❓Why the public procurement process exists

Procurement is the act of obtaining goods or services from an external party. Most organisations have some sort of formal procurement process to ensure purchases happen in line with their objectives.

For large organisations, the process will focus on ensuring that purchasing decisions are made in a manner which is cost-effective, that procured goods and services meet quality standards, and that purchases are made in a way that stakeholders can hold to account.

A large supermarket chain which only purchased vegetables from farms owned by families of the directors may be missing out on better quality and value for its customers from other suppliers, while unduly enriching the directors.

In the private sector, managers, auditors and shareholders must be able to trace purchasing decisions to ensure that those involved are doing their job. Rules governing these processes can be simple, such as requiring a minimum number of quotes before commissioning work or buying a good to ensure a competitive price is being paid. Large purchasing decisions may require that suppliers are vetted for legal and ethical behaviours before contracts can be awarded.

Even for the self-employed, who might not have a set of written procedures around procurement, informal processes and checks will be in place to ensure goods and services are fit for purpose and within budget.

The same principles hold true in the public sector. Managers, MECs, ministers, treasury, the Auditor General and citizens at large must be able to scrutinise purchasing decisions to ensure decisions are made for the good of all.

Throughout this course, the term public procurement is used to refer to the process where the government buys goods and services using public money. Public money is money the government raises from the general public through taxes. For example, when the government buys textbooks, or pays for the building of a new school, a procurement process must be followed.

When public procurement is not working as it should, the quality of public services declines. When it is not conducted in a transparent manner, the opportunity for kickbacks and bribes is greater.

Every organ of state must follow procurement processes, which are designed to prevent corruption and ensure public money is spent in the most effective way possible.

Legislation such as the Public Finance Management Act (1999) and the Municipal Finance Management Act (2003) regulate the financial management processes at National and Municipal level. National departments, provincial departments, public entities (including state-owned entities), municipalities and municipal entities are included in the laws' remits.

Every national and local government department, and every state owned entity (SOE) is subject to these laws and regulations. We'll look at these rules in the next topic.