The Advantages of Public Sector Procurement

Public sector procurement ensures citizens obtain the best goods and services in the market.

Private organizations exist to maximize profits. They tend to shy away from business ventures that promise little or no profits. Such ventures include providing free education or health services. These goods and services are known as public goods and services. Public goods and services are mainly provided by the government. The process by which the government acquires public goods and services is known as public sector procurement. The government can also contract private companies to provide these goods and services.

Risk Minimization

The risks involved in the supply of public goods include misuse of the powers bestowed upon the supplier. For example, a supplier contracted to supply ammunition would pose the risk of insecurity to the community if such goods get in the hands of unauthorized persons such as terrorists. The government, however, strictly monitors the procurement of such goods. The contract is only awarded to a competent supplier. This minimizes the risk involved in supplying such goods.

Competition

Public procurement opportunities are open to everyone. Every company has the opportunity to apply for a contract to supply public goods and services. This nurtures competition in the private sector as contractors try to outdo each other to obtain a slice of the lucrative government tenders. Only the most suitable company will be awarded the contract. This leads to an improvement in the quality of goods and services provided to the members of public.

Improved Quality

The public sector procurement process is governed by rules and regulations. These rules include ensuring that competition is encouraged and that procedures followed during the contracting process are revealed to all parties involved in the process. This ensures that the suppliers awarded a contract to supply public goods will offer better quality services. This reduces the cost, increases delivery efficiency and quality of services. These benefits lead to increased value and efficiency.

Continued Supply

Private businesses have always neglected venturing into the production and provision of public goods and services due to unprofitability. Government, on the other hand, is not concerned with profit maximization. Public sector procurement ensures that basic and essential --- but unprofitable --- goods are available to the public. This is achieved through subsidization in the cost of operations of a company contracted to supply these goods and services. The government could also provide them. Hence, the public is assured of continued supply.

References

• Office of Government Commerce: An Introduction to Public Procurement
• Office of Government Commerce: Supply Chain Management in Public Sector Procurement
• Small Business Service: A Study of the Benefits of Public Sector Procurement from Small Businesses
• The Scottish Government; Community Benefits in Public Procurement; Richard MacFarlane, et al; 2008