine which best suits, or indeed which mix best suits, their individual needs:

• agency purchasing is devolved to line officers who are supported by standardised electronic purchasing and payment systems;
• agency purchasing is organised through an Internal Procurement Unit (IPU), which establishes trading relationships for the agency; the actual ordering activity is devolved;
• several agencies collaborate for purchasing and form a Shared Service Centre to provide purchasing services to all subscribing agencies; and
• the agency outsources purchasing functions, either to another agency, or to a value adding service provider.

The first three approaches allow for purchases to be conducted by decentralised purchasing officers using electronic systems. These approaches reflect arrangements and business rules currently required of agency Chief Executive Officers. The fourth approach requires the agency to rely on contracted services to provide the systems and may require some adaptation of current agency business processes. For large agencies it may be appropriate to consider a different model for each of simple and complex procurement.

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SUPPLIER ARRANGEMENTS

Suppliers to Government will be encouraged to trade electronically with the government. In moving to electronic arrangements, the emphasis will be on simple and free access to Government business.

Suppliers to Government will, in general, make their own decisions on how to transact electronically with agencies. This will be determined initially by their existing level of electronic business support systems. Suppliers with sophisticated electronic support systems may wish to transact directly with agencies. Suppliers with less sophisticated support systems may use electronic marketplaces to deal with Government. Possible trading scenarios are illustrated in the diagram below.

Possible trading scenarios

To ensure suppliers do not need to register their identity with each buying agency, a single registration process will be developed, linked to the ABN and related Digital Signature Certificate (DSC). This process will provide suppliers with a unique electronic identification for trading with Government, backed by technologies to permit authentication and non-repudiation of transactions based on the GATEKEEPER Government Public Key Infrastructure. Included in the registration process may be the provision of a supplier's bank account details to facilitate electronic payments with an appropriate remittance advice.

Information system architectures

System architectures that suppliers may adopt include:

• suppliers with existing integrated systems trading electronically with agencies, or through emerging Internet-based Electronic Data Interchange (EDI) services-such suppliers could be encouraged to adopt more 'open' approaches;
• suppliers with business systems that cannot receive electronic orders might implement systems to allow such orders;
• suppliers with low levels of electronic business support might purchase services from others to implement better business automation-connection to the supplier's systems could be either through direct links, or over the Internet; and
• suppliers with no current electronic business support might purchase 'hosted application services' that provide the full range of business system support on the service provider's infrastructure, accessible through the Internet.

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ELECTRONIC MARKETPLACES

Electronic marketplaces will be an important option for many suppliers and agencies. They will supplement current purchasing approaches for simple procurements. Marketplaces are expected to offer agencies more support, greater accountability, and improved statistical information gathering, for simple purchases. They will also provide more flexibility and efficiency for complex purchases. The Government will investigate options to use existing electronic marketplaces, and where appropriate, stimulate new and emerging electronic marketplaces.

Electronic marketplaces could include those established by:

• the buying agency to facilitate trading on 'standing offer' arrangements;
• groupings of suppliers acting as a community of interest, either by product or region;
• value-adding service providers, which assist buyers and suppliers in return for subscriptions, transaction-based fees, advertising revenue, or a combination of these; and
• government or community organisations promoting the trading capacity of their local, or special interest, constituency.

Buyers may access electronic marketplaces through:

• existing or specially created marketplaces identified for commodity goods and services, with agency buyers transacting business in the same manner as other buyers in the marketplace; and
• procurement arrangements entered into by agencies establishing electronic catalogues of goods and services available through that procurement arrangement, with the agency electronically transacting orders within the terms and conditions of that arrangement.

Suppliers may access electronic marketplaces through the following alternative arrangements:

• The supplier transacts directly with the electronic marketplace-the supplier trades through multiple locations using a standardised system; aggregation of orders for record keeping and payments is achieved systematically; individual transactions are supported by a standardised supplier-wide catalogue and price list.
• The supplier may use an intermediary to access relevant system capabilities-this could be in return for subscriptions, transaction-based fees, advertising revenue, or a combination of these.
• Several suppliers act through an intermediary as a trading community. The buyer selects the preferred offer from many presented electronically by the trading community, and the order is placed with the 'winning' supplier. Individual transactions in the community are supported by a standard catalogue interface and orders may be aggregated by the trading community to the supplier, where appropriate and requested.

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COMMUNICATION FLOWS BETWEEN BUYER AND SUPPLIER

Interactions between buying agencies and suppliers would occur directly or through intermediaries. Direct interactions might be supported by electronic technologies such as the use of 'implant terminals' which are directly linked to a supplier's systems. In the last resort, phone and fax connections can be used to exchange information.

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OPEN STANDARDS

Product and service identification and catalogue standards require careful monitoring as trends and standards emerge in the electronic trading environment. Open standards are to be supported to ensure maximum interoperability between buyers, service providers and suppliers. The use of a range of open standards (e.g. Open Buying on the Internet (OBI), Extensible Mark-up Language (XML)) is being promoted by Federal, State and Territory Governments through the Australian Procurement and Construction Ministerial Council.

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MANDATORY REPORTING ARRANGEMENTS

Mandatory reporting of Government business opportunities and of Government purchases and standing offers valued at more than $2 000 will continue to occur via the Internet.

