Public Procurement Policy and Purchasing Strategy

This chapter introduces the concepts of public procurement policy and public purchasing strategy. It explains that a procurement policy contains the resolutions and guidelines of a public organization for guiding and prescribing general procurement choices and utilizing its supply base. The cyclic procurement policy process is presented and described, including an explanation of how conflict and ambiguity affect the implementation of procurement policies. It is explained that the guidelines and framework provided by a procurement policy are used to develop a specific strategy for a tender or group of tenders. Subsequently, the Kraljic portfolio model is introduced in combination with Carter’s customer portfolio model for setting a general direction for a purchasing strategy. This can, for instance, be to focus on collaboration (for strategic tenders), competition (for leverage tenders), supply certainty (for bottleneck tenders), or efficiency (for routine tenders). This chapter concludes with a description of several specific strategic decisions that a public buyer makes based on the general direction of a procurement strategy such as single or multiple sourcing, the length of the contract, the type of specifications, and the attractiveness of the tender.