ACKNOWLEDGEMENTS - ubir.bolton.ac.ukubir.bolton.ac.uk/1064/1/Jimmy Dumisan Mkaliainga. 201… ·...
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1 An impact Of Centralised Procurement in the Public Sector, A Case study of Malawi Defence Force Jimmy Dumisani Mkaliainga Submitted in partial fulfillment of the requirements for the degree of MSc. IN SUPPLY CHAIN MANAGEMENT The University of Bolton 2014 -2015
Transcript of ACKNOWLEDGEMENTS - ubir.bolton.ac.ukubir.bolton.ac.uk/1064/1/Jimmy Dumisan Mkaliainga. 201… ·...
ACKNOWLEDGEMENTS
1
An impact Of Centralised Procurement in the Public Sector, A Case study of Malawi Defence Force
Jimmy Dumisani Mkaliainga
Submitted in partial fulfillment of the requirements for the degree of
MSc. IN SUPPLY CHAIN MANAGEMENT
The University of Bolton
2014 -2015
LIST OF ABBREVIATIONS
APP - Annual Procurement Plan
CPS - Centralised Procurement System
CIPS - Chartered Institute of Purchasing and Supplies
GSD - Government Stores Department
ACB - Anti -Corruption bureau
CPS - Centralised Procurement System
ODDP - Office of the Director Of procurement
DOL - Director of Logistics
DOF - Director of Finance
MDF - Malawi Defence Force
HoD - Head of Department
PPA - Public Procurement Act
PE - Public Entity
PMU - Procurement Management Unit
IPC - Internal Procurement Committee
IFIMS - Integrated Financial Management System
MAAW - Malawi Arm Air Wing
MAMAU - Malawi Armed Marine Unit
TB - Tender Board
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ABSTRACT
Centralised and decentralised are the two commonly used procurement concepts in the
public and private sectors today. In Malawi all the public sectors use centralised
procurement system under the guidance of the Office of the Director of Public
Procurement. Malawi Defence Force (MDF). Being a government arm they use
centralised procurement system to sustain the troops during peace and operational
periods. To date, authors continue to debate on which procurement systems of the two
are ideal for the public sector. However, both systems have their own advantages and
disadvantages.
The MDF has of late switched from decentralised system to the current centralised
system under the Directorate of Logistics (DOL) which is the procurement entity of the
MDF. Procurement in the military system is more complicated and different from the
public sector because it involves large purchases of capital investment from the global
market. The objective is to acquire products and services that specify specific needs
and provide measureable improvement to accomplish any assigned tasks but at a
reasonable cost.
The MDF being an arm of the government receives financial funding from the
government and it is for this reason that the MDF should adhere to the government
procurement procedures as stipulated in the Public Procurement Act (2003) and also
encourage transparency and accountability in the procurement process to achieve
Value for Money (VFM).
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This research was therefore meant to investigate the impact of centralised procurement
system in the MDF and to recommend strategies which can enable the MDF improve
the procurement process to achieve Value for Money and conduct the process in a
transparent and a corrupt free environment.
The researcher used questionnaires and interviews (in- depth and informal) as primary
and secondary sources. The data was mainly collected from within the MDF and other
government institutions such as the Office of the Director of Public Procurement
(ODPP) and National Audit. The data was qualitative and was analysed in a qualitative
manner.
The research revealed that MDF procurement officers are conversant with the
procurement regulations but lack proper guidance from the commanders who interfere
with the procurement activities for their personal benefits. It further revealed that the
level of corruption in the MDF procurement had increased due to influence of the
commanders and senior political leaders delivering products to MDF at exorbitant costs
and demanding payments for goods or services not rendered.
In conclusion, the research revealed that centralised procurement system has a positive
impact in the MDF procurement process because it enables management to monitor
and control procurement activities thereby reducing unnecessary costs.
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ContentsACKNOWLEDGEMENTS..............................................................................................................1
LIST OF ABBREVIATIONS...........................................................................................................2
ABSTRACT....................................................................................................................................3
LIST OF FIGURES........................................................................................................................9
Figure 1.0 Organization of DOL..............................................................................................10
Figure 1.1 Concept Map Public Process (MDF Centralised Procurement System)..........10
Figure 2.0 Government Procurement Cycle..........................................................................10
Figure 2.2 Public Procurement Process.................................................................................10
Figure 2.3 Detailed Public Procurement Process..................................................................10
Figure 3.0 Research Process Onion Model...........................................................................10
Figure 3.1 Research Design....................................................................................................10
LIST OF TABLES........................................................................................................................10
Table 1.0 List of outstanding payments.................................................................................11
Table 2.0 Research process..................................................................................................11
Acknowledgements.....................................................................................................................11
CHAPTER ONE...........................................................................................................................12
OVERVIEW OF THE STUDY.....................................................................................................................13
1. Introduction...............................................................................................................................13
1.2 Background...................................................................................................................................13
1.2.1 History..........................................................................................................................................16
1.2.2 Issue of concern......................................................................................................................17
1.2.3 Rationale....................................................................................................................................17
1.3 Background to the organisation (MDF)................................................................................18
1.4 Directorate of Logistics (DOL)..........................................................................................................19
1.4.1 Functions of DOL........................................................................................................................20
1.4.2 Structure of DOL.......................................................................................................................21
1.4 The Author (2015)......................................................................................................................22
1.6 Research aim and objectives...........................................................................................................23
1.6.1 Aim...............................................................................................................................................23
1.6.2 Research Objectives................................................................................................................23
1.6.3 Research questions..................................................................................................................24
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1.7 Research Methodology................................................................................................................24
1.8 Significance of the research........................................................................................................25
INTRODUCTION.........................................................................................................................26
a. Chapter one..........................................................................................................................26
b. literature....................................................................................................................................26
c. Methodology – Chapter Three...................................................................................................26
d. Data and analysis and research findings – Chapter Four...........................................................26
e. Recommendations - Chapter Five...........................................................................................26
Concept Map.........................................................................................................................................28
Public Procurement Process (MDF Centralised Procurement System)..................................................28
CHAPTER 2.................................................................................................................................29
LITERATURE REVIEW...............................................................................................................29
THEORETICAL BASES OF THE STUDY......................................................................................................30
PREVIOUS RESEARCH.............................................................................................................................30
2.1.3 PROCUREMENT RESEARCH IN MALAWI.....................................................................................30
2.2.2 RESEARCH ON MILITARY PROCUREMENT..................................................................................31
2.3. PROCUREMENT..........................................................................................................................32
2.4 MILITARY PROCUREMENT SYSTEM................................................................................34
2.5 PROCUREMENT SYSTEMS..........................................................................................................37
CENTRALISED PROCUREMENT DEFINED.............................................................................37
2.5.2 DECENTRALISED PURCHASING DEFINED............................................................................38
2.5.3 HYBRID PROCUREMENT...........................................................................................................39
2.6 ADVANTAGES OF CENTRALISED PURCHASING:............................................................39
2.61 Economies of scale........................................................................................................................39
2.6.2 Coordinated Activities..................................................................................................................40
2.6.3 Control of Purchasing Activities....................................................................................................40
2.7 DISADVANTAGES OF CENTRALISED PURCHASING..........................................................................41
2.8 ADVANTAGES OF DECENTRALISED PURCHASING...........................................................................42
2.9 DISADVANTAGES OF DECENTRALISED PURCHASING.......................................................................42
2.10 ADVANTAGES OF HYBRID PROCUREMENT SYSTEM...................................................................43
2.11 DISADVANTAGES OF HYBRID PROCUREMENT SYSTEM.................................................................43
2.12 PUBLIC PROCUREMNET.............................................................................................................43
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2.13 MDF PROCUREMENT REFORMS................................................................................................46
2.14 PUBLIC SECTOR.............................................................................................................................46