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ELECTRONIC PAYMENTS

Optimum efficiency and cost effectiveness will be achieved through direct credit payments to suppliers' bank accounts. Most agencies already complete payment activities electronically with their banks. With the introduction of the Shared Systems Suite Initiative and the inclusion of financial management information systems, most agencies now have, and some routinely use, the capacity to transact all elements of payments to suppliers electronically. Furthermore, the banking system has long had the capability to directly credit supplier bank accounts when suitably instructed.

The diagram below illustrates one variation of the proposed process.

Proposed payment process

1. The supplier presents an invoice to the agency requesting payment for specific goods and services; this process may be redundant if goods and services receipt is conducted electronically to trigger payment.
   
2. The agency (after approving the invoice, if relevant) instructs its bank to pay the supplier on a specific day, the period established by the arrangements between the agency and the supplier.
   
3. (a) The bank deposits the payment directly into the supplier's bank account on the pre-determined day; and

   (b) where necessary the agency, or its bank, electronically sends the remittance advice for the payment to the supplier.

4. The bank provides normal supplier account statements regularly.

Suppliers to Government have indicated that the main reason for not moving to electronic payments has been the inadequacy of the current 18-character remittance advice provided by the banking system to reconcile direct entry payments.

The main inhibitors to the full-scale adoption of electronic payments to suppliers could be overcome by:

• developing a means of providing an appropriate remittance advice to coincide with the electronic payment; and
• encouraging suppliers to accept direct credit by requesting the necessary bank account details at contract signature or at registration on an approved government supplier database.

The Government will take action to define the standard content for remittance advice and obtain endorsement by industry of that standard.

Once the appropriate remittance advice content has been developed Commonwealth agencies can fully implement the goal of this strategy to pay all suppliers electronically by the end of 2000.

Electronic remittance advice will be provided in one of the following ways:

• the agency sends an electronic remittance advice to the supplier either directly or through a third party who delivers the advice in a format acceptable to the supplier (e.g. EDIPOST, FaxPOST, Lettergram); or
• the agency's bank transmits the electronic remittance advice on the agency's behalf (allowing for consolidation of payments and respective remittance advice).

Direct credit is being used increasingly by agencies for paying suppliers as suppliers adjust to the widespread use of electronic transactions in the current business environment. Suppliers may be further encouraged to accept electronic payments if agencies can use such mechanisms to ensure accounts are paid on the due-date or on a common due-date. The standard 30-day terms of payment does not preclude agencies and suppliers from settling alternative terms of advantage to both parties.

This strategy focuses on payments to suppliers from Government. However, agencies should be aware that the Department of Employment, Workplace Relations and Small Business (DEWRSB) Business Entry Point (BEP) Internet Payments Panel standing offer has been established to facilitate the procurement of Internet products and services for receipt of payment by agencies. Agencies will be strongly encouraged to use this panel. A Shared Service Centre could incorporate a facility for payments to suppliers from Government, and payments to Government.

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4. IMPLEMENTATION

Developments in the field of e-commerce, and specifically e-procurement, are occurring so rapidly that a continuous (evolutionary) approach to implementation will be a necessity. The implementation strategy will encourage innovative approaches on the part of agencies, and build on successful pilot and demonstration projects.

Agencies operate within a framework of accountability that includes the Financial Management and Accountability Act 1997. The Act places clear obligations on Chief Executives for the efficient, effective and ethical management of resources. Chief Executives and others who approve spending proposals must have regard to the Commonwealth Procurement Guidelines: Core Policies and Principles March 1998, including the principles of value for money and open and effective competition, in their purchasing decisions.

It is expected that agencies will leverage their significant investments in existing financial management information systems infrastructure to achieve the goals of this strategy.

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IMPLEMENTING ELECTRONIC PURCHASING AND PAYMENTS

Implementation of electronic purchasing and payment will be through the following projects and activities:

• Enabling actions-those projects that will ensure the enabling frameworks are present and that the strategy is implemented through consistent action.
• Pilots and demonstrations-there are many areas of the strategy where a demonstration approach is advisable; generally not to test technology, but rather to assess the business impacts of its introduction.
• Cooperation with industry-consulting with industry, seeking input to ensure industry interests (suppliers and e-commerce service providers) are represented, and participating in industry initiatives.
• Cooperation with other jurisdictions-working through the APCC forum to promote consistency and exchange of information between governments moving to implement online procurement.
• Marketing and communications strategy-developing and implementing a strategy to inform agencies and suppliers and encourage their participation.
• Promoting best practice-through monitoring e-procurement developments, promoting best practice, and facilitating exchange of information between agencies.
• Monitoring progress-identifying agency progress in achieving the strategy goals, and identifying impediments to implementation.

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ENABLING ACTIONS

Enabling actions will 'prepare the ground' for widespread adoption of e-procurement in government.

The key projects in this phase (see Annex C for project details) are to:

• develop a single supplier registration process;
• develop a standard electronic remittance advice; and
• investigate the impact of e-procurement on IT infrastructure.

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PILOTS AND DEMONSTRATION PROJECTS

Pilots and demonstration projects have been defined with clear, measurable success criteria to enable the project outcomes to be directly applicable to the broader strategy. Final arrangements in this area will be dependent on funding priorities.

