This South Centre Analytical Note looks at the donor-driven agenda in the reform of public procurement – the rules that guide government purchasing of goods, works and services – as one of major components in the good governance agenda being incorporated by donors into their aid programmes. It further stresses that such an agenda vis-à-vis government procurement not only restricts the flexibility of developing country governments to use public procurement as a policy tool for development, but also has significant consequences for local firms that rely on government contracts.