Government procurement or public procurement is the procurement of goods, services and construction on behalf of a public authority, such as a government agency. With 10 to 20% of GDP, government procurement accounts for a substantial part of the global economy.
To prevent fraud, waste, corruption, or local protectionism, the laws of most countries regulate government procurement to some extent. Laws usually require the procuring authority to issue public tenders if the value of the procurement exceeds a certain threshold. Government procurement is also the subject of the Agreement on Government Procurement (GPA), a plurilateral international treaty under the auspices of the WTO.
Need for government procurementEdit
Government procurement is necessary because governments cannot produce all the inputs for the goods they provide themselves. Governments usually provide public goods, e.g. national defense or public infrastructure. Public goods are non-rival and non-excludable, which means that one individual's consumption does not diminish the quantity or quality of the commodity available to others, and individuals cannot be prevented from freely consuming the commodity, or "free-riding". Consequently, private markets cannot provide public goods. Instead the government provides those goods and finances them by raising taxes from all citizens.
In addition to public goods, governments often also provide merit goods, such as education or health care. Merit goods are private goods which are rival and excludable and are therefore provided by private markets. Nevertheless, governments also provide merit goods because of reasons of equity and fairness and because they have positive externalities for society as a whole.
In order to provide public and merit goods, the government has to buy input factors from private companies, e.g. police cars, school buildings, uniforms etc. This process is called government or public procurement.
Government procurement involves a high risk of corruption because of the great size of financial turnover and the complexitiy of many procurement processes in which businesses interact very closely with politicians and civil servants. Often the personal interests of the public officials are not the same as the interests of the public. Such a conflict of interest problem, known as the principal-agent-problem, increases the risk of corruption. According to OECD, the highest percentage of bribery cases occur in the area of public procurement to influence the awarding of public contracts. Corruption in public procurement causes inefficiencies and high costs to the public. In order to prevent corruption and to ensure transparency and competition among suppliers, public procurement is subject to legal regulation.
Government procurement regulations normally cover all public works, services and supply contracts entered into by a public authority. However, there may be exceptions. These most notably cover military acquisitions, which account for large parts of government expenditures. The GPA and EU procurement law allow of exceptions where public tendering would violate a country's essential security interests. Additionally, certain politically or economically sensitive sectors, such as public health, energy supply or public transport, may also be treated differently.
Strategic purchasing in public procurementEdit
One of the consequences of Financial crisis of 2007-2008 is attempt to decrease public spending to control public debt. This trend is affecting government procurement for its significant share in public spending. Therefore, various purchasing strategies have been implemented to increase quality and to decrease cost of government procurement. These strategies include public e-procurement, centralized purchasing or framework agreements.
Public e-procurement stands for replacing various phases of public procurement with electronic means. Purpose of using e-tools is reducing administrative costs by automation. E-procurement can also mitigate some barriers to entry for smaller suppliers, consequent increase of competition can reduce price of procurement.
Centralized purchasing in public procurementEdit
Centralized purchasing means awarding procurement contract on behalf of one or more procuring entities. This method has been used to gain various benefits emerging from demand aggregation. Centralized procurement can be done by ordinary contracting authorities or established central purchasing body. Centralized procurement is regulated by local legislation. For instance, directives 2004/17/EC and 2004/18/EC are dealing with this issue in the EU. Commonly mentioned benefits of procurement centralization are as follows:
· Final unit price decrease - Higher procurement value coming from demand aggregation can increase buyers bargaining power and decrease final price. Moreover, higher value can attract more companies to bid in the tender, increased competition might lead to better price as well.
· Transaction costs reduction – Key objective of centralized procurement is preventing duplication of some procedures. Contracting units can reduce their transaction costs in cooperating with other entities. This aspect is often considered as most relevant argument for procurement centralization.
· Increasing transparency – Under many jurisdictions, there is certain threshold in value obliging procurer to publish tender details. Therefore, higher procured value can contribute to higher transparency among public tenders.
· Knowledge sharing – Cooperation in purchasing can also result in sharing best procurement practices. Some central procurement bodies also perform research activities.
However, other centralization aspects are often criticized. Discussed drawbacks are often connected to the decentralization theorem stated by American economist Wallace E. Oates in 1972. The theorem claims, that decentralized system is more efficient, because of the information asymmetry between local and central government.
Procurement decentralization might also negatively impact supply side. Higher procured values might require higher capacity of supplying company and it might create barrier to entry for small or medium companies. Consequently, it might lead to monopolizing public procurement market.
Critics also mention that only some goods can be purchased centrally. Goods that are heterogeneous or they have many characteristics are not suitable for this strategy.
Framework agreement is another method for aggregation of demand. It’s a type of two-stage bid tendering procedure, that establishes incomplete contracts awards with one or more suppliers for given period of time.
The discussed advantage is an administrative costs reduction again as tender procedure don't have to be duplicated for agreed period of time. On the other the Winners curse I associated with framework agreement as there is a price uncertainty in time.
All of these three procurement strategies are not mutually exclusive. So, framework agreements can be processed centrally through e-procurement.
Regulation by jurisdictionEdit
The Office of Procurement, based in Tafuna, is the central authority on procurement for the American Samoa Government (ASG), being responsible for the procurement of all construction, goods, and services including the management, control, warehousing, and sale of stores/inventory commodities contained in its warehouse.
Public procurement in Angola is governed by Law No. 20/10 of 7 September 2010, the Public Procurement Law, and Law No. 2/2011 on Public-Private Partnerships in Angola. The Public Procurement Law repealed Law No. 7/96 of 16 February 1996 and Decree No. 40/05 of 8 June 2005. Public expenditure, the provision of services, the leasing and acquisition of goods, and public works contracts regulated through the Public Procurement Law.