The key projects in this phase (see Annex D for project details) are:

• a lead agency implementing electronic purchasing capabilities by integrating with its existing FMIS, including electronic tendering;
• assessing the feasibility of Electronic Marketplace models;
• developing Shared Service Centre for small agencies;
• developing a best practice request and contract documentation database; and
• developing an electronic invoicing facility.

OGO, in conjunction with the BEP and with support from the APCC members, is developing a single business opportunity portal. This project will support the discovery tasks of business by making tender opportunities more readily available across the nation from a single website.

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COOPERATION WITH INDUSTRY

Industry associations will be encouraged to participate in implementation projects to ensure that the best interests of their members are represented and that e-commerce is adopted broadly throughout their industry.

As part of the implementation of this strategy, industry will be requested to:

• provide advice and input on the single supplier registration process;
• participate in government-industry forums for exchange of information about e-procurement implementations;
• provide advice and input into the establishment of regional and industry-specific pilot electronic marketplace projects; and
• assist in the identification of appropriate electronic marketplaces for Government to adopt.

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COOPERATION WITH OTHER JURISDICTIONS

Links with other jurisdictions to develop a national approach to e-procurement are important. The APCC is the peak body coordinating the procurement and construction policies of the Australian Commonwealth, State and Territory Governments. The APCC cooperates on a national basis to provide consistency in the Australian Governments' procurement policies.

The APCC has developed a Framework for National Cooperation on Electronic Commerce in Government Procurement (at www.apcc.gov.au ).

As part of the implementation of this strategy, the APCC will be asked to:

• assist in the promotion of consistent contracting laws across all jurisdictions;
• comment on common terms and conditions during the best practice contract database project;
• provide advice and input on the means used to determine appropriate supplier identification;
• provide advice and input on the means used to determine the preferred product and service identification;
• provide advice and input into the establishment of regional and industry-specific pilot electronic marketplace projects; and
• assist in the identification of appropriate electronic marketplaces for Government to adopt.

Similarly, regional councils will be encouraged to participate in implementation projects to ensure that the best interests of their constituents are represented and that e-commerce is promoted throughout their region.

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MARKETING AND COMMUNICATIONS STRATEGY

Implementing online procurement will represent a new way of doing business for most agencies and suppliers. The purpose of the marketing and communications strategy will be to inform agencies and suppliers of the e-procurement initiatives underway, the benefits of being involved, and to encourage active interaction between agencies and suppliers to improve electronic business processes for all parties.

Activities conducted as part of the marketing and communications strategy will include:

• holding seminars, workshops and other forums for disseminating and sharing information;
• providing a forum for ongoing dialogue between Government, and between Government and its suppliers; and
• providing information about implementation of the Government's strategy to stakeholders and target audiences.

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PROMOTING BEST PRACTICE

The e-procurement environment is evolving rapidly, and agencies will require access to current and accurate information to determine the most appropriate strategy for their requirements. Accordingly, the Commonwealth will establish systems to collect information about developments in e-procurement and disseminate it to agencies. As Commonwealth agencies move to e-procurement and build up expertise in what is a new field, it will be necessary to ensure the knowledge gained is shared with other agencies.

Activities conducted as part of this requirement will include:

• conducting research into developments within the e-procurement marketplace (e.g. relating to service providers, solutions, and marketplaces);
• monitoring best practice in e-procurement (within government and industry, domestically and overseas);
• using (and where necessary establishing) mechanisms for the dissemination and exchange of information (discussion forums, newsletters, websites etc); and
• publishing and regularly updating an online Electronic Procurement Implementation Handbook to assist agencies.

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MONITORING PROGRESS

The Government will establish appropriate systems for monitoring progress toward the goals of the strategy. These arrangements will leverage the reporting regime which is being established as part of the overall Government Online Strategy. Information will be collected from agencies about barriers to implementation, and where appropriate, remedial strategies will be developed.

Activities conducted as part of this will include:

• collecting information from agencies about their e-procurement implementations;
• analysing the data collected;
• identifying impediments to take-up; and
• researching strategies to overcome identified impediments.

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ROLES AND RESPONSIBILITIES

The implementation of electronic purchasing and payment across Government will be agency driven, within the purchasing policy framework for which DOFA has responsibility. Within this policy framework, implementation projects will be conducted by lead agencies, within a coordinating framework to share experience and expertise and pool resources.

The following table indicates the key roles proposed for particular agencies in implementation of the strategy:

Agency

Role

Department of Communications, Information Technology and the Arts (DOCITA) (Office for Government Online)

• Coordinate the implementation by agencies of electronic purchasing and payments across Government.
• Take a leadership role in the implementation of electronic payments to suppliers across Government.
• Facilitate lead agencies towards the successful completion of implementation projects through guidance, advice and participation on project teams.
• Provide chair and secretariat services to electronic purchasing and payments working groups during the implementation phase.
• Establish forums to communicate information and exchange ideas.
• Develop and implement a communications strategy to inform agencies, suppliers and industry associations about electronic purchasing and payments implementation issues.

