This excellent report entitled Buying Power: Aid, Governance and Public Procurement is a must read. An excerpt here:
It sounds very administrative and technical, but reform of government procurement – the rules that guide government purchasing of goods, works and services – is one of the most controversial aspects of the good governance agenda. Donors have two goals: greater accountability and transparency, which is limited because of its reliance on a one-size-fits-all approach; and greater efficiency, which is narrowly defined as value for money to be secured through open competition. This not only restricts the flexibility of developing country governments to use procurement as a policy tool for development, it can also have significant consequences for local firms that rely on government contracts.