Think about the roads that you drive on. Think about government offices, public libraries, and the public transportation system. How do you think all of these things came to be? It is not news that government-funded projects are made possible by the taxpayer’s money. But, money is merely a tool that facilitates a give-and-take relationship between different stakeholders. Furthermore, the government is composed of our elected representatives, and not construction companies, and automobile manufacturers. So, how do the services that we avail at the government’s discretion come to be? Governments hire other service providers or vendors to meet the needs of the public. But, you must be wondering how does the government pick vendors from an infinitely large pool existing in the business world. There’s a system in place to resolve that predicament. This system called the public procurement process enables government organizations to find vendors or service providers that provide the best value for the taxpayer’s money.
The architecture of public procurement
The government engages in the procurement process in a manner analogous to the corporate world. However, the nature of the process is comparatively more formal in the case of organizations composed of publicly elected representatives. Here are the different stages in the life cycle of the public procurement process:-
- Defining the Project Scope:-An organization needs to materialize the goals of the project before it can publicly issue a request to tender. Thus, before they officials flesh out the prerequisites for project completion. More precisely, this phase of the procurement process deals with the initial planning that propagates the rest of the mechanism further. Variables like expected duration, acceptance delivery standards, cultural expectations, and grounds for penalties are computed when stakeholders define the scope of the project. When a government organization works on this stage of the procurement process, the public is also viewed as a stakeholder.
- Drafting the Request for Tender:-This stage is concerned with the development of the document that acts as the backbone of the process. An RFT is extremely meticulous. The introductory section of this document details the project scope elucidated in the first stage of the PPP (Public Procurement Process). Thereafter, the RFT clarifies project guidelines. Any special instructions or unusual requirements are highlighted. Procuring agencies also specify the format in which they expect incoming bids. Another crucial detail encompassed in the RFT is the evaluation methodology used to determine the winning tenderer.
- Publishing the RFT:-Before the advent of the internet, government entities published their tenders in newspapers and trade magazines accessible by the general public. Nowadays, government-based procurers publish tenders online. This shift benefits tenderers in a major way. The accessibility of a government website is far greater than that of print media. Furthermore, government organizations also publish tenders online for their upcoming projects scheduled for the next few months. This helps interested agencies to prepare for the procurement process in advance.
- Evaluating acquired proposals:-After the deadline to submit bids expires, the next stage of the public procurement process materializes itself. In this segment of the mechanism, all the received bids are scrutinized by government agents tasked with upholding the evaluation criteria. All bids are subjected to a scoring system detailed in the RFT. The winning tenderer is determined by the virtue of this stage of the PPP. Governments in most countries are obligated to publish results of their procurements processes on publish tenders gov portals. This is yet another factor that contributes to the overall transparency of the PPP.
- Entering into a Contract:-Government-issued tenders do wonders for the reputation of the business entity at the other end of the contract. However, this boon to the businesses’ reputation only happens once the contract being talked about is signed by both the parties. Usually, minor negotiations happen at this stage of the PPP, but no major changes take place. Once the contract comes into existence, the organization tasked with delivering the product or service detailed in the tender starts working on the project. Communication happens between both parties throughout the lifespan of the project inside and outside the publish tenders gov portal.
How is public procurement different from the tendering process of the corporate?
The most prominent distinguishing factor between both these processes is the level of flexibility that they have. Government-issued tenders are subject to the bureaucratic functioning inherent to entities liable to the tax-payer. However, let’s view the other differences that create a fine line of separation between public procurement and private procurement:-
- Budget:- Government-issued tenders are usually more capital-intensive when compared to their private-issued counterparts. Furthermore, government budgets are not as flexible as the tendering budgets of private companies. Private companies have the luxury of transferring capital from one department to the other. Government entities do not possess that luxury.
- Agenda:-Tenders issued by private organizations are drafted with profit as the key motivator. However, in the case of government-issued tenders, the needs of the public outweigh the need to profit. The end-goal of the public procurement process is to add value to the societal structure. On the other hand, private entities are most concerned with generating revenue.
- Legal Framework:-Given the bureaucratic hierarchy of most government organizations and the regulations that governments are subjected to, government-issued tenders are expected to adhere to a meticulous legal framework. Conversely, private-issued tenders are created with lesser regulations to be mindful of. This constraint further reinforces the formal nature of the public procurement process.
In today’s day-and-age, tenderers also have access to government-issued tenders on online platforms. This is an indication of the fact that governments are just as welcoming of digitalization as their private counterparts. Regardless of the differences between the procurement procedures adopted by government and private companies, the main goal of these mechanisms remains the same. The tendering process promotes healthy competition in the business world and elevates the overall quality of the developments in public as well as private enterprises. At the end of the day, the goal of any kind of procurement is to connect buyers and suppliers best suited to the needs of each other.