Public procurement refers to the whole process from identifying what is needed, finding the best supplier, to ensuring the best quality product or service is delivered to the right place, at the right time and at the best price. Of course, the process must be carried out in a fair and transparent manner. Governments spend a large sum of money through public procurement to carry out their daily functions and deliver their mandates. As such, public procurement represents an important economic activity and a strategic lever to achieve economic, social and environmental policy goals. Yet, its economic significance as well as the close interaction between multiple actors, especially between the private and the public sectors, make it a government activity that is particularly susceptible to waste, misuse and corruption.

Public procurement can play an important role as a strategic policy lever to advance diverse policy objectives – such as protecting the environment, promoting sustainable development, achieving more inclusive growth, and promoting ethical behaviour and responsible business conduct. While delivering goods and services necessary to accomplish their missions in a timely, economic and efficient manner remains the primary objective of public procurement, government increasingly recognises its economic and governance relevance to pursue broader policy objectives.

Ensuring fair and effective competition is a key element of public procurement system that functions soundly. To this end, potential supplies of all sizes should have access to procurement opportunities, i.e., a level playing field must be provided. However, specific challenges linked to public procurement – such as slow payment cycle, the complexity of the rules and procedures, excessive technical and financial requirements, myriad documents required – discourage certain groups of suppliers from participating in public procurement markets. These challenges are often considered to limit the access, in particular, of smaller businesses to procurement opportunities with governments.

Increasing efficiency and delivering value-for-money in the use of public funds is a key objective of public procurement. Strategic centralisation of procurement needs could generate numerous benefits to this end – including better prices through economies of scale, lower transaction costs and improved capacity and expertise. As such, central purchasing bodies (CPBs) have been established in order to reap the benefits of strategic centralisation. Depending on the countries, CPBs’ functions range widely, including acquiring goods or services; awarding public contracts for works, goods or services; and/or concluding framework agreements (FAs) for works, goods or services – intended for one or more contracting authorities (CAs).

Governments increasingly adopt and use digital technologies in the public sector to unlock efficiency gains and support effective implementation and monitoring of policies. Public procurement systems are also going through digital transformation. In particular, electronic procurement (e-procurement) helps increase the transparency and competitiveness of the processes and hold public authorities more accountable. Furthermore, it accelerates the process, reduces the transaction costs for both public and private sectors, and also facilitates access to public procurement opportunities, and enables collection of consistent, up-to-date and reliable data.

Public procurement is one of government activities that is especially susceptible to risks of misuse, fraud and corruption. While effective delivery of infrastructure projects represents one of the major mandates of governments in order to ensure sound provision of public goods and services, the risks involved in these projects are often more complex and have higher potential consequences. Infrastructure projects have direct implications on a country’s economic capacity, human development, social inclusion and environmental sustainability. As such, government’s role is more important in upholding the key principles of public governance, such as transparency, integrity and accountability, at all stages of infrastructure projects. Such stages range from where a project is planned and financing schemes are defined to making sure that the project is delivered in a cost-effective and secure way.