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Africa's Public Procurement & Entrepreneurship Research Initiative – APPERI

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Namibia: Public Procurement Bleeds Namibia


AllAfrica.com

By EDGAR BRANDT, 2 MAY 2013

Windhoek — Despite a significant increase in public expenditure, public procurement has not brought about the desired outcomes, such as increased employment, improvement in the distribution of economic opportunities, enterprise development and economic growth and development, the Minister of Finance, Saara Kuugongelwa-Amadhila, told a Tender Board meeting held recently in Windhoek.

According to the finance minister the desired outcomes have not been reached for the most part because of leakages out of the economy. “Many tenders are awarded to foreign companies even where local companies have the capacity to perform these tenders. Goods and services procured under these contracts are sourced from outside, and too many expatriates perform work on the projects under these contracts even where locals have the skills to do so. So resources leak out of the Namibian economy as a result of this and opportunities for learning and enterprise development are forfeited,” said Kuugongelwa-Amadhila.

She added that setting tenders aside for local companies and special target groups such as women and youth for economic empowerment could address these challenges.

Additional tools recommended by Kuugongelwa-Amadhila to address these issues include a policy that some tenders should require mandatory sole contracting of Namibian companies and SME‘s, that there should be requirements for local participation in all companies to be awarded tenders and that there should be a mandatory requirement for sourcing of supplies and labour services from within Namibia.

With specific regard to procurement, the finance minister noted there is a significant increase in expectations from the public for the system to help the country overcome the challenges of unemployment and inequities and to support sustainable economic growth. With public expenditure having increased significantly in the recent past, the government’s role in the economy has grown much bigger. “We should also put in place monitoring and evaluation systems to ensure that compliance with bidding commitments are enforced and that the impact of the procurement programmes is evaluated. Companies that fail to honour their bidding commitments should be held to account,” said Kuugongelwa-Amadhila, adding that the current allegations of corruption and court challenges against the decisions of the board do not augur well for the public image of the board.

Also, she encouraged the Tender Board to look at ways to delegate the adjudication of some tenders to state-owned enterprises, local authorities and regional authorities.

She also revealed that a dedicated procurement reform project office has been set up and recruitment of staff is in progress. “The office will help drive the reform process including assisting with the drafting of the regulations for the new (tender) law once passed, and operational guidelines, as well as the setting up of the procurement advisory office and the new secretariat. I encourage the board to ponder on all the challenges and ways and means of overcoming them,” concluded Kuugongelwa-Amadhila.

Leadership: a public procurement perspective


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

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

 

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