2.15 THE PROCUREMENT PLANNING....................................................................................................47
2.15.1 MDF-OUTSTANDING PAYMENTS................................................................................................48
2. 16 PUBLIC PROCUREMENT AUDIT....................................................................................................51
2. 17 OUTSOURCING...........................................................................................................................52
2.17.1 MDF OUTSOURCED PROJECTS....................................................................................................54
2.18 INEFFICIENCY OF GOVERNMENT PAYMENT SYSTEM (IFMIS)........................................................55
2.19 CORRUPTION IN CENTRALISED PROCUREMENT...........................................................................56
2.19.1 CORRUPTION CASES INVOLVING MDF.......................................................................................59
2.20 INTERNAL PROCUREMENT COMMITTEE (IPC................................................................................60
2.21 PUBLIC PROCUREMENT PRINCIPLES............................................................................................61
2.22 PROCUEMENT PERFORMANCE......................................................................................................62
Figure 2.3 detailed Public Procurement Process...................................................................................63
2.23 EMPIRICAL REVIEW.......................................................................................................................65
2.24 SUMMARY OF LITERATURE REVIEW..........................................................................................65
2.25 FURTHER RESEARCH......................................................................................................................66
2.26 IDENTIFICATION OF GAPS IN RELATION TO THE PROPOSED RESEARCH........................................66
2.27 SUMMARY AND CONCLUSION.......................................................................................................67
CHAPTER 3: METHODOLOGY..................................................................................................69
3.0 Introduction.....................................................................................................................................69
3. 1 Research philosophy..................................................................................................................69
Figure 3.0. Research Onion Source: Saunders et al, 2003.....................................................................71
3. 2 Research Approach....................................................................................................................71
Table 2.0 Research Process...............................................................................................................73
3.3 Research Paradigm..........................................................................................................................74
Saunders (2009) categorizes the paradigms in three levels as follows:.....................................74
Level 1. (Philosophical) reflecting basic beliefs of the world....................................................74
Level 2. (Social level), guidelines of how the study is to be conducted..................................74
Level 3. (Technical level) choosing methods and techniques ideal for the study.................74
3.4 Research Design...............................................................................................................................74
Table 3 Research Design........................................................................................................................75
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3.5 Triangulation....................................................................................................................................76
3.6 Research Sample..............................................................................................................................77
3.7 Research Credibility.........................................................................................................................77
3.8 Research Size Sample......................................................................................................................78
3.9 Data Collection................................................................................................................................79
3.9.1 Primary Data.................................................................................................................................79
3.9.2 Secondary Data.............................................................................................................................79
3.9.3 In– depth Interview......................................................................................................................80
3.10 LIMITATION AND DELIMITATION...................................................................................................80
Limitation..............................................................................................................................................80
(i) Nature of institution.................................................................................................................81
(ii) Participant bias......................................................................................................................81
(iii) Busy schedules.......................................................................................................................81
(iv) Financial.................................................................................................................................82
(v) Time.......................................................................................................................................82
(vi) Scarcity of information concerning military procurement.........................................................82
(vii) Red Tapes in offices...............................................................................................................82
3.11 VALIDITY AND RELIABITY...........................................................................................................83
(b) Reliability...............................................................................................................................83
3.12 Ethical Considerations...................................................................................................................83
3.13 Summary........................................................................................................................................84
CHAPTER 4.................................................................................................................................85
DATA ANALYSIS AND RESEARCH FINDINGS...........................................................................................85
INTRODUCTION.....................................................................................................................................85
4.1 Data Analysis...................................................................................................................................86
4.2 Findings from in- depth Interview...................................................................................................87
4.2.0 Introduction..................................................................................................................................87
4.2.2. From Office of Director of Public Procurement...........................................................................87
4.2.3. From National Audit Department..............................................................................................88
4.2.4. Anti- Corruption Bureau (ACB)...................................................................................................89
4.2.5 Summary Findings from in- depth Interview................................................................................90
4.2.6 Findings from Participants............................................................................................................91
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4.3 Challenges of centralised procurement system...............................................................................91
4.4 Benefits of centralised procurement system...................................................................................92
4.5 Findings from Participants..............................................................................................................93
CHAPTER FIVE...........................................................................................................................94
CONCLUSION AND RECOMMENDATIONS..............................................................................94
5.1 CONCLUSIONS............................................................................................................................95
5.2 Recommendations.....................................................................................................................96
5.2.1 for Policy Makers (Malawi Government....................................................................................96
5.2.2 for the Commanders.................................................................................................................97
5.2.3 for the Procurement Entities....................................................................................................97
5.2.4 for the Finance Officers..............................................................................................................97
5.2.5 for IPC...........................................................................................................................................98
5.2.6 for ODDP...................................................................................................................................98
5.3 FURTHER RESEARCH........................................................................................................................98
CHAPTER 6...............................................................................................................................100
REFERENCES........................................................................................................................................100
8.0 APPENDICES......................................................................................................................109
INSTRUCTIONS.....................................................................................................................................110
Appendix A: In-depth interview with the ODDP.........................................................................110
Appendix B. interview with Anti-Corruption Bureau...................................................................111
APPENDIX C: In-depth interview with Nation Audit Office........................................................115
QUESTIONNAIRE.....................................................................................................................116
APPENDIX D: Questionnaire for Directorate of Logistics (Staff)............................................116
APPENDIX E: Questionnaire for Internal Procurement Committee.....................................................119
8.6 FOCUSE GROUP DISCUSSIONS.......................................................................................................121
LIST OF FIGURES
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Figure 1.0 Organization of DOL
Figure 1.1 Concept Map Public Process (MDF Centralised Procurement System)
Figure 2.0 Government Procurement Cycle
Figure 2.2 Public Procurement Process
Figure 2.3 Detailed Public Procurement Process
Figure 3.0 Research Process Onion Model
Figure 3.1 Research Design
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LIST OF TABLES
Table 1.0 List of outstanding payments
Table 2.0 Research process
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Acknowledgements
This dissertation has been a success following the support I received from many people
ranging from financial, material, guidance, encouragement and constructive ideas
during the entire period. First and far most I thank the almighty God for giving me good
health and fighting spirit to enable me persevere the challenges along my way.
Specifically, I would like to express my sincere appreciation to my local supervisors Mr.
Peter Mwanza and my supervisor at University at the Bolton Mr. Malcolm Thorpe for the
insights and guidance contributed to the successful completion of the research.
