Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

The 7 Steps of Public Procurement

Step 1 – Sourcing Methodology

Before explaining how sourcing methodology is applied in public procurement, it is important to distinguish it from the sourcing process and sourcing policy within the public sector context. The sourcing methodology represents a structured and transparent framework that guides the entire public procurement process, ensuring compliance with legal regulations, transparency, and equal treatment of bidders.

A sourcing strategy, on the other hand, refers to the specific approach used within that framework to achieve objectives such as value for money, sustainability, or risk reduction, while the sourcing policy defines overarching rules, legal requirements, and ethical standards that govern public procurement activities.

The first step in establishing a sourcing methodology in public procurement is clearly defining the procurement need, including technical specifications, budget limits, timelines, and compliance requirements. This definition must align with public procurement laws and strategic objectives, and it requires formal approval and commitment from management and key stakeholders.

After that, a dedicated procurement team is formed, typically involving procurement officers, technical experts, legal advisors, and financial representatives. The team then conducts comprehensive analyses, including assessment of current procurement practices, market analysis, budget and cost analysis, legal and contract analysis, and risk assessment. The conclusions drawn from these analyses form the basis for selecting the appropriate sourcing methodology, procurement procedure, and evaluation criteria in line with public procurement regulations.

Step 2 – Market Research

The assignment to procure goods, services, or works in public procurement usually comes from public authorities, departments, or authorized decision-makers. Before a procurement officer initiates any purchasing activity, there must be a clearly identified and justified public need in line with approved procurement plans and budgets.

Therefore, it is the responsibility of the public procurement officer to recognize the procurement need and to conduct market research for the required goods, services, or works.

Public procurement market research helps determine the realistic quantity, scope, and estimated value of the procurement, while ensuring compliance with public procurement laws and principles such as transparency and competition.

For example, a public institution plans to equip a new administrative unit with 40 employees, but currently has only 20 workstations available.

In this case, the procurement officer’s market research must include relevant data to ensure a clear understanding of the market for IT equipment, including availability, pricing, technical standards, and delivery timelines.

Some of the questions a procurement officer should consider during market research include the following:

• Are there existing framework agreements or current contracted suppliers?
• Are there alternative or backup suppliers available on the market?
• Is the allocated public budget sufficient for the planned procurement?
• Is there a shortage of goods or services being procured?
• If so, will this affect the estimated contract value or budget allocation?
• Are there alternative solutions if the required supply is not available?

Market research in public procurement should also cover identifying potential new suppliers to ensure adequate competition. Depending on the complexity of the procurement, market consultations or prior information notices may be used to gather additional insights from the market.

Finally, market research helps identify key inputs for the next steps of the process. Information such as indicative pricing, quality standards, technical specifications, and market capacity is essential and must be documented as part of the procurement preparation phase.

Step 3 – Request for Information (RFI)

The third step in public procurement involves RFI not only from potential economic operators but also from internal organizational units that require the goods, services, or works. This step helps ensure that the procurement need is clearly defined and justified before any formal procurement procedure is launched.

Before initiating a procurement procedure, the contracting authority must determine the exact scope and quantity of the required items. Information such as current availability, estimated unit prices, technical characteristics, and delivery conditions can be collected through an RFI or similar preliminary market consultation tools, in line with public procurement regulations.

At this stage, the procurement officer should consider the following questions:

• Which public institution, department, or organizational unit requires the procurement?
• What quantity of goods, services, or works is needed?
• What is the expected duration of use or contract period?
• Are there existing contracts or framework agreements in place?
• Is there a justified opportunity to consider new suppliers or solutions?
• What budget has been allocated or planned for this procurement?
• What technical, quality, or compliance requirements must be met?

Once sufficient information has been collected, a formal procurement request is submitted for internal approval in accordance with public sector governance procedures. Based on the gathered data and market research, management or authorized bodies confirm the budget and approve the initiation of the procurement procedure.

In public procurement, the RFI is considered a transparent and non-binding tool used to gather information from the market without restricting competition. One of its key advantages is the ability to obtain comparable information from multiple economic operators simultaneously, reducing the risk of bias or dependence on a single supplier. By using RFIs, contracting authorities gain broader market insight, supporting fair competition and more accurate cost estimation in subsequent procurement stages.

