While often used interchangeably, even by government employees, the terms procurement and acquisition are not synonymous. Here’s the difference in a nutshell:
Government agencies typically use the word procurement (or eProcurement) to refer to the end-to-end process of obtaining goods or services.
Acquisition has a much broader, strategic meaning. Acquisition encompasses not only the procurement process, but also other processes that precede and follow it. You may hear people use the terms acquisition and acquisition management process interchangeably. Both refer to the same broad process.
The wider government acquisition process is typically the domain of federal organizations. State and local government leaders more often focus on the procurement process.
But like many things in government, the differences are not quite that simple. Let’s examine some distinctions and give some context to help you better collaborate with public sector stakeholders on procurement and/or acquisition.
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In government, procurement is the process of buying the goods and services required by local, state, and federal agencies to carry out their missions. Each stage in the procurement process involves a series of exacting steps. (Read more about what each phase entails.) Here’s a quick overview of the five phases of a procurement:
Identifying and defining the need for the goods or services. This includes deciding on a procurement strategy, such as whether you should purchase an off-the-shelf or bespoke product.
Requesting bids and proposals from vendors.
Reviewing bids and proposals to determine the best vendor.
Setting the terms and conditions for delivery of the goods and services.
Ensuring the delivery of the procured goods or services adheres to the government contract, including meeting specifications and timelines.
At the federal level, while all the above procurement activities are part of the acquisition lifecycle, they are just one portion of it. Referred to by federal teams as the “Big A,” the larger realm of acquisition also accounts for how new capabilities and their requirements are generated and vetted, how the agency contributes to their portion of the president's annual budget and allocates resources, and how projects, programs, and contracts are governed and executed.
Requirements, driven by acquisition needs.
Programming and budgeting, driven by the fiscal year planning calendar.
Governance, driven by the successful completion of acquisition events and milestones.
But didn’t we say earlier that the requirements leg is part of procurement? That is true. Requirements is the first phase of procurement, and many procurement processes start with requirements entry.
However, some requirements activities are acquisition planning tasks that fall outside the realm of procurement (or “to the left” of procurement, if you view an acquisition as a left-to-right workflow). For example, some early planning work may start years before the funding requirement is entered and actionable by contracting.
State and local government agencies have a much shorter and less complicated requirements process than the federal government. State and local government agencies don’t have as many processes, documents, and approvals required to the left of contracting.
The federal requirements process is more complex (which is one reason that, among modules in the Appian Government Acquisition suite of solutions, the Requirements Management module is the most popular at federal agencies). At federal agencies, most of the programming and budgeting leg of the Big A comes before procurement. Those early budgeting processes feed into the requirements process when the funds are officially committed to the requirement. To the right of the procurement cycle, federal acquisitions also include the administration of the program from the program office side, like tracking training, NDAs, and government furnished property.
Keep in mind that the distinction between acquisition and procurement is not all cut and dry. There are some gray areas. That’s because the government acquisition process is a living, breathing thing that has evolved over time. The Federal Acquisition Regulation (FAR) is used by all executive agencies in their acquisition of supplies and services. The FAR and its supplements are updated frequently, meaning that they, too, continue to evolve.
What’s more, not every federal acquisition needs to go through the complete acquisition process. The most appropriate approach for each project depends on factors such as cost, timeframe, risk, technological developments, and the availability of a suitable product or service.
For example, if an existing commercial product can fulfill the requirement efficiently, a shorter lifecycle can be used. On the other hand, for complex services or unique items that require development, testing, manufacturing, and so on, the entire acquisition lifecycle is necessary. The key point is that the acquisition lifecycle is flexible and can be adjusted to a particular situation.
Until the late 1970s, federal agencies used the term procurement to encompass all contracting functions. For example, there was an Armed Services Procurement Regulation (ASPR), a Federal Procurement Regulation, and a NASA Procurement Regulation, among others.
Then, in 1978, the Department of Defense (DoD) decided that acquisition was a better term to communicate contracting as part of a larger process, including things like specification of requirements and program management. So they replaced the word procurement with contracts. They retained the word procurement to refer to the budgetary process.
When the FAR was published in 1984, it used the term acquisition instead of procurement. But the word procurement was too deeply ingrained to be eliminated entirely, and so in 2001, the FAR councils yielded to prevalently used terminology and added the current definition of procurement to FAR 2.101 in an attempt to dispel confusion. (See FAC 97-22, 66 Fed. Reg. 2117.) But based on the interest in this topic, that attempt did not put the confusion to rest.
While there is shared ground between the meanings of procurement and acquisition, here are the high-level distinctions government leaders should remember:
The procurement landscape continues to evolve, and government agencies at all levels need to modernize their environments to keep up. Learn more about what's in store. Read Government Acquisition Outlook: Experts Weigh In on the Future of Procurement.