Department of Finance and Administration

(DOFA)

• Advise on competitive tendering and contracting and procurement policy and services (including contracting out and disposals), with particular regard to the Commonwealth Procurement Guidelines-Core Policies and Principles and the Endorsed Supplier Arrangement (ESA).
• Liaise between the ESA and the Single Supplier Registration Project.
• Advise on appropriateness and coverage of common terms and conditions of contract for the Best practice request and contract documentation database project.
• Advise on financial management policy and legislative framework, including e-payments, cash management and banking.
• Consider, and make recommendations on, the appropriateness of using shorter payment periods to induce suppliers to adopt Government-promoted e-commerce.

Attorney-General's Department

(A-G's)

• Promote the acceptance by agencies of the Electronic Transactions Act 1999.
• Investigate the flow on effects to other legislation; e.g. Patents Act and Regulations.
• Assist in promoting consistent contracting laws across all jurisdictions.
• Advise on the appropriateness and coverage of common terms and conditions of contract for the Best practice request and contract documentation database project.

Department of Employment, Workplace Relations and Small Business

(DEWRSB)

• The BEP Management Branch will:

• assist in the development of the Single Supplier Registration Process, including establishing linkages to the Endorsed Supplier Arrangements database;
• assist in the development of a single electronic invoicing facility across Government; and
• assist in the development of an electronic tender discovery facility across Government.

Department of Defence

• Participate in a project to determine the expected impact of moving to e-procurement on agency IT infrastructure.
• Assist in the development of the Single Supplier Registration Process.
• Advise on the appropriateness and coverage of common terms and conditions of contract for the best practice request and contract documentation database project.

Centrelink

• Participate in a project to determine the expected impact of moving to e-procurement on agency IT infrastructure.

Lead agencies will be sought to implement projects, particularly where the agency or its suppliers have characteristics that are seen as providing broadly applicable examples to other agencies and suppliers.

All agencies will be responsible for reporting through DOCITA to the Minister for Communications, Information Technology and the Arts on their progress in implementing this strategy's goals.

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ANNEX A-DEVELOPMENT OF THE STRATEGY

The Department of Communications, Information Technology, and the Arts (DOCITA),

through the Office for Government Online (OGO), has coordinated development of the strategy to move the Government to e-procurement, encompassing purchasing and payment. In June 1999 OGO selected a PricewaterhouseCoopers/Electronic Trading Concepts team to assist it in the development of the strategy and its implementation plan.

A discussion paper, Moving to an Electronic Marketplace, was released in August 1999 for public comment. Nearly 60 written submissions were received from a wide range of small, medium and large businesses, and Federal, State and Local Government agencies.

Several options were considered by the Government's Electronic Purchasing and Payments Working Groups and wide consultation with buyers and suppliers formed the basis of the discussion paper.

The four options considered in the public discussion paper were:

• Option 1-continuing to procure goods and services in the current manner.
• Option 2-relying on emerging electronic marketplaces.
• Option 3-stimulating electronic marketplaces where appropriate, combined with the use of emerging electronic marketplaces.
• Option 4-establishing a single electronic trading marketplace through which all Government procurement takes place.

These options described a broad continuum of approaches to implementing electronic purchasing and payments in Commonwealth agencies. The feedback from the discussion paper verified and refined the preferred strategic option (Option 3) of the working groups. The implementation strategy presented in this report was developed as a result of this input.

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ANNEX BTHE NATURE OF GOVERNMENT PURCHASING

The procurement process can range from discovery by purchasing officers of availability or capability of industry to supply goods and services, to delivery, contract management, invoicing and payment. Procurement is categorised as simple (low value) or complex (high value or high volume in combination with low value). Within Government agencies, purchasing operations and functions vary from centralised to decentralised.

Illustrated below are the commonly used functional modules for a typical procurement process. To gain the most benefit from the e-procurement process, each module must be interoperable with the other modules. Using open standards makes this task easier for suppliers to government and for government purchasing officers. An effective information management system is essential.

Supplier registration-involves registering suppliers in agency systems to ensure they are uniquely identifiable, which may be by electronic means in an online procurement environment.

Catalogue-allows buyers to access information from suppliers about products and services, prices and their availability; catalogues may be electronic and hosted by a supplier or a third party catalogue service provider.

Tender process support-involves supporting tendering where the products required are complex and difficult to describe, and includes the issuing of tenders, receiving tender responses electronically, and facilitating tender assessment in an online procurement environment.

Procurement management-refers to the management of the procurement process within an organisation, and covers issues such as strategic procurement arrangements (to what extent will benefits be achieved for the agency if fewer or more suppliers are sought, and under what conditions) and delegations, processes and procedures (who can buy what, on what authority and how).

Product order system-refers to the activity of generating purchase orders within an organisation's systems and transmitting them to the supplier.

Contract management-this activity ensures that contract deliverables are received, and that payments only occur within the terms and conditions of the contract, and will continue to play a vital role in e-procurement.

Goods receipt-refers to the activity of receiving products ordered and recording goods receipt in an organisation's systems (which is usually a trigger for payment).

Earned value systems-these monitor and control the receipt of services, where the accumulation of services received is not always tangible, or readily defined (as opposed to purchasing of goods), and usually involve presentation of an invoice (possibly electronically) by the supplier.

