In procurement, sourcing is the process of finding, evaluating and engaging suppliers to provide goods, works or services (technical and non-technical).
,It involves identifying and selecting suppliers who meet key criteria such as cost, quality and reliability. It is important for organizations to ensure they obtain the required products or services at the best value by choosing the right suppliers. Sourcing is at the heart of the procurement process.
Principles of Procurement
Procurement (both public and private) is built on core principles that safeguard fairness and value. There are 7 principles of procurement including transparency, competition, fairness, accountability, value for money, integrity and efficiency.
- Transparency: Procurement processes must be open and information readily accessible to all stakeholders.
- Competition: Multiple suppliers should be allowed and encouraged to bid, so the best offer wins and creates competition.
- Fairness: All qualified suppliers, large or small, local or foreign must have an equal opportunity to compete within the procurement process.
- Accountability: Every step of procurement must be documented and justifiable for audit and accountability purposes.
- Value for Money: Procurement should obtain quality goods or services at the best overall price, considering total costs and benefits
- Integrity: Integrity involves conducting procurement activities honestly, professionally and ethically
- Efficiency: It is about doing things most effectively and timely.
These principles are enshrined in law. Ghana’s Public Procurement Act (Act 663 as amended) aligns with international norms (such as the UNCITRAL model law) by explicitly embedding transparency and competitiveness into procurement policy.
Ghana’s Public Procurement Act (Act 663 as amended 914)
Ghana’s Public Procurement Act, 2003 (Act 663) and the 2016 Amendment (Act 914) give legal force to these principles. The Act established the Public Procurement Authority (PPA) to oversee procurement and develop guidelines for efficient public procurement. Key provisions include:
- Mandatory Competitive Tendering: Section 35 of Act 663 as amended states that a procurement entity “shall procure goods, services or works by competitive tendering except as provided in this Part.”. Any use of a non-competitive method (e.g. single sourcing) must be formally justified and recorded. This makes open bidding the default, ensuring multiple suppliers can compete.
- Publication of Tenders: To enforce transparency, the Act requires that all tender opportunities be advertised publicly. Notices must be published in the official Public Procurement Bulletin and on the PPA’s website, and in the national newspaper. The Government of Ghana has also launched the GHANEPS e-procurement portal to list all open tenders from all public institutions. These measures ensure that no contract is hidden and that any qualified supplier can learn about and bid for the work.
- Value for Money and Transparency: When selecting the procurement method, procurement officials must consider value for money alongside competition and transparency. The Act’s language explicitly ties these goals together: any chosen method should “ensure value for money, provide competition and transparency to the extent possible.”. This reinforces that competitive sourcing is not only a legal formality but a means to better outcomes.
- Adherence to International Standards: The 2016 Amendment Act (Act 914) updated Ghana’s law to incorporate UNCITRAL model procurement standards. It explicitly emphasizes transparency and non-discrimination, reflecting global best practices.
Importance of Sourcing from Different Suppliers
Sourcing from a diverse supplier base has become widely recognized as best practice in procurement. Relying on multiple suppliers (or dual sourcing) helps mitigate supplier risk: if one supplier fails or faces disruption, another supplier can be called upon. A recent supply-chain survey found that 73% of companies are moving toward dual-sourcing strategies to avoid single points of failure. In effect, splitting orders between two or more vendors creates a safety net that keeps production and services running smoothly.
Sourcing from multiple suppliers also produces better commercial outcomes. When two or more suppliers vie for your business, they often offer more competitive pricing and strive to improve quality to win the contract. Competition between suppliers can spark innovation as each looks for ways to stand out. Over time this tends to lower costs and yield higher-quality goods or services for the buyer. In contrast, single-sourcing can leave an organization vulnerable to price hikes or supply shortages.
In public procurement, engaging different suppliers including local businesses is also a strategic goal. It promotes broader economic participation and resilience. For instance, Ghana’s procurement law encourages sourcing from qualified local firms (sometimes through margins of preference) to build domestic capacity. But the underlying advantage is universal: a diversified supplier portfolio reduces dependency and creates a more robust supply chain. In short, using multiple suppliers is key to business continuity and value, while also aligning with principles of fairness and local development.
Conclusion
In summary, both global best practices and Ghanaian policy stress competitive sourcing as the vehicle for transparency. Transparency is a hallmark of good governance and competitive sourcing is a powerful way to achieve it in procurement.
By defining clear rules, publicly advertising opportunities, and encouraging multiple bids, governments can ensure fair competition and build public trust. The Public Procurement Act 663 as amended embody these ideals, making open tendering and disclosure of contracts the norm.
By ISAAC AHASU
Procurement Expert- [email protected]
