Tuesday, February 9, 2010

Competitive Procurement

Benefits of Competitive Procurement

The purpose of competition is to benefit your enterprise, and competition should not be promoted for the sake of competition. Indeed, in some cases, it may cost more to enter into a competitive procurement to do business directly with a supplier because of the unicity of the requested products, the inadequacy of other sources, the immediacy of your needs, or the emergency or legitimacy of circumstances. In other words, competitive procurement should be promoted pragmatism, with other methods thus becoming exceptions.

Competitive procurement is the contractual acquisition (purchase or lease) by an organization of any kind of asset, whether material (goods, products, or construction) or immaterial (services) with appropriated funds, enabling all deemed responsible sources to compete in a fair and open environment. Competitive procurement is also known as full and open competition (FOC), or competitive solicitation.

While procurement is supposed to bring fairness, impartiality, transparency, and suitability to corporate practices, a competitive procurement process will ensure the highest level of openness, thus maximizing the suitability of the requested assets or services, and the best return on investment (ROI).

Different Procurement Methods

There are several procurement methods that can be used to complete an acquisition. Let us define the difference between procurement methods and their supporting processes. A procurement method is the manner chosen to perform a contractual acquisition. Procurement methods could be any of the three following:

1. Simplified acquisitions, like micro-purchases, small purchases;
2. Competitive Procurement: Full and open competition (FOC), like bids, proposals; or
3. Other than full and open competition (OFOC), like sole source.

Full and Open Competition (FOC)

When do you have to put a formal solicitation process based on competition in place? You may be required, depending on your organization’s purchasing policy, to use a formal solicitation and selection, i.e. competitive procurement, process for acquisitions for which the amount exceeds a certain threshold—in our case, the simplified acquisition threshold.

The competitive procurement methods available for use in fulfilling the requirement for full and open competition in the acquisition process are

1. sealed bidding, relying on bids, also called sealed bids;
2. negotiated procurement, relying on competitive proposals; and
3. two-step sealed bidding, a combination of bidding and negotiating.

Competitive Procurement is also known as: Full and Open Competition, FOC, competition-based procurement, competitive procurement process, competitive solicitation, competition-based purchase process, competitive contractual acquisition, Competition In Contracting Act, CICA, competitive acquisition, competitive procurement processes, competitive purchase process, competition-based acquisition, federal competitive procurement, competitive procurement methods, Request for Proposals, RFP, RFP procurement, RFP solicitation, Invitation for Bids, IFB procurement, IFB solicitation, Invitation to Bid, ITB, ITB procurement, ITB solicitation, competitive procurement policies and procedures, competitive procurement methods, Federal Acquisition Regulation, or FAR.


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