3.1: Public Procurement Governance
All procurement activities must be conducted in a fair, legal and transparent manner, and the procurement governance framework ensures this happens. Public sector institutions are increasingly under the microscope of the public eye, with many decisions questioned by citizens. A governance framework provides a basis for public sector supply chain officers as they execute procurement decisions and ensure regulations are adhered to. The procurement governance framework consists of minimum requirements for each procurement activity, from planning, sourcing and contract management.
Public procurement rules originate from legal sources, trade agreements and common law. The following sources and principles must be taken into consideration in the development of a governance framework for public procurement:
- Trade Agreements
- Legal Framework
- Tender Documents
- Codes of Conduct
- Considerations that apply to government procurement
Practical Procurement: Scenarios and Solutions
Roozbeh Shah, the newly appointed procurement officer at GrenFirst Municipal Services, faced a significant challenge. Tasked with overseeing the procurement of essential supplies and services for the city of Grenville’s public works, Roozbeh quickly realized that the existing procurement processes were outdated and lacked transparency. This was a critical issue because the city had recently come under scrutiny from local media and citizens’ groups, questioning the fairness and legality of its procurement activities. Roozbeh knew that the city’s reputation and operational efficiency were at risk without a robust procurement governance framework.
GrenFirst Municipal Services, a mid-sized organization, provided a range of services, including waste management, water supply, and public transportation to a population of approximately 150,000 residents. With a workforce of 500 employees, the organization relied heavily on external suppliers for goods and services. GrenFirst’s budget was primarily funded through local investors and government grants, making it imperative to ensure that every procurement decision was both cost-effective and compliant with legal standards. The organization had a history of ad-hoc procurement practices, often leading to delays, cost overruns, and allegations of favouritism.
Roozbeh identified three potential options to address the procurement governance issues. The first option was to develop and implement a comprehensive procurement governance framework. This framework would include clear guidelines, procedures, and performance management metrics to ensure all procurement activities were conducted in a fair, legal, and transparent manner. It would also involve training staff on the new procedures and establishing a monitoring system to track compliance and performance.
The second option was to outsource the procurement function to a third-party specialist firm. This firm would manage all procurement activities, ensure compliance with legal and trade agreement requirements, and provide regular reports on procurement performance. While this option could bring in expertise and potentially streamline processes, it also raised concerns about losing control over critical procurement decisions and the potential for increased costs.
The third option was to enhance the existing procurement processes incrementally. This would involve updating the current procedures to align with best practices, improving documentation and record-keeping, and introducing periodic audits to ensure compliance. This approach would be less disruptive and could be implemented more quickly, but it might not comprehensively address all the underlying issues.
Roozbeh needed to decide which option would best address the company’s procurement challenges while ensuring compliance with legal and ethical standards. The decision was urgent, as continued scrutiny and potential legal challenges could jeopardize GrenFirst’s operations and the trust of the board and government.
Discussion Questions:
- What are the key elements of a procurement governance framework, and how can they help ensure fair, legal, and transparent procurement activities?
- Compare and contrast the three options available to Roozbeh. What are the potential benefits and drawbacks of each?
- How can performance management metrics be integrated into the procurement governance framework to improve accountability and efficiency?
Source: Scenario and questions created with the assistance of Microsoft Copilot.
Essential Reading
Read “Section 2.4, Three Basic Public Governance Models” from Chapter 2: Public Values in Procurement by Lizet Kuitert in Public Procurement: Theory, Practices and Tools (2023) edited by J. Grandia and L. Volker, Palgrave Macmillan, licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
This reading outlines the three basic governance models that influence the daily operation of the public procurement office. Public sector procurement is responsible and accountable for creating value for the stakeholders or society. Understanding value tensions, dilemmas, and conflicts and how they add to the complexity of public procurement can make safeguarding public values a balancing act.
Checkpoint 3.1
Attributions
“Practical Procurement: Scenarios and Solutions” box was created with the assistance of Microsoft Copilot and is shared under the Creative Commons – CC0 1.0 Universal License.
The multiple choice questions in the Checkpoint boxes were created using the output from the Arizona State University Question Generator tool and are shared under the Creative Commons – CC0 1.0 Universal License.
