Government procurement

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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.[1]

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.

Overview[edit]

Scope of application[edit]

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.[2]

Regulation by jurisdiction[edit]

Angola[edit]

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 The Public Procurement Law repealed Law No. 7/96 of 16 February 1996 and Decree No. 40/05 of 8 June 2005.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.[3]

Canada[edit]

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.[4] 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 [5]
  • Defence Production Act
  • Federal Accountability Act, 2006 [6]

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".[7]

Ethiopia[edit]

Government procurement in Ethiopia is governed by the Ethiopian Federal Government Procurement and Property Administration Proclamation No.649/2009,[8] 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".[8]

European Union[edit]

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.[2]

Bulgaria[edit]

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".[9] 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.[10] 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".[11]

Czech Republic[edit]

Government procurement in the Czech Republic is regulated by Act No. 134/2016 Coll., on Public Contracts.

Denmark[edit]

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[edit]

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.[12]

Ireland[edit]

Government procurement in Ireland is governed by the European Communities (Award of Public Authorities' Contracts) Regulations 2006 [13] and the European Communities (Public Authorities’ Contracts) (Review Procedures) Regulations 2010.

Poland[edit]

Spain[edit]

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".[14]

United Kingdom[edit]

Government procurement in the UK is governed by the Public Contracts Regulations 2015, Part 3 of the Small Business, Enterprise and Employment Act 2015 [15] and (in Scotland) the Public Contracts (Scotland) Regulations 2015 [16] and 2016,[17] 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.[18] 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",[19] with a target of increasing government spending with SMEs to 33% of all third-party public expenditure by 2020.[20]

Health commissioners in England are exempt from the Lord Young Rules rules when procuring clinical services and these rules do not apply in Wales (i.e. to wholly or mainly devolved functions).[18] 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.[21]

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".[22]

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.[23] 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.[24]

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;[25] the latest version (version 11) was issued in August 2014.[26] 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.[27]

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.[28]

Tender opportunities published by public sector bodies in the UK are legally required[29] to be published to the following sites:

Ghana[edit]

Public procurement in Ghana is undertaken and overseen by the Public Procurement Authority of Ghana.[32] 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.[33]

Guyana[edit]

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.[34]

Iceland[edit]

Act No. 84/2007 on Public Procurement (2007) aims "to ensure the equal treatment of companies during public procurement, encourage efficiency in public operations through active competition and promote innovation and development in the public procurement of goods, labour and services".[35] 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".[36]. 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.[37]

Kenya[edit]

Public procurement in Kenya is governed by the Public Procurement and Asset Disposal Act 2015.

Russia[edit]

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.

Rwanda[edit]

In Rwanda, the public procurement process is managed on daily basis by an autonomous organ, the Rwanda Public Procurement Authority (RPPA),[38] 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 [39] which was modified and complemented by the Law N°05/20013 of 13/02/2013.[40] 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.[41]

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.[42]

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.[43] 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).[44] 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.[45]

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[edit]

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[edit]

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".[46]

KwaZulu Natal Province[edit]

The KwaZulu Natal Supply Chain Management Policy Framework was established on 20 December 2005.[46]

Ukraine[edit]

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.[47] 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 since August 2016.[48]

United States[edit]

Government procurement by public authorities in the United States accounts for about USD 7 trillion annually.[2] 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.[49] Historically, the procurement data has been criticized for deficiencies leading to a number of reforms.[50] As of 2013, there is an initiative to consolidate eight legacy databases into a single system called System for Award Management.[50] Contracts are not posted online, although two agencies have explored the possibility.[50]

In January 2014, the Office of Inspector General at NASA released a report criticizing the agency's lack of strategic sourcing.[51] Because IT departments were spending autonomously, NASA spent $25.7 million on similar purchases.[52]

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[edit]

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.[53]

Zimbabwe[edit]

Zimbabwe established a public procurement law in 1999.[54]

See also[edit]

Notes[edit]