Payment means-payments to suppliers for goods and services received is the final stage of most purchasing activities. The main methods of payment available are cheque, electronic (Direct Entry or electronic data interchange) and Credit Card/Procurement Card.

Security-the issue of security is of paramount importance within the e-procurement environment, and centres on infrastructure security (how an agency maintains the integrity of its internal network security when connected to external suppliers) and business security (authentication of suppliers and buyers, controlling access to sensitive data, and ensuring confidentiality of data).

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ANNEX C-ENABLING PROJECTS

This Annex sets out enabling project charters.

Project

Develop a single supplier registration process

Aims

• To develop and implement a process through which businesses can register as a supplier to government, and critical supplier details will be disseminated to all agencies automatically.
  

• To facilitate electronic trading and possibly provide a mechanism through which suppliers can notify all agencies of new products or capabilities.

Lead agency

DOCITA (OGO)/DEWRSB (BEP)/DOFA/Defence/APCC

Dependencies

Supplier ID (ABN), GATEKEEPER

SCOPE

The project will design, develop and implement a web-based process that will provide businesses with a single location to register as a supplier to Government. The process will record critical details about suppliers in a single supplier database, allowing appropriate access to that data through the supplier's unique identification for relevant users. This registration will be backed by technologies to permit authentication and non-repudiation of transactions based on the GATEKEEPER public key infrastructure. Included in the registration process may be the provision of suppliers' bank account details to facilitate electronic payments with an appropriate remittance advice. The project will also develop and implement a means by which supplier details can be automatically updated into agency FMIS master vendor files for all shared systems initiative FMISs.

The registration process will not pre-qualify suppliers for selection by agencies, but it will be linked to other qualification processes, such as the Endorsed Supplier Arrangement. This project will link with other sites established through the work of APCC members.

OUTPUTS AND OUTCOMES

Expected outputs from the project are:

• a single web-based process for businesses to register as suppliers to Government.
• a database of all registered suppliers containing critical information with which to trade electronically with those suppliers.
• an automated means of updating agency FMIS master vendor files from the supplier database.

The outcomes of this project will be:

• A single source of data on suppliers for agencies to use to facilitate electronic trading, and to ease the burden to suppliers of maintaining this information across Government.

EXPECTED BENEFITS

This project is expected to provide the following benefits for the Commonwealth:

• A repository of all suppliers to Government and a definitive source of critical trading information will increase the efficiency of electronic purchasing and payments.
• A single source of supplier information will provide agencies with a means of monitoring changing product and capability profiles of suppliers and it will simplify the search for appropriate suppliers.

This project is expected to provide the following benefits for suppliers to Government:

• A single means of providing information about the business and its products and capabilities will eliminate the need to register on a multiple basis with many agencies.

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Project

Develop standard electronic remittance advice

Aims

Drawing upon internationally accepted standard definitions to the maximum extent possible, establish a definition of the standard content of an electronic remittance advice to support electronic payments

Lead agency

DOCITA (OGO)

Dependencies

Supplier Registration

SCOPE

The project will draw on existing international standard document definitions (e.g., EDIFACT, ANSI X12) to determine the standard content of a remittance advice to accompany an electronic payment. Particular characteristics that the standard content will require are the:

• ability to be linked unambiguously to specific payments on a bank statement to allow reconciliation of multiple and partial payments within a single transaction.
• ability to be presented in multiple formats, including but not limited to, facsimile, email, and HTML, without loss of content, authority or efficacy.
• ability to be implemented at little or no cost in existing agency FMIS installations, preferably through standard government templates, where applicable.

OUTPUTS AND OUTCOMES

Expected outputs from the project are:

• A single standard electronic remittance advice applicable to all electronic payments to suppliers.

The outcomes of this project will be:

• The ability for agencies to accompany electronic payment instructions with unambiguous electronic remittance advice that will remove the final technical obstacle to complete electronic payments to suppliers.

EXPECTED BENEFITS

The project is expected to provide the following benefits for the Commonwealth:

• A single means of providing electronic remittance advice to suppliers to accompany electronic payments for products and services.

The project is expected to provide the following benefits for suppliers to Government:

• Following agency take-up, receiving electronic remittance advice that can be tied unambiguously to electronic payments recorded on bank statements will allow faster, more efficient payment processes to become the norm.

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Project

Investigate impact of e-procurement on IT infrastructure

Aims

To determine the expected impact of moving to electronic purchasing and payments on the IT infrastructure of agencies.

Lead agency

Defence/Centrelink/DOCITA (OGO)

Dependencies

None

SCOPE

The project will develop a model with which to assess infrastructure load of electronic purchasing and payments activity on the IT infrastructure of agencies. The model will be used to develop benchmarks of the existing level of activity. It will also be used to assess scenarios of different loads representing different take-up rates of electronic purchasing and payments. The project will recommend a strategic approach to infrastructure capacity planning to accommodate the introduction of electronic purchasing and payments.

OUTPUTS AND OUTCOMES

Expected outputs from the project are:

• A model with which to analyse the infrastructure impact of electronic purchasing and payments activity.
• A recommended strategic approach to infrastructure capacity planning.

