Public procurement is broadly defined as the purchasing, hiring or obtaining by any other contractual means of goods, construction works and services by the public sector. Public procurement is alternatively defined as the purchase of commodities and contracting of construction works and services if such acquisition is effected with resources from state budgets, local authority budgets, state foundation funds, domestic loans or foreign loans guaranteed by the state, foreign aid as well as revenue received from the economic activity of state. Public procurement thus means procurement by a procuring entity using public funds.
The items involved in public procurement range from simple goods or services such as clips or cleaning services to large commercial projects, such as the development of infrastructure, including road, power stations and airports. Public procurement is different from private procurement, because in public procurement the economic results must be measured against more complex and long-term criteria.
Furthermore, public procurement must be transacted with other considerations in mind, besides the economy. These considerations include accountability, non-discrimination among potential suppliers and respect for international obligations. For these reasons, public procurement is subjected in all countries to enacted regulations, in order to protect the public interests.
It is worth noting that unlike private procurement, public procurement is a business process within a political system and has therefore significant consideration of integrity, accountability, national interest and effectiveness. Insofar as public procurement has important economic and political implications, ensuring that the process is economical and efficient is crucial. This requires in part that the whole process is well understood by both the actors (the government, the procuring entities, the business community/suppliers) and other stakeholders, including the professional associations, academic entities and the general public.
Unfortunately, for most developing countries, this is not the case. Although several developing countries have taken steps to reform their public procurement systems, the process is still shrouded by secrecy, inefficiency, and corruption and undercutting. In all these cases, huge amounts of resources are wasted.
A basic tenet of public procurement is to provide ample and equal opportunities for participation to interested and qualified suppliers of goods, works or services. This ensures a healthy and effective competition. It is principally through such an open and effective competitive environment that the government, just like any procurer, gets the best value in procurement and at minimum cost while making it possible for the suppliers/contractors to fully benefit from doing business with it in a regulated environment that safeguards against favoritism and profiteering and provides equal participating opportunities to every potential and eligible supplier/contractor.
For procuring entities, open and effective competition should therefore aim at obtaining from suppliers the best possible combination of costs, goods and services. Suppliers/contractors competing with each other become market conscious by being innovative, strategic and focused in the delivery of their services.
Consequently, they make effort to optimize their price and quality for the procuring entity. While suppliers and contractors, as a result of market competition, strive to satisfy the anticipated needs of their customers, procuring entities need not sit back. They should be proactive and professionally apt to get the best possible outcome from the market.