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CORRUPTION WATCH:Procurement law must be simplified


Mar 31, 2013 | Corruption Watch

Is our government just really bad at procurement, or is there a deeper problem with the law that applies to tendering?

IT SEEMS that every other week there is a different scandal involving procurement. Most tenders seem to land up in court, with service providers squabbling over the spoils of government spending. Is our government just really bad at procurement, or is there a deeper problem with the law that applies to tendering? Perplexed

Dear Perplexed

We believe that it is a bit of both. While there is no denying that some of the bureaucrats responsible for procurement are corrupt (as are some of the private companies that bid for contracts), the law governing public procurement has become increasingly complicated.

In our view, procurement law has now become so complicated that it may be undermining service delivery. For example, many organs of state are unable to spend their budgets and infrastructure grants. The complexity of procurement law contributes to this problem by paralysing civil servants who become hyper-cautious in their desire to avoid infringing the law.

Part of the problem is that there are so many different levels of procurement law.

A well-intentioned and honest administrator will find that the following layers of law govern procurement:

Section 217 of the constitution expressly deals with government procurement. It provides that when an organ of state contracts for goods or services, it must do so “in accordance with a system which is fair, equitable, transparent, competitive and cost-effective”.

The award of a tender constitutes administrative action in terms of the constitution. As such, the award of tenders is subject to review under the Promotion of Administrative Justice Act.

Various pieces of legislation govern the budgeting process, internal controls and the requirement that people historically disadvantaged by unfair discrimination be favoured.

Each organ of state has its own supply chain management policy, which must be followed by its bureaucrats when engaging in procurement.

Any information held by an organ of state relating to the tender process is potentially affected by the Promotion of Access to Information Act, and may be the subject of requests for information by other affected parties.

The contract between the relevant organ of state and the service provider is governed by the common law of contract.

As a result, innumerable pitfalls await even the most well-intentioned administrator.

The competitive nature of tender processes and the enormous financial benefits to be gained from contracts for government procurement are a powerful incentive for unsuccessful parties to litigate, which they often do.

Their lawyers scrutinise every step in the process for compliance with the various laws and procedures, and pounce on every real or perceived irregularity. Very few administrative processes are entirely free from any misstep, and when one is found, litigation soon follows.

In addition, bureaucrats are required to account to government oversight bodies in respect of expenditure, including internal accounting officers and the Treasury. The procurement process may also be subjected to scrutiny by the auditor-general and the public protector.

Even where litigation by disgruntled parties fails, or investigations by other organs of state result in a clean bill of health, the effect of such litigation and investigation is to delay the provision of the service in question.

Procurement processes are often suspended while disputes are resolved, which can mean delays of years in service delivery.

We are therefore of the view that legal reforms to simplify and speed up procurement are justified. Any reform would have to ensure that accountability mechanisms remain in place, and that the law retains proper safeguards for detecting corruption and maladministration.

That would require careful balancing between swift, effective service provision and a functioning oversight mechanism.

* This article was first published in Sunday Times: Business Times

 

New Research Gives Insight into the Procurement Practices of the Top 100 US Public Companies


The Sacramento Bee

By Trading Partners

October 27, 2011

CHICAGO, Oct. 27, 2011 — /PRNewswire/ — TradingPartners (www.tradingpartners.com), the leader in spend management and visibility technology and services, today released research showing the spend management and sustainable supply chain practices of Fortune 100 companies.  The study showed that while almost half of the top public companies cited spend management as a key strategic objective, only four have a Chief Procurement Officer.  The research results also illustrate that:

  • Only 20% of companies have board members with procurement or supply chain backgrounds.
  • The most successful companies have advanced sourcing tools.
  • Companies that include suppliers in their corporate, social and environmental responsibilities (CSER) programs, tend to have a higher net income margin than those who do not.
  • Despite CSER being a success factor for many companies, only seven Fortune 100s have a Chief Sustainability Officer.
  • 35% of CEOs see emerging markets as a key strategic objective, yet only 15% have executives from BRICS (Brazil, Russia, India, China, South Africa) countries on their senior management team.

The study “Procurement Practices: What Every Company Needs to Know About Spend Management Practices in Fortune 100 Companies” was officially released today in conjunction with TradingPartners’ first annual procurement forum in Chicago.  The event hosts C-level executives focusing on innovation in spend management and visibility, as well as sustainable supply chain best practices.

“Our objective with this research was to determine the best practices in both spend and sustainable supply chain management among the top companies in the country,” said Mark Barnekow, Chief Executive Officer of TradingPartners.  “We were astonished to discover that many companies are not taking full advantage of the tools they have, nor are they making serious commitments at the board or executive level to focus on managing spend.”

A slideshow summary of the study can be found at http://slidesha.re/v1Orda, while the full version of the research is available on request fromwww.tradingpartners.com.

About TradingPartners

Based in Chicago, with European headquarters in London, and operations in Africa, Asia and Latin and South America, TradingPartners provides growing companies and global Fortune 500 firms with the most comprehensive and effective spend management and visibility technologies and services.  With a global vertical focus in foodservice, healthcare, manufacturing, public sector, retail and services industries, TradingPartners assists its customers to reduce the cost of their direct and indirect purchases with tangible results often in the 10-25% range.  TradingPartners’ unparalleled domain expertise, comprehensive supplier database, and robust spend management technology platform have helped hundreds of corporations and public sector entities achieve dramatic business process improvements and tangible cost savings.  For more information, visit www.tradingpartners.com.

TradingPartners and its respective logos are trademarks of TradingPartners Ltd.  All other trademarks are the property of their respective owners.

SOURCE TradingPartners.

Uganda: NGO sues UMEME over contract


New Vision 

By Roderick Ahimbazwe

A non-governmental organisation has taken UMEME to court over failure to make details of its 20-year-concession contract public. 

The power distributor is jointly sued with the Government and the sector regulator in a suit filed at the High Court in Kampala yesterday.

The African Institute of Energy Governance (AFIEGO) along with 1,927 others want the Government to reveal the details of the contract it signed with UMEME.

The public who are the consumers are entitled to know what transpired between UMEME and the Government when signing their contract. That is why we are taking UMEME,  the Electricity Regulatory Authority, the Uganda Electricity Distribution Company Limited and the Government to court,” Dickens Kamugisha, the AFIEGO chief executive officer, said yesterday.

Kamugisha revealed that his organisation had tried to ask UMEME for details of the contract but that they had been told that the contract was confidential.

“We want court to terminate this contract because the terms are very unfair to the people of Uganda who are the consumers of power,” he noted.

Kamugisha observed that since UMEME was getting paid for any power losses, it was not in its interests to improve electricity services because it stood to gain from the rebates.

Kamugisha also wondered why the findings of the Saleh Commission were not being investigated by the Government. The Saleh Commission that reviewed the UMEME contract found out that the tariffs were expensive, while the Government was paying a lot of subsidies to UMEME.

“The commission made several recommendations, which are yet to be implemented,” Kamugisha said.

He said his organisation, unlike the Saleh Commission, does not want the contract reviewed but rather terminated and the running of the electricity sector given back to the Government or put up for competitive bidding. Owen Murangira of Murangira and Advocates, the AFIEGO attorneys, said his client was concerned about the high electricity charges and the poor billing system based on estimation.

“AFIEGO wants electricity to be declared a right so that everyone is entitled to cheap power. It also wants the billing of power by estimation to be declared unlawful,” he said.

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