VALUE FOR MONEY PROCUREMENT AND SUPPLY: A CRITICAL CHALLENGE
FOR PROCURING ORGANIZATIONS
Challenges Enhancing Value for Money Procurement and Supply in Tanzania.
By
Dr.CHRISTOPHER NDITI
[PhD, CSP (T)]
A Presentation at the Procurement and Supplies Professionals’ Annual
Conference
held From Dec 2-3, 2014 At AICC, Arusha
ABBREVIATIONS
EOI
-
Expression of Interest
GPSA
-
Government Procurement Services Agency
HoPMU
-
Head of Procurement Management Units
LGAs
-
Local Government Authorities
MDAs
-
Ministries, Departments and Agencies
MoF
-
Ministry of Finance
NAOT
-
National Audit Office of Tanzania
PEs
-
Procurement Entities
PMUs
-
Procurement Management Units
PPA
-
Public Procurement Act
PPAA
-
Public Procurement Appeals Authority
PPPD
-
Public Procurement Policy Division
PPRA
-
Public Procurement Regulatory Authority
PSPTB
-
Procurement and Supplies Professionals and Technicians Board
RFP
-
Request for Proposal
TB
-
Tender Board
TOR
-
Terms of Reference
VFM
-
Value For Money
2
TABLE OF CONTENTS
1.0 INTRODUCTION……………………………………………………………………........................04
2.0 EXECUTIVE SUMMARY…………………………………………………………………………..……...04
3.0 KEY CONCEPTS…………………………………………………………………………..…………………07
3.1 PUBLIC PROCUREMENT………………………………….……………………….…….......07
3.2 VALUE FOR MONEY…………………………………………..…………………………………08
3.3 PROCUREMENT FUNCTION…………………………..……………………………………..11
4.0 ROLE PLAYED BY PROCUREMENT FUNCTIONS IN THE PUBLIC SECTOR
PERSPECTIVES………………………………………………….……………………………....……..16
5.0 CHALLENGES ENHANCING VALUE FOR MONEY PROCUREMENT AND SUPPLY
IN THE PUBLIC SECTORS…………………………..……………………………………….………19
6.0 WAY FORWARD……………………………………………..…………………………………….….....26
7.0 REFERENCES….……………………………………………..…………………………………….….....29
LIST OF TABLES
1.0
2.0
TABLE 1:PROCUREMENT’S PROCESS GROUP………………..…………………………. 15
TABLE 2.0:VALUE FOR MONEY AUDIT REPORT FOR FY2013/14……….…….....24
LIST OF FIGURES
1.0
2.0
3.0
4.0
5.0
FIGURE
FIGURE
FIGURE
FIGURE
FIGURE
1.0: AVERAGE LEVEL OF COMPLIANCE………………………………..…..…18
2.0: AVERAGE COMPLIANCE FOR THREE FINANCIAL YEARS…………19
3.0: IMPLEMENTED PROJECTS FOR YEAR 2013/2014……..……………22
3.0: PMU’S LEADERSHIP LEVELS………………………………………...….….23
5: ACTIONS TAKEN FOR THE POOR PERFORMANCE……………………..27
3
1.0
INTRODUCTON
Procurement is one of the components of supply chain which deals with all
processes of acquisition of goods and services. The key concepts of this paper
involve Public procurement, Value for money, and procurement functions. The
paper will show the empirical understanding of the role played by procurement
function as sub-function of the wider supply chain domain from public sector
perspective. Public sectors involves Procuring entities under the central
government such as Parastatal Organizations, Ministries, Local Government
authority, Regional administrative secretaries, Independent dept and Executive
agencies/water authority. Lastly
but not least this paper will explain some
empirical challenges enhancing value for money in procurement and supply in
Tanzania and concluding with way forward.
2.0
EXECUTIVE SUMMARY
The Tanzania Government has long realized the importance value for money in
public procurement to the economic development of Tanzania. Before
procurement reforms, the Government of Tanzania was fully aware that its public
procurement were weak and needed to be strengthened substantially to enable it
to ensure that the procurement laws and institutions become effective tools in
the efficient and transparent management of public funds and hence ensuring
value for money. The government of Tanzania initiated the public procurement
reform in 1992 by commissioning a consultant to conduct a study on Public
4
Procurement and Supplies management. According to Nkinga (2003), the result
of the study indicated that there was urgent need of the reform of procurement
systems in the procurement sector, due to the serious weaknesses found in the
overall system of public procurement management in Tanzania.
