Public procurement is the procedure by which government departments or agencies acquire products and services from the private sector. It occurs on both a national and regional scale, and the procedure is typically constrained by particular laws and regulations governing how pertinent decisions are made. Governments are required to carry out public procurement effectively and in accordance with high standards of behaviour because it represents a sizable amount of taxpayer money, ensuring high standards of service delivery and defending the public interest.
The relevant government personnel must adhere to a predetermined procedure for procurement, depending on local rules. This system might include how they recruit suppliers, how they select those suppliers, and how they assess and uphold the demands they place on those suppliers. The typical objectives of such a system will be to benefit from supplier competition and to lower the danger of corruption.
Public Procurement Legal and Regulatory Framework
The national procurement policies/laws, regulations, organizational procurement policies, and standard bidding papers make up the legal and regulatory framework for public procurement (also known as the procurement rules) in a nation.
The policies, laws, guidelines, or regulations that control procurement in an organization are referred to as the procurement legal and regulatory framework. To ensure that its objectives are achieved, any organization, whether it be in the public, private, or third sectors, has some regulations governing the purchase of goods, works, and services. When we refer to the legal and regulatory framework for public procurement, we mean the collection of laws, rules, and policies that direct the execution of the steps and processes required to buy goods, works, and services for public sector organizations.
Components of the Procurement Legal and Regulatory Framework
The fundamental law that serves as the basis for all other laws in a nation is its constitution. No law should conflict with this corpus of law, but rather should uphold it. A constitution, according to the Merriam-Webster Dictionary, is the fundamental principles and rules of a country, state, or social group that establishes the powers and responsibilities of the government and ensures certain rights for its citizens. National procurement laws and policies must be consistent with the constitution. Anything opposite is void and unenforceable.
- National Procurement Laws
These are the general guidelines and legislation that define and control public procurement. These legislation must not go against the nation’s constitution. The Public Procurement and Concessions Act 2010 of Liberia, the Public Procurement Act (Amendment) 663 of Ghana, and the Public Procurement and Assets Disposal Act 2015 of Kenya are a few examples of national procurement laws. Typically, a nation’s national procurement law is created by its legislature.
- Procurement Regulations
The regulations in some countries are included next to the procurement laws. These are pieces of legislation that back the national procurement law. They often come from the nation’s governing authority for procurement. By giving thorough justifications for its requirements, these regulations serve to support the procurement law.
- Standard Bidding Documents and Related Standard Template
The standard bidding documents are those that are used to request market offers. These documents are tailored to specify the rules and guidelines for submitting a bid for a specific procurement opportunity. They specify the requirements, send out invitations to tenderers, lay out the assessment criteria, specify who is eligible to submit a bid, explain how proposals should be put together, and explain to tenderers what they need to know about the particular tendering procedure. Each system offers standard bid documents for goods, projects, and services that can be altered to meet particular tendering requirements. These documents must not be at odds with national procurement laws or regulations. Standard bid documents and accompanying templates come from the procurement regulatory authority in the majority of countries.
- Procurement Manual
The procurement manual is a document that provides in-depth explanations or step-by-step instructions on how to implement the processes and procedures necessary to implement the acquisition of goods, works, and services under the various procurement techniques.
- Organization Procurement Policies
These are procurement guidelines that are particular to the many public sector organizations using taxpayer money. They describe the authority and procedures to be followed when starting a procurement process, as well as the organization’s special procurement-related processes. The organization’s procurement policy must adhere to national procurement law and not conflict with it.
A legally binding agreement is referred to as a contract. A formal contract that obligates the government and the supplier, contractor, or service provider to fulfil an obligation is the typical outcome of a successful procurement process. The terms and conditions of the contract outline each party’s obligations.
What Is the Importance of a Legal and Regulatory Framework for Procurement?
- The importance of the legal and regulatory framework for public procurement is to clearly define the laws that govern the practices and procedures of every area of public procurement management and to ensure that the public procurement principles are fully realized.
Every country’s legislative and regulatory framework for procurement is often designed to complement that nation’s plans for economic development. It is significant to remember that in the Gross Domestic Product(GDP) Economic Model, public procurement is a component of the actual implementation of government spending. Delivery of public goods and services and economic development depend greatly on how procurement is handled. This is what the legislative and regulatory framework for public procurement is meant to ensure.
- The opportunity to make use of specialized knowledge and lower expenses are the key benefits.
In the majority of capitalist nations, these advantages are essentially assumed, therefore any disagreements mainly centre on the parameters and practices of public sector procurement.
There are two main justifications for public sector procurement.
The first major benefit is that it enables a public entity to select from a variety of vendors. Creating pricing competition, should lower agency costs and, ultimately, public costs.
The ability to engage specialists rather than internal staff members is the other primary justification for this kind of procurement. This may simply be a matter of expertise; a business will frequently be better able to find, hire, and train employees for a specific position than an organization that manages a variety of tasks.
Scale economies are another factor. A governmental entity that only occasionally has to perform a specific work may not always find it worthwhile to invest in the kind of specialized equipment that a business will purchase or benefit as much from bulk savings on supplies.
There is debate over the advantages of public sector procurement. One is the notion that selecting the least expensive supplier is usually the best choice. Whether this might cause a supplier to produce subpar work or jeopardize safety standards is open for dispute. As a result, several government organizations employ purchasing practices referred to as “Best Value.” Due to this, the organization must evaluate possible suppliers based on a variety of factors, such as knowledge and quality, rather than just price.
The loss of control and accountability is another factor that could restrict the advantages of public sector procurement. It’s feasible for a private contractor engaged to do work to fall behind schedule. If this occurs, the government agency may face financial repercussions in the form of penalty clauses, but this won’t alter the fact that the project isn’t finished. In turn, this can have political repercussions for those in office. Our Procurement & Supply Chain Management course has this and more discussed in depth.