Building Blocks of Public Procurement


A number of structural issues are considered as supporting of good management and integrity in public procurement.


These include:


Legislative framework



The legislative framework establishes procurement procedures to be followed as well as the rules to guarantee that public procurement is conducted in a fair and open manner while ensuring effective, efficient and proper use of resources.


It may be articulated in a number of sources that can be broadly categorised as either primary or secondary law. Primary law typically outlines the guiding principles and responsibilities and is generally supplemented by secondary law to provide more precise details on practices and procedures.


Although legislative frameworks have developed differently over time in different countries, a number of standard provisions should be included. These include: definition of public sector organisations that are covered under the legislation; the types of tender methods/or procedures available and thresholds; selection and award criteria to be used in the tender process; exemptions from standard procurement procedures; the review and remedies system; and enforcement mechanisms to ensure the well function of the public procurement system.


In some cases the legislative framework has been amended to ensure compliance with international treaties and standards set by the World Trade Organisation and the European Commission.


For more information see International and pluri-lateral legal instruments


Administrative infrastructure



The basic condition of a procurement administrative infrastructure is the precise definition of the roles played by public sector organisations and officials in the procurement process. Many countries have established a central public procurement organisation with responsibility for developing the procurement rules and regulations, creating a government-wide information and publication system, ensuring government procuring authorities employ trained personnel, developing a training system and maintaining general supervision of the public procurement system.


The degree to which the purchasing function is centralised or decentralised varies from country to country and no standard model can be recommended. Developments in the last decade—e-government, the emergence of procurement as a strategic profession, modern financial management practices from the government’s side, as well as e-commerce and new production technologies from the private sectors side—dilute the strength of some of the arguments of the centralisation vs. decentralisation debate.


A system that mixes elements of decentralisation and centralisation is likely to work well in many countries.


Within procuring and contract authorities, however, particular attention is necessary to ensure clear separation of responsibilities. In particular, staff roles and responsibilities with regards to specifying requirements, giving financial authority and making purchasing commitments must be clearly delineated.


For more information see Key arguments for centralised and decentralised public procurement systems


Professional group of public procurement practitioners



Public procurement systems have increasingly moved from a situation where procurement practitioners are expected to comply with rules and procedures to a more flexible and goal orientation. Recognising practitioners who work in the area of public procurement as a profession is critical to enhancing resistance to mismanagement, waste and corruption.


One of the key building blocks to equip professionals is to provide them with well-defined curricula, specialised knowledge, professional certifications and integrity guidelines to ensure that they have the necessary knowledge, skills and integrity for successfully perform their tasks.


Review and remedy system



An effective review and remedy system allows unsuccessful suppliers/bidders to challenge decisions taken by public authorities in awarding contracts and supports the appropriate functioning of a procurement system. Procedures which provide effective mechanisms to seek redress in cases where suppliers/bidders deem that contracts have been unfairly awarded is essential to establishing trust with both the private sector and the general public.


The main objective of a public complaints review and remedies system is to enforce the practical application of public procurement legislation. It serves as a deterrent to breaking the law and thus encourages compliance. Moreover, violations of the law and genuine mistakes can be corrected. Therefore, an effective functioning public procurement review and remedies system may ultimately contribute to the achievement of the objectives of the substantive procurement rules, such as transparency, non-discrimination and equal treatment, and value for money.


Internal management control and audit systems



The existence of independent control systems in financial and technical aspects related to procurement is crucial to enhance integrity and detect fraud and corruption. Internal control systems are intended to provide assurances that management’s objectives are being achieved and contribute to continuous improvements in programme management, service delivery and accountability. Internal audit covers administrative and accounting reporting on the procedures governing decision making processes, as well as the preparation of reliable financial records. They provide management with an assessment of the adequacy and functioning of an organisation’s risk management, control and governance processes.


The OECD Best Practices for Budget Transparency states that a dynamic system of internal financial controls, including internal audit should be in place to assure the integrity of information provided in the reports.  The International Organisation of Supreme Audit Institutions (INTOSAI) has identified the following objectives of internal control systems:

  • produce orderly, economically, efficient and effective operations;
  • safeguard resources against loss owing to waste, abuse, mismanagement, errors and fraud;
  • adhere to laws, regulations and management directives; and
  • develop and maintain reliable financial and management data; and disclose this data in timely reports.


To be effective, internal controls must be appropriate, function consistently throughout the procurement cycle, and be cost-effective.


For more information see INTOSAI guidelines for internal control standards


Independent external audit



External audit is conducted by a supreme audit institution. A core component of this audit is the regularity audit. A regularity audit generally covers the attestation of financial accountability of public organisations and the government as a whole. It also includes an audit of financial transactions and internal control functions.


In some countries, the supreme audit institution may also conduct specific audits on the functioning of the public procurement system. Upon completion of an audit, the supreme audit institution expresses a written opinion on its findings.


The auditor may give an unqualified opinion if it is sufficiently satisfied that the systems are in compliance with statutory requirements and regulations; are consistent with the auditor’s knowledge of the public organisation; and adequately disclose relevant information.