The Government has taken some very positive steps since the first Country
Procurement Assessment Report (CPAR) in 1996, including the enactment of the
Public Procurement Act (PPA) and implementation of Regulations in July 2001
there after the enactment of Public Procurement Act (PPA) of 2004 and
implementation of Regulations in July 2005. In 2014, the government has
endorsed the use of new enactment Public Procurement Act (PPA) of 2011 and
implementation of Regulations of 2013.
Public procurement expenditure is the largest volume of expenditure in the
annual development budget of Tanzania. About 75% of its budget per financial
year is used in public procurement. And it is consumes 100% of Government
development budgeted. The size of public Procurement in Tanzania is steadily
increasing every year.
The roles played by procurement functions in the public sector perspective
include judging the right price for any purchase and this aspect of the task is
seen at most dramatic in the commodity market. The other role involves adding
value by maintaining or enhancing the base value for money outcomes that have
been identified. The major role public function is to ensure that all PEs procure
5
required services, materials, equipment, and construction while ensuring that
quality, safety, and cost-effectiveness are achieved.
Enhancing Value for money procurement and supply is very good as they are but
their implementation face some challenges which affect the intended outcome of
value for money. Some of those challenges are Politics interference with
procurement duties and late delivery/completion of the contract due to long
procedures in contract approval. Unrealistic plans, budgets and cost estimates
are common to all PEs, since the government system operates through cash
budgets; so it becomes a challenge PEs to conduct procurement based on
Annual Procurement Plan. Public Entities are inappropriately staffed by having
adequate number of staff, and inadequate procurement qualification. Also there
are Irregularities, fraud and corruption despite the effort being made to prevent
and combat them. There are still dubious payments involving some procurement
entities, and increasing numbers of Consultants/ contractors who fail to fulfill the
contract at stipulated time after getting some installment payment.
Therefore there are needs of reviewing and adding more steak to some sections
of PPR 2013 which seems to obstruct the enhancement of value for Money
Procurement. Disciplinary measure should be increased to those Consultants/
contractors who fail to fulfill the contract at stipulated time after getting some
installment payment. Strengthening Procurement audit will help authorities to
determine
level
of
compliance
to
procurement
regulations
and
law.
Strengthening the procurement cadre to ensure that Procurement Management
6
Units in Public Entities are appropriately staffed by having adequate number of
staff, and adequate procurement qualification. The PEs are required to plan for
their expenditures in their annual procurement plans as the procurement law
requires, and Intensify whistle blowing mechanisms.
3.0
KEY CONCEPTS
3.1
Public Procurement
According to Sharma (2010), procurement is not purchasing, since purchasing
refers to any major function of an organization that is responsible for acquisition
of required materials, services, and equipment. To define procurement broadly,
“Procurement” is the overarching function that describes the activities and
processes to acquire goods and services. Importantly, and distinct from
“purchasing”, procurement involves the activities involved in establishing
fundamental requirements, sourcing activities such as market research and
vendor evaluation and negotiation of contracts. It can also include the
purchasing activities required to order and receive goods.
Public procurement is one of the essential elements in the today to day activities
of any country. It is a tool from which the government is able to procure in a
way that promotes value for money and make sure that it obtains the best prices
and cost effective expenditure within the government. However, there have been
some concerns from various stakeholders that public procurement undertakings
7
are designed in a way that does not take into account value for money concerns.
The Goal of Procurement is to carry out activities related to procurement in such
a way that, the goods and services so procured are of the right quality, from the
right source, are at the right cost and can be delivered in the right quantities, to
the right place, at the right time.
The procurement philosophy of every organization must be to obtain the most
suitable goods and services at the most reasonable contract prices, delivered
when and where required; since apart from salaries, the biggest area of expense
for most businesses is procurement. All organizations need to plan for future;
this requires the development of frameworks to allow the process to take place.
