Introduction

This app provides practical guidance on how to manage a procurement reform and/or capacity development process whether at the national, sector or entity level. The app draws primarily on the OECD/DAC publication A Practical Guide to Transforming Procurement Systems (2011).

What is Public Procurement?

Procurement includes the functions from the identification of needs, solicitation and selection of sources, preparation and award of contract, and all phases of contract administration through to the end of a contract. Public procurement is procurement falling under the jurisdiction of a Government or other public sector organisation including all entities that use public funds. In practical terms public procurement ranges from the buying of fuel to construction of roads and highways, from school books to medicines and from office supplies to consulting services.

 

The Strategic Importance of Procurement

Procurement of goods, services and works accounts for a significant amount of national expenditures. Globally, expenditure for public procurement is estimated at about 15% (source) of the world's GDP, though in some developing countries the percentage may be much higher. Improved public procurement, therefore, has positive impacts on achieving economic and social outcomes or goals.

 

Many countries are finding that the contribution of public procurement goes beyond achieving savings in Government spending and can in fact support delivery of Government policies in other areas. Public procurement is a stimulus for growth in the domestic and/or regional private sector as the government is one of the main clients of the private sector and thus hugely influences the way that business processes evolve within the country. Through sustainable public procurement, governments can lever public spending to promote economic, environmental and social policies in the country. This is also relevant in fragile states and situations.

 

Clearly then, procurement is strategically important and the argument for Governments to invest in improving their public procurement systems is compelling. However, experience shows that technical fixes alone do not lead to sustainable transformation of public procurement systems - a broader understanding of societal, institutional and individual capacities is needed. Public procurement is not only an integral part of public financial management, but is also intimately linked to wider Public Sector reforms which in turn are deeply political (source). This app is intended to provide practical guidelines to navigate these processes.

Key Concepts in Procurement

Value for Money

Value for Money is often described as being the balance of economy, efficiency and effectiveness and many countries are now recognizing that it has a strategic element that goes beyond the narrow focus of cost or cost versus quality related to an individual procurement case. Rather the optimal definition of value for money will depend on the strategic goals and outcomes specific to each government (or public sector organisation).

 

Professionalism

Procurement has often been viewed as an administrative function, but the evidence suggests that investing in professionalism in procurement and emphasizing not only compliance to the rule of law, but also market and organisational knowledge as well as ethical standards, can be extremely effective in terms of improving procurement (source) and in terms of strengthening innovation in procurement.

 

E-Government Procurement

Electronic Government Procurement (e-GP) is a tool that, when applied appropriately, can facilitate tremendous improvements in terms of efficiency and effectiveness in procurement. Many countries are now using web-based technology to improve access to procurement information - an inexpensive but highly effective means to increase transparency and competition.  Other countries are applying much more sophisticated approaches (source). This includes e-invoicing, electronic submission of tenders, online training, etc.

 

Performance Management

Most countries are now looking at implementing systems to measure the performance of the procurement system allowing them to demonstrate improvements as well as driving the ongoing implementation of reforms (source).