Step 4 – Request for Quotation (RFQ)

The RFQ in public procurement is a formal step in which the contracting authority invites selected economic operators to submit price quotations for clearly defined goods, services, or works. This step is typically used for procurements of lower value or simplified procedures and must be conducted in accordance with public procurement laws, ensuring transparency, equal treatment, and fair competition. RFQs are usually issued in written form through official communication channels, and suppliers respond by submitting their price offers and basic commercial conditions.

When preparing an RFQ, the procurement officer should request information that allows for a clear comparison of quotations, such as:

• Does the supplier have adequate storage or operational capacity to deliver the required supplies?
• Where are the goods or services provided from?
• What is the expected delivery time for supplies sourced internationally?
• What is the expected delivery time for supplies sourced domestically?
• What is the quoted unit price and total price?
• Are there any current market constraints or shortages affecting availability?

Once the RFQ responses are received, the procurement officer or evaluation committee reviews and analyzes the submitted quotations. Prices are assessed in relation to the results of prior market research to determine whether they are reasonable and aligned with market conditions. The insights gained from earlier market research are crucial at this stage, as they support objective evaluation and informed decision-making, and they help prepare the contracting authority for the subsequent steps of the public procurement procedure.

Step 5 – Negotiation Phase

The negotiation phase in public procurement is a regulated and carefully controlled stage, as negotiations are only permitted under specific procedures and legal conditions. Unlike private procurement, negotiations cannot be freely conducted in all cases and must strictly follow public procurement laws to ensure transparency, equal treatment, and non-discrimination among bidders.

When negotiations are allowed, they are conducted to clarify technical, financial, or contractual aspects of the submitted offers and to achieve the best value for money for the contracting authority. During this phase, procurement officers or authorized negotiation committees may consider questions such as:

• Is the proposed quantity and availability of supplies sufficient to meet public needs?
• Are there legally permitted price reductions, discounts, or improved commercial terms?
• Who are the officially designated contact persons representing the contracting authority and the economic operator?

In public procurement, negotiation skills are demonstrated through compliance, objectivity, and effective communication rather than aggressive bargaining. All discussions must be properly documented and conducted based on previously defined criteria. Once again, the information gathered during the market research and earlier phases is essential, as it provides a solid factual basis for negotiations and supports fair and defensible procurement decisions.

Step 6 – Contracting Phase

The contracting phase in public procurement covers the formal conclusion and administration of the public contract, including all legally required documents such as the contract itself, delivery notes, invoices, acceptance reports, and related records. This phase must be carried out in strict compliance with public procurement legislation, as contracts are legally binding instruments subject to audit and public oversight.

During the contracting phase, the contracting authority should closely monitor contract execution and verify the following:

• Were the goods, services, or works delivered in accordance with the contract specifications and in acceptable condition?
• Were there any delays in delivery or performance?
• If delays occurred, what corrective or preventive measures can the contractor take in the future?
• Was payment made in accordance with contractual terms and public financial regulations?

Public institutions commonly use electronic procurement systems or contract management tools to store and manage all documentation securely and transparently. Proper contract documentation is essential not only for control and accountability but also for future procurements, as existing contracts and performance records can serve as valuable inputs for market analysis, supplier evaluation, and planning of subsequent public procurement procedures.

Step 7 – Supplier Relationship Management (SRM)

The final step in public procurement is SRM, which focuses on managing and maintaining effective relationships with both the awarded suppliers and other qualified suppliers who participated in the procedure. Even in public procurement, maintaining professional relationships with non-awarded suppliers is important to ensure alternatives are available for future procurements or unforeseen needs.

In this phase, active collaboration with the contracted supplier is essential to ensure they meet contractual obligations, deliver goods, services, or works on time, and comply with quality and regulatory standards. Regular communication, performance monitoring, and feedback exchanges are key activities, helping the contracting authority address issues, identify areas for improvement, and support continuous performance enhancement.

SRM in public procurement goes beyond basic contract management, emphasizing transparency, accountability, and long-term partnership building based on trust and shared objectives. By effectively managing supplier relationships, public institutions can strengthen supply chain reliability, ensure value for money, and foster sustainable collaboration for future procurement projects.