Nowadays procurement has become involved in both tactical and strategic
decision making in today’s successful organizations (Baily, et al, 2005).
3.2
Value for Money (VFM)
Value for money (VFM) is the term used to assess whether or not an
organization has obtained the maximum benefit from the goods and services it
acquires and /or provides, within the resources available to it. It is not only
measures the cost of goods and services, but also takes into account the mix of
quality ,cost, resource use, fitness for purpose, timeliness and convenience to
judge whether or not, when taken together, they constitute good value.
Achieving VFM may be described in terms of the three Es’- economy, efficiency,
8
and effectiveness. Value for money is based not only on the minimum purchase
price (economy) but also maximum efficiency and effectiveness of the business.
The perception of ‘value for money’ is critical to every function/department in the
government and organization in today’s business environment. With the
increased focus on finding ways to economize on procurement costs, the
procurement function has been elevated to the strategic component of creating
value (Garret 2003).
Previously, buyers expected additional value for the money they spent. Currently,
their mindset is shifting from “Value for Money” to “Money for Value”. This
implies that buyers are ready to pay extra if they are offered better services.
They count on the array of value-added services they get out of the contract
since they know well that it would otherwise cost them more than the actual. To
put it simply, they value getting the right service at the right time more than the
lowest cost to procure maintenance services available in the market.
9
In respect to procurement, value for money
is ‘the optimum combination of
whole-of-life costs and quality (or fitness for purpose) of the good or service to
meet the user’s requirement’. The purpose of procurement is to maintain the
value for money outcomes identified by ensuring that the expected value is
delivered, the expected quality is provided and the expected cost and time is not
exceeded. Also where possible, enhance the value for money outcomes identified
by enabling the identification of a solution with more value (e.g. higher quality)
or at a lower whole-of-life cost than anticipated in the initial value for money
evaluation. The value for money spent can be maintained or enhanced by
working within a strategic approach to procurement that includes:

understanding the role of procurement in realizing value for money spent

developing and maintaining knowledge of the supplier market

encouraging a sustainable supplier market and minimizing barriers to
competition

using a combination of procurement approaches and capabilities

adopting performance and success measures for the procurement
strategy.
To obtain value for money, Procuring Entities must be able to proactively
identify, evaluate and manage any risks, opportunities and issues arising out of
the procurement process. Risk management should be built into an approved
procurement process. The extent of risk management will vary from routine
10
procurement processes to significant undertakings involving high levels of
additional planning, analysis and documentation.
3.3
Procurement function
Effective public procurement functions are functions that are defined as offering
a high level of transparency, accountability and value for money in the
application of a procurement budget. Before the reform of Procurement
functions, the Government has been using the Central Government Stores (CGS)
for its expertise in procurement and also to achieve the economies of scale and
in that time it was also observed that procurement was not recognized as an
established profession within the public sector and does not present an attractive
career path.
This situation pushed the Government to establish necessary capacity for proper
procurement in compliance with existing rules and it was important that
measures for capacity building are systematically devised. The Government has
taken some very positive steps since the first Country Procurement Assessment
Report (CPAR) in 1996, including the enactment of the Public Procurement Act
(PPA) and implementation of Regulations in July 2001; there after it came to
pass the enactment of Public Procurement Act (PPA) of 2004 and implementation
of Regulations in July 2005.
11
In 2014, the Government endorsed the use of new enactment Public
Procurement Act (PPA) of 2011 and implementation of Regulations of 2013 for all
procurement functions in public sector. The Government has established the
following organization to enhance value for money procurement by developing
rule and regulations, and ensuring that all procurement functions are
appropriately undertaken in public sectors:
i.
PSPTB - The Role of Procurement and Supplies Profession Technical
Board (PSPTB) on the improvement of public procurement includes
Procurement and supplies professionals and technicians in the public
sector need to exercise high level of Competence and integrity in
performing their duties and updating themselves on the requirements
of Laws and regulations as a way to enhance compliance to the same.
ii.