Similarly, I would like to thank to extend my acknowledgement to members of staff at
Malawi Institute of Management (MIM) for their untiring support during the period of my
course. Specifically, I would like to single out the Admission Secretary and the Librarian
Staff.
I am also thankful to all my class colleagues Frank Chirwa and Samuela Nachowone for
their encouragement and assistance rendered to me.
My deepest thanks go to my family; especially my wife Violet, son Marko and daughter
Afrika who were always there for me when I was caught up with stress due to pressure
of work. To my parents Grace and my late father James Snr (RIP) for the parental
guidance and love.
CHAPTER ONE
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OVERVIEW OF THE STUDY
1. Introduction
This introductory chapter provides background to this study. The study will focus on the
impact of centralized procurement system in the public sector, with a special focus on
the Malawi Defence Force (MDF) procurement entity the Directorate of Logistics (DOL).
This chapter outlines study objectives, study questions, MDF background, and
significance of the study and will also discuss the limitations of the study. Furthermore,
the chapter presents the structures of this paper and an overview of the contents of
each subsequent chapter. It concludes with a summary and an introduction for the next
chapter, which is Literature Review.
1.2 Background
Malawi is one of the poorest countries in the world, ranking at 170 th out of 187th
countries in the Human Development Index (HDI 2013). Malawi has been experiencing
economic problems following pervasive theft of public funds by officers in public
procurement entities starting from 1993, when the country changed to democratic
system of government. The theft of public funds led to the withdrawal of financial aid to
the Malawi Government by donor countries, which contribute 40 percent of the national
budget. This development greatly crippled the operations of public institutions including
the MDF (Nyasatimes 2014). It is evident that Malawi should find permanent remedy to
improve the poor procurement performance. As Phiri (2006) explains much of this is to
do with Malawi’s reluctance to diversify from the traditional centralised procurement
system process using Central Government Stores (CGS), which has been in use since
1964, when Malawi attained her independence from Britain.
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The CGS was mandated by law to procure and supply goods to all public institutions in
Malawi. Act of Parliament, No: 127/1968 Cap 37:01 of the Laws of Malawi until 1995.
The MDF formerly called Malawi Army, had an integral procurement unit Army
Ordinance Depot (AOD), which was responsible for logistics ( procurement, storage and
distribution of goods) to support all units of the MDF.
A public procurement audit conducted soon after the first multiparty elections, in 1994,
established that the public procurement sector, including the MDF procurement entity,
was characterised with massive fraud and corrupt practices, and lack guidelines for
public procurement procedures National Audit Report (1994). The AOD, which like any
government entity was using a centralised procurement system which also experienced
challenges similar to those experienced by CGS, ranging from low stock levels, low
funding and late deliveries, which had serious impact on military operations. MDF
responded by decentralizing procurement activities to the units, while AOD became an
inventory section. Malawi later dissolved CGS and decentralised the procurement
process to ministries, departments and agencies. Lysons (2012) defines centralised
procurement as a system whereby all strategies, policies and procurement decisions
are taken at a headquarters level.
In 2010, in an effort to improve the situation, MDF restructured the organisation and
established the Directorate of Logistics (DOL), which was mandated to manage and
monitor all procurement activities that were previously conducted by AOD (MDF Act,
2004). McCue (2001) strongly agreed with the idea that changing system used in the
public sector will improve the procurement process in terms of cost saving, reduce lead
time and chain of reporting to complete procurement processes.
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According to Gattorna (1998), military logistics consists of the integration of
procurement, transportation and inventory management to provide timely support to the
troops. Lubnievski (2013) noted that military procurement receives low marks from the
public opinion, because military budgets are massive and procurement is not open to
the public, due to the nature of the goods, which are meant for security purposes.
Malawi enacted the Public Procurement Act (PPA) in August 2003. It was aimed at
providing guiding principles and procedures to be applied in public procurement
process. The overall objectives of the PPA (2003) and the Desk Instructions (2004) are
to achieve economy, efficiency, transparency and value for money, which are
prerequisites in any procurement processes. The implementation of the Act was
supported by a World Bank Project to enable public institutions switch from centralised
public procurement system to decentralised system, without difficulties.
The Baker Tilly Audit Report (2014) was published by a British private audit firm
following the firm’s investigation into the embezzlement of public resources, christened
“Cashgate” whereby K38 billion (U$18 million) June 2014 was stolen from public
institutions between the period April 2012 to September 2013. The report documented
that MDF was amongst the worst corrupt procurement entities as evidenced by K5
billion which was unaccounted for It was further observed that MDF made payments
without supporting documents, inflated prices and unplanned procurement processes
Baker Tilly Audit Report (2014).
Lysons (2008) urge that optimum purchasing performance can be measured by
comparing trends of measuring efficiency with that of effectiveness, and concludes that
past purchasing functions were operated in a reactive manner while presently it is a
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proactive pattern which adheres to procurement planning and compliance of
procurement regulations to achieve value for money.
World Bank Audit Report (2011) singled out MDF as the worst public procurement entity
for lacking a procurement plan, weak accountability, and failure to comply with the legal
requirements and procurement procedures stipulated by the PPA (2004).
This study, therefore, aims to investigate the impact of the centralised procurement
process to the organisation (MDF) and to establish the factors hindering the
performance of the procurement entity, despite having a healthy financial status and
qualified staff in place.
1.2.1 History
The history of MDF dates back to 1889 when a British Central Africa Force was
established with a core function of terminating Arab slave traders. Subsequently, in
1902, the colonial administration in the then British territories formed the King’s African
Rifles, through the amalgamation of all British forces operating in East and Central
Africa.
After attaining independence in 1964, Malawi withdrew all its troops from the
‘Federation Force’ (which comprised troops drawn from Malawi, Zambia and
Zimbabwe), to form Malawi Army (now MDF), which started with one unit in Zomba and
Moyale as the training institution. Malawi Army maintained the British military tradition,
such as Ordinance section providing logistics support using centralised procurement
process to sustain the force. Under that system, the AOD undertook procurement
activities using Local Purchase Orders (LPOs), while under the current system the DOL
is responsible for procurement following the Public Procurement Act (2003). As of 1964
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MDF has grown from one unit to three brigades (12 units), including a unit for
Peacekeeping Operations. MDF receives monthly funding from the government to
sustain both operational and administrative requirement
1.2.2 Issue of concern
According to Baker Tilly Report (2014) and National Audit Report (2013), it was
observed that MDF procurement function was involved in dubious procurement of high
value military machinery and that the procurement activities were associated with fraud
and corrupt practices.
This perennial problem has precipitated a decline in procurement performance of the
MDF. Hence this study has been conducted to investigate the impact of centralised
procurement system and how the system can help improve the current situation to
enable MDF achieve value for money. The study will further assist MDF improve
procurement standards and to account for financial resources as stipulated by the
ODPP and PPA (2003).
Lysnos (2012) acknowledges that good procurement ethics are value adding and cost
saving, while Weel (2005) points out that an effective and efficient centralised
procurement system adds value to an organization.
