What is a Public Procurement Contract?

• 10 August 2021
• Local News
• 4899 Views

Have you ever wondered why some private companies frequently gain contracts to build large-scale government infrastructure projects while others did not? Do you know how those companies obtain the work from the government? These are all related to public procurement.

What is a public procurement contract? And how does it work?

Procurement is the process of finding and agreeing to terms, and acquiring goods, services, or works from an external source, often via a tendering or competitive bidding process. Procurement generally involves making buying decisions under conditions of scarcity.

Thus, a public procurement contract is an agreement made between the government and other parties (can be other government bodies or private firms) on a specific project which could be acquiring goods or providing services.

For instance, the government intends to build a new national road. Before the construction begins, the project has to first go through public procurement.

Public procurement contracts can be implemented in various ways but in most cases, contracts are done through bidding procedures that can be public or non-public bids.

In Cambodia, most large infrastructure projects are open to public bidding for high transparency purposes.

According to the Law on Public Procurement 2012, all construction companies that are interested in bidding for state infrastructure projects must first register as a certified bidder at the General Department of Public Procurement of the Ministry of Economy and Finance.

Regarding this registration, the company can register as any of three types of bidder depending on the qualifications of the company itself. The three categories are small (eligible for bidding on projects worth less than 500 million riels), medium (projects worth less than 3 billion riels), and large (no project price limit).

In addition, public bidding can also be done at the international and domestic levels, with the international level only for projects with a value higher than 6 billion riels while the national level is for projects of a value ranging from 100 million riels to 6 billion riels.

Disclaimer: The public procurement contract is complicated with many other legal factors involved. This article is not for the purpose of any legal or official usage, but just the explanation of the basic meaning of public procurement.

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