Essay On Private Sector Procurement

On the surface, one might say that purchasing is purchasing no matter who the purchaser is. In both public and private procurement sectors, purchases are made from the same suppliers. Both sectors search for flexible, value and price planning, efficient systems. However, systems and rules are what distinguish the two. They are completely different in the dynamics of their operations. Compared with the private sector, the procurement process of the public sector differs in quite a few ways. The intent of this paper is to examine the differences between public sector procurement and private sector procurement with attention to how private sector procurement methods may or may not be useful in public sector procurement.

Definitions of procurement are abundant. For the sake of this paper, I will use the definition given by BusinessDictionary.com, which states that procurement 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. Procurement may be further classified according to the sector that it serves such as public or private.

Literature Review

In both public and private sector procurement, goods and services have to be acquired, and in both there are good motives to strive for the best contract in procuring the required goods and services. Still, despite these similarities, it is well recognized that public procurement is quite different from procurement in the private sector (Erridge, 1996; Thai, 2001; Thai et al., 2004).

The methods to evaluate these differences differ across several publications. A number of papers consider how the execution of procurement is influenced differently in the public and private s...

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... material specifications, and the purchasing process itself. In the event that the process changes, purchasers should hold bidders' meetings to convey these changes. An alternate instrument procurement specialist in the public sector should consider in bid evaluation is the "should cost" strategy. "Should cost" pricing is obtained by calculating an estimate of the supplier's real cost to create and deliver the materials or services requested. This examination can then be utilized to discover inefficiencies or options to decrease expenses. Should-cost pricing is produced by building expense models dependent upon both standard information and data that has been asked for as a component of the RFQ process. The expense models can additionally be utilized within negotiating the last contract and in negotiations that may happen if the supplier asks for a price increase.