Procurement is the process of acquiring goods and services, (including civil works) by a public or private entity to satisfy a specific need. Two broad categories of procurement are identified here: goods and services. I consider them as inclusive of civil works procurement, including utilities such as water, sanitation and electricity, given that (at least in public procurement) civil works is contracted out to ultimately provide a service –a medical facility is built to provide medical services, a school to house students in the process of delivering educational services, etc. So whatever infrastructure is built by government, its purpose is to deliver public services.
Given the above, it is important to further classify procurement according to the sector which it serves, that is: public or private; thus, the following is the classification we will use:
i. Public Sector Procurement,
ii. Private Sector Procurement, and
iii. Project Procurement
a. Public Sector Project Procurement, and
b. Private Sector Project Procurement
Below, the first two (public and private sector procurement) are defined. Project Procurement is the subject of the next post:
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 nondiscriminatory 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.
Private Sector Procurement
Private sector procurement, on the other hand, is the process of acquiring goods and services to satisfy the needs of a particular private entity (usually a business, for profit or not). These are goods and services needed for (i) the operation of the business or (ii) the business to use in the process of production of goods and/or services they provide to their customers. Respecting the former, a primary example are goods such as stationary, furniture, office equipment, etc. needed for a business to operate, and respecting the latter, are all the goods and services needed to satisfy customer demands.