PPRA-Procurement process in Tanzania is guided and regulated by
the
Public
Procurement
Act
of
2011and
its
Regulations
of
2013.Procurement activities in Tanzania are under the oversight of the
Public Procurement Regulatory Authority (PPRA).Its existence ad
responsibilities has been stipulated under Section 7(1) up to section 30
of PPA, 2011. The objective of PPRA is to determine whether
procedures, processes and documentations for procurement and
contracting were in accordance with the provisions in the PPA 2011,
Public Procurement Regulations (GN. No.446 of 2013) and the
12
standard documents prepared by PPRA and that procurement carried
out achieved the expected economy and efficiency (value for money
for the allocated resources), and the implementation of contracts
conformed to the terms thereof.
iii.
PPPD- Public Procurement Policy Division(PPPD), this is the division
established , under the public procurement Act section 5 of 2011 with
the role of developing a National Procurement Policy, reviewing
procurement policies, regulations, circulars and implementation of
Public Procurement Policies. The PPPD also advise the Central
government, Local governments and statutory bodies on issues related
to procurement policies.PPPD has a mandate of developing and
developing procurement cadre.
iv.
PPAA- Public Procurement Appeals Authority (PPAA),This is the
appeals authority established under the public procurement Act of
2011 with the role of hearing, deciding and determining the public
procurement litigations brought about by the PEs or the suppliers. The
PPAA gives ruling over complaints from the aggrieved parties in
procurement undertakings if they decide to lodge their dissatisfaction.
All disputes settlement by PPAA has been written under part IX section
88 to section 101 of PPA 2011.
v.
GPSA- Government Procurement Services Agency (GPSA), This is an
executive agency of the Ministry of Finance, established under the
13
Executive Agency Act No. 30 of 1997 as amended through Government
Notice No. 235 of 7th December 2007 as amended by Government
Notice No. 133 of 13th April 2012.The role of GPSA is to ensure
availability of secure and quality procurement services to the
government and non-government institutions in a sustainable and cost
effective manner with a mission of providing effective and efficient
procurement services to the government and non- government
institutions.
GPSA
is
expected
to
implement
the
system
for
procurement of common use Items and Services (CUIS) by PEs to
provide an efficient, cost effective and flexible means to procure
goods, works and services that are required continuously or repeatedly
over a set period of time.
The procurement function has received considerable attention in the past decade
as the firms are constantly finding ways to increase the effectiveness and the
efficiency of the task of acquisition, particularly in its people, processes,
technologies, and the framework under which they are governed and measured.
Procurement functions involves the five process group(as shown in Table 1
below) that is initiating (user requirements), planning (plan requirements),
Executing (conduct procurement), Monitoring and controlling (administer
procurement), and closing (close procurement).
14
Table 1: procurement’s Process Group
Process group
Procurement management process
initiating
User requirements
Planning
Plan requirements
Executing
Conduct procurement
Monitoring& controlling
Administer procurement
closing
Closing procurement
Procurement function roles normally are based on two big facts:

Buyer – Big or part procuring the goods and services from seller.

Seller/service provider- organization or party providing or delivering goods
or services.
Effective procurement functions contribute significantly to organizational success
(Leenders and fearon, 2006).The procurement function uses various inputs to
perform value adding processes (market and value analyses, sourcing,
negotiation, etc) and to provide output as quality, services, materials, etc.
15
4.0
ROLE PLAYED BY PROCUREMENT FUNCTIONS IN THE PUBLIC SECTOR
PERSPECTIVE.
The importance of procurement as a key function in the management of the
business can be emphasized by considering the total cost of materials and this
includes the specification being purchased. Buying Prices is probably the factor
most often associated with procurement functions.
4.1
The procurement functions have a role in working towards the optimum
specification. As many value analysis studies have shown, the cost saving
potential in this area is considerable and procurement function has a vital
part to play in the search for the optimum specification (Baily and Farmer,
1990)
4.2
The value chain demonstrates that the purchasing function has major
roles in adding value. It is the strategic and tactical procurement
processes that deliver the big improvements that the companies are
seeking from their procurement functions. For example, reduction in cost
of goods sold improvement in service levels.
