PUBLIC PROCUREMENT

PRINCIPLES
(PST 06101)
Topic One: Introduction Public
Procurement Principles
By
Dr. Meshack Siwandeti
Ph.D (MoCU), MIB (UDSM), Msc.PSCM (MU), ADPLM (IAA),
CPSP(T).
Meaning of public procurement
 According to the Public Procurement Act,
2011 (as amended in 2016)
Procurement means buying, purchasing,
renting, leasing or otherwise acquiring
any goods, works or services by a
procuring entity and includes all functions
that pertain to obtaining of any goods,
or works, including description of
requirements, selection and invitation of
tenders, preparation and award of
contract
Continues……………………
 Public procurement therefor, means the
acquisition of goods, works or services
under formal contracts done by public
bodies.
 Public body may be
 Ministry, department or agency of the
government
 Any body corporate / statutory body or
authority established by the government
 Any regional or local government authority
Continues………………
 Any company registered under
companies Act being a company in
which the government or
government agency of government is
in position to influence the policy of
the company.
Public procurement
objectives
The main objectives of public
procurement includes acquisition of
supplies of right quality, quantity,
price, from right supplier, taking into
account economy, accountability, non-
discrimination among potential
suppliers and respect for
international obligations, in order to
protect the public interests.
Objectives…………………..
 It is through public procurement
system which governments provides
services
 Demonstrates accountability and gain
legitimacy from its citizen
 Achieving value for money in government
expenditure
 Reducing corruption through competition,
budgetary savings,
 Reduce debt levels
 Encourage development of private sector
Continues……………………..

 To supports social-economic or
political objectives. It is used to
stimulate economic activities,
protection of industry sector,
removing disparate, creation of
employment, environmental
protection.
Basic Principles of Public
Procurement

i. Need for economy and efficiency in use of public

funds.
ii. Providing for the fair and equitable treatment of all
suppliers and contractors (Fairness)
iii. Equality of participation (Competition)
iv. Probity and ethics
v. Transparency
vi. Equity
vii. Value for money
viii. Accountability
ix. Objectivity (Avoid conflict of Interest)
Economy

Economy, means achieving

the desired goals at
minimum cost, acquiring
goods, works, and services
that satisfactory quality,
works or services completed
timely.
Efficiency

 Means usage of funds in such manner

that maximize the goal. Efficiency leads
to savings. When the process of
procurement is carried out efficiently
project can be completed timely within
the budget amount. Red tape and
incompetence of public official
responsible for procurement causes
waste of resources. Thus, efficiency and
economy does not only achieve the
primary objective
Fairness

 It means treating bidders equally by

 Making decision and actions which are
unbiased and no preferential treatment.
 Tenders considered on the basis of their
compliance with the terms of the
solicitation documents,
 Bidders should have right to challenge
the bidding process whenever they feel
that they were unfairly treated.
Fairness can be realized
through:
 The use of recognized
procurement procedures that
permit objective comparison of
bids, such as international and
national competitive bidding
 Government accountability in the
administration of those
procedures
Equality
Attained through:
 Competitive method of procurement
 Wide advertisement
 Neutral specifications
 Simple requirements
Probity and ethics
•It is a requirement of the Public
Procurement Act 2011 for public
officers concerned with procurement
and disposal of assets to be scrupulous
honest in dealing tenderers.
•Officials responsible are prohibited to
receive gratuities or other valuable
things to influence tender decisions.
•Officials are obliged to declare if they
have interest to any bidders
Transparency

 Transparency refers ability of all

interested parties to know and
understand how the process of
procurement is managed. Elements
of transparency includes, notice of
tender publication, award
notification, record-keeping and
universal definitions for key
procurement terms
Promotion of domestic bidders

 Measures for promotion of

domestic firms includes defining
target group and eligibility,
reservations, exclusive and
margin of preference, application
of tendering securing declaration,
splitting of contracts, the use of
solicitation document in Kiswahili
and timely payments.
Value for money
 The ultimate goal of public
procurement is to achieve value
for money. It is associated with
deployment of resources vis a vis
realization of expected output
 In broader terms it VFM is
associated with economy,
effectiveness and efficiency of
product, services
Cont…………………………
 It is evaluated on a whole-life basis of the
good or service being procured and is
influenced by a number of factors which
procuring entities have to observe
 VFM in procurement is key to ensuring the
optimum utilization of scarce budgetary
resources.
 It usually means buying the product or
service with the lowest whole-life costs
that is ‘fit for purpose’ and meets
specification.
VFM=
Economy+Efficiency+Effectiveness
Benefits of a good procurement
system
 Improve participation and growth of
private sector
 Good governance
 Efficient use of public resources
 Improve availability, quality
reliability of requirement
 Encourages accountability and
responsibility in supply management
process
The implication of an inefficient
procurement

 Encourage corruption
 Delays in delivery/completion of
assignment
 De-motivates private sector
 Increase cost of goods and services
 Loss of public financial resources
Types of procurement

 Public procurement

Public procurement is the acquisition of goods, Works,

and Services by using public or tax payer’s fund.
 Private procurement

Private procurement is the acquisition of goods,

Works, and Services by using individual or company
funds.
Similarities between Public and
Private Procurement
 Private procurement main concern is to obtain
requirements timely and effectively at best
price while public procurement on top of that
must ensure procurement is fair, open and
Transparent.
 Both aims at achieving value for money
 Both must comply with the legal framework.
 Both involve cost reduction by negotiating
with suppliers
 Both involve the acquisition of goods,
services, and works for organizational use
The difference between public
and private procurement

 Volume of procurement
 Diversity
 Sovereignty
 Regulations
 Source of Funds
 Public review
 Socioeconomic
 Conservatism
 Procurement Funds
 Purpose of acquiring goods or services
 Accountability
 The flexibility of procurement Laws and Regulations
 The volume of Purchases
 Procurement budgets
 Procurement Lead-time
 The number of stakeholders
 Nature of organizations
 Governance of purchasing functions
Volume of procurement

 Normally, the magnitude of

Government procurement is
big, over 80% of Government
revenue is spent on
procurement. The Biggest
expenditure: Military defense,
construction and social services
Diversity

 Government purchases wider

range of products and services
(Goods, services and works).
 Socialservices, infrastructure
works, medical devices &
medicines
Sovereignty

 Government has sovereign power

can change procurement rules
through statute, executive order or
regulation.
Decision making processes

 Governed by Laws, Regulations,

Executive orders.
Source of funds

 Taxespaid by citizens and

businesses etc
Public review

 The expenditure of public fund

attracts the interest of every
tax payer. The expenditure is
subject to many audit
activities.
Socioeconomic Programs

 Government expenditure are

directed towards
accomplishment of social or
political ends sometimes
purchases are restricted.
Conservatism

 Purchaserfrom government are

motivated by merit promotion
system rather than profit.
Public censure

 Publicofficials are subjected to

public censure and are required
to be conservative in every
decision.
Self Assessment
1. Compare and contrast a private sector company with a
public sector organisation in the following FIVE areas:
• Ownership and control
• Sources of finance
• Legal and regulatory environments
• Organisational objectives
• Importance of corporate social responsibility.
2. What are the needs for accountability in public
procurement?
3. With examples explain Five proper procurement practices
in an organization
4. Explain the Five importance of procurement in an
organization?