Public vs. Private Procurement: What’s the difference?

Procurement is an area that remains essential to supply chain strategy in just about every business with a need to purchase goods and/or services.

With this being said, procurement — in it’s definition and function — differs greatly between the public and private sectors.

Within this post, I plan to build an understanding of the main differences between public and private procurement. Avoiding generalizations and conclusions of broad strokes will be nearly impossible. So here’s your disclaimer: I might/probably will generalize. Sorry.

Now that the logistical nonsense is out of the way, let’s dig right into it!

Definition

Public Procurement:

This is procurement that is completed within the context of not-for-profit organizations (NFP’s). Also known as the public sector, the procurement that occurs in this context is typically government affiliated, which can be central, state, or local.

Private Procurement:

This is procurement that is completed within the context of for-profit organizations (FP’s). Private procurement happens within privately owned companies; also known as the private sector (Surbhi 2015).

Budget

Budgets are one of the more clear-cut differences between the public and private sectors.

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

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