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What Is Public Procurement?

About Public Procurement

Procurement by government entities like: Ministries, Banks, Defense, Federal Government, State Government, Municipal Corporations, Counties etc is also termed as Public Procurement. The word ‘Public’ implies that the procurement is being done for the public and from money received from the public in the form of taxes. Since the procurement officers have to deal with public money, it is imperative for them to maintain Transparency and bring Efficiency in procurement function. This ensures that the procurement activity is undertaken with sufficient caution, and that the funds are utilized judiciously, efficiently and economically.

Procurement Methods

Every country has its own set of rules/legislations for public procurement. Procurement methods adopted by the World Bank (after many years of research and consultations) are supposed to be the best; and adopted by many other funding agencies and local governments, may be with a few modifications/localizations.

Public Procurement Market Size

Typically governments across the globe spend 10-30% of their GDP on public procurement. The total GDP of the whole world in 2017 was around 126 Trillion USD on PPP basis (as per IMF report 2017). If the average public procurement spend is calculated at 15% of GDP, it translates in to a whopping 19.00 Trillion USD worth of business opportunities every year.

Funding Agencies

All local governments are not able to meet their development funding requirements from internal sources/finances and hence depend on various funding agencies. There are different types of funding agencies like Multilateral Funding Agencies, Bi- lateral Funding Agencies, NGOs, Foundations with specific objectives, charities etc. Few examples of multilateral funding agencies: The World Bank, ADB, AfDB Caribbean Bank, UN system etc. Generally suppliers are more interested to participate in funded projects as the payment is assured.

About This Business

As explained above, it is mandatory for all governments and quasi government organizations to publish their procurement information in local newspapers, national news papers, own website, funding agency websites etc. The objective is to get maximum circulation of their buying requirement and hence attract wider participation. This published notice is known as ‘Tender Notice’ In the pre-internet era these buying requirements/tenders/opportunities could not be circulated to a wider supplier base, and hence the competition used to be very thin. Common methods used to be: Faxes, embassies, local agents etc. But with the advent of the internet, collection, collation and dissemination of this information to suppliers as per their profile, have not only become easier, but also faster.