Dear Reader, you are welcome to this guide on Public Procurement. In this guide, we begin our discussion of public procurement with definition and explanation of public procurement as well as the scope of public sector procurement.
This guide ends with a discussion of some relevant definitions of public procurement of public sector procurement. We believe you would enjoy this unit, just like other previous units
Procurement may be defined as the act of acquiring goods, works and services that are relevant to the achievement of the objectives of an organization.
The resources of an organization need to be acquired or constructed. The process of acquisition needs to be properly handled so that the organization can achieve value for money.
This is of concern to both the private and public sectors. When the procurement action is undertaken by a public sector organization like a ministry, department or agency then it is termed as public procurement.
Some Relevant Definitions of Public Procurement
Goods means objects of every kind and description including raw materials, products and equipment and objects in solid, liquid or gaseous form, and electricity, as well as services incidental to the supply of the goods if the value of those incidental services does not exceed that of the goods themselves; An example of services incidental to the supply of goods will be training of staff (costs) on use of acquired technical products.
Works means work associated with the construction, reconstruction, demolition, repair or renovation of a building or structure or surface and includes site preparation, excavation, erection, assembly, installation of plant, fixing of equipment and laying out of materials, decoration and finishing, and any incidental activity under a procurement contract.
Services mean intangible products such as accounting, banking, cleaning, consultancy, education, insurance, expertise, medical treatment or transportation. Procurement entity means any entity conducting public procurement under this Act.
Tender: In procurement refers to the process whereby governmental institutions invite bid for large projects that must be submitted within a finite deadline. These invitations are normally made public through publication in daily newspapers.
Request for Tenders (RFT) is a formal, structured invitation to suppliers to submit a bid to supply products or services.
Tender document: A written invitation sent to potential suppliers of a good or service to inform them about the information required for the buyer to choose among them.
Bid: Is to offer a certain price for something, especially at an auction. In response to request for tenders, potential suppliers indicate what they have to offer and the price at which they are willing to trade those goods, contracts and services. The bid-receiving party would then decide on who to buy from based on his/her requirements and bids received.
Proposal: It is a plan that is put forward for consideration.
Quotation: It is a written statement of the cost of a good, contract or service.
Tender Security: a bid security is an amount of money that may be calculated as a percentage of the budget estimate of a procurement requirement or a percentage of a bidder’s bid price. It is used as a protection against bidders withdrawing their bids prior to the end of their bid validity period, or for refusing to sign the contract.
Tender Validity Period: is the period in course of which the supplier is bound by the tender, in relation to its content and conditions offered (price, execution time, guarantee, etc.).
Margin of Preference: Is the extent to which one person or group is given more favorable treatment than others. The percentage of reduction in the requirements of the goods, contracts and services to be procured by a procurement unit for domestic suppliers/ tenderers or domestically produced goods, works and services.