All goods required by the Ascension Island government are purchased through the Ascension Island Government (AIG) Stores, located just outside the Georgetown Pier. Goods are also for sale to the general public.
The Australian government's procurement activity is governed by the Commonwealth Procurement Rules and overseen by the Department of Finance. The rules were revised on 1 January 2018. The Procurement Coordinator is responsible for:
- providing external parties with an understanding of the Commonwealth Procurement Framework;
- handling of certain procurement-related complaints (although the Procurement Coordinator has no authority to compel a government department to reconsider the conduct or outcome of tender processes for which that department is responsible);
- monitoring issues related to Australian Government procurement; and
- reporting to the Minister for Finance on procurement matters where necessary.
The Senate Order for Entity Contracts of 20 June 2001 (amended 14 May 2015), also known as the Murray Motion, requires ministers to publish details of public contracts valued over AUS$100,000 on the internet and to table a letter detailing such contracts in the Senate.
On 1 December 2016 the House of Representatives and the Senate established a Joint Select Committee to inquire into and report on the Commonwealth Procurement Framework. The Committee reported in June 2017 recommending a series of amendments to the current Commonwealth Procurement Rules. The Australian government issued a response on 14 November 2017 accepting a number of the recommendations but rejecting others.
Infrastructure Australia has issued a national Public Private Partnership (PPP) Policy and set of guidelines on behalf of the federal government, which apply to all PPP projects released in Australia.
Australia ratified the GPA on 5 April 2019 and participation in the requirements of the agreement will come into effect on 5 May 2019.
Queensland's Government Procurement Strategy, subtitled "Backing Queensland Jobs", came into effect in 1 September 2017. Annastacia Palaszczuk, Queensland's Premier, stated in the strategy that this "major shift in procurement" would "put Queenslanders first", by support[ing] genuine local jobs, by demonstrating a commitment to those businesses that share our commitment to Queenslanders" and "deliver greater transparency in procurement planning across agencies". The strategy includes a target to "increase procurement with Aboriginal and Torres Strait Islander businesses with a target of 3% of addressable spend by 2022". Implementation of the strategy and the Queensland Procurement Policy is overseen by the Office of the Chief Advisor — Procurement, but each government agency is responsible for its own procurement in practice.
Tender opportunities are published on the government's QTenders site.
Public bodies in Tasmania are required to comply with the Treasurer's Instructions on Purchasing and Property. The Department of State Growth's Tasmanian Wood Encouragement Policy has been established to ensure that (where feasible) sustainably sourced wood is fully considered within Government procurement decision-making.
Since 1 July 2018, government departments in Western Australia have been required to award an increasing percentage of contracts to registered Aboriginal businesses under the state's government's Aboriginal Procurement Policy. The target is 1% of contracts initially, increasing to 2% on 1 July 2019 and 3% on 1 July 2020.
The procedure of government procurement in Brazil is regulated for a lot of different laws with different procedures depending on the importance and the value of the procurement. The most important law about government procurement which contains basic rules of public procurements and administrative contracts is the Law nº 8.666, 21 June 1993, which contains rules for public tenders and for restricted tenders. There are other different rules to regulate procurement public services, as Law nº 8.987, 13 February 1995 (Concession and Permission of Public Services); Law nº 12.462, 4 August 2011 (Differentiated Procurement - RDC in portuguese) and Law nº 10.520, 17 July 2002, with deal with presential auction. In the internet field (e-procurement) there are executive orders (Decretos) which regulate public procurement as Decree nº 5.450, 31 May 2005 and Decree nº 7.982, 23 January 2013. This latter regulates the procedure of specific situations of sharing acquisitions of goods or under portioned deliverings.
Public procurement in Canada is regulated on various governmental levels (federal, provincial, municipal). Most federal procurement is organized by the Public Services and Procurement Canada (PSPC) agency and is governed by their Code of Conduct of Procurement in combination with principles laid out in the Federal Accountability Act and in the Financial Administration Act. Public procurement is guided by the principles of fairness, transparency, openness, and non-discrimination and complies with all international agreements that Canada is a member of (WTO Government Procurement Agreement [GPA], NAFTA, CETA, and various bilateral FTAs). Foreign suppliers from member nations to these agreements can bid on Canadian government procurements and are treated the same as domestic suppliers.
The principal statutory provisions regulating government procurement are:
- Department of Public Works and Government Services Act (1996)
- Financial Administration Act (1985) and the Government Contracts Regulations
- Defence Production Act 1985 (consolidated version published 2011)
- Federal Accountability Act, 2006
In general, bids must be solicited by the procuring department unless estimated expenditure does not exceed $25,000, or $100,000 "where the contract is for the acquisition of architectural, engineering and other services required in respect of the planning, design, preparation or supervision of the construction, repair, renovation or restoration of a work". For contracts above $25,000, tenders are published on the transparent Government Electronic Tendering Service (GETS). A non-competitive procurement process is only used in certain special circumstances. One such area of exception are security-related procurements. In that case the Defence Production Act applies, which allows using a special process and favouring domestic suppliers in acquiring defence supplies and conducting defence.
Government procurement in Ethiopia is governed by the Ethiopian Federal Government Procurement and Property Administration Proclamation No.649/2009, which replaced the proclamation on Procedures of Public Procurement and Establishing its Supervisory Agency, Proclamation No. 430/2005. The Public Procurement and Property Administration Agency advises the federal government on "on all public procurement and property administration policies, principles and implementation" and provides "technical assistance to the regional governments and city administrations".
