1.3: Basic Principles of Public Procurement

Public procurement acts or laws govern public procurement in most countries. Although regulations vary from country to country, public sector supply is based on the following globally accepted principles:

• Economy
• Integrity
• Efficiency
• Transparency
• Fairness

Governments are playing an increasingly important role in our economies, and this trend in growth in supply chain management will continue. As budgets in the public sector continue to tighten, public-sector supply organizations will continue to adopt management practices from the private sector.

Globally Accepted Principles

Economy

Value for money is the principle of economy that emphasizes the proper management of public funds. Public procurement officers should avoid fraud, waste and abuse of public resources. Public officers must do their due diligence, not pay high prices for goods, collude with other bidders or indulge in unacceptable practices.

Integrity

Integrity of the procurement process and the public procurement officers ensures stakeholders’ confidence in the public supply chain. When solicitation documents are made publicly available, the information they contain must be dependable and free of ambiguities or bias. Procurement officers should be perceived as honest, trustworthy, responsible and reliable. They must strive to ensure responsible management of the process as mandated by the public regulations and accountability for taxpayers.

Efficiency

Public procurement strives to create efficient processes by reducing administrative overhead costs and devoting time to complex, strategic projects instead of straightforward ones. Increasing competition through negotiation can improve contracts and identify solutions before projects are awarded. Creating a centralized information database on prior performance provides information to potential bidders during decision-making. Enhancing the expertise of the public procurement officers is essential in managing transactions and innovative solutions.

Transparency

Transparency in public procurement is very important; all information must be available for all stakeholders unless prevented by legal reasons. Company proprietary information or military information about defence-related procurements are examples of confidential information. When a procurement requirement is announced, it must include sufficient details for interested suppliers to determine their ability to compete. The close interaction between the public and private sectors creates risks for private gain and waste at the expense of taxpayers’ money. Providing transparency is critical to minimize risk and create a level playing field for suppliers.

Fairness

Fairness is achieved in public procurement processes by ensuring equal treatment and opportunity for all bidders. Decision-making must be unbiased and based on compliance with solicitation documents, with no preferential treatment given to one supplier over the other. In accordance with the public procurement rules, suppliers should have the right to challenge the procurement process whenever they feel they were treated unfairly.

Attributions

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.