Background

Technology has transformed many activities in our daily lives. It changes how a company does its business, for example, online sales, digital marketing, and so on. It has also transformed the way the government conducts its business, including digital services for its citizens and how it procures goods and services to deliver public goods and services. Many private and government entities are adopting e-procurement since its development in the early 2000s. It is defined as any technology, including the use of the internet, to facilitate the purchase of goods or services by the public or private entity (Davila et al, 2003).

Various studies highlighted the benefits of e-procurement adoption in the public sector. Neupane et al (2012) mention potential e-procurement advantages, including improved transparency and efficiency, curbing corruption, cost reduction, superior decision-making, and keeping track of supplier performance. With all those perceived benefits, it is no wonder that many international organizations, such as the World Bank, European Union, and OECD, suggest its implementation for the member countries.

Indonesia has been adopting e-procurement since 2012. The President Regulation Number 70/2012 gives the foundation of e-procurement practices in Indonesia. It mentions two e-procurement methods, namely e-tendering and e-purchasing. The latter is executed through a system called e-catalogue, which contains information regarding the product (type, technical specification, and price) from government suppliers. Over the past decade, the e-catalogue has changed dramatically. It becomes more flexible, eliminates much red tape, and consequently is used by many government employees and suppliers. A senior minister of the Government of Indonesia even mentions that the e-catalogue is a tool to prevent corruption in government procurement. Contrary to the claim, McCue et al (2015) state that one of the procurement dilemmas is that a reduction in bureaucracy will not yield a decrease in fraud opportunity. This article aims to demonstrate the existence of such a dilemma in Indonesia's e-catalogue system.

E-Catalogue and its evolution

E-purchasing through the e-catalogue system has evolved since 2012. In the early stage of its implementation, a supplier who wishes to sell its goods or services should contact the National Public Procurement Agency/NPPA (Lembaga Kebijakan Pengadaan Pemerintah). Then, the agency will choose a supplier over a tender or a non-tender mechanism. After passing the selection mechanism, the agency will award a contract to the supplier and put its product in the e-catalogue system. The commitment-making officer (the buyer) from any government ministry or agency, and the local government can purchase the goods or services through the e-catalogue system. This process suggests that the NPPA has curated suppliers. Hence, the price of goods or services on the e-catalogue is the best price available for the government. Initially, the e-catalogue system offered only a few products, including vehicles, internet services, agricultural machinery, medical devices, drugs, and peripherals from a few vendors. It is plausible since suppliers should deal with theNPPA for the selection process to place their products on the e-catalogue, but the agency has limited resources to do so. However, the commitment-making officers across the government benefited from the e-catalogue, as it eliminated the need for a lengthy tender process, resulting in an efficient procurement process and a better price or improved economy.

To address the bottleneck at the NPPA, the Head of the NPPA issued Regulation number 14/2015 as the basis to delegate the vendor selection process to the local government. Although such a policy had been enacted, procuring goods and services through the e-catalogue was not popular enough among commitment-making officers. Even the President of Indonesia issued Presidential Instruction number 1/2015 and President Regulation number 4/2015 to encourage the use of e-procurement and e-catalogue. Furthermore, President Regulation number 16/2018 has removed red tape for utilizing the e-catalogue. This includes eliminating the need for the commitment-making officer to establish the owner estimate and for the vendor to submit a performance bond/insurance.

A dramatic change for the e-catalogue happened in 2022, as the Head of the NPPA issued Resolution Number 122/2022. It removes various barriers, including product standardization and the vendor selection process, as a requirement to put a product or service on the e-catalogue. As a control tool, the commitment-making officer should prepare the price reference as a basis for negotiation with the vendor, and the latter should guarantee that the price put on the e-catalogue is the best price for the government.

One might argue that the Resolution’s purpose is to increase the number of suppliers and foster competition, thereby enabling the government to obtain a better price. As can be seen in the table below, there is a significant increase in the number of suppliers, transactions, and the value of transactions on the e-catalogue system.

Source: https://data-pdn.inaproc.id/public/page/id/888

However, we should note that a competitive market does not guarantee competitive behavior. Zahra et al (2021) mention that expansion of market access is not enough to reduce fraud in government procurement.

The SAI Indonesia auditor's procedures in response to the e-catalogue

The application of e-procurement benefits not only the buyer and vendors but also provides an advantage to the auditor. Schapper (2008) mentioned that one of the advantages of e-procurement is to improve audit data and transparency. OECD (2025) conducted a survey in 2024, showing that 68% of respondents highlighted the use of emerging technologies in public procurement to enhance control and oversight, such as detecting bid rigging, collusion among suppliers, or other anomalies.

According to OECD (2024), Supreme Audit Institutions (SAIs) and other oversight bodies have explored the use of data available on e-procurement to improve their oversight function. Using data analytics, the SAI can detect patterns, irregularities, or relationships in the procurement data. As an example, SAI Colombia has adopted a tool to analyze indications or patterns that might represent collusive behavior (OECD, 2025).

The e-catalogue system enables the commitment-making officer to purchase goods or services from any supplier on the system. Due to the limited restrictions on the supplier's ability to sell goods or services on the e-catalogue, there is a risk that a particular seller may have a private channel with the commitment-making officer outside the system. As a result of this uncompetitive behavior, the seller is chosen by the commitment-making officer. This is aligned with Alilovic (2008), who stated that communication through a private channel might jeopardize efforts to prevent bribery in public procurement.