Government procurement in the European Union accounts for more than EUR 2.2 trillion, or 14% of the EU GDP. It has been regulated and harmonized by community law since the 1970s in order to guarantee transparency and non-discrimination of EU companies in government procurement in all member states. EU laws apply only to tenders that exceed certain thresholds in value. These thresholds vary depending on the area the contract is for and if the procurement is done by a central government or by other public authorities (e.g. municipal government). National laws are applied for tenders below these threshold values. Relevant EU Directives regarding government procurement currently in force are Directive 2009/81, Directive 2014/24, and Directive 2014/25.
There are five different procedures for public procurement:
- Open procedure: any company is allowed to submit a tender
- Restricted procedure: only companies that have been preselected are allowed to submit a tender
- Negotiated procedure: there are direct negotiations with at least three companies
- Competitive dialogue: if it is not possible to define technical specifications at the beginning, a competitive dialogue with at least three companies is started after which tenders can be submitted. This procedure is applied for complex procurements.
- Electronic auctions: companies that pass a pre-evaluation process can bid in electronic auctions for public contracts
The European Commission is working on further improving efficiency and transparency in government procurement in the EU with its current public procurement strategy.
Belgian legislation on public procurement is set out in the Act of 17 June 2016 implementing the 2014 EU procurement directives. The Laws of 17 June 2016 on public procurement and on concession contracts, and the Law of 16 February 2017 on remedies, failed to meet the EU's transposition deadline (18 April 2016). Royal Decrees issued on 18 April 2017 for general public procurement, 18 June 2017 for procurement in the water, energy, transport and postal services sectors, 22 June 2017 containing new rules on the performance of public works contracts and concession contracts for public works and 25 June 2017, for the award and performance of concession contracts, have augmented the earlier laws.
Article 51 of the Royal Decree of 18 April 2017 includes a "revolving door mechanism", which targets the situation where a person previously working for a contracting authority is now being employed by an economic operator involved in a public procurement procedure established by that contracting authority. In this type of situation the person would be presumed to have a conflict of interest for a two-year period following the termination of his/her employment with the contracting authority.
Government procurement in Bulgaria is a critical area in corruption risk. Public procurement contracts have been awarded to a handful of companies amid widespread irregularities, procedure violations and tailor-made selection or award criteria. The Bulgarian public procurement portal reported in September 2016 that since the beginning of 2016, "a total of 15,105 contracts were signed on the basis of public procurement orders". At the beginning of 2015, the Bulgarian government announced a 130-kilometer extension to the barbed wire border fence along its border with Turkey in order to completely secure the land border. Prime Minister Boyko Borisov described the extension as "absolutely necessary" in order to prevent persons from illegally entering the European Union member state. The Bulgarian Parliament authorised amendments to procurement legislation to allow continued construction of the fence without launching a public procurement procedure "because of the need to safeguard national security". Overall,
The first public procurement law in Croatia based on the EU Procurement Directives was enacted in 2001, but a revised legal structure for public procurement was put in place with the Public Procurement Act of 2012, and this was superseded by the Public Procurement Act of 2016, effective 1 January 2017. Public-private partnerships (PPPs) are governed by the Act on Public-Private Partnerships. Two key Croatian institutions are the Public Procurement Office and the Public Procurement Supervisory Commission, established in 2001, now (since 2013) the State Commission for Supervision of Public Procurement (DKOM). The State Commission is an independent quasi-judicial body with nine members appointed by the Croatian Parliament for a five-year term and accountable to the Croatian Parliament for its work. The High Administrative Court of the Republic of Croatia has jurisdiction over the State Commission in relation to disputes concerning procedure, but there is no right of appeal against Commission decisions.
Under Croatian law, procurement procedures must be carried out by authorised representatives of the contracting authority, of whom at least one must hold a valid procurement certificate.
The Estonian Ministry of Finance is responsible for public procurement policy, drafting the law, providing supervision and consultancy, and maintains a central Public Procurement Register. The current legislation is the Public Procurement Act of 2017, which came into effect on 1 September 2017, and which operates in conjunction with the Public Information Act of 2000, which regulates the publication of "information concerning public procurements which are being organised or have been organised by the state or local governments". Disputes are handled by the Public Procurements Appeal Committee.
Defence procurement for the Defence Forces, Ministry of Defence, Defence League, Defence Resources Agency and Estonian War Museum is organised by the Estonian Centre for Defence Investment, whose purpose is "to carry out procurement activities through ... professional-quality procurement and to use dedicated funds sparingly and prudently". The Centre for Defence Investment was established by the decree of the Minister of Defence on 9 November 2015 and became operational on 1 January 2017.
In Finland the following legislation applies to government procurement:
- Act on Public Contracts and Concession Contracts (Act no. 1397 of 2016, effective 1 January 2017)
- Act on Public Contracts by Contracting Authorities in the Water, Energy, Transport and Postal Services Sectors (Act no. 1398 of 2016, also known as the 'Act on public contracts in special sectors')
- Act on Public Contracts in the Fields of Defence and Security.
A Government Decree on Public Contracts was also in force until 2017.
The Ministry of Employment and the Economy is responsible for the preparation of legislation concerning public procurement. The Finnish Competition and Consumer Authority (FCCA) oversees public procurement: section 139 of the Act on Public Procurement and Concession Contracts mandates the FCCA to supervise compliance with public contracts legislation and to provide 'administrative guidance' or if necessary to issue a caution to a non-compliant public authority. The Market Court operates as a specialist court handling public procurement cases. The Market Court's rulings in public procurement cases can be appealed to the Supreme Administrative Court of Finland.
The Act on Electronic Auctions and Dynamic Purchasing Systems of 17 June 2011, which entered into force on 1 October 2011, introduced new procurement procedures, whereby documents relating to procurement would be sent and received exclusively online. This legislation included the use of eAuctions. Electronic procurement is now covered within the 2016 Act on Public Contracts.
