OVERVIEW OF PROCUREMENT OF GOODS, SERVICES AND WORKS
Procurement is the act of acquiring, buying goods, services or works from an external source, often via a tendering or bid process. It is favorable that the goods, services or works are appropriate and that they are procured at the best possible cost to meet the needs of the acquirer in terms of quality and quantity, time, and location. It is the act of obtaining or buying goods and services. The process includes preparation and processing of a demand as well as the end receipt and approval of payment. It often involves:
- Purchase planning,
- Standards determination,
- Specifications development,
- Supplier research and selection,
- Value analysis,
- Price negotiation,
- Making the purchase,
- Supply contract administration,
- Inventory control and stores, and
- Disposals and other related functions.
What is the difference between Procurement and Purchasing?
Many people use the terms purchasing and procurement interchangeably, but despite their similarities they do have different meanings. Let’s clarify any confusion on the difference between procurement and purchasing.
Procurement function commonly encompass: purchase planning, standards determination, specification development, supplier research and selection, value analysis, financing, price negotiation, making the purchase, contract administration, inventory control and stores/disposals and other related functions.
Purchasing may be defined as; that function responsible for obtaining by purchase, lease or other legal means, equipment, materials, supplies and services required by an undertaking for use in the organization. Purchasing is an essential business function that makes the same level of contribution to a firm’s success as the other major business functions.
PROCUREMENT OF GOODS, SERVICES AND WORKS
Procurement involves the process of selecting vendors, establishing payment terms, strategic vetting, selection, the negotiation of contracts and actual purchasing of goods.
Note: Procurement is essentially, the overarching or umbrella term within which purchasing can be found.
PROCUREMENT OF GOODS, SERVICES AND WORKS IN VARIOUS SECTORS
VARIOUS PROCUREMENT SECTORS
Procurement of goods services and works in various sectors. There are three sectors in which procurement takes place.
- Public sector
- Private sector
- Third sector.
1. PUBLIC SECTOR PROCUREMENT
Public sector procurement is the process of acquiring goods and services for the operation of government and to provide public services. It is carried out within a specific legal framework based on certain principles aimed at making the fulfillment of public procurement requirements competitively available to qualified firms and individuals in a transparent and non-discriminatory manner based on pre-established selection criteria. The goal of public procurement is to provide everything necessary for the operation of government and, specifically, public services to the population within a country.
Other definitions of public procurement include:
- Purchase of commodities and contracting of construction works and services if acquisition is effected with resources from state budgets, local authority budgets, state foundation funds, domestic or foreign loans, revenue from economic activities of the nation (draft policy framework for public procurement in Kenya).
- Procurement by a public entity using public funds.
Characteristics of public sector procurement