Introduction to public procurement

Introduction

Public procurement is the process whereby public sector organisations acquire goods, services and works from third parties. It includes much that supports the work of government and ranges from routine items (e.g. stationery, temporary office staff, furniture or printed forms), to complex spend areas (e.g. construction, private Finance initiative projects, aircraft carriers or support to major change initiatives).

Effective public procurement is essential for good public services and good government.  The public sector in the UK spends well over £150 billion a year on the goods and services necessary to deliver public services. The procurement process spans a life cycle from identification of the need, through the selection of suppliers, to post-contract award management, including disposal.

Public sector procurement is governed by the UK regulations that implement the EU procurement directives. These apply to the majority of procurements with a total value over a specified threshold (Office of Government Commerce 2008, 3-4). The value of public procurement in the UK stands for approximately £125 billion each year (Unite 2007).

SMES access to public procurement 

From 2006 – 2008 319,728 individual contract award notices were published by member states on TED (Excluding financial services and purchases of armed forces). A positive trend has since 2002 been observed in the number of notices published, with a relatively steep increase in 2007-2008 (42% in these two years, corresponding to an annual average of about 19% compared to an average growth of only 10% between 2002 and 2005). The total value of tenders published on TED for the three-year period between 2006 and 2008 was estimated by the Commission services to about 1,137 billion Euros.

Public procurement accounts for some 40% of the output of the construction industry (DTI 2004).