4.3
The procurement function has an important role in judging the correct
price for any purchase and this aspect of task is seen at its most dramatic
in the commodity markets. Since prices are affected by costs, at least in
the long run, an important function of procurement is to work with
16
colleagues and suppliers to eradicate unnecessary costs (Baily, et al,
2008).
4.4
It is the role of procurement function to maintain or enhance the base
value for money outcomes that have been identified. The base value for
money outcomes are then documented through Clear output specification
in a proposal and assessed through the evaluation process for the
preferred supplier.Inorder to ensure that value for money is maintained or
enhanced, the components of procurement process should be followed;
for instance taking a strategic approach to procurement, optimizing
whole-of-life value for money, using an approved procurement procedure,
allocating and managing risk appropriately, proactively managing contract
delivery, and monitoring performance.
4.5
The procurement function has a major role of ensuring all PEs procure
required services, materials, equipment, and construction while ensuring
that quality, safety, and cost-effectiveness are achieved. Also to ensure
that procurement transactions are conducted in a manner providing full
and open competition whenever practicable and to comply with
procurement rules and applicable laws and regulations as required.
4.6
To facilitate the role of procurement function, PPRA aims at ensuring
application of fair, transparent, non-discriminatory, and value for money
procurement standards and policies. Harmonize the procurement system
17
in Tanzania between local and central governments. Set standards for the
public procurement systems in Tanzania, Monitor compliance of procuring
entities; and Build procurement capacity in Tanzania. In the annual report
of PPRA for the financial year 2011/12 indicated the average level of
compliance of 74% (as shown in the figure 1 below).
Figure 1: Average level of compliance
LGAs, 67%
MDAs, 77%
PAS, 76%
The above figure shows the average level of compliances for MDAs, PAs
and LGAs was 77%, 76% and 67% respectively.
In the financial year 2013/14 the compliance level below the targeted
compliance level of 72 %( Lumbanga 2014). The average compliance for
three financial years are shown the figure below
18
Figure2: Average compliance level of PEs in three financial years
COMPLIANCE
74%
64.30%
Financial Year
2011/12
5.0
Financial Year
2012/13
65%
Financial Year
2013/14
CHALLENGES ENHANCING VALUE FOR MONEY PROCUREMENT AND
SUPPLY IN THE PUBLIC SECTORS.
Enhancing Value for money procurement and supply is very crucial, but their
implementations face some challenges which affect the intended outcome of
value for money. Those challenges are as follows:
5.1
Politics interference with procurement duties. There is a high incidence of
vested interests, political interference especially in local governments and
insider dealings. There were occasional cases of retroactive approvals of
contract awards.
19
5.2
Late delivery/completion of the contract due to inappropriate tender
documentation and long procedures in contract approval. Inappropriate
procurements, causing delays in the implementation of the projects,
inappropriately prepared tender and contract documents, specifications
and drawings that were not included in the tender and contract, resulting
in activities that were not adequately described and delayed payments.
Procedures procurement of consultancy services involves a number of
steps where each step must be approved by the Tender Board. The steps
are as follows:i.
Invitation of expression of interests (EOI) where submission is after
14 days. It follows evaluation of EOI and shortlist of qualified firms
to be issued with RFPs after approval by the Tender Board.
ii.
Issue RFPs with TOR, to bidders who must submit back their
Technical & Financial Proposals after one Month.
It starts with
evaluation of technical proposals and seeks approval of Tender
Board.
iii.
Opening of financial proposals and evaluation and there after get
approval of Tender Board.
iv.
Negotiation with the selected consultant and thereafter seek
approval of Tender Board.
v.
Signing of contract. For the contracts above 50 million Tanzanian
shillings must be endorsed by the attorney general within 21 days.
20
The Procurement Act No59 (1) of 2011 requires any formal contract
arising out of the acceptance of tender whose value is fifty million or more
shall be vetted by the Attorney General’s office before the contract is
signed by parties. This act to some extent has stalled development and
hence the value of money is not supported here, since the contractor will
not have the power to continue maintaining his /her expert and also
donors fund has a limited time to be disbursed otherwise the fund will be
dissolved back. According to Shekifu (2014) the attorney general has been
given 21 working days of vetting the contract, which has caused
bureaucratic delays and hence resulted into a big failure to construct a
number of roads because the Attorney General is yet to approve and
return the contracts.