Transposition of the 2014 EU public procurement directive into Finnish law was delayed after the deadline (18 April 2016) with the consequence that some aspects of the directive were directly applicable from April 2016 until the new Finnish legislation was in place from 1 January 2017.
Hansel Ltd. is a state-owned central purchasing body established by the Act on a Limited Liability Company Called Hansel Oy, which operates framework agreements and supports central government departments in Finland with public procurement tasks.
In France, the Department of Legal Affairs (DAJ) of the Ministry for the Economy and Finance (French: Ministère de l'Économie et des Finances) is responsible for establishing regulations regarding public procurement (la commande publique). All currently relevant EU directives have been implemented into national law.
In Germany, the Federal Ministry for Economic Affairs and Energy (German: Bundesministerium für Wirtschaft und Energie, abbreviated BMWi) is responsible for defining laws and principles regarding public procurement. In 2016 Germany transposed the new EU Directives of 2014 into domestic law. Thereby, processes and contracts in public procurement have become easier and more flexible. The Act against Restraints of Competition - Part IV (German: Gesetz gegen Wettbewerbsbeschränkungen, abbreviated GWB) and the Ordinance on the Award of Public Contracts (German: Verordnung über die Vergabe öffentlicher Aufträge, abbreviated VgV) regulate procurement above EU thresholds. Detailed procedures are specified in further regulations, e.g. the Procurement Regulation for Public Works (German abbreviation: VOB), the Procurement Regulation for Public Supplies and Services (VOL), and the Procurement Regulation for Professional Services (VOF). For many contracts electronic procurement is made possible via an online platform.
For public procurement below the EU thresholds there are different regulations. At the federal level national budgetary law applies while the 16 federal German states and some municipalities have their own public procurement laws and regulations. This decentralized system reflects the political decentralization in Germany. However, sub-national level procurement regulations often take national regulations as examples and also ensure competition, non-discrimination, and transparency.
Law 4412/2016 on public procurement and Law 4413/2016 on concessions are the main instruments of Greek legislation governing public procurement. These two laws of 2016, along with earlier reforms introduced under Law 4281/2014 on public procurement law, have radically simplified the previously complex legal regime, repealing numerous previous laws. The European Commission's profile for Greece in its study of administrative capacity in the EU had described the public procurement system in the country as "singularly complex, ... being dispersed among as many as 400 laws, regulations, and presidential decrees". Public contract notices are published in the Central Electronic Registry for Public Procurement (KIMDIS).
The Public Procurement Monitoring Unit (PPMU), established in 1997, part of the Centre of International and European Economic Law in Thessaloniki, provides Greek contracting authorities with "specialised and prompt legal advisory support on awarding public works and technical services contracts falling within the scope of EU Law on Public Procurement".
The Hungarian Public Procurement Authority was established by Act XL of 1995 and the current Public Procurement Act (Act CXLIII of 2015) entered into force on 1 November 2015, implementing the 2014 EU procurement directives. The objectives of the 2015 legislation are:
- to secure transparency and public control of the effective use of public funds;
- to establish conditions of fair competition in public procurement;
- to enhance the access of local small and medium-sized enterprises to procurement procedures; and
- to promote environmental protection and the social considerations of the State.
Concession award procedures are also covered within the same legislation, and the fundamental principles set out in Act V of 2013 on the Civil Code, the "ultimate instrument relating to the operation of civil persons and economic organizations", also apply to public procurement.
Government procurement in Ireland is governed by the European Communities (Award of Public Authorities' Contracts) Regulations 2006 and the European Communities (Public Authorities’ Contracts) (Review Procedures) Regulations 2010. Patrick O’Donovan TD is the Minister of State with special responsibility for Public Procurement.
Public procurement in Italy is primarily regulated by the Public Contracts Code, which is administered by the Ministry of Infrastructure and Transport (Italian: Ministero delle infrastrutture e dei trasporti). The code was reformed in 2016 to implement the new EU directives of 2014 into domestic Italian law. In addition to the code, guidelines from the National Anti-Corruption Authority (Italian: Autorità Nazionale AntiCorruzione, abbreviated ANAC) and decrees from various ministries also apply to public procurement. Most public procurement on a national level is administered by the state-owned company Consip S.p.A. Larger regions have their own agencies for public purchasing.
Government procurement in Latvia is regulated by the Public Procurement Law, effective 1 March 2017, and the Law on the Procurement of Public Service Providers, which came into effect on 1 April 2017. These laws transpose the EU procurement directives; one additional legal provision is that for supplier selection purposes, real estate tax debts are checked where tenderers are registered or permanently resident in Latvia. Public procurement opportunities are advertised on the Latvian Elektronisko Iepirkumu Sistēma (EIS) website.
The Procurement Monitoring Office within the Ministry of Finance oversees public procurement. A deposit for filing a review application with the Procurement Monitoring Office must be paid, calculated as 0.5% of the estimated contract value, but no more than €15,000 for construction work contracts or €840 for supply and public service contracts.
In Luxembourg, the main policy body for public procurement is the Public Procurement Directorate within the Public Works Department of the Ministry of Sustainable Development and Infrastructure (MDDI). This department is responsible for the regulatory framework, drafting relevant legislation and monitoring its implementation, and also for representing the Luxemburgish authorities in the field of public procurement. A Tender Commission with members drawn from contracting authorities, chambers of commerce and small business sectors undertakes a consultative role in relation to public procurement.
The EU 2014 Directives on public procurement and utilities procurement were implemented by the Law of 8 April 2018 on public procurement, which was published in the Luxembourg official Gazette (Mémorial: Journal officiel du Grand-Duché de Luxembourg) on 16 April 2018 and entered into force on 20 April 2018. Procurement in the defence and security sector is covered by the Law of 26 December 2012.