1.2.3 Rationale
Through this study, the author hopes to make an important contribution to the public
procurement profession in Malawi, with specific emphasis on the military institution
(MDF). It is expected that awareness of the benefits accrued from centralised
procurement process will encourage public sector procurement entities to adhere to
PPA (2003) procurement planning procedures and benefits of recruiting qualified
procurement personnel in the field to avert fraud and corruption in the sector.
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1.3 Background to the organisation (MDF)
The MDF started as the Kings African Rifles (KAR) and was formed on 1 January 1902
under the command of Brigadier William Manning, through the amalgamation of all
British forces operating in East and Central Africa. Upon attaining independence in 1964
the Army remained under the command of British Officers until 1972, when General
Matewere resumed command from Brigadier Lewis Namangale, (2002). Although the
concepts of operations changed to suit dynamic roles of modern Army, MDF maintained
the British military tradition, both administrative and operational systems.
The mandate of MDF is to protect the state and conduct security operations in order to
promote, defend and protect the sovereignty and territorial integrity and vital interests of
Malawi against internal or external threats. To achieve the objective, the MDF like any
institution has a procurement entity which procure, stores and issues goods to sustain
troops during training and war periods. This is a critical function because, as
Montgomery (1948) states, timely provision of logistic supplies uplifts morale of soldiers
in the battlefield.
Malawi Army purchases were made by AOD in Zomba, in the Southern Region of
Malawi, and distributed to the respective command units in Lilongwe, Salima, Mzuzu
and Mangochi for further deliveries to the user units. This was a centralized purchasing
system, whose benefits, according to Lysons (1996), range from coordination and
control of purchasing activities across the organisation to provision of economies of
scale, enabling the organisation to achieve bargaining power privileges in return.
Since 1972, MDF has tremendously improved in terms of strength, training standards
and also acquisition of latest equipment in line with modern technology. Today, MDF
has four new battalions: Changalume, Chilumba, Engineers, and Malbat mechanized
18
battalion specialized in Peacekeeping Operations, which deploys with integral resources
under Wet Lease agreements.
The defense stocks are categorized as follows:
i. Fighting equipment and ammunition
ii. Combat Service Support (rations, fuel and uniforms).
iii. General Stores (office and accommodation facilities )
In 1996 the MDF decentralised the procurement process to the units in an effort to
improve the procurement service levels (delivery and quality) following the
establishment of new units in remote areas such as Karonga and Likoma. Low funding
was another contributing factor since AOD could not meet the requirements of fast-
growing force.
In 2010, Malawi faced serious economic problems resulting in price fluctuations of
essential commodities and failure to pay suppliers, due to erratic funding. Hence, MDF
had no choice, but to re-introduce centralised procurement system this time under the
DOL, and the government instructed ODDP to provide technical expertise to help
improve the procurement process which according to the Audit Report (1995) was
associated with fraud and massive corrupt procedures.
The Baker Tilly Report (2014) revealed massive financial mismanagement in the public
institution, whereby MDF was documented as the worst procurement entity, as
evidenced by illegal awarding of contracts, over expenditure, inflated prices and
payments made to suppliers without supporting documents.
1.4 Directorate of Logistics (DOL)
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Fernie (2009) defines Logistics as the art of planning and availing required products to
troops or customers at the right time, place, correct quantities and correct quality to
sustain an operation. The Directorate of Logistics was established in 1974 to provide
logistic support to all units and operations pertaining to MDF in terms of procuring
combat stores, inventory management, developing infrastructure and distributing stocks
to units MDF Act (2008). The logistics operations are meant to support the protection,
movement, firepower and sustainment of operating troops.
1.4.1 Functions of DOL
The functions of DOL range from procuring, storage and distributing defense stores to
sustain troops during peace and war periods. According to MDF Act (2004) the
functions of the DOL are as follows:
To advise the MDF Commander on all matters pertaining logistic requirement;
To prepare MDF procurement plan for defense stores and services;
To consolidate requisitions from user units for Internal Procurement Committee
(IPC) consideration.
To identify suppliers, and manage contracts;
To manage inventories and issue stocks to units.
To process payments for suppliers in collaboration with the Finance section.
To prepare tender bidding for high value contracts and purchases;
To consolidate logistic shortfalls and disposal process of obsolete stores;
Assess serviceability of defense stores prior to any deployment and after
operations.
20
To process and clear custom duty payments.
Processing insurance coverage of high value equipment and transport facilities,
(vehicles, maritime and aircrafts).
Formulation and supervising performance of the outsourced services (catering
and accommodation);
To procure capital equipment for training and operational purposes.
To conduct stocktaking and updating ledger inventory of the organisation.
1.4.2 Structure of DOL
According to the MDF Act, the Chief of Logistics (COL) is a senior officer of the rank of
Colonel, with a Lieutenant Colonel as deputy Procurement Officer, Peacekeeping desk,
Administrative Officer and Housing Officer. There is a logistics officer at each level in
the infantry units as follows: Quartermaster (Battalion level), Company Sergeant Major
(company) and Administration Sergeant (Platoon level).
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Source MDF Act 2008
1.4 The Author (2015)
The author has been employed by the MDF for 27 years out of which he worked 17
years under DOL in various appointments such as Ordinance Provision Officer
responsible for processing payment vouchers, Ordinance Officer responsible for
inventory and fleet management and finally as Deputy Director of DOL, responsible for
consolidating logistics budget, conducting IPC meetings and approving distribution of
stores to fighting units.
The author has a direct responsibility for procurement planning, inventory management
of combat supplies, and is keen to ensure that highest standard of governance is
utilized in the future procurement process. The author is responsible for advising the
22
Director of Logistics on matters concerning stock levels and replenishments of fighting
stores to the user units during training and war operations. Furthermore, the author is
responsible for training procuring officers.
1.6 Research aim and objectives
1.6.1 Aim
The aim of the study is to investigate the benefits and challenges of centralised
procurement system adopted by the MDF, as opposed to decentralised system.
1.6.2 Research Objectives
. The objectives of the study are as follows:
To evaluate challenges of centralised procurement system in the MDF.
To assess role of centralised system in stemming corruption within MDF
procurement process.
To explore whether the MDF procurement procedure complies with the Malawi
PPA (2003).
To recommend strategies which can enable MDF improve the current
procurement practices in order to achieve value for money.
The above aims and objectives are important to this study because for any procurement
unit to be successful there is need to consider factors such as procurement budget,
public procurement regulations, zero corruption, compliance with the law, and
procurement strategies. Particularly for MDF, the study is meant to examine if these
essential factors, which are prerequisites to successful procurement are adhered to and
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why the procurement entity (DOL) is failing to achieve the standards established by the
Malawi Public Procurement Act 2003.
1.6.3 Research questions
The research is designed to explore and answer the following questions:
How can adoption of centralised procurement system add value to the MDF?
What are the challenges and benefits of centralised procurement system to
MDF?
Why did MDF fail to eliminate fraud and corrupt procurement practices despite
having an IPC in place?
Which system (centralized or decentralized) is ideal for MDF procurement
section to maintain.