5 Real-Life Examples of Public Procurement

1. Douala Urban Mobility Project – IT Equipment Procurement (Cameroon)

One example of international public procurement is part of the Douala Urban Mobility Project in Cameroon, financed by the World Bank. As part of this project, the local urban community issued a competitive public bidding process for the supply of office and IT equipment for the project’s coordination unit, which was officially awarded after a competitive evaluation. This procurement helps ensure that project staff have the necessary hardware and technology to plan and manage urban mobility improvements.

This tender was published through official channels that support transparency for World Bank‑funded contracts and shows how public funds can be used to obtain goods ranging from computers to telecommunications equipment. The notice includes the formal procurement ID and details on the contracting authority and sector classification.

2. International Public Tender for Electric Buses and Charging Equipment (EU)

The European Union issued a public tender for the supply of electric buses and related charging infrastructure in Portugal, aimed at modernizing urban passenger transport and reducing emissions. Public authorities published this notice under EU public procurement rules on the EU Publications Office portal, with an estimated contract value of almost €13 million.

This procurement required suppliers to submit competitive bids for delivering new electric buses, fast chargers, and maintenance services, helping local authorities transition to cleaner public transport fleets. It’s a direct real‑world example of an EU public procurement of goods with clear environmental and public service goals.

3. Purchase of Electric Buses in Slovenia (EU Public Contract)

Another concrete European public procurement example is the purchase of electric buses for public service in Slovenia. This contract involved the delivery of several buses from a supplier competing under EU procurement procedures and was officially awarded to a specific transport vehicle provider with a multi‑million euro value.

Such procurements help local governments upgrade public transport fleets and improve sustainable mobility. They are published on EU procurement platforms and subject to EU rules ensuring open competition among companies across EU member states.

4. Invitation for Bids: Abidjan Urban Mobility Project (Ivory Coast)

In Côte d’Ivoire, the Abidjan Urban Mobility Project (P167401), financed by the World Bank, issued an international tender for construction works. This procurement called for bids on civil construction tasks, including general site preparation and electrical installations, as part of a larger transport infrastructure improvement agenda.

These invitations for bids are examples of how large development projects use public procurement to competitively select contractors for major works, providing transparency and adherence to donor procurement policies. The notice includes a list of CPV codes and deadlines for bid submission.

5. World Bank‑Backed Urban Mobility Works: Road & Infrastructure Procurement (Cameroon)

Also under the Douala Urban Mobility Project, the World Bank opened a works procurement for road construction and urban transport infrastructure in Cameroon. The public procurement notice invited international and local contractors to bid on a package of civil works, including earthworks, sidewalks, lighting, and traffic management installations

This kind of procurement for works is typical in large development projects where public funds are used to hire firms through a competitive process to build and upgrade transport infrastructure, demonstrating how public procurement extends beyond goods/services into major civil works.

The 5 Key Differences Between Commercial Procurement and Public Procurement

Here are some key differences between Commercial Procurement and Public Procurement that you should know about.

1. Budget

Considering public procurement is typically driven by government entities, there are limitations to the flexibility in their spending and methods of funding.

It is more typical for the public sector’s limitations to arise in the sense of earmarked money. Meaning, that public procurement budgets are more likely to be delegated preemptively and tougher to alter their course of distribution.

As for the private sector, there is much more room for flexibility and agility within budgeting. 

This makes it easier to procure goods and services based on price and competitiveness. Considering there is an underlying focus on procuring to better top-line value, in private procurement, there is a need for room to wiggle. Otherwise, it would be a real pain in the behind to keep up with competitors.

2. Motivation

Private procurement is typically in FP (for-profit) organizations, while public procurement functions to support NFP’s (not-for-profit).

3. Regulations

For public procurement, there are regulations to follow. Constraints, caused by regulations, create less room for creative procurement methods. Spend is mandated by governments for the government.

Meanwhile, private procurement is more creative. Private entities don’t answer to the scrutiny of government bodies, but rather march to the beat of board members, owners, and shareholders. This makes for a procurement strategy focused on the contentment of private persons rather than government bodies.