The EU Directive on public procurement is transposed into Maltese law by the Public Procurement Regulations, S.L.174.04, 28 October 2016. These regulations also create the Office of the Director of Contracts (Regulation 10), who is responsible generally for the regulation and administration of public procurement procedures in Malta, a General Contracts Committee, whose members are appointed by the Prime Minister (Regulation 64), a Departmental Contracts Committee for each contracting authority, and in each Ministry a Ministerial Procurement Unit (Regulation 79). Under regulation 80 a Public Contracts Review Board is established. The Commercial Sanctions Tribunal (Regulation 95) is appointed to hear and determine issues relating to the black listing of persons unsuitable for the award of a public contract or to act as a sub-contractor to a public sector contractor.
The main legislative provisions governing public procurement in the Netherlands are:
- the Public Procurement Act;
- the Public Procurement Decree;
- the Works Procurement Regulations 2012;
- the Procurement Regulations for the Utilities Sectors 2013;
- the Proportionality Guide.
Public procurement in Portugal is governed by the Código dos Contratos Públicos or Public Contracts Code (PCC), which has been implemented through the following Decretos-Leis (decree-laws) and other legislation:
- Decree-Law 18/2008 (29 January 2008)
- Decree-Law 59/2008 (11 September 2008)
- Decree-Law 223/2009 (11 September 2009)
- Decree-Law 278/2009 (20 October 2009)
- Decree-Law 3/2010 (27 April 2010)
- Decree-Law 131/2010 (14 December 2010)
- Law 64-B/2011 (30 December 2012)
- Decree-Law 149/2012 (12 July 2012)
- Decree-Law 214-G/2015 (2 October 2015)
- Decree-Law 111-B/2017 (31 August 2017)
Decree-Law No. 104/2011 (6 October 2011) applies to defence contracts.
The Administrative Procedural Code, established under decree-law 4/2015 (7 January 2015) also provides for general procedures on administrative matters and the Procedural Code of the Administrative Courts established by Law no. 15/2002 (22 February 2002), amended by Decree-Law 214-G/2015, stipulates procedures for litigation regarding public contracts and procurement practices.
Public procurement in Slovakia is subject to the Law on Public Contracts, which came into effect in September 2015. Contract opportunities are advertised in the Slovak Official Journal for Procurement Notices and a public register of final beneficiaries of companies that win public sector contracts is maintained.
Public procurement in Slovenia is overseen by the Public Procurement Directorate within the Ministry of Public Administration. The Slovenian Public Procurement Act, the ZJN-3, came into force on 1 April 2016, and covers both public sector and utilities procurement, implementing Directives 2014/24/EU and 2014/25/EU in one piece of legislation.
Spanish Law 30/2007 on public sector contracts (known as the "LCSP") was substantially amended by a new Law 2/2011 on Sustainable Economy ("LES") following an infringement procedure undertaken by the European Commission, which found that the LCSP "gave contracting authorities a wide, almost unlimited, power to modify essential terms of public contracts after award, in a manner which was not in line with the principles of equal treatment between bidders, non-discrimination and transparency set out in EU public procurement rules".
The Swedish Competition Authority is responsible for oversight of government procurement in Sweden, having taken over this role from the Board for Public Procurement (Swedish: Nämnden för offentlig upphandling) when it was dissolved in 2007.
Government procurement in the UK is governed by the Public Contracts Regulations 2015, Part 3 of the Small Business, Enterprise and Employment Act 2015 and (in Scotland) the Public Contracts (Scotland) Regulations 2015 and 2016, which implement EU law and also contain rules known as the "Lord Young Rules" promoting access for small and medium enterprise (SMEs) to public sector contracts, based on Lord Young's Review Growing Your Business, published in 2013. In November 2016 an advisory panel of 24 entrepreneurs and business figures was formed to advise the government on purchasing goods and services from SMEs, and a campaign was launched to demonstrate that "government is open for business", with a target of increasing government spending with SMEs to 33% of all third-party public expenditure by 2020.
In Wales, two organisations - the National Procurement Service, established in 2013, and Value Wales - oversee Welsh public sector procurement. The role of Value Wales includes shaping procurement policy, monitoring procurement in practice, supporting, advising and developing procurement staff and ensuring compliance with procurement regulations. The Welsh government requires public sector bodies in Wales to include the delivery of social, economic and environmental benefits for the community as an integral consideration in procurement and for this purpose each public body in Wales must appoint a Community Benefits Champion.
In the light of the economic downturn of 2008 onwards, sometimes referred to as the "Great Recession", the UK government adopted a series of 10 "procurement for growth" principles intended to ensure that UK government procurement would "take account of supply chain opportunities for UK companies in policy and delivery planning".
Part 3 of the Small Business, Enterprise and Employment Act 2015 allows the Minister for the Cabinet Office or relevant Secretary of State to impose further regulations on public bodies regarding how they undertake procurement. The Minister for the Cabinet Office is the minister with overall responsibility for procurement policy, which is delivered through the Crown Commercial Service, an executive agency sponsored by the Cabinet Office.
In Northern Ireland the Central Procurement Directorate within the Department of Finance (formerly the Department of Finance and Personnel) is responsible for procurement policy. A revised public procurement policy for Northern Ireland departments, agencies, non-departmental public bodies and public corporations was adopted on 16 May 2002; the latest version (version 11) was issued in August 2014. A Concordat on Public Procurement was agreed on 1 June 2001 by the UK Government and the Northern Ireland Executive for the handling of EU, international and policy issues on public procurement.