1.7 Research Methodology
The researcher chose Qualitative as opposed to quantitative, since the study is
concerned with qualitative phenomenon and it involves investigating the reasons for
human behavior and attitude towards centralised system. The study, therefore, focus on
analyzing factors contributing to procurement problems that are feasible.
Greener (2008) highlights that qualitative approach requires subjective assessment of
attitudes, opinions, and behavior, and that it focuses on words (texts) as opposed to
numbers. Kothari (2004), on the other hand, explain that quantitative research centers
on measurement of quantity or amount expressed in terms of quantity.
The researcher will use inductive approach, as the research focuses on the
organization’s business problems and economics. Interpretivisim is ideal since it
concerns business and management, which concerns staff members.
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The researcher will collect information from MDF staff working in various sections, who
are directly involved in procurement planning, finance (payment) and issuing of stores
requisitions. Max Weber (1864-1920) emphasize that inductive approach helps to
identify causes and effects of the research problem.
1.8 Significance of the research
In general, the outcome of this study will benefit different categories as follows:
MDF authority – as evidence to influence formation of new policies to improve
procurement regulations in line with the Public Procurement Act (2003) and the
ODDP procurement procedures.
DOL – The research findings will necessitate the importance of having qualified
and competent procurement staff capable of preparing procurement budget and
adhering to public procurement procedures.
Individual staff - The research findings will help bring awareness to staff about
the importance of adhering to Public Procurement regulations and consequences
of fraudulent procurement process.
1.9 Organisation of the dissertation
This dissertation contains five chapters namely Introduction, Literature Review,
Methodology, Data Collection and analysis, Recommendation and finally Conclusion.
The following is the structure of the dissertation and a summary of each of the chapters:
25
INTRODUCTION
a. Chapter one
This is an introductory chapter to the topic under study, which provides a historical
background to the topic. The chapter further outlines the importance and purpose of
the study. Research questions, objectives, reasons for conducting the research are
also outlined, and limitations affecting the research progress are stated.
b. literature review - Chapter two
This chapter contains literature review. In this chapter the author will review the
literature relating to centralised purchasing system from previous research studies,
books, magazines and journals concerning the impact of centralised procurement in
the public sector with an emphasis on MDF as an individual organisation.
c. Methodology – Chapter Three.
This chapter presents the Methodology of the study. In this chapter the researcher
presents various approaches used throughout the whole process of gathering
appropriate research data. It will further outline limitations of the study and tools for
data collection.
d. Data and analysis and research findings – Chapter Four.
This chapter will contain an analysis of data collected and research findings based
on the research questions and objectives of the study.
e. Recommendations - Chapter Five.
This chapter will present recommendations derived from the study, on the basis of
discussions of the findings presented in Chapter Four.
26
f. Conclusion
In this chapter the author will provide a summary of the study and suggestions on
possible areas where further research on centralised procurement could be
undertaken in the future
2.0 Conclusion
The present chapter has provided the introduction and background to the issue under
study, as well as an overview of the organisation where the research will take place.
The method and strategy employed in the research have been briefly stated in the
introductory section. The problem statement, purpose and significance of the research,
research objectives, research questions and limitations have been outlined. The
Chapter has concluded by describing the structure of this paper. The next chapter will
be the literature review, which will look into the knowledge and ideas of other
researchers on the impact of centralised purchasing.
27
Concept Map
Public Procurement Process (MDF Centralised Procurement System)Figure 1.2
28
CHAPTER 2
LITERATURE REVIEW
The previous chapter provided a background to the study. It specifically outlined the
study objectives and questions, functions of the organization and significance of the
study. This chapter reviews literature pertaining to the impact of centralised purchasing
and other various aspects of the system that can improve service level and assist MDF
achieve value for money.
The chapter reviews concepts, theories, and previous research findings from available
literature relating to the statement of the problem and research objectives for the
purpose of establishing a theoretical and empirical base for the study.
The review appreciates the means on how centralised procurement can contributes to
realise value adding measures to the public sector with an emphasis on MDF. The
advantages and disadvantages of centralised, decentralised and hybrid are also looked
at thoroughly.
Literature concerning impact of adopting centralised procurement in the Public sector
will be critically analysed and a comparison will be given between current literature and
problem and those of previous writers. The gap between the past literature and the
present on centralised procurement in the MDF is the one that has necessitated this
research to be undertaken. The basis for the chapter is the concept map given in
chapter one (Figure 1.1) the research looked at:
29
THEORETICAL BASES OF THE STUDY
In this section, the researcher presents theories that other authors have come up with
regards to the centralised procurement process, public procurement system in Malawi
with emphasis on MDF procurement in general.
PREVIOUS RESEARCH
A lot of literature has been written on the topic Supply Chain Management and public
procurement in particular. There are many journals and books written by writers like
Steven (1978), Bailey et al (2008) and Friedrich Stiifung Digital Bibliothek study wrote
about Public Procurement Policy Southern Africa.
Public Purchasing, A Guide to Measuring Performance in Purchasing (No 14) (Public
Competition and Purchasing Unit of HM Treasury and Enterprises) by Stevens (1978)
The studies recognizes and outlines the importance of the purchasing function and
measuring purchasing performance in large organizations. The study recommends
public procurement to operate in a transparent and accountable situation to achieve
value for money.
2.1.3 PROCUREMENT RESEARCH IN MALAWI
The ODPP and World Bank (2007) conducted a Procurement Assessment (CPPA) to
evaluate on compliance of public procurement regulation, training standard of the
procurement personnel and shortfalls in procurement organizations. The study was
sponsored by the UNDP and was meant to assist Malawi adapt to the decentralised
purchasing process.
30
International Procurement Consulting (American consulting firm) conducted a study, on
procurement system which was done by Central Government Stores. The study
observed that the system was riddled with flaws ranging from poor funding, lack of
formal procurement procedures and lack of legal framework. Following the study ODDP
was established to monitor the performance of public procuring entities and Anti-
Corruption Bureau (ABC) violations of the PPA. Mawindo (2013).
2.2.2 RESEARCH ON MILITARY PROCUREMENT
Lubnievski (2013) article was conducted to investigate why the military procurement
process receives low marks from the public opinion. The author observed that military
budgets are massive and procurement process is secretive due to the nature of the
goods meant for security purpose. It was further observed that corruption is common in
the military institution following poor procurement procedures which is normally affected
with the interferences by politicians.
There two studies previously conducted concerning MDF procurement, Chaika (2010)
conducted a study on how MDF can develop measures of improving supply chain
responsiveness through the use of ICT from foxhole (battlefield) to supplier in order to
improve the information flow. The study observed that there is need for MDF to adopt
ICT usage to improve coordination between service providers and troops deployed
beyond national borders.
Ishmael (2013) also conducted a study concerning SME dealing with MDF; the author
observed that MDF has weak procurement procedures the author faulted MDF for
having failed to promote the SME due to delays in payment process. The author
31
recommended MDF to introduce strict procurement planning measures so that the SME
can be paid on time.