The Audit Board of the Republic of Indonesia (SAI Indonesia) is using the e-audit feature in the e-catalogue system to identify potential collusion between vendors and the commitment-making officer in the procurement process. As a result, SAI Indonesia identifies some data anomalies that indicate collusion exists, including:

1. Speed of first sale of the product or services

There are some steps for the commitment-making officer when he uses the e-catalogue system to purchase goods or services, i.e., (i) establish technical specification, (ii) create a purchasing package on the system, (iii) select product and vendor from various vendors on the system (iv) negotiate the price, and (v) create purchase order/contract on the system. If the supplier lists the product or service on the e-catalogue for the first time and it is purchased by the commitment-making officer shortly thereafter, it may suggest that communication occurred outside the system between the two parties. Data analytics show that there were 29 transactions in 2023 and 46 transactions in 2024 for products or services that were listed for less than an hour.

2. Price change before transaction

Once a product or service is put on the e-catalogue, its price can be monitored in the data log. If there is an increase shortly before a transaction happens, it might indicate that the vendor and the commitment-making officer are colluding. The data analytics in the table below show an increasing price of transactions, ranging between 35% and more than 100% before the transaction happened.

Source: Yenny and Rohman (2025)

However, Caulfield in Maulidi (2017) argued that untrained observers can conduct the search for collusion in public procurement since it generally leaves signs to be discovered. Therefore, the auditor should be aware of whether several conditions below exist.

1. A mismatch between the technical specification established by the commitment-making officer and the technical specification of a product put on the e-catalogue. A commitment-making officer should not purchase a product with different or incomplete technical specifications, as this might jeopardize their duty. If they purchase a product with incomplete technical specifications and the acquired product is perfectly suited to it, this may suggest that both parties have communicated outside the system.

2. A customized product or a service package. Products or services, such as customized furniture requiring room measurements, cars with specific modifications, or event organization service packages lacking detailed venue, food, or other criteria required by the commitment-making officer, may sign a communication outside the system that has occurred between the commitment-making officer and suppliers.

3. A standardized product with a particular installation technique. Sometimes, a standardized product listed on the e-catalogue, such as software, requires a specific installation process, including hardware checks, server diagnosis, and other steps. If the e-catalogue lacks information on the installation process and time required, and the commitment-making officer purchases it, this may indicate that both parties are meeting outside the system.

Other audit procedures, such as interviews using the PEACE technique, should follow up on the analysis to detect collusion above.

Conclusion

The recent development of the e-catalogue has removed various barriers for sellers to sell their products to the government using the platform. It seems such development is aimed at increasing the number of sellers, hence creating more competition and better prices for the government. However, a competitive market does not always mean competitive behavior. Data analytics and product analysis indicate that collusion happened between the commitment-making officer and vendors in procurements using the e-catalogue system. This provides evidence that the procurement dilemma exists.

Reference

President Regulation Number 70/2012
President Regulation Number 4/2015
President Regulation Number 16/2018
Presidential Instruction Number 1/2015
Head of the NPPA Regulation Number 14/2015
Head of the NPPA Resolution Number 122/2022

Alilovic, M. (2008). E-procurement impact on corruption: E-GP Scenario/Model in Indonesia. In ADB/OECD Anti-Corruption Initiative for Asia and the Pacific (Ed.), Fighting bribery in public procurement in Asia and the Pacific: Proceedings of the 7th regional seminar on making international anti-corruption standards operational (pp. 113–128). Asian Development Bank & Organisation for Economic Co-operation and Development.

Davila, A., Gupta, M., & Palmer, R. (2003). Moving Procurement System to the Internet: The Adoption and Use of E-Procurement Technology Models. European Management Journal, 21(1), 11-23.https://doi.org/10.1016/S0263 -2373(02)00155-X

Maulidi, A. (2017). The Investigation and Elimination of Public Procurement Fraud in Government Sectors (A Case Study in Indonesia’s Procurement System: Case from 2006 to 2012). International Journal of Economics and Financial Issues, 7(2), 145-154.

McCue, Clifford P., Prier, E., & Swanson, D. (2015). Five dilemmas in public procurement. Journal of Public Procurement, 15(2), 177-207.https://doi.org/10.1108/JOPP-15-02-2015-B003

Neupane, A., Soar, J., Vaidya, K., & Yong, J. (2012). Role of Public e-Procurement Technology to Reduce Corruption in Government Procurement. International Public Procurement Conference, August 17-19. 304-334.

OECD. (2025). Digital transformation of public procurement: Good practice report. OECD Publishing. https://doi.org/10.1787/1a89ed5e-en

OECD. (2024). Strengthening oversight of the Court of Auditors for effective public procurement in Portugal: Digital transformation and data-driven risk assessments. OECD Publishing. https://doi.org/10.1787/35aeab1e-en

Schapper, P. (2008). The impact of e-procurement on corruption: The potential of e-procurement for curbing corruption risks. In ADB/OECD Anti-Corruption Initiative for Asia and the Pacific (Ed.), Fighting bribery in public procurement in Asia and the Pacific: Proceedings of the 7th regional seminar on making international anti-corruption standards operational (pp. 113–128). Asian Development Bank & Organisation for Economic Co-operation and Development

Yenny, & Rohman, M. A. (2025, July 29). KTF Audit e-Katalog [PowerPoint slides]. Badan Pemeriksa Keuangan RI.

Zahra, F., Abdullah, Muhammad I., Kahar, A., Din, M., & Nurfalah. (2021). Preventing Procurement Fraud in E-Purchasing for Indonesian Local Governments. Journal of Asian Finance, Economics and Business, 8(2), 505-511. https://doi.org/10.13106/jafeb.2021.vol8.no2.0505