5.3
Unrealistic plans, budgets and cost estimates are common to all PEs.
There are very low budget allocations compared to the requirements,
which affect the on time implementation of procurement functions and
value for money procurement. Also Poor procurement planning, leading to
packaging of procurements that do not support value for money. Since
the government system operates through cash budgets, it becomes a
challenge PEs to conduct procurement based on Annual Procurement
Plan. Thus, public procurement is generally characterized by the
Unrealistic plans, budgets and cost estimates.
21
According to NAOT (2014), the figures allocated in the Annual
Procurement Plans (APPs) are not reflective of the actual figures that take
place within the year. For the year 2013/14 About 45 percent of the
Implemented projects of PEs were not budgeted for and about 47 percent
were not included in the respective Annual procurement plans (as shown
in figure 2 below).
FIGURE 3: IMPLEMENTED PROJECTS FOR Year 2013/14
IMPLEMENTED PROJECTS FOR
YEAR 2013/14
Implemented
projects not
in APP
47%
Implemented
projects not
budgeted for
45%
For financial year 2012/13, most LGAs ended up having a number of
unfinished projects partly due to lack of funding arising from mismatch
between the forecasts and the actual requirements of the projects. For
instance in Kinondoni, out of 10 projects selected, only 2 projects were
completed and all of these selected projects selected were not in the APPs
(NAOT, 2014).
22
5.4
PEs are still not allocating sufficient resources to build the capacity of staff
involved in procurement activities. Some Procurement Management Units
(PMUs) in Public Entities are inappropriately staffed by having adequate
number of staff, and inadequate procurement qualification. The study (as
shown in the figure 3 below) which was conducted in 2013 on
implementation of structures of procurement management units in the
public service institutions revelead that out of 47 PEs, 7PMUs are headed
by directors; 3 are headed by Managers; 14th are headed by HOPMUS, 7
are led by acting heads, 4 PMUS are headed by non-procurement
professionals.
Figure 4: PMUs’ Leadership levels
16
14
12
10
8
6
4
2
0
14
7
7
4
3
Number of PMU
5.5
Irregularities, fraud and corruption despite the effort being made to
prevent and combat them. The lack of focus in the existing regulations
23
and guidelines were giving rise to decisions, which were devoid of
objectivity, accountability and transparency and resulted in a high
incidence of corruption and high expenditure.
5.6
There are still dubious payments involving some procurement entities, and
that the procurement entities made payments for exaggerated quantities
of works or shoddy jobs. Also there are Consultants/ contractors’ failure to
fulfill the contract at stipulated time after getting some installment
payment.
The following table (Table 2) shows the result of PEs performance on
projects in relevancy to value for money for the financial year 2012/13.
Table 2: value for money audits reports for the financial
year 2012/13
Projects
Performance
Remarks
47
Above 75%
Value for money realized
109
51
Between 50% and 75%
Below 50%
Performed fairly
Value of money wasn’t
achieved
The above table indicates value for money audits (done by PPRA in
financial year 2012/13), where by 47 out of 207 audited projects
24
performed well (above 75 per cent), signifying that project objectives
were likely to be achieved and value for money realized. It was also found
that 109 of the audited projects performed fairly (between 50 per cent
and 75 per cent, and that these weaknesses were unlikely to achieve
intended objectives. More findings also revealed that 51 of the audited
projects performed poorly (below 50 per cent), suggesting that most of
the objectives of the projects were unlikely to be achieved or have not
been achieved so value for money wasn’t achieved. This has caused the
government to lose almost Tshs 2.1 trillion in public funds within one
financial year 2012/13 just because the procurement entities had paid a
whopping of that much for jobs undone (Yahya, 2013).
5.7
Still there are no enough whistle blowers compared with the severity of
corruptions. This is because most people are not sure about their security
and confidentiality after whistle blowing procurement malpractices with
the community.