2.3. PROCUREMENT
Procurement is the process of acquiring goods or services, purchasing, leasing or
renting by a procuring entity on behalf of the particular body or any regional department
of the government and it includes the whole lifecycle from identification of needs,
acquiring and finally disposal stage.
Malawi government (2003) defines procurement as the acquisition by any means of
goods, works and services. Lysons et al (2006) and Bailley et al (2008), defines
procurement as the process of obtaining goods, works and services and includes
borrowing, leasing and even force pillage. The co-authors further explains that
purchasing merely refers to the acquisition of goods, works and services in return for a
monetary or equivalent payment and also that procurement is a wider term than
purchasing.
Similar observations were documented as Laming (1985) comments that the new
strategic function will probably not be called purchasing which is a too limited word.
Considering the developments which continue to happen in the global economy,
purchasing should be considered as one of the means through which procurement can
be achieved. Therefore, although the terms purchasing and procurement are used
interchangeably by some authors; the term procurement is certainly quite wider and
demanding than purchasing. Mphinga (2010) and Bowersox (2010) both authors
observed and agree that the term ‘purchasing’ is usually used in private sector
organizations while ‘procurement’ is usually used in public sector organizations. In the
32
interest of this research the terms procurement and purchasing will be used
interchangeably.
The authors referred have similar meaning however; Bowersox further states that it
includes activities such as ascertain specifications and quantities to be ordered, suppler
selection, order delivery including payment approval.
Government Procurement Cycle Table
33
2.4 MILITARY PROCUREMENT SYSTEM
Procurement in the military institutions is conducted by logistics section hence MDF has
DOL conducting all procurement activities. Knight Wendling (1996) defines Logistics as
the system consisting of integration of procurement, transportation and inventory
management to sustain customer requirements at a cost effective price. It is worth
noting that procurement supply chain management and logistics management are often
used interchangeable, in this respect the definition of procurement processes can be
different but have a similar meaning of sourcing goods and services to satisfy
customers (troops). Lysons et al, (2009)
The military use “a demand- responsive Supply Chain” strategy thrived to achieve
responsiveness, reliability and efficiency by having high level inventories (ordinance
reserves) “just in Case” inventories. For any military to be effective it requires to be
focused on accurate responsive and ability to sustain troops demand during any
operation such as war situation, peacekeeping and disaster relief operations. Hence the
nature of military operations makes it different from the commercial procurement and
other public institutions which have forecasted budgets.
Additionally, the urgency of replacement of Defence stocks entails that the military
should be ready to deploy anywhere in the world at short notice. This as a result calls
for more funding, large procurement levels and with a rather different procurement
cycle.
34
Procurement of military supplies requires a bureautic management since the process
deals with provision of products meant for security support of the nation. The objective
is to acquire specified products with a short lead time at a reasonable price to achieve
given mission.
The author observed that in Malawi there is a difference between public procurement to
military procurement despite both being government institutions. Generally,
procurement in the military is not transparent due to the secrecy of military products
furthermore military procurement is conducted when required while the normal public
procurement is done based on pre-arranged budget. Finally MDF has an additional
special funding provided called the account called Account Number One (ANO) to
facilitated procurement of supplies required for emergency security related operations.
However, both patterns have inventory (warehouses) to sustain demand of customers
when required.
Modern (2006) comments that logistics observe the supply chain strategy formulation
which is a plan of action designed to achieve a particular goal using common strategic
elements of logistics namely sourcing, operations and distribution. The author
concludes that purchasing and logistics have similar objectives to acquire products and
services to satisfy customers’ demands bearing in mind value for money and cost
effective principles.
According to Stockholm Research (2013) the major public procurement worldwide is
done by the military with an expenditure of approximately $1.7 trillion while MDF annual
stands at US 9 billion. The military budgets are massive in nature hence the
procurement process attracts the attention of both government and military authorities
35
ensure that procurement is in accordance line with the budget. The author cited armed
conflicts and peacekeeping operations policies as key contributing factors to the high
military spending. The MDF spending margin had drastically increased due to
requirements for training, peacekeeping and border security operations.
36
2.5 PROCUREMENT SYSTEMS
CENTRALISED PROCUREMENT DEFINED
Lysons (2012) defines centralised purchasing as the purchasing system where all key
strategies, policies and decisions are taken at a company headquarters or regional or
divisional level. Lyson (2006) outlines that in production purchasing will tend to be
completely centralised when the required items at each plant are largely homogeneous
Harrison (2011) agrees that centralizing procurement process is cost benefit because all
the activities of the organisation are coordinated and controlled by the headquarters and
this includes deciding and managing strategies and policies.
Cammish and Keoough (2006) trace the development of centrealised purchasing
through four stages as follows:
a. Purchasing as a function with a primary task of identifying suitable suppliers to
ensure availability of raw materials for continuity production.
b. Purchasing as a means of reducing unit cost by employing qualified procurement
staff.
c. Coordinated purchasing to implement standardization procurement system with
an emphasis on cross – unit coordination and compliance with the policies.
d. Strategic purchasing with an emphasis on joint problem solving with the suppliers
to reduce unnecessary cost.
37
2.5.2 DECENTRALISED PURCHASING DEFINED
Lysons and Farrington (2008). Define decentralised as moving authority to lower levels
of government. Decentralization involves shifting of decision making discretion with
regard to the policy or program to be pursued which includes system of budget planning
to the lower level of managements.
According to Mimba at el (2007) decentralization implies transfer of activities from
central to intermediate and local governments or whereby divisions are spread over with
each individual plant undertaking its own purchasing. In this situation purchasing is
done at plant level hence the materials and components used are specific to the
particular location
Pollitt et al (1998) defines decentralization as the shifting decision – making from
central headquarters to lower level of the government or within an organisation with
regards to the policy to be pursued and this covers pattern of expenditure to lower level
managements
38
2.5.3 HYBRID PROCUREMENT
This is a situation whereby the organisation practice a combination of centralised and
decentrailsed procurement systems are used in an organisation. Manson (2010).
Lysons et al (2006) define hybrid procurement as center- led procurement system
where a combination of strategic and operational nature are conducted within an
organisation, but the procurement authority vested with the central procurement entity.
2.6 ADVANTAGES OF CENTRALISED PURCHASING:
2.61 Economies of scale
Consolidation of quantities resulting in quality discounts. (Advantages of high volume
purchases). This supplier encourages supplier and buyer relationships.
Cheaper prices achieved as a result of reduced fixed overhead (resulting into having
products selling at low prices). As a result buyers can suggest to introduce “vendor
managed inventory” and Just in Time” as cost saving measures.
Specialist purchasing staff can be employed for each of the major categories of
purchase. This reduces wastages in terms of time and specification since forecast can
be prepared in advance.
Lower administrative costs achieved due to consolidated order/combined orders. This
also calls for better payment terms as suppliers have trust in the buyers.
Centralised purchasing enables strict control of purchasing activities and procedures
and allows the organisation to concentrate on the core competences. It allows the
purchasing director to have a direct access of communication with the management.
39
Standardized level of training amongst the staff is achieved since training can be done
less than one roof which is cost effective and easy to manage since the experience staff
can be utilized to assist the newly recruited staff.