The Crown Commercial Service (CCS) publishes Procurement Policy Notes from time to time, which advise procurement staff in the public sector of government policy developments and best practice in relation to procurement. CCS operated a Mystery Shopper scheme from February 2011 to November 2018, whose remit was to provide a route for suppliers to raise concerns about public procurement practice in England, The service was rebranded as the "Public Procurement Review Service" in November 2018, responding to feedback from suppliers and public bodies that the "mystery shopper" title did not properly reflect the role of the service.
General transparency principles applicable to government procurement were published in March 2015 and updated in February 2017, stating that there is a presumption in favour of contractual information being made publicly available (except in matters of commercial confidentiality such as pricing, intellectual property and business plans). Tender opportunities advertised by public sector bodies in the UK are legally required to be published to the following sites:
- Contracts Finder for England for all tenders and contracts valued over £10,000 for central government and £25,000 for sub-central authorities and the NHS. According to OpenOpps, a tender publishing company, only 27% of all UK public sector tenders were published on Contracts Finder between 2015 and 2017.
- Public Contracts Scotland for Scotland
- Sell2Wales for Wales
- eSourcing NI for Northern Ireland, in use since May 2008.
The Public Contracts Regulations 2015 provide that public sector buyers must pay prime contractors within 30 days and must ensure that any subcontracts through the supply chain include a similar provision. In 2014-15 at least 33 NHS trusts paid fewer than half of their trade invoices on time, up from 23 in 2015-16 and 11 in 2014-15. Under the Better Payment Practice Code, they should pay at least 95% of non-NHS invoices within 30 days.
Under the draft agreement on the withdrawal of the United Kingdom from the EU it is proposed that procurement procedures commenced under the EU regulations before the end of the transitional period should continue to be governed by the relevant regulations up to the issue of a contract award notice. If there is no agreement with the EU following withdrawal, the government has stated that it will establish "a UK-specific e-notification service" as a replacement. Contracting authorities and entities would be expected to ensure that their contract notices are published on the new e-notification service as well as the relevant site listed above.
The Fiji Procurement Office was established under Section 4 of the Fiji Procurement Regulations 2010 and commenced operations on 1 August 2010. The establishment of the Office and the new Fiji Procurement Regulations were a direct result of the re-organisation of the Government Supplies Department by the Fijian government. The main functions of the Fiji Procurement Office are to regulate and administer the procurement of goods, service and works for the government. The Government Tender Board is "constituted with authority to approve all procurement of goods, services and works valued at FJ$30,001 and more".
Public procurement in Ghana is undertaken and overseen by the Public Procurement Authority of Ghana. The Public Procurement Board is the central body for policy formulation on procurement. The existing Public Procurement Act 2003 (Act 663) was amended by the Public Procurement (Amendment) Act 2016 (Act 914), which came into effect on 1 July 2016.
Public procurement in Guyana is overseen by the Public Procurement Commission, appointed under the Public Procurement Commission Act 2003. Due to lengthy delay in identifying and agreeing commission members, the commission was not appointed until 2016. The PPC is based in the Queenstown area of Georgetown. The National Procurement and Tender Administration of Guyana (NPTA), established under section 16(1) of the Procurement Act 2003, undertakes administrative processes for high value governmental tenders.
In 2005, the Haitian government formed the National Commission for Public Procurement (French: La Commission Nationale des Marchés Publics, CNMP), based in Port-au-Prince, whose tasks are to ensure that competitive bidding takes place for public contracts and to promulgate effective procurement controls in government administration. The Commission was established by the Decree of December 3, 2004. The CNMP publishes lists of awarded public contracts. According to the website GlobalSecurity.org, "despite the CNMP's efforts, major public procurement contracts, notably those involving the state electric company EDH, are routinely awarded in a non-competitive fashion", providing significant opportunities for corruption.
Act No. 84/2007 on Public Procurement (2007) has three objectives:
- to ensure the equal treatment of companies during public procurement
- to encourage efficiency in public operations through active competition and
- to promote innovation and development in the public procurement of goods, labour and services. The law applies to "the Icelandic State, local authorities, their institutions and other public entities" and to "associations formed by one or more of such authorities". An independent Public Procurement Complaints Commission has power to investigate complaints and may declare a contract "ineffective" if its award was not compliant with the legislation.
Isle of ManEdit
In Israel, the Mandatory Tenders Law of 12 March 1992, 5752-1992 (as amended), governs government procurement procedures. Oversight of the legislation lies with the Ministry of Finance in conjunction with the Knesset Constitution, Law and Justice Committee. The government may, with the approval of the Knesset Foreign Affairs and Defense Committee, direct that a state or a government corporation may not enter into a contract with a particular foreign country or with a particular foreign supplier for reasons of foreign policy.
The Government of Jamaica Procurement Guidelines apply to government procurement in Jamaica, and the Public Sector Procurement Policy of November 2010 reflects "the government’s ... strategy to further reform the public procurement system that is aligned to international best practices and promote fair competition for government contracts".
Until 1996, Jamaica operated a centralised procurement system coordinated by the Central Supply Division of the Ministry of Finance, and procurement activity was regulated by the Financial Administration (Supplies) Regulations 1963 supplemented by directives from the Ministry of Finance. The Ministry of Finance and the Public Service is now responsible for oversight of procurement policy. A Procurement Policy Implementation Unit was established within the Ministry of Finance in September 1999.
The Office of the Contractor-General (OCG), based in Kingston, was established in 1983 under the Contractor General Act of that year.The Contractor General is appointed by the Governor General. In December 2008, three members of the procurement committee of the Jamaica Urban Transit Company resigned following reports of procurement breaches identified by the Contractor-General, Greg Christie.
Public procurement in Kenya is governed by the Public Procurement and Asset Disposal Act 2015.
