Processes and Tools to Promote Community Benefits in Public Procurement

Abstract

Public procurement differs from private purchasing by the fact that goods and services are bought by taxpayers’ money. For that reason there are regulations to safeguard that the money are appropriately used. Globally, public procurement accounts for 5% to 20% of the global GNP. Alongside efficiency objectives, public procurement is seen as a vehicle to promote other political objectives. This thesis is derived from a managerial problem regarding ways to promote community benefits in the process. A number of selected types of community benefits are introduced and elaborated upon while processes and tools to promote those are summarized.

Secondary data have been used as part of the qualitative research methodology. The data were derived from annual reports, invoices, and lists of innovation project descriptions.

In this thesis, public procurement is defined and national spend is calculated and organized into multiple legal categories. In further exploration, an investigation of innovations is presented using a database describing innovations in the health and social care sectors. Professionals concerned with green public procurement look for tools to enhance the green impact. Local and SME procurements in seven municipalities are studied. In the introduction the processes and tools for the procurement professionals are summarized. The introduction also presents the view of multiple scientific silos in public procurement.

A neglected area is recognized with this research, namely in-house procurement, or “procurement called by another name” as it’s referred to in the literature. In the national spend in Finland the total procurement volume is 52 billion euros compared to the 38 billion euros figure that is often quoted. Innovation procurement can use many frameworks. Of note, a procurement system for off-the-shelf innovations could be created.

Green public procurement should be employed in multiple procurement process levels, and the aspiration could have an environmental impact instead of just legal compliance. In municipal procurement SMEs seem to have their GNP share of business. When looking at local suppliers share, it is derived both from the proximity of a larger city and from public sector structure.

This work contributes to the field with a definition of public procurement in accounting terms and revelations of procurement when called with other names. Both are connected to in-house and other government-to-government procurements. From the view of processes, monitoring and procure-to-pay processes in promoting community benefits are scarcely researched areas.

Further research should be directed to in-house and other government-to-government procurement. A comprehensive view of procurement transactions is also missing. Another path to understand public procurement in different scientific silos is to conduct in-depth literature reviews in administrative, technological, public management, and legal silos. Focusing impacts, the literature review on healthcare or environmental economics is likely to reveal further research directions.