Public procurement is critical to the sustainable development of any functioning government. It’s how municipalities, counties, states, and provinces purchase essential goods and services to satisfy community needs. An effective government procurement process means schools and hospitals will get much-needed supplies and crucial infrastructural work—like road repairs—can be done cost effectively, among other things. And none of this is done without public procurement contracts.
While public procurement processes may seem like mundane functions of government, finding and choosing the necessary providers can be surprisingly complex and overwhelming to outsiders. Much like the private sector, when it comes to public procurement, there are many terms to learn and regulations to be aware of. But despite all this, it’s far more approachable than you’d expect.
To begin, let’s get familiar with public procurement procedures by looking at the government’s perspective:
Project scoping
Before soliciting bids for public contracts, a public procurement agency must first establish the objectives and requirements of a given project. This often means sitting down during the project scoping phase to outline exactly what they need from a chosen vendor, including technical requirements (if the project is IT-related, for example), quality standards, volume capability (if purchasing goods), delivery capabilities, among other things.
Once these guidelines are set up, they’ll be able to choose bids that line up with their needs. To prevent miscommunication, these expectations need to be expressed clearly and concisely through appropriate documentation provided to potential vendors.
Choosing the method of public procurement
In the next stage of the government procurement process, they must decide if they’d like their project to be an “open” tender or “limited” tender.
An open tender means the contract will be posted on the government’s website and is open to any vendors who choose to submit a bid. By considering all suppliers, contracting authorities take an unbiased approach to the market – an important factor for government departments and agencies. However, that public procurement process not only becomes time-consuming, but also more expensive the longer they’re searching.
A “limited” tender, on the other hand, involves the government directly reaching out to a small pool of qualified suppliers with the project. While this approach would favor more reputable and professional suppliers, there’s a great chance of missing the potential of a suitable supplier that can offer a better deal or service.
Creating the RFP and exploring options
Once a contracting authority has established the needs and parameters of a project and decided on a method of public procurement, it’s time for them to create the request for proposal (or RFP).
An RFP is a document that describes the project and outlines the minimum requirements and contract terms for vendors. It’s designed to solicit responses (commonly referred to as “bids”) from interested parties who would like to be the chosen supplier of goods and/or services. Once the deadline window for bids has closed, the government will then collect all the relevant bids for assessment.
Evaluating submissions
At this point, a government will then begin comparing bids, stacking them against mandatory and weighted criteria.
Mandatory criteria are the minimum requirements needed for a bid to be considered. Depending on the government and project, these can include budget limit, commitment to meeting the delivery deadline, compliance with certifications, and financial stability of the bidder, among others.
Weighted criteria, on the other hand, typically refer to those that already meet established minimum standards but go a little above and beyond. For example, an IT consultant who already meets the minimum requirement of speaking English and French would currently meet the mandatory criteria, but being able to also speak German would give him or her a slight advantage when it came to weighted criteria.
Awarding and managing the contract
Once a winning bid has been selected, the vendor will be notified and a public contract will be drawn up to be signed. To avoid legal issues or lesser-quality goods and services from vendors, it’s important at this stage that both parties clearly agree on the terms before finalizing the contract.
After that, a government may develop a contract management plan, which can boil down lengthy government contracts into easy to read, accessible, and straightforward framework agreements that help both governments and vendors understand core requirements, responsibilities, and expectations while increasing accountability.
While it’s important to know how governments purchase goods and/or services for the public, it’s also integral to understand the why as well. Generally, there are four main goals driving public procurement operations:
The 4 main goals of government procurement
1. Accountability
An important objective for any government engaging in procurement is to be accountable to both their internal and external stakeholders. This means establishing clear lines of oversight during the entire process, making sure that responsibilities and authorities are boldly outlined. It can also mean taking disputes seriously by investigating them thoroughly to bring about a timely resolution.
2. Encouraging competition
For governments to get the best value on an open tender contract, it’s essential to promote competition among bidders. This is why programs that promote an equitable playing field for smaller or disadvantaged businesses are important, as well as vendors in general vying for government attention by offering the best goods and services they can. The more vendors there are bidding for a specific contract, the more likely a public buyer is to get a lower price for a better product or service. This not only benefits the taxpayer but frees up funds to be allocated to other important community initiatives.
3. Fairness and transparency
Fairness and transparency are integral to the public procurement process. They ensure that final decisions remain unbiased and help vendors clearly understand the many steps and factors of a government’s scoring phase. Because procurement contracts are awarded with public funds, preferential treatment towards certain vendors cannot be allowed, and each bid should be judged only against its compatibility with the RFP’s requirements.
In addition, a government should be open and honest regarding their selection process, answering questions and providing further information to vendors and the public when needed.
4. Value for taxpayers
Of course, one of the biggest goals governments have in mind when purchasing is the value for taxpayers. At the end of the day, it’s public funds they’re using, so they want to make sure the money is spent as responsibly and wisely as possible. Finding the best solution for the cheapest price is always paramount during their scoring process, and often a final decision between two equally suitable vendors comes down to who can offer them the best deal.
To have the best chance at submitting a winning bid, it’s important for vendors to understand the motivations and inner mechanics of a government’s procurement and sourcing process. Knowing what a public agency will be looking for in a supplier and how they’ll be scored, vendors can take stock of their strengths and weaknesses and adjust accordingly for their best chance at success. That’s why looking at procurement procedures from a government angle can benefit both your company and the agencies you’ll eventually do business with.