Public procurement in the Lao People's Democratic Republic is governed by the Prime Minister's Decree on Procurement of Goods, Works, Maintenance and Services No. 03/PM, dated 9 January 2004, and the Implementing Rules and Regulations on Government Procurement of Goods, Works, Maintenance and Services No. 063/PM, dated 12 March 2004. Amendments were made to some of the articles of the Implementing Rules and the Decree by Update 0861/MOF of 5 May 2009. Procurement activities are overseen by the Procurement Monitoring Office (PrMO) within the Ministry of Finance.
Government procurement in Liberia is governed by the Public Procurement Act. The Public Procurement and Concessions Commission (PPCC) was established in 2005 to "regulate all forms of Public Procurement and Concessions and provide for institutional structures for public procurement and concessions". The PPCC operates an online Vendors' Register.
Procurement is decentralised, but the Ministry of Finance is required "to take part in the negotiations and signing of contracts over US $250,000" and such contracts must "be attested to by the Ministry of Justice".
Government procurement in the Maldives is subject to the Public Finance Law (Law No. 3/2006) and chapter 10 of the Public Finance Regulation. The approval of the National Tender Board is required before contracts in excess of MVR 2.5m can be awarded.
Public procurement is included in Article 134 of the Mexican Constitution. Article 134 is implemented by the Law of Public Sector Acquisitions, Leasing and Services ("Acquisition Law") and the Law of Public Works and Related Services ("Public Work Law"). At a local level, each of the 31 states and the Federal District has different public procurement laws.
Morocco's National Commission for Public Procurement (CNCP) was established "to oversee public procurement, control public spending and guarantee the principles of transparency and parity in the development and execution of contracts between competitors", with a role also in handling complaints regarding procurement actions.
The New Zealand Government Procurement Branch of the Ministry of Business, Innovation and Employment is responsible for the Government Procurement Rules, Government Rules of Sourcing and Principles of Government Procurement. The aim of the Government Rules of Sourcing is to "support good practice for procurement planning, approaching the supplier community and contracting". The 66 rules were initially introduced in 2013. The principles apply to all governmental procurement activity but the rules only apply to projects or purchases exceeding $100,000 or construction projects valued over $10 million.
Purchasers of certain common goods or services are required to use "All-of-Government contracts" (AoG) established by the Government Procurement Branch, overseen by the Procurement Functional Leader and managed by appointed procurement Centres of Expertise. Where a public agency wishes to opt out of the use of an AoG contract it must obtain the approval of approval the Procurement Functional Leader: if the agency and the Procurement Functional Leader fail to agree on an opt-out, the State Services Commissioner will decide.
Peruvian public procurement law was formerly set out in the Government Procurement Act (approved by Legislative Decree No. 1017) and the Regulation of the Government Procurement Act (approved by Supreme Decree No. 184-2008-EF), which were replaced by a new Government Procurement Act (Law N° 30225) in 2014. Peruvian President Pedro Pablo Kuczynski resigned on 21 March 2018 following allegations that public works contracts had been corruptly awarded to Brazilian conglomerate Odebrecht.
Russian Federal Law N44-ФЗ of 05.04.2013 require all federal, regional and municipal government customers to publish all information about government tenders, auctions and other purchase procedures on special public government websites.
In Rwanda, the public procurement process is managed on daily basis by an autonomous organ, the Rwanda Public Procurement Authority (RPPA), which operates under the Ministry of Finance and Economic Planning (MINECOFIN). Public procurement is regulated by the Law N°12/2007 of 27/03/2007 on public procurement which was modified and complemented by the Law N°05/20013 of 13/02/2013. The law is implemented by a Ministerial Order N°001/14/10/TC of 19/02/2014 establishing Regulations on Public Procurement, Standard Bidding Documents and Standard Contracts.
Rwanda has a decentralized public procurement system whereby procuring entities (central government organs, local government entities, government projects, commissions, public institutions, parastatals, agencies or any other government entity charged by the Chief Budget Manager to manage public funds) have the power to conduct directly their public procurement process. The main mission of RPPA is (1) to process the establishment and improvement of public procurement legal framework, (2) provide public procurement legal advisory services, (3) conduct audit and monitoring of public procurement activities carried out by procuring entities(tender award and contract management) and (4) build the capacity of public officials involved in public procurement activities.
The public procurement system in Rwanda is governed by 6 fundamental principles namely (1) transparency, (2) competition,(3) economy, (4) efficiency, (5) fairness and (6) accountability. In the national system, bidders have the right to appeal against public procurement procedures they may think were not conducted appropriately. In that connection, the legal framework provides for the Independent Review Panels at National Level (National Independent Review Panel) and at District Level (Independent Review Panel at District Level). The Independent Review Panels are composed of members from the Private Sector, Civil Society and the Public Sector, and the members from the Public Sector cannot form the majority of members of the Panel. The Independent Review Panel at National Level is under the supervision of the Minister of Finance and Economic Planning whereas the Independent Review Panel at District Level is under the supervision of the District Council.
In order to make the procurement sector a profession in Rwanda, there is an Association of Procurement Professionals which was established by the Law N°011/2016 of 02/05/2016.
Rwanda introduced an e-procurement system in 2016. For more information about Rwanda's e-procurement system please visit www.umucyo.gov.rw; for more information about public procurement in Rwanda in general, please visit www.rppa.gov.rw.
The current Serbian Law on Public Procurement came into effect on 1 April 2013, replacing the previous legislation enacted in 2008. A particular concern for Serbia's legislators was dealing with corruption in government procurement: the Law requires Serbia's Public Procurement Office, which oversees procurement, to draft a plan for combating corruption in public procurement procedures, and contracting authorities with an estimated annual value of public procurement in excess of one billion dinars (8.9m Euros) to adopt an internal plan for preventing corruption. The Public Procurement Office is based in Belgrade. The role of the Republic Commission for the Protection of Rights in Public Procurement Procedures, established in 2002, is to protect the rights of bidders during procurement exercises.