5.8
There is no assurance that all PEs ensure that the value for money is
obtained through Micro- value procurement. Micro value procurement has
brought a very big challenge in PEs, since some user departments take
advantage of diverging procurement procedures in order to use direct
procurement by the way of petty cash or imprest. However most of these
PEs fail to report these purchases to tender board(monthly) and PPRA(
25
every three months) as stipulated in section 166(1) of PPR 2013.However
the PPRA’s procedural form is not yet displayed in the PPRA website. For
this case there is no assurance that all PEs ensure that the value for
money is obtained to the extent practicable.
5.9
There are still persistence in poor performance by PEs, Contractors,
consultants and Suppliers which leads to delays in completion of
infrastructure projects, poor quality of goods, service and works; hence
resulting to losing the meaning of value for money when the government
is entering in re-tendering and price escalation. In 2013 value for money
audits, the chairman and the board of PPRA summoned accounting
officers and heads of departments responsible for managing works
contracts of 7 PEs to give reasons for poor performance. Also the Board
of Directors of PPRA has also debarred 35 firms from participating in
public procurement for financial year 2013/14 for a period of one year.
According to Lumbanga (2014), 19 firms have been debarred this year
(2014/15) by PPRA and automatically lose the contractual rights due to
their poor performance in contract. The PPRA also has temporarily
suspended 4 firms for participating in any tender floated by the
Government or its institutions until further notice. This is summarized in
the figure 5 below
26
Figure 5: Actions taken for the poor performance
Actions for poor Performance
40
35
30
25
20
15
10
5
0
6.0
No of Firms
WAY FORWARD
6.1
Intensify training to chairman, mayors and other members of Council
about the importance of adhering to procurement laws and regulations,
they should have a clear understanding of the repercussions of interfering
politics with the PPA. An Intensive disciplinary action should be applied to
those leaders and members of council who breach the procurement’s rules
and regulation.
6.2
There are needs of reviewing rules and regulations that relate to
procurement procedures of consultancy services consumes much times
27
and hence may affect the enhancement of value for Money Procurement.
Also the duration of endorsing the contract by the attorney general should
be reduced and the office of attorney general should work on
endorsement of the contract within the time boundary.
6.3
The PEs are required to plan for their expenditures in their annual
procurement plans as the procurement law requires. The accounting
officers should be required to substantiate why a shopping method was
used if not in the procurement plan. Thus, the PEs are expected to have in
place detailed and accurate estimates of their expenditures in the goods
and services for each financial year. The importance of proper
procurement planning, including packaging and choice of procurement
method
must
be
emphasized
by
providing
additional
focus
on
substantiating the individual steps of the procurement plan.
6.4
Strengthening the procurement cadre to ensure that Procurement
Management Units in Public Entities are appropriately staffed by having
adequate number of staff, and adequate procurement qualification. There
is a need authenticate staffing levels in procurement cadre with their
relevant qualifications and skills. There is a need to find out as to why
other PEs have the acting directors or acting head of PMU for long-time
28
without being confirmed. The authority /division should increase the
protection of professional staff against any unfair treatment.
6.5
Disciplinary
measure
should
be
increased
to
those
Consultants/
contractors who fail to fulfill the contract at stipulated time after getting
some installment payment. , it is recommended that the disciplinary
measures should be increased for all contractors who perform their
contracts poorly. For year 2012/13, 35 firms were debarred by PPRA from
participating in public procurement for a period of one year. In the
financial year 2013/14, 19 firms were debarred for a period of one year
for poor performance.
6.6
Strengthening Procurement audit will help authorities to determine level of
compliance to procurement regulations and law. The authority should put
more strength in procurement audit so that they are able to detect
inapropriateneness in procurement processes, and any poor performances
by contractors.
6.7
Intensification of whistle blowing mechanisms, by ensuring security and
confidentiality to whistleblowers. Sometime awarding people who have
shown their concern to malpractices in public funds will allow and
encourage citizens to proceed in blowing the whistle on malpractices
within public procurement.
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6.8
The micro-value procurement should be examined very closely, as some
user departments get loophole of doing direct procurements for their own
personal interests and hence deteriorating the real aim of introducing this
kind of procurement. The authority should put more restrictions on micro
value procurement by making available all procedural forms needed, and
making a firmly follow- up for quarterly submission of micro-value
procurement report to the authority as stated in section 166(1) of PPA
2011.
30
7.0
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