Improved purchasing efficiency through the use of computers to facilitate efficient data
processing in the organisation. This is time saving an reduces redundancy of work
2.6.2 Coordinated Activities
Standardized purchasing procedures can be followed since all activities are conducted
under one roof. Uniform policies can be adopted e.g. single sourcing enabling
organisation focus on strategic goals.
Competitive buying between departments is eliminated thereby reducing unnecessary
costs.
Staff training and development is achieved on a systematic basis. It further paves way
for joint problem solving between suppliers and buyers as it is more convenient to
approach one central purchasing department.
2.6.3 Control of Purchasing Activities
Uniformity of purchase prices is obtained as the system assist standardized costing.
Inventories can be managed to reduce overhead cost and obsolescence.
Approaches such as Just in Time (JIT) and MRP 11 can be implemented. It is easy for
the authorities to monitor all activities.
Purchasing activities can be monitored by asserting objectives and comparing actual
results with predetermined standards.
40
Budgetary control is achieved by both the purchasing and finance departments following
a pre-planned procurement forecast.
2.7 DISADVANTAGES OF CENTRALISED PURCHASING
According to Lysons and Farrington (2006) the lead time is long the reason being that
the purchasing department is not close to user units. There is additional cost on
transportation of the stocks. In MDF, procurement is done in Lilongwe and then
transported to the rest of the units country wide.
Centralised purchasing encourages corruption since the expenditure is high attracting
competition amongst suppliers who opt to bribe the buyers to win the bids. As a result
small scale entrepreneurs are not considered due to financial restrictions as required by
the Tender Bid pre requisites.
Procurement of wrong technical specifications are common because purchasing
technical stores for aircrafts and Naval equipments require technical experts to order
required spare parts. In can be argued here that in decentralised purchasing chances of
procuring wrong specifications are slim.
According to Pitzer (2000) centralised system creates conflicts between central
procurement entity and the line departments it is designed to serve.
In summary, the needs of the user units are not fully considered since the procurement
is done at the headquarters and tend to disregard some requisitions which are a priority
to the respective user units. Lack of essential stocks as a result affects training and
operational preparations.
41
2.8 ADVANTAGES OF DECENTRALISED PURCHASING
According to McCue (2001) centralised system breaks the grip of centralised
government and induces participation in democratic governance.
To reduce costs and improve services levels to enable public institutions receive
supplies at the right time. Therefore efficiency and effectiveness is achieved since
managers are able to make decisions without facing red tape which is associated with
the top management.
According to Baily et al (1986) states the system provides offers short lead time
responding to emergency requirements because of the proximity. In this situation
chance of making a timely deliver at the right place when demanded by the troops is
met since procurement is done with the region. Lysons and Farrington (2006).
Kamudi (2015) states that decentralised system is feasible to military institutions due to
flexibility and quick response quick reaction operations which demands movement at
short notice such as disaster management operations.
2.9 DISADVANTAGES OF DECENTRALISED PURCHASING
Duplication of effort in buying and less buyer specialization resulting into high
expenditure returns where there is no supplier loyalty in return.
Privilege of achieving discounts is lost since procurement is done on regional lines
whilst in centralised system orders are consolidated. Small scale purchasing does not
attract established and successful suppliers.
There is lack of standardization and expertise in the different regions of the
organisation. Command and control by the procurement authority is also affected.
42
The system is costly in terms of overhead costs since each region (unit) incurs
overhead costs for the offices and warehouses.
There is little sharing of experience and resources hence efficiency and effectiveness
varies greatly too. Technology decisions vary by units and normally focus is by region
not on the organization’s strategic considerations. Matewere (1970).
2.10 ADVANTAGES OF HYBRID PROCUREMENT SYSTEM
The main advantage of hybrid system being benefits of global procurement by the
regional procurement entities thereby by meeting customer requirements at short
notice. High valued items are purchased following centralised system while the low
value stocks are purchased using decentralised system.
2.11 DISADVANTAGES OF HYBRID PROCUREMENT SYSTEM
There is a tense work relationship between he headquarters and regional authorities
and chances of levels. Command and control is difficult and chances of duplication of
purchases are high.
2.12 PUBLIC PROCUREMNET
Public procurement is the acquisition of goods and/ or services by a procuring entity
using public funds including loans, grants, state revenue and normally operates within
the national budget (The World Bank guideline, 2004).
The United Nations development Program (UNDP) (2007) defines Public Procurement
in detail adding that it is the overall process of acquiring goods, civil works and services
43
which include all functions from identification of needs, selection and solicitation of
sources, preparation and ward of contract and all phases of contract administration
through the end of services’ contract or useful life of an asset.
Jessop et al.(2008) and World Bank (2004) further emphasizes that public
procurement covers vast range of equipment, goods ,services military weapons and
capital projects and the bottom line being that the process should operate within
approved government budget for the benefit of the community.
The Public Procurement Act (No. 8 of 2003) being the guiding set of legislation to
provide legal basis of the Government of Malawi’s public procurement system. It
outlines the organisations structure of the procurement system and establishes the
basic procurement principles and procedures to be applied in the procurement process
which are economy, efficiency, transparency and value for money.
Basheka (2009) agrees with the authors and clarifies that public procurement plays a
significant role of explaining how public funds are spent. Government is the key
customer within the country and public procurement uses approximately 15 percent of
GDP worldwide. In Malawi public procurement accounts for 40 percent of the total
expenditure QECD (2005).
MDF receives funding from the government hence its procurement entity is obliged to
conduct procurement transactions in line with the PPA (2003) and ODPP (2004).
44
Furthermore, the National Audit Board is mandated to verify that there is transparency
and accountability. Maulana (2014) states that public procurement is the responsibility
of the government and MDF hence procurement officers should ensure there is no loss
of resources through dubious procurement. Baily et al and Lysons also note that
procurement function if well utilized help to add value to the organisation by procuring
specified items at the recommended price.
Procurement is regarded as the key component of both private and public sectors and
considered of strategic Importance. Paulraj et al. (2006). PPA (2003) states that
procurement activities shall be audited regularly to ensure that public funds are
expended for their intended purposes and to ensure the process is conducted in an
accountable and transparent atmosphere.
Public procurement process involves three key stages, namely pre-procurement, tender
process and contract award and contact management. These stages are illustrated in
figure below
Source-ODDP 2004
45
2.13 MDF PROCUREMENT REFORMS
In an effort to improve the procurement activities MDF made procurement reforms to
insure procurement is in line with the allocated budgets and the PPA (2003).The
objective was enhance transparency and accountability in the procurement activities.
MDF Reforms. MDF Act (2008)
i. Introduced Centralised procurement replacing decentralised system.
ii. Adopted of monthly financial funding special government funding.
iii. Tendering Procurement was introduced replacing LPO system.
iv. DOL was formed and mandated to conduct procurement activities replacing
Ordinance.
However, despite of the restructuring and reforms made, MDF remains the worst
performing public procurement entity National Audit Report (2014).
.