The outcomes of this project will be:

• A specification of the requirements for a planned progression of infrastructure capacity to optimise the balance between efficient electronic trading and government expenditure on infrastructure.

EXPECTED BENEFITS

The project is expected to provide the following benefits for the Commonwealth:

• Strategic infrastructure planning will allow realistic estimates to be budgeted for appropriate infrastructure improvement.
• Benchmarks and a model(s) for measuring impact of increased electronic purchasing and payments that will be re-useable for assessing the impacts of other e-commerce initiatives (e.g. electronic service delivery).

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ANNEX D-PILOT/DEMONSTRATION PROJECTS

This Annex sets out pilot/demonstration project charters. It is envisaged that OGO would coordinate the development and rollout of these projects.

Project

A lead agency(s) to implement electronic purchasing capabilities with existing FMIS

Aims

• A lead agency(s) to implement electronic purchasing as an extension of an existing FMIS installation.

• To collect, analyse and disseminate the lessons learned and experience of assisting that agency to other agencies with similar requirements and the same FMIS.

Lead agency

To be determined

Dependencies

None

SCOPE

The project will identify a volunteer agency within Government that will implement electronic purchasing functionality within its existing FMIS. The project will collect experience, lessons learned and best practice information for dissemination to other agencies.

OUTPUTS AND OUTCOMES

Expected outputs from the project are:

• A carefully documented and monitored implementation of electronic purchasing functionality within one of the shared systems initiative (SSI) FMIS.
• Best-practice information will be produced for use by other agencies in planning and executing their electronic purchasing implementation projects.

The outcomes of this project will be:

• Insight and experience gained into the issues and their resolution while implementing electronic purchasing within a SSI FMIS will greatly facilitate follow on implementations by reducing costs and time for implementations.

EXPECTED BENEFITS

The project is expected to provide the following benefits for the Commonwealth:

• Knowledge that will enhance the efficiency and effectiveness of future similar implementations; and
• Sharing of experience and lessons learned from a successful implementation will increase confidence in future implementations.

The project is expected to provide the following benefits for suppliers to Government:

• Establishing e-procurement capabilities within the agency will facilitate take-up by its suppliers.

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Project

For a lead agency with a relatively discrete supplier community, develop an electronic marketplace for these suppliers, in conjunction with relevant industry bodies

Aims

To assess the feasibility of an electronic marketplace for suppliers in a specific industry sector where the Government is a key buyer.

Lead agency

To be determined

Dependencies

None

SCOPE

The project will identify a specific industry sector where the Government is the dominant buyer and call for volunteers from amongst industry members in the area to establish an electronic marketplace for Government purchasing. The project would assess the development and operation of the electronic marketplace in conjunction with the relevant industry group.

Once established the marketplace could be used by suppliers for electronic trading beyond the Government's demand. The project will not attempt to re-assess suppliers or to re-arrange supplier arrangements except to the extent dictated by the move to electronic trading.

OUTPUTS AND OUTCOMES

Expected outputs from the project are:

• To assess an electronic marketplace in a specific industry sector populated by suppliers to Government.
• A carefully documented and monitored establishment of an electronic marketplace for a group of suppliers.
• Best-practice information for use by agencies and supplier communities in planning and executing electronic marketplace projects.

The outcomes of this project will be:

• Knowledge gained while establishing an industry-specific electronic marketplace will influence future implementations.

EXPECTED BENEFITS

The project is expected to provide the following benefits for the Commonwealth:

• The Government will demonstrate its commitment to encouraging supplier adoption of e-commerce.

The project is expected to provide the following benefits for suppliers to Government:

• A pilot industry-specific electronic marketplace resulting in carefully collected knowledge will greatly enhance the efficiency and effectiveness of future similar projects.
• Once the electronic marketplace is established, other agencies and suppliers may choose to join the new marketplace rather than creating another, potentially improving cost savings.
• The industry sector selected will benefit from the low-cost introduction of e-commerce capabilities.

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Project

A group of small agencies to establish a Shared Service Centre for purchasing

Aims

• A group of volunteer agencies to establish a Shared Service Centre for electronic purchasing.

• To collect, analyse and disseminate the lessons learned to other agencies with similar requirements.

Lead agency

To be determined

Dependencies

None

SCOPE

The project will identify a group of volunteer agencies within Government that will establish a Shared Service Centre to provide purchasing services to all volunteer members. The cost of establishing the Shared Service Centre will be borne by the volunteer agencies collectively. The project will collect lessons learned and best practice information for dissemination to other similar projects.

OUTPUTS AND OUTCOMES

Expected outputs from the project are:

• A carefully documented and monitored establishment of a Shared Service Centre by a group of volunteer agencies.
• Best-practice information for use by other agencies in planning and executing their own Shared Service Centre projects.

The outcomes of this project will be:

• Insight and experience gained into the issues and their resolution while establishing a Shared Service Centre will greatly facilitate later implementations leading to reductions in the overall cost of such implementations.

EXPECTED BENEFITS

The project is expected to provide the following benefits for the Commonwealth:

• Enhanced efficiency and effectiveness of future similar projects
• Once a shared service centre is established, other agencies may choose to join the new centre rather than creating others, potentially magnifying cost savings.
• Sharing of experience and lessons learned from a successful pilot will increase confidence in future projects.