4. Funding

Private companies can easily transfer money from one department to another if business conditions end up changing. In the event that prices increase, or another supplier reduces prices, public organizations face a much longer process to change their budgets.

If a government department decides to reduce funding to a certain area of the public sector then things can change overnight, putting undue pressure on procurement teams in a short amount of time.

5. Management Styles

In public sector management, which tends to be heavy on procedure and bureaucracy, procurement is less efficient when compared with the private sector. 

In this sector, the procurement manager answers to the CEO and a board of directors who then have the final say on what choices should be made.

The 5 Challenges and Solutions in Public Procurement

Top 10 Statistics of Public Procurement in 2026

1. Public Procurement Share of Global GDP 10–15%

Public procurement accounts for approximately 10–15 % of global GDP, representing a significant portion of the world economy and reflecting its enormous economic impact. According to estimates by the World Bank and WTO, this range covers countries with varying economic levels, from low to high income, and serves as a global reference indicator for 2026.

2. OECD Procurement as % of GDP 12.7%

In OECD countries, public procurement makes up about 12.7 % of GDP, showing a stable value in OECD member states and highlighting the importance of this indicator for public policy analysis. This percentage reflects the significance of public procurement in developed economies and serves as a reference for 2025–2026.

3. Openly Published Contracts 2.8%

Only about 2.8 % of the value of public contracts is available as open data, which limits oversight and transparency. The World Bank notes that a very small portion of contracts meet open data standards, and improving this disclosure is crucial to reducing corruption and enhancing public procurement efficiency.

4. Government Expenditure on Procurement 29.9%

Public procurement accounts for around 29.9 % of total government expenditure in OECD countries, showing how significant a portion of the state budget is spent on goods and services. OECD data highlight the central role of public procurement in government finances, and this share remains stable and relevant for 2025–2026.

5. Health Sector Procurement 29.7%

About 29.7 % of public procurement in OECD countries is allocated to the health sector, reflecting policy priorities, especially after the pandemic. This includes medical equipment, medicines, and services, and demonstrates the trend in 2026 toward strengthening healthcare resources.

6. Corruption Losses in Procurement 10–25%

Estimates indicate that 10–25 % of public contract value may be lost due to corruption, including bribery, cartels, and inefficiencies. UNODC and Transparency International highlight that reducing these losses is a global goal of public procurement reforms.

7. e‑Procurement Adoption Trend +100%

Global digitization of public procurement is rapidly increasing, as the World Bank reports that more countries are implementing electronic procurement systems. Digitization improves monitoring, transparency, and data analysis, and the trend is expected to continue in 2026.

8. Procurement Size by Income Group 13–14%

Across countries, public procurement accounts for about 13–14 % of GDP, demonstrating global consistency in the share of GDP allocated to public procurement. World Bank studies show around 13 % in low- and middle-income countries and about 14 % in high-income countries.

9. Sub‑national Procurement Share 61.2%

Around 61.2 % of public procurement in OECD countries is carried out at local and regional levels, affecting governance dynamics and process efficiency. OECD statistics show that decentralized authorities handle the majority of public procurement, which is crucial for policy planning in 2026.

10. Green/Sustainable Procurement 5–10%

Approximately 5–10 % of public procurement is oriented toward sustainable and environmentally friendly projects, according to OECD and UN sources. An increasing number of contracts are aimed at reducing environmental impact, and this trend is expected to continue in 2026.

Conclusion

Public procurement plays a crucial role in ensuring that governments and public institutions acquire goods, services, and works efficiently, transparently, and in compliance with legal regulations. By following structured processes like sourcing methodology, market research, RFIs, and RFQs, public entities can achieve value for money while maintaining accountability.

The integration of technology, such as e‑procurement systems and contract management tools, enhances transparency, reduces human error, and allows for better monitoring of supplier performance. Supplier Relationship Management ensures long-term collaboration and reliability in the supply chain, which is essential for public service delivery.

Despite challenges such as corruption risks and budget constraints, public procurement remains a major economic driver, representing a significant share of global GDP. Trends like sustainable procurement and digitalization indicate that public procurement will continue to evolve, supporting efficiency, fairness, and social responsibility in the coming years.