The Regulation on Mandatory Elements of Tender Documents in Public Procurement Procedures and Way to Prove Fulfilment of Requirements  prescribes a model contract as a mandatory element of every set of tender documents, except when a negotiated procedure is being conducted or where a loan is being procured as a financial service.
In 2016, the EU funded a programme of support for "further improvement of Public Procurement system in Serbia", as part of the EU's pre-accession assistance programme. There is no current target date for Serbia to join the EU.
Singapore's Ministry of Finance is responsible for the Government Procurement policy framework, which governs how government agencies undertake their procurement. In 2014, the Public Accounts Committee of the Parliament of Singapore criticised the state of government procurement in Singapore, identifying a number of irregularities in procurement procedures including:
- weak rationales invoked when waiving competitive processes;
- allowing some bidders to amend their tenders after tenders had closed;
- not disclosing evaluation criteria to bidders within tender documentation;
- improper procedures for tender evaluation;
- lax oversight and monitoring of outsourced projects.
GeBIZ is a Government-to-business (G2B) Public eProcurement business centre where suppliers can conduct electronic commerce with the Singaporean Government. All of the public sector's invitations for quotations and tenders (except for security-sensitive contracts) are posted on GeBIZ. Suppliers can search for government procurement opportunities, retrieve relevant procurement documentations and submit their bids online.
- (1) When an organ of state in the national, provincial or local sphere of Government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost effective.
- (2) Subsection (1) does not prevent the organs of state or institutions referred to in that subsection from implementing a procurement policy providing for —
- (a) categories of preference in the allocation of contracts; and
- (b) the protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination.
- (3) National legislation must prescribe a framework within which the policy referred to in subsection (2) must be implemented.
The Public Finance Management Act 1999 also refers to the duty of the Accounting Officer of a Department to have and to maintain an appropriate procurement and supply system which is "fair, equitable, transparent, competitive and cost effective".
Government procurement in Suriname takes place on the basis of open tenders. Participants in a tendering procedure must hold a valid business license and must be registered with the Suriname Chamber of Commerce and Industry (KKF). Suriname is not a signatory to the WTO Government Procurement Agreement.
The Ministry of Economic Development and Trade (Ukraine) is an executive authority in charge of coordination of procurement of goods, works and services for public funds. The Law “On public procurement” is one of the core legislative bases of the procurement regulations. It made electronic public procurement procedures and use of e-procurement system Prozorro mandatory for all procuring entities after August 2016.
United Arab EmiratesEdit
Federal government procurement within the United Arab Emirates is governed by Cabinet Resolution No. 32 of 2014 on Federal Government Procurement Regulation and Storehouse Management in Federal Government, which applies to all supply, works and services purchasing undertaken by the federal government and the federal ministries and governmental agencies (except the Ministry of Defence), and also to independent federal entities such as the General Authority for Civil Aviation, Emirates Real Estate Corporation, FEWA, ESCA, Insurance Authority, Emirates Post Group Holding, National Transport Authority, Telecommunications Regulatory Authority, UAE University and Zayed University. UAE Federal Decree No. 12 of the Deputy Supreme Commander of the Armed Forces (1986) applies to armed forces procurement.
Conditional preferential treatment is afforded under Resolution 32 to corporate suppliers whose capital does not exceed AED 10 million and in which the UAE national shareholding is not less than 51%, and to facilities which are financed by SMEs-supporting funds and governed by federal or local law.
Government procurement by public authorities in the United States accounts for about USD 7 trillion annually. Federal procurement is governed by the Federal Acquisition Regulation. FedBizOpps and USASpending.gov are websites where federal contracts are shown. Public announcements of awards has several exemptions, including contracts less than $3.5 million. Historically, the procurement data has been criticized for deficiencies leading to a number of reforms. In 2013, eight legacy databases were merged into a single system called "System for Award Management" (SAM), where companies interested in doing business with the federal government may register their interest.
Contracts are not posted online, although two agencies have explored the possibility.
In January 2014, the Office of Inspector General at NASA released a report criticizing the agency's lack of strategic sourcing. Because IT departments were spending autonomously, NASA spent $25.7 million on similar purchases.
The National Institute of Governmental Purchasing and the Federal Acquisition Institute are active in procurement certification and training. A specialized program in procurement law in the United States is located at The George Washington University Law School.
Purchasing is overseen by the Secretariat for the Economy, which is responsible for setting purchasing policies and procedures, while responsibility for expenditure is devolved to individual dicasteries and administrations.
Public procurement in Zambia is governed by the Public Procurement Act No. 12 of 2008 and the Public Procurement Regulations of 2011. Prior to 2008, public procurement was governed by the Zambia National Tender Board Act, Act No. 30 of 1982.
Zimbabwe established a public procurement law in 1999. The Public Procurement and Disposal of Public Assets Act, 2017 repealed the Procurement Act of 1999 and abolished the State Procurement Board. On 9 January 2018, President Emmerson Mnangagwa appointed an eight-member Procurement Regulatory Authority of Zimbabwe which replaced the Board. The legislation incorporates a "domestic preference" section empowering procuring entities to "give preference to bids from Zimbabwean or local suppliers and manufacturers" and provides for a Special Procurement Oversight Committee to be established to oversee "certain especially sensitive or especially valuable contracts".
- Best value procurement
- Contract awarding
- Forward Commitment Procurement
- Open Contracting Data Standard
- Public eProcurement
- Standstill period
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