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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.
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.
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.
Regulation by jurisdiction
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 The Public Procurement Law repealed Law No. 7/96 of 16 February 1996 and Decree No. 40/05 of 8 June 2005.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.
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".
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.
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".
Government procurement in the Czech Republic is regulated by Act No. 137/2006 Coll., on Public Contracts, as amended (Act on Public Contracts) and by Act No. 139/2006 Coll., on Concession Contracts, as amended (Act on Concession Contracts).
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).
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.
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".
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 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.
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.
Tender opportunities announced by UK Government are published to:
- Contracts Finder for England
- Public Contracts Scotland for Scotland
- Sell2Wales for Wales
- eSourcing NI for Northern Ireland
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.
Public procurement in Kenya is governed by the Public Procurement and Asset Disposal Act 2015.
Russian Federal Law N94-ФЗ of 21.07.2005 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.
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
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.
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. As of 2013, there is an initiative to consolidate eight legacy databases into a single system called System for Award Management. 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.
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