Implementing Procurement Compliance

Procurement often needs to move fast, and when it does, procurement policies and regulations may not be drafted and approved in time, or if they already exist, applied to the procurement process. 

Accelerated or unregulated procurement exposes companies to risk. In a rapidly changing landscape, making sure procurement is compliant with policies and regulations protects reputation and sets businesses up for success in their projects.

What is procurement compliance?

Procurement compliance is where those responsible for purchasing materials and services follow established roles, procedures and policies that align with regulatory requirements in the relevant jurisdiction/s.

Why procurement compliance matters

Procurement in government or in the private sector can involve numerous transactions. The sheer volume, complexity and frequency of procurement transactions can expose the organisation to corruption, procurement fraud or irregularities. 

Establishing and continually revising procurement policies in light of new and emerging risks is the first step in ensuring robust procurement processes. But policies require action to have an impact. Procurement practices and the tools used must also reflect these policies and regulatory requirements, ensuring transactions occur within best-practice guidelines.

Keeping the bigger picture in mind

Procurement compliance saves time and money in the long term by mitigating risk in the process. This means purchases can proceed and project delivery is more likely to be on time and on budget. 

Procurement policies are not arbitrary rules. They are guidelines and processes that ensure regulatory compliance so that transactions are legal, there is minimal risk of fraud or corruption and procurement decisions align with organisational values, such as ethical commitments to reduce carbon or to source services with fair trade employment conditions. 

Compliance in infrastructure procurement

Policies and procedures for infrastructure procurement help to ensure compliance with contracts, laws and regulations and work health and safety as well as sourcing items that meet defined technical specifications. 

Compliant infrastructure procurement facilitates timely and high quality project delivery, protecting from risk of unqualified subcontractors, purchasing delays and quality assurance issues that may impact the infrastructure delivery. 

More on infrastructure: Streamlining railway procurement in UK markets

How to measure procurement compliance

Chief procurement officers are often formally measured on KPIs for risk management and procurement compliance, as well as procurement outcomes. These metrics provide insights into procurement performance, supplier relationships, procurement risks and provide clarity for overcoming bottlenecks in processes. 

Compliance rate

The compliance rate is the percentage of bids and supplier contracts that meet the required standards set out by regulation and law. Compliance laws change as frequently as every one or two years, whether triggered by supply chain disruptions, cybersecurity incidents, or evolving environmental standards. 

Time to compliance

Time to compliance is how long it takes to complete the procurement processes to align with laws and regulations as well as applicable standards for a particular project. 

When key suppliers face financial blocks or even bankruptcy, procurement processes must have inbuilt flexibility to adapt and solve bottlenecks or roadblocks to source of materials and services in time to prevent delaying project delivery. 

Reducing time spent on administrative and manual tasks also accelerates time to compliance. Adopting intuitive tools and keeping documentation stored centrally and securely means outcomes are achieved more quickly and seamlessly.

Audit completion rate

The procurement audit completion rate is the share of projects with an approved compliance and risk auditing plan. 

Regular procurement audits help identify risks early. Factors like conflicts of interest, poor accountability or lack of information clarity can be identified early and mitigated before the issue escalates. 

Cybersecurity metrics

Protecting supplier and bidder relationships means providing best in class security for sensitive information. Traceability, redaction and control of access all play a role in reducing the frequency and duration of information leaks. Monitoring the frequency and duration of any cybersecurity incidents is key to understanding areas for priority improvement. 

Vendor non-compliance rate

The vendor non-compliance rate is the percentage of vendors submitting tenders through your platform that do not meet the procurement requirements and regulations. 

Cost of compliance

This metric defines the total cost of ensuring procurement activity is secure and follows best practices to minimise risk, and the cost of the expertise needed to meet procurement regulations. Procurement compliance costs may increase when operating across jurisdictions. 

Managing costs of procurement compliance will help with budgets and the financial health of the procurement business. Automating tasks and reporting, streamlining processes and using tools to ensure compliance procedures are followed precisely all help to manage and control the cost of compliance. 

Supplier sustainability performance

To meet Environmental, Social and Governance (ESG) targets, suppliers must show a positive impact, for example, energy efficiency, sustainable raw material sourcing and reduction of waste indicators. This measure demonstrates how procurement helps the organisation to meet innovation and sustainability goals for the infrastructure project. 

Building positive relationships through procurement compliance

Companies’ and individuals’ reputations often ride on the relationships they have with suppliers and stakeholders. Compliance processes and tools can help to build trust and drive efficiency, making it easier for all stakeholders to engage in successful tender processes. 

Protecting sensitive bidder information

Bids often share commercially confidential information. Keeping this secure by managing access and demonstrating full traceability of who accesses which documents when provides certainty for bidders and stakeholders. 

Provide transparency in tender awards 

Full evaluation report extracts ensure transparency in the award process without revealing confidential or sensitive information from the bidder, project or procuring company. 

Using sophisticated procurement software, individual evaluators and teams can view submission information while administrators can see the progress made. 

Use a customised procurement process

Infrastructure procurement can be complex, particularly when public-private partnerships form to achieve the project objectives. Creating streamlined workflows and a central hub for documentation and collaboration helps to enhance confidence and trust between parties. 

Public trust can be earned by automating audit trails for fair competition and probity, demonstrating fairness and transparency throughout procurement.

Demonstrate clear benefits for stakeholders

The best way to encourage compliance with policy and procedure is to demonstrate benefits for individuals and teams. This might be simpler processes, fewer steps or centralised documentation. 

By implementing cutting-edge procurement tools that enhance efficiency and outcomes, as well as ensuring compliance with internal policy, stakeholders are more likely to eagerly adopt the tool along with in-built compliant processes. 

Procurement compliance benefits for boards

For boards, this might mean showing how procurement compliance adds value while reducing costs. This could mean accelerated timelines that enable optimal project value to be realised, enhancing resilience through effective collaboration or promoting sustainability through practical governance measures. 

Procurement compliance benefits for bidders

For bidders, this might mean providing staged, equal access to information, with no plugins or installations required to access systems, and an intuitive platform with 24/7 support that is accessible across devices and operating systems. 

Implementing procurement compliance policies can streamline and enhance processes and deliverables

At Ansarada, we understand how complex and extensive infrastructure procurement can be. That’s why we continually improve Procure, our end-to-end procurement management tool designed to simplify procurement processes and compliance. 

With automated tasks that alleviate manual inputs, like redaction and reporting, and a cloud-based software that can be used on any device, Procure is designed to simplify procurement, so you can focus on what really matters — successful, compliant project delivery.

FAQs on procurement compliance

What are the five critical functions of procurement?

Receive bidders, two-way Q&A, secure disclosure, evaluation and awarding the tender. Preparation is key to streamlining these five essential steps, ensuring a fair and equitable process that is transparent and auditable. 

What is compliance risk in procurement?

Compliance risk is the potential negative impacts on reputation, finances and legal exposure if procurement law, regulation and best practice is not deployed effectively. 

More on infrastructure procurement: 

• Hydropower Construction: Keys To Successful Project Delivery

• What does best practice PPP management look like?

• Seven great reasons to switch to an all-in-one Procurement platform