The project is expected to provide the following benefits for suppliers to Government:

• Establishing e-procurement capabilities within agencies sharing the service centre will facilitate take-up by suppliers.

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Project

Develop best-practice request and contract documentation database

Aims

To collect, refine, enhance and disseminate best-practice model request and contract documentation for procurement activity.

Lead agency

DOCITA (OGO)/A-G's/Defence/DOFA

Dependencies

None

SCOPE

The project will work with agencies across Government to collect examples of typical and unique request and contract documentation. The collection will be analysed to identify common or core elements, which will be enhanced by requirements set within Government policy and contract law. The enhanced core elements will be framed into templates as examples of the preferred approach, supplemented by examples of clauses used by agencies to resolve unusual requirements. This information will be collected into an electronic database available to all agencies. The project will also review and re-establish a set of standard approaches to tendering for goods and services across Government.

The project will not renegotiate any contracts already in place, nor will it conduct any tendering processes.

OUTPUTS AND OUTCOMES

Expected outputs from the project are:

• A collection of model request and contract documentation elements for use by agencies.
• Template documentation with suggested additions for particular circumstances drawn from experience and use across Government.
• A consistent approach to tender processes including consistent response requirements.

The outcomes of this project will be:

• More efficient and effective tender-based procurement based on consistent request processes using documentation based on best-practice templates.

EXPECTED BENEFITS

The project is expected to provide the following benefits for the Commonwealth:

• A database of best-practice request and tender documentation elements will lighten the burden of conducting tender-based procurement and will generally lead to better results for lesser costs.
• Using request and tender documentation formed from long experience and tried and tested approaches to procurement will assist agencies with lesser procurement experience.
• A consistent approach to tendering across Government will reduce the ambiguity of Government's requirements, promoting better responses from suppliers.
• A consistent approach to tendering will also reduce the cost to Government of actually conducting the tender as efficiencies can be applied to a single process.

The project is expected to provide the following benefits for suppliers to Government:

• A consistent approach to tendering across Government will increase the efficiency with which suppliers can respond to Government business opportunities.
• Consistent request and tender documentation based on best-practice elements will reduce the ambiguity of Government requirements and conditions, and increase the comfort of suppliers through familiarity with the arrangements that the Government seeks to establish.

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Project

Develop an electronic invoicing facility for suppliers to Government

Aims

To design, develop and implement a mechanism through which suppliers can electronically invoice Government, reliant upon the minimum e-commerce capability possible.

Lead agency

To be determined

Dependencies

Security, Supplier Registration

SCOPE

The project will design, develop and implement a process by which suppliers can lodge invoices on Government electronically. The facility will allow a variety of data entry possibilities from receiving pre-formatted emails, through completion of a web form, to receiving standard EDI invoice documents. The project will develop a single process applicable across Government.

GATEKEEPER security will be used.

OUTPUTS AND OUTCOMES

Expected outputs from the project are:

• A single operational electronic invoicing facility available to suppliers to Government.

• An electronic means of suppliers invoicing Government promotes efficiency in payment processing for both Government and suppliers leading to cost savings and potentially lower cost products.

EXPECTED BENEFITS

The project is expected to provide the following benefits for the Commonwealth:

• Electronic invoices will facilitate increased electronic purchasing and payments integration, reduce errors and consequent re-work, and offer efficiencies in payment processing.
• A direct intervention by Government of this nature will demonstrate its commitment to encouraging supplier adoption of e-commerce.

The project is expected to provide the following benefits for suppliers to Government:

• The ability to present invoices to Government electronically will reduce the effort involved for suppliers, increase the responsiveness of Government to payment, and facilitate greater adoption of e-commerce amongst suppliers.

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GLOSSARY

ABN

Australian Business Number (ABN)-a unique identifying number issued under the A New Tax System (Australian Business Number) Act 1999 so that an entity can identify itself reliably in all dealings with the Australian Government. (www.taxreform.ato.gov.au)

APCC

Australian Procurement and Construction Council (APCC)-this organisation represents the jurisdictions of Commonwealth of Australia, New South Wales, Victoria, Queensland, South Australia, Western Australia, Northern Territory, Australian Capital Territory. Tasmania and New Zealand have observer status. (www.apcc.gov.au)

Authentication

The process of providing assurance of the identity of an individual or entity.

Business

The Australian Bureau of Statistics (ABS catalogue 8141) defines:

• micro business, as one which employ fewer than five people;
• other small business, as one employing five or more, but fewer than 20 people;
• medium business as one employing 20 or more people but fewer than 200; and
• large business, as one employing 200 or more people.

BEP

Business Entry Point (BEP)-an interactive information and transaction service giving individuals and businesses immediate access to government information services, and allowing users to more easily meet Commonwealth and State/Territory government obligations. Access to the BEP is via the Internet, a telephone hotline, computer disks and in the future through government and other shopfronts. In the future users will be able to carry out financial transactions with some Commonwealth Government agencies through the BEP. (www.business.gov.au).

Certification Authority

An organisation that provides certified digital signatures using asymmetric cryptography in accordance with its published policies and practices.