  1. ^ Global Trade Negotiations Home Page at Harvard University, accessed 18 December 2006
  2. ^ a b c Prieß, Hans-Joachim; Harvey, Diana; Friton, Pascal. "Global Overview". Prieß (2012): 3–7. 
  3. ^ Rodrigues, A. M. and Dias, N. M., The New Rules on Public Procurement, published June 2011, accessed 8 November 2016
  4. ^ Public Works and Government Services Canada, Policy and Guidelines
  5. ^ Government Contracts Regulations, accessed 23 May 2016
  6. ^ Public Works and Government Services Canada, Statutes and Regulations, accessed 23 May 2016
  7. ^ Government Contracts Regulation 6b, accessed 23 May 2016
  8. ^ a b Ethiopian Federal Government Procurement and Property Administration Proclamation, 9 September 2009, accessed 6 November 2011
  9. ^ Sofia News Agency, 15,105 Public Procurement Contracts Signed So Far in 2016, accessed 1 October 2016
  10. ^ "Bulgaria to extend fence at Turkish border to bar refugee influx". Retrieved April 12, 2015. 
  11. ^ "Parliament OKs Building of Border Fence Without Public Procurement". Retrieved April 12, 2015. 
  12. ^ Government of Gibraltar, Procurement Office, accessed 5 July 2016
  13. ^ S.I. No. 329 of 2006: European Communities (Award of Public Authorities’ Contracts) Regulations 2006
  14. ^ Public procurement: Spain amends its legislation on public sector contracts following infringement procedure, Brussels, IP/11/430, 6 April 2011, accessed 9 September 2016
  15. ^ Small Business, Enterprise and Employment Act 2015, Part 3
  16. ^ Public Contracts (Scotland) Regulations 2015
  17. ^ Public Contracts (Scotland) Regulations 2016
  18. ^ a b Local Government Association, 'Lord Young' reforms, accessed 11 September 2016
  19. ^ Government is open for business, accessed 22 November 2016
  20. ^ Government is open for business: new advisory panel, published 15 November 2016, accessed 22 November 2016
  21. ^ Procurement in Wales, accessed 18 September 2016
  22. ^ Office of Government Commerce, The ten key procurement for growth principles, accessed 24 September 2016
  23. ^ Small Business, Enterprise and Employment Act 2015, Reg. 39
  24. ^ Crown Commercial Service, accessed 18 September 2016
  25. ^ Introduction to the NI Public Procurement Policy document, accessed 19 September 2016
  26. ^ Northern Ireland Public Procurement Policy, accessed 19 September 2016
  27. ^ Concordat on Co-ordination of EU, International and Policy Issues on Public Procurement, accessed 19 September 2016
  28. ^ Crown Commercial Service, Mystery Shopper: scope and remit, updated 28 January 2016, accessed 15 September 2016
  29. ^ https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/539104/Procurement_Policy_Note___Legal_requirement_to_publish_on_Contracts_Finder__1_.pdf
  30. ^ https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/539104/Procurement_Policy_Note___Legal_requirement_to_publish_on_Contracts_Finder__1_.pdf
  31. ^ https://openopps.com/blog/post/51/only-27-of-public-sector-tenders-are-on-contracts-finder/
  32. ^ Public Procurement Authority of Ghana
  33. ^ Public Notice: Passage of the Public Procurement (Amendment) Act 2016 (Act 914), accessed 15 September 2016
  34. ^ After 14 years, Guyana establishes procurement commission, "Supply Management", 12 August 2016, accessed 1 October 2016
  35. ^ Act No. 84/2007 on Public Procurement, Article 1
  36. ^ Act No. 84/2007 on Public Procurement, Article 3
  37. ^ Act No. 84/2007 on Public Procurement, Articles 91-100
  38. ^ Law N°25/2011 of 30/06/2011 establishing Rwanda Public Procurement Authority (RPPA) and determining its mission, organization and Functioning
  39. ^ published in the Official Gazette of the Republic of Rwanda, N°8 of 15/04/2007
  40. ^ Published in the Official Gazette of the Republic of Rwanda, N°16 of 22/04/2013
  41. ^ Published in the Official Gazette of the Republic of Rwanda, N°10 of 10/03/2014
  42. ^ http://www.rppa.gov.rw
  43. ^ Article 4 of the Law N°12/2007 of 27/03/2207 on public procurement as modified and complemented to date
  44. ^ Article 14 of the Law N°05/2013 OF 13/02/2013 modifying and complementing the Law N°12/2007 of 27/03/2007 on public procurement
  45. ^ Published in the Official Gazette of the Republic of Rwanda, N°21 of 23/05/2016
  46. ^ a b KwaZulu Natal Provincial Treasury, Guideline for Bid Committee Members: Practice Note Number: SCM-03 of 2006, 22 February 2006, accessed 4 December 2017
  47. ^ "Web Portal on Public Procurement of Ukraine". tender.me.gov.ua. 
  48. ^ "Public Procurement Roadmap - Ukraine" (PDF). ukraine.nlembassy.org. 
  49. ^ Update on FedBizOpps data. Sunlight Foundation.
  50. ^ a b c Halchin LE. (2013). Transforming Government Acquisition Systems: Overview and Selected Issues. Congressional Research Service.
  51. ^ Martin, Paul. "NASA's Strategic Sourcing Program" (PDF). NASA Office of Audits. Retrieved 5 March 2014. 
  52. ^ Busch, Jason. "NASA, or Need Another Sourcing Act: IT Security Spending Horror Stories". Spend Matters. Retrieved 5 March 2014. 
  53. ^ Public Procurement System in Zambia, accessed 11 January 2017
  54. ^ World Bank, Zimbabwe Begins Public Procurement Modernization, 13 May 2015, accessed 19 September 2016

References[edit]

  • 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.