The Procurement ClassRoom

Aaron K.D. Cholopray

Public Procurement Legal and Regulatory Framework

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Public procurement is the organized process of acquiring goods, works and services by public sector organizations, usually through contracts. Public procurement legal and regulatory framework (also called the procurement rules) in a country includes the constitution of the country, national procurement policies/laws, regulations, organizational procurement policies and the standard bidding documents. 

What is Procurement Legal and Regulatory Framework?

Procurement legal and regulatory framework refers to the policies, laws, guidelines or regulations that govern procurement in an organization. Every organization (public sector, private sector or third sector entities) have some rules governing the acquisition of goods, works and services to ensure fulfillment of its goals. When we speak of public procurement legal and regulatory framework, we mean the set of laws, regulations, and policies that govern the implementation of the procedures and processes necessary to acquire goods, works and services of public sector organizations. 

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Price Reasonableness Analysis: A Bid Evaluation Stage in Public and Project Procurement

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Price analysis can be considered a stage of bid evaluation depending on the provisions of a legal and regulatory framework. It is an assessment of the evaluated price of a responsive bid to ascertain that it is not unreasonably high nor unreasonably low, but fair enough to the procuring entity and the supplier. In the Millennium Challenge Corporation (MCC) Program Procurement Guidelines (PPG) and the accompanying MCC Procurement Guidance Note: Price-Reasonableness Analysis (MCC-PGN-PRA) used by Millennium Challenge Accounts (MCAs) around the world, price analysis is a mandatory requirement during bid evaluation. After bid evaluation, the Procurement Agent does a price reasonableness analysis to determine if the price is reasonable. The price reasonableness analysis may be included in the evaluation report or documented separately and referenced in the evaluation report. The unreasonableness of an evaluated bid price could be described as unreasonably high or unreasonably low. If the price reasonableness analysis proves that the price of the lowest evaluated bid is unreasonable, the bid is rejected.

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The Bid Evaluation Process

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As the field of Procurement is still evolving and scholars don’t seem to subscribe to universal definition of concepts such as what constitute the procurement cycle, this article does not make reference to any textbook or academic publication. It is based on years of experience from practicing Public and Project Procurement and takes into consideration bid evaluation procedures and practices applicable under several Public and Project Procurement legal and regulatory frameworks.

Definition of Bid Evaluation

Bid evaluation is the organized process of examining and comparing bids to select the best offer in an effort to acquire goods, works and services necessary to achieve the goals of an organization. The best offer recommended as a result of bid evaluation is referred to as the lowest responsive evaluated bid. It may also be called the most economically advantageous tender (MEAT).
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