Commonwealth Procurement Guidelines

Commonwealth Procurement Guidelines-Core Policies and Principles (March 1998) clarify what is required and expected in Commonwealth procurement activity. These Guidelines allow agencies to decide how best to handle their affairs, taking account of their own circumstances and the nature of the markets in which they are operating. (www.ctc.gov.au/publications/purchasing/cpg/cpg.htm)

EDI

Electronic Data Interchange (EDI)-computer-to-computer communication of business messages in standard codes and formats. EDI is used extensively for contracts, invoices and ordering between component suppliers and manufacturers, and is being extensively integrated within e-commerce models converging around the Internet.

E-business

Electronic business (e-business)-encompasses all of what has been called e-commerce-the external channels beyond the boundaries of an organisation-and goes on to include every aspect of the firm's strategy and operations. Unlike e-commerce, e-business is less about technology than it is about business. It is about doing business differently, being acutely aware of a new range of options that are becoming available to survive, compete and succeed. In its narrowest sense, e-business means the use of information and Internet technologies to conduct business among buyers, sellers and other trading partners. Largely because of the electronic infrastructure, it allows all participants to reduce the costs associated with inter-company communications and transactions. Leveraged further, these electronic channels can provide faster time to market for goods and services, eliminate geographic barriers to market entry, and offer new ways to serve existing customers, while attracting new ones.

Electronic Business Communities

Multiple 'internetworked' enterprises that collaborate and compete to deliver new value to their customers at lower cost. These communities are agile partnerships in which each participant contributes based on core competencies. They are surrounded by knowledge that is dynamically created and shared among customers and partnering enterprises. Customers are the driving force in these communities, defining needs, sometimes even creating much of the value themselves. E-business communities can act with the focus of a single organisation, but are smarter, leaner and more responsive than the sum of all the constituencies.

E-commerce

Electronic commerce (e-commerce)-any electronic communication that facilitates the exchange of goods and services or other assets between suppliers and buyers. E-commerce includes all forms of electronic trading including electronic data interchange (EDI), electronic banking, electronic mail and other online services.

Electronic Marketplace/
Trading Community

The established electronic trading networks, mainly procurement chains, between component suppliers and manufacturers and between buyers and suppliers. Through global electronic markets these supply chain networks are inter-related through computing networks such as the Internet.

ESA

Endorsed Supplier Arrangement (ESA)-a system for pre-qualifying suppliers in the Information Technology, Major Office Machine, Commercial Office Furniture and Auctioneering industries to sell into the Commonwealth Government marketplace. Buyers are able to use the online search facility to find information on suppliers, outlet/dealer networks and the products and services that are offered (the ESA home page is at: www.ctc.gov.au/esa/index.htm).

ETA

Electronic Transactions Act 1999-an Act that provides a regulatory framework that recognises the importance of the information economy to the future economic and social prosperity of Australia; and facilitates the use of electronic transactions; and promotes business and community confidence in the use of electronic transactions; and enables business and the community to use electronic communications in their dealings with government (the Act is available at: http://scaleplus.law.gov.au/html/pasteact/3/3328/top.htm)

Financial Management and Accountability Act 1997

The main purpose of this Act is to provide a framework for the proper management of public money and public property. This Act contains rules about how public money and property are to be dealt with. Many of the rules in this Act apply to officials of agencies and to Chief Executives of agencies. (www.dofa.gov.au/Pubs/fmab/Consolidation_FMA_FMLAA.doc)

Gatekeeper

A public key trusted infrastructure to be used for mechanisms and processes to secure electronic transactions with the Government. (www.dcita.gov.au)

Non-repudiation

A term used to describe the grounds on which it would be claimed that there was an inability of the sender of a document to deny sending it or the receiver of a document to deny receiving it, at a later stage.

Privacy

Privacy includes procedures for the proper collection, management and use of information about a natural person. Commonwealth and ACT government agencies must comply with all the information privacy principles which are set out in section 14 of the Privacy Act 1988. (www.privacy.gov.au)

Procurement

Simple procurement-the acquisition, through simple purchase processes, of goods and services that are commodities or otherwise easily described.

Complex procurement-the acquisition, through multi-stage, managed selection and evaluation processes, of goods and services that are large, or difficult to specifically describe.

Strategic procurement-the selection of a small group of suppliers through which all of a business's needs are acquired; the suppliers are guaranteed demand and volume, the buyer is guaranteed discounted prices and other value-add services.

Security

Relates to the measures required for an adequate level of physical protection and confidence in the people who have access to ensure that sensitive national and commercial information is properly protected from unauthorised disclosure.

Shared Service Centre

Several agencies collaborate for purchasing and form a Shared Service Centre to provide purchasing services to all subscribing agencies.

Shared System Suite Initiative

The Shared Systems Initiative developed from the recommendation in Clients First-The challenge for Government information technology (www.dofa.gov.au/pubs/itrg/itrg-tc.html) aims to reduce the number of administrative systems in use in Commonwealth agencies to improve administrative efficiencies. (www.dcita.gov.au)

SME

Small-to-medium sized enterprise (SME)-refer to definition of 'business' in this glossary.

VAN

Value Added Network (VAN)-a network through which business partners communicate where the network provider offers additional services, such as translations of data formats, or data storage and forwarding capabilities.