ED3262 Ed 209- Financial Management

S/Y 2021-2022

Guidelines on Procurement
JOVERT M. OFRACIO FRANCIA A. NOEL
Professor HILDA A. NOBORA
DAWN C. OBLIGACION
VANESSA L. CONCEPCION
Reporters
Procurement generally refers to the final
act of purchasing but it can also include
the procurement process overall which
can be critically important for
companies leading up to their final 
purchasing decision.
It is important for an individual to remember
that procurement activities are preceded
through proper planning, referring to other
business plans, and with the online expansion
strategy of the company. There are also five
basic principles that are followed during
procurement.
Principles of Procurement
1.Transparency
2.Integrity
3.Economy
4.Openness
5.Fairness
Transparency

This is one of the most important

principles when it comes to procurement.
It is important for an organization to
ensure that the information related to
any public procurement process should
be accessible to all procurement
stakeholders including suppliers,
contractors, service providers, and the
general public.
Integrity
When it comes to the topic of public
procurement then, the topic of integrity is
twofold. First is the integrity of the public
procurement process and second is the
integrity of the public procurement
practitioner. The integrity of the public
procurement process simply refers to the value
of integrity. This means that bidders and the
stakeholders must be able to trust any
information that is spread through the
procurement identity, either formally or
informally.
Economy
This is the third basic principle that is majorly
similar to the principles of efficiency, value for
money, and commercially reasonable price. The
economy also refers to the principle of managing
public funds with extreme care and due diligence so
that the prices that are paid for the services, goods, or
other works are acceptable. Those prices should
further represent good value for the public funds that
are spent on them.
Openness

It is important for all public procurement

requirements to open and accepting of all
qualified organizations and individuals. This
means that every qualified organization or
individual should be free to apply for any tenders
that he or she wants to.
Fairness
This is the last basic principle of procurement.
According to this principle, all bidders and parties
that are involved in the process of public
procurement should be treated equally. This can be
done by ensuring that all decision-making actions
are unbiased, no preferential treatment should be
given to anybody, and every party reserves the right
to challenge any decision if he or she believes that it
has been made in an unfair manner.
Methods of Procurement

1.Open Tendering

Arguably, the open tendering method of

procurement encourages effective competition to
obtain goods, emphasizing the value of money.
However, considering this is a procedure-based
method, many procurement experts feel that this
method is unsuitable for large or complex
acquisitions due to the intense focus on the output
process instead of strict obedience to standards.
2. Restricted Tendering

Unlike open tendering, restricted tendering only

limits the number of requests for tenders that
can be sent by a supplier or service provider.
Because of this selective process, restricted
tendering is also sometimes referred to
as selective bidding.
3. Request for Proposals (RFP)

Request for Proposal is a term that is used all

across the business world. Social media
managers receive RFP’s from potential
clients all the time when a client is seeking a
new manager of their venture. This proposal
is a compelling and unique document stating
why the business is the best fit for the
project.
4. Two-Stage Tendering

Two procedures are used under the two-stage

tendering method. Each one of the procedures
has a two-stage process. This can be
disadvantageous for some procurement teams
if there is a time limit on securing a contract. In
the same vein, this option is more flexible for
both parties, allowing more room for
discussion to meet mutual needs.
5. Request for Quotations (RFQ)
This procurement method is used for small-
valued goods or services. Request for quotation
is by far the least complex procurement method
available. There is no formal proposal drafted
from either party in this method. Essentially, the
procurement entity selects a minimum of three
suppliers or service providers that they wish to
get quotes from. A comparison of quotes is
analyzed, and the best selection determined by
requirement compliance is chosen.
6. Single-Source
Single source procurement is a non-competitive
method that should only be used under specific
circumstances. Single source procurement
occurs when the procuring entity intends to
acquire goods or services from a sole provider.
This method should undergo a strict approval
process from management before being used.
Three Main Types of Procurement

1. Direct procurement
Direct procurement involves the direct purchase of raw
goods, machinery, and wholesale goods that directly
contribute to the company’s end product. The key
stakeholders in direct procurement processes are
procurement officers and contracted suppliers.
2. Indirect procurement
Indirect procurement involves the purchasing of goods
like office supplies. These goods don’t directly affect the
company’s end product or bottom line, but they support the
day-to-day management of the business. A small company
may task office managers with indirect procurement
processes while large corporations may employ a facilities
management company to manage those purchases.
 3. Services procurement

This type of procurement can involve

hiring temporary staffers, leasing software, and
bringing in short-term vendors to work at an
event or seminar.