Digital Procurement Solution Helps Streamline German E-Government

A CSC team in Germany has created an online secure procurement system for the German government that replaces paper-based tender offers and helps Germany move toward a transparent "e-government" and a modernized administrative structure.

The procurement system, e-Vergabe (e-tendering or e-procurement), is part of the BundOnline 2005 initiative created in 2000 by German Chancellor Gerhard Schröder to put all German federal services online by 2005. The goals of the project included greater government efficiency, increased access to public services and contracts, and higher transparency. Part of this project included moving the federal procurement process online.

In May 2001, the German Interior Ministry’s Procurement Agency signed a contract with CSC Ploenzke, CSC’s German busines unit, to develop an online contract bidding system. Bonn-based Ploenzke created e-Vergabe, which helps reach the BundOnline 2005 goals. Further, the system allows a greater range of bidders and is cheaper than traditional paper-based bidding and procurement.

The system is now in place at the German Ministry of the Interior (Beschaffungsamt des Bundesministeriums des Inneren), the Federal Office for Building and Regional Planning (Bundesamt für Bauwesen und Raumplanung) and the Federal Office of Defense Technology and Procurement (Bundesamt für Wehrtechnik und Beschaffung), and was chosen to be the central contract bidding system for the German federal administration, which invites all corresponding state authorities to use it as well.

Independent studies state that by saving paper and streamlining the contract process, electronic procurement could produce savings of 5 to 10 percent of the overall procurement cost, which would sum up to roughly 17.5 million euros (US$20 million) annually for the Ministry of the Interior and its bidders. Further, by putting the procurement process on a publicly accessible Web site, it promotes transparent bureaucracy and allows more bidders to compete for contracts. As an official from the Ministry of the Interior put it, “Above all, private enterprises win with e-tendering: gone are the days when bidders had to laboriously read a multiplicity of official journals and fill out forms in order to take part in the procurement procedures of the public administration.”

CSC’s Leading Edge Forum (LEF) awarded e-Vergabe its most coveted award, the Award for Technical Excellence, which recognizes the project both for innovation and technical excellence. In 2003, there were six award winners.

The challenge

Many observers were skeptical that the electronic-tendering technology could adhere to German law. The system represents an extension of traditional procurement, so similarly rigorous legal standards apply. Because the process is electronic, the law demands careful encryption and digital signature controls as set out in the recent German New Signatures Act. These hurdles were significant, demanding both technical innovation and careful attention to legal requirements.

In January of 2002, computer journalist Manfred Klein wrote an article in Government Computing, “Konkurrenz für Wirtschaft ” (Competition for Commerce ), in which he noted that “experts still doubt whether the implementation of this ambitious project will meet customer expectations, since many of them think that the legal requirements of the planned procurement platform, in particular regarding digital signatures and encryption, are by far too complex to be mastered with reasonable effort.”

To satisfy these requirements, e-Vergabe uses both embedded signatures and encrypted document transfer to ensure security and integrity in the bidding process. The trickiest part of the e-Vergabe team’s task was finding an elegant solution to the challenges posed by integrating these functions.

The first part, secure document transfer, has two main components: transport encryption and storage encryption. Both use rigorous encryption: 128-bit and 1024-bit, respectively. Transport uses a Public Key Infrastructure (PKI), meaning that a sender of a procurement document signs it with a “public key,” ensuring that only the intended recipient can then open the document with his appropriate “private key.” Further, a required digital certificate contained on a smart card ensures document integrity.

Each user of e-Vergabe has to have a smart card with two digital certificates issued uniquely for him. During signing of an electronic document, one of the certificates is associated with it so that the user can be positively identified as the signer of an electronic document. This allows for a reliable “digital signature” that is legally equivalent to a paper signature in German law.

The documents themselves are in Adobe Acrobat (PDF) format, with included plug-ins to allow for the signature process. These technologies allow bidders to submit bids in response to publicly posted tender offers, with the assurance to the procurer that the bids are authentic and to the bidder that only the procurer can read the bid. All the elements of the traditional bidding process are there, but electronically.

e-Vergabe in practice

CSC Ploenzke first installs its software at the procurer’s location — for example, a government ministry. Then, any bidder who wishes to participate in the online bidding process must obtain a smart card reader and a certified smart card. The bidder then downloads the e-Vergabe software and begins bidding. They submit their bid documents much as they always have, except in the form of digitally signed Acrobat files rather than traditionally signed papers.

The system runs on standard server configurations (Apache, BEA Weblogic and Oracle based on RedHat/Debian Linux or Sun Solaris) and can be ported to any J2EE 1.2/SQL92 compliant server. While a few special pieces of hardware are required (such as a time stamp device), for the most part the system consists of software that installs on top of pre-existing standard hardware.

Central to the process are smart cards (or digital signature cards). Every function of e-Vergabe is regulated with smart cards — there are no passwords. Not only are signatures controlled on both ends by smart cards, but also key encryption, user administration and even login. The system supports four different card readers and six different cards, and can be adapted on-demand to other smart card hardware.

Product leverage

The components of the system are basically stand-alone products. The jSign plug-in for Acrobat, which allows the digital signatures, has been adapted to be an independent product. The smart card interface is independent of e-Vergabe. The secure document transfer uses an innovative method to ensure both security and data integrity and is of interest to businesses. Finally, e-Vergabe’s public key infrastructure is a valuable encryption tool.

The German government has chosen e-Vergabe as its one-for-all purchasing system, which will be used as other ministries and regional and state authorities get on board for e-government. CSC Ploenzke has made this a simple process, even for smaller ministries, by creating a central server with multi-client capability at the German Federal Statistical Office that can serve many ministries at once.

The team

After completing the initial development of e-Vergabe, roughly half of the team stayed on to develop its multi-client capability. Now, five or six members continue to develop the system. Some have, for instance, adapted the system to allow for the signature of XML-based documents in addition to PDF files, while others are working on a feasibility study for the German states of Brandenburg and Berlin, and others still continue to maintain and improve the integral system itself.

Stefan Knopp, the software architect for e-Vergabe, has recently begun a project for the German Federal Ministry of Education and Research designed to put government funding for research online. Similar to e-Vergabe, the procedure will make extensive use of signature cards and allows broader and streamlined access to government resources. Following the success of e-Vergabe, the German government has engaged CSC for much of its future e-Government implementation.

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