News Day

by Nyasha Chizu

May 6th, 2013

Public procurement is generally recognised as reactive, responding or processing purchase requisitions as they are raised, thereby relegating the activity to a clerical level.

This is mainly because the public procurement systems are very complicated and are very difficult to innovate for many reasons.

Some of the reasons could be lack of knowledge and expertise of the leaders, rigidity causing failure of the system to adapt to ever-changing business environment. Despite all these limitations, public procurement needs to be efficient to support public finance management systems. How then do we maximise the efficiencies of government budget execution?

A budget is a plan for a specific period that allocates resources to departments and divisions of the state in order to acquire the required goods and services. It is, therefore, a tool for allocation of funds to accomplish national or organisational objectives. In order to maximise the efficiency of budget execution, public procurement must minimise procurement costs through centralised decision making and decentralised execution.

To show innovation, public procurement must facilitate procurement of commonly used supplies by establishing annual unit price contracts for products in continuous demand.

This inevitably raises efficient budget execution when economies of scale achieve savings at a national level. Institutions such as hospital and local authorities have commonly used supplies that can be procured using this system.

The move, if adopted, will not only save on procurement expenditure itself, but also set a budget saving pattern for all government agencies promoting best practices.

Spooling of commonly used supplies would ensure that the public procurement system puts in place appropriate quality management techniques. Lower priced acquisition or reduced budgets will not compromise quality given the implication of poor quality on a national supplier. The volume of the business becomes attractive that no sane businessman would want to lose the contract due to compromised quality.

While the objective of public procurement is to improve efficiency, the systems need to be transparent and fair. There is generally a conflict of efficiency and transparency in public procurement. Private sector procurement systems are generally regarded efficient because of the elimination of bureaucractic procedures that characterise public procurement.

In the private sector, decisions are made fast and buyers are made accountable for their decisions. It might, therefore, be necessary to train in the public sectors to acquire private sector procurement methods for the efficiency of public procurement systems.

Training alone will not be enough, appropriate systems that promote ethical behaviour are necessary. Public procurement officials need to subscribe to a professional organisation recognised by the government so that moral of buyers is upheld.

This is necessary because public procurement requires that personnel are ethical, as it operates amidst commercial interests of numerous bidding participants. Abiding to a set code of ethic will then be mandatory and appropriate punishment for offenders will be enshrined in the system.

To show innovation, public procurement must facilitate procurement of commonly used supplies by establishing annual unit price contracts for products in continuous demand

Procurement can, therefore, assume a leadership role in the efficient use of budgets through adoption of strategies that minimise costs of inputs in the public sector.

Nyasha Chizu is a Fellow of the Chartered Institute of Purchasing and Supply writing in his personal capacity. Feedback: chizunyasha@yahoo.com