Public vs Private Procurement
When we talk about public and private sectors, we know that we are talking about two different entities that have different work ethics, different roles and responsibilities in the economy, and different work parameters. In case of public enterprises, the first and foremost objective is not profit, but public good. On the contrary, for a private enterprise, it is profit for the shareholders; it has to think about profit while involved in awarding contracts for procurement. Because of this clear cut dichotomy, it is not surprising that even vendors are divided into those who serve the public sector and those who provide services to the private sector. Let us take a closer look at the procurement process in a public and a private company.
Despite all the differences between private and public enterprises, the differences in the procurement process do not seem to be justified at all. No matter, how you look at private and public enterprise, in the end you have to veer around the view that both are doing some sort of business. Yes, I agree that public enterprise has to ‘appear’ fair and just in even, how and to who it awards contracts. Just like reservations in employment, there seems to be a similar attitude when it comes to procurement in the public sector companies. There have to be certain minimum minority vendors to whom contracts need to be awarded, and then there are small businesses, disadvantaged businesses, woman entrepreneurs , and so on that puts a drain on creativity and a fair procurement process in the first place. On the other hand, all private sector enterprises have to do is to select the best vendor that fulfills their requirements in the least possible prices with the best possible quality.
What is the difference between Public and Private Procurement?
– In the public sector contract invariably goes to the lowest bidder that can perform the job at the minimum level of quality, while keeping or maintaining standards of safety and performance.
– In the private sector, even a high bidder can be selected, as the objective is to find the bidder who can perform the job in the best possible manner, while generating the highest value for money.
– A bureaucratic procedure needs to be followed in case of public enterprises in procurement, which is not there in case of private enterprise.
– Environmental issues dominate in public procurement that are easily avoided in case of private procurement.