Government procurement or public procurement is the procurement of goods, services or constructions 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 law of most countries regulates government procurement more or less closely. It usually requires 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.
Video Government procurement
Overview
Scope of application
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.
Maps Government procurement
Regulation by jurisdiction
Angola
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 The Public Procurement Law repealed Law No. 7/96 of 16 February 1996 and Decree No. 40/05 of 8 June 2005.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.
Ascension Island
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.
Bangladesh
The Swiss Challenge system is utilised in Bangladesh to procure infrastructure development through public-private partnerships.
Canada
Government of Canada procurement activities are principally carried out pursuant to a governing framework consisting of statutes and regulations (including a challenge process), trade agreements and policies, directives, procedures and guidelines. 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
- 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".
Ethiopia
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".
European Union
Government procurement in the European Union has been regulated and harmonized by community law since the 1970s. It accounts for more than EUR 2 trillion, or 19% of the EU GDP.
Austria
Government procurement in Austria is regulated by the Federal Procurement Act 2017.
Belgium
Belgian legislation on public procurement is set out in the Act of 17 June 2016 implementing the 2014 EU procurement directives.
Bulgaria
Government procurement is regulated in Bulgaria and transparency is well developed: 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".
Czech Republic
Government procurement in the Czech Republic is regulated by Act No. 134/2016 Coll., on Public Contracts.
Denmark
Economic operators who are dissatisfied with the conduct of public procurement activity in Denmark may complain to the Klagenævnet for Udbud (Public Procurement Complaints Board).
Gibraltar
Government procurement in Gibraltar is managed by the Procurement Office, an independent office of Her Majesty's Government of Gibraltar which reports directly to the Financial Secretary.
Ireland
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.
Luxembourg
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.
Malta
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.
Poland
Spain
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".
Sweden
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.
United Kingdom
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.
Health commissioners in England are exempt from the Lord Young Rules when procuring clinical services and these rules do not apply in Wales (i.e. to wholly or mainly devolved functions).
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 operates a Mystery Shopper scheme, whose remit is to provide a route for suppliers to raise concerns about public procurement practice in England, and 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.
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.
Fiji
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$30,0001 and more".
Ghana
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.
Guernsey
Public procurement opportunities in Guernsey are advertised on the Channel Islands Procurement Portal, which was launched in April 2008 and is shared with Jersey.
Guyana
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.
Iceland
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 Man
The Isle of Man government promotes competition in procurement under the Council of Ministers' Procurement Policy for Government published in 2017.
Israel
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.
Jersey
The States of Jersey's procurement opportunities are advertised on the Channel Islands Procurement Portal, which was launched in April 2008 and is shared with Guernsey.
Kenya
Public procurement in Kenya is governed by the Public Procurement and Asset Disposal Act 2015.
Liberia
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".
Maldives
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.
Mexico
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.
Peru
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.
Russia
Russian Federal Law N44-?? 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.
Rwanda
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.
Singapore
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.
South Africa
Section 217 of the Constitution of the Republic of South Africa, 1996 (Act 108 of 1996) provides the basis for government procurement:
- 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.
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".
Ukraine
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 States
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.
Zambia
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
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".
See also
- Best value procurement
- Contract awarding
- Open Contracting Data Standard
- Public eProcurement
- Standstill period
Notes
References
- Prieß, Hans-Joachim, ed. (2012). Public Procurement 2012: An overview of regulation in 40 jurisdictions worldwide (8. ed.). Getting the Deal Through. ISSN 1747-5910.
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