2.14 PUBLIC SECTOR
The public sector expenditure is substantial and that it is made up of all general public
operations and it is part of the economy that provides basic government services to the
citizens. The composition of the public sector vary from country to country while in
Malawi it include services such as health, education, agriculture, transport and
infrastructure such as roads and military, PP Act (2003).
Van Weele agrees that public procurement is concerned with how public sector entities
spend taxpayer’s money on goods, works and services for the benefit of the local
46
population. ODPP and World Bank Malawi (2007) both agree that approximately 70 %
Malawi budget is spent on procurement of goods, works and services equating to 15 %
of the GDP
2.15 THE PROCUREMENT PLANNING
As the saying goes’ failing to plan is planning to fail, this clearly explains emphases the
importance of having a procurement plan in line with the budget. Procurement Planning
is the preparation and arrangement of a project or work to be done given period. It is the
process of describing the extent, timing and purpose of projected procurement
requirements for the budgetary period. PP Act (2003). Booth (2010 states that planning
describes and identifies various resources required to conduct projected activities and
how the tasks should be managed and accomplished. Welsch et al (1988) states that
procurement planning is a continuous process because the passage of time demands
re-planning and making new plans.
According to Hill (1993), regardless of any purchasing strategy followed, procurement
entity should consider Order Winners and Qualifiers when conducting budgets in order
to have a clue on how products and service win attention of buyers such as price, after
sales service, brand and Quality. Mawindo (2010) states additional benefits of
procurement planning being:
Identify anticipated problems and possible solutions.
Timely payment terms resulting in good buyer - suppliers relationship.
Delivery calendar is known reducing overhead costs.
Ability to guide and monitor procurement activities.
47
ODDP (2013) and Baker Tilly Report (2014) documented that MDF registered high over
expenditure due to lack of proper planning. Gondwe (2015) announced closure of
MDF’s ANO citing high expenditure resulting from poor procurement planning. Other
authors argue that it remains a challenge for military institution to have an established
procurement plan due to the nature of the military operations which cannot be
forecasted. Lord Steel. (2014) told British parliament that “Cashgate” was a result of
poor procurement planning in Malawi which he described as a mockery of democracy.
Nanadzunda (2014) concurs with Lord Steel that Malawi Cashgate was a result of poor
procurement planning in the public sector.
2.15.1 MDF-OUTSTANDING PAYMENTS.
SERIAL ORGANIZATION PRODUCTS AMOUNT
1 SS Express procurement of
tents
K 1 billion
2 Medicine
pharmaceutical
medicine K 34 million
3 Greenland
Enterprise
food stuff K 1 million
4 Million Millennium
trading
assorted items K 167 Million
5 Medi-care medicine K 34 million
6 MI Building
company
Construction
services
K 346 million
7 Two Rivers
Trading
Construction
services
K 150 Million
8 Two Rivers Construction of K 148 Million
48
Trading camp site
9 TKB Investments Stationary K 105 Million
10 Afro Project Construction
projects
K 163 Million
11 LL Chiran Pharmaceutical
products
K27 Million
12 Universal sales Purchase of tires K275 Million
13 Kasco Suppliers Assorted items K173 Million
14 Lido electronics Assorted items K1500 Billion
solid Organization Products Amount
1 SS Express procurement of tents K 1 billion
2 Medicine
pharmaceutical
medicine K 34 million
3 Greenland Enterprise food stuff K 1 million
4 Million Millennium
trading
assorted items K 167 Million
5 Medi-care medicine K 34 million
6 MI Building company Construction
services
K 346 million
7 Two Rivers Trading Construction
services
K 150 Million
8 Two Rivers Trading Construction of camp
site
K 148 Million
9 TKB Investments Stationary K 105 Million
10 Afro Project Construction projects K 163 Million
49
11 LL Chiran Pharmaceutical
products
K27 Million
12 Universal sales Purchase of tires K275 Million
13 Kasco Suppliers Assorted items K173 Million
14 Lido electronics Assorted items K1500 Billion
50
2. 16 PUBLIC PROCUREMENT AUDIT
Procurement audit in is the examination, assessment or checking of documents,
process or procedures of documents pertaining to acquisition of goods, works or
services. When the exercise is conducted with financial funding from the government it
is called public procurement audit. According to World Bank Malawi, (2007) the Public
sector expenditure in procurement Malawi constitutes approximately 70 % of Malawi’s
budget. The money is meant to help development projects of the country and essential
services such as security to have a well trained and equipped force. It has been that
many governments have face challenges to achieve objectives due to mismanagement
f the public funds hence procurement audit was introduced to detect the corrupt and un
procedural procurements syphoning government resources.
National Audit PPA (2003) and Bailey et al (2008) concur that the primary purpose of
public accountability is to prevent abuses of public resources and to identify the
defaulters. The author strongly disagrees because according to Baker Tilly Report
(2014) MDF misused K5 billion of government resources despite of audits conducted
annually. The author agrees that the audit process if conducted professionally enables
organisation achieve transparence and accountability. However, the author disagrees
as evidenced that MDF lost K5 billion through dubious payments to suppliers for goods
and services not rendered despite of having audit process being conducted on annual
basis.
The auditors failed to highlight specific regulations whereby Finance Section had
violated procedures such as issuing cheques worth K5 billions to IPS without supporting
51
documents. The amount had exceeded withdrawal limit of K500, 000.00 according to
Desk Instructions (2004).
According to ODDP Audit/Review (2013/2014) MDF failed to submit 2013/14
procurement report following an increase of corruption related cases and non-
compliance of procurement procedures World Bank Procurement Guideline (2011). The
exercise enables ODDP to monitor how respective ministries conducted procurement
transactions in the stated financial year. MDF Audit Report (2013)
2. 17 OUTSOURCING
Outsourcing is the strategic management policy being followed by the public and private
institutions have adopted in the modern world. The adoption is done on different
motives depending on individual organisation concerned. In general it concerns
transferring non – core activities which were previously done internally to external to
external specialists who perform these activities efficiently, The decision is taken to
enable the organisation concentrate on core business at the same time reduce costs
while providing essential services in an effective and efficient manner. Lysons and
Farrington (2006p. 392).
Bailey et al (2008) defines outsourcing as the strategic use of outside resources to
perform activities traditionally handled by internal staff and resources. He further
comments that outsourcing is not a synonym for procurement but that it is concerned
with the external provision of functional activity and therefore outsourcing decisions are
strategic in nature.
52
Cowan (2006) Billingtone (2001) define outsourcing is the practice of getting a supplier
to do services previously performed internally to an external party which involves the
transfer of all the assets (staff and capital) that enabled an organisation conduct the
process in – house. It concerns handing over the complete capability to perform a
particular task to someone else. In all the definitions of outsourcing above, there is a
common feature of entrusting some of the previously done internally to an external
party. The main objectives being cost reduction, use of specialist economies of scale
and reduced time spent on supervising when outsourced system is introduced.
The author disagrees with Cowan (2006) that the process concerns handing over
assets such as staff and capital since it depends on the contracts agreement in some
cases supplier brings own staff and capital resources. The bottom line is to enable the
organisation concentrate on core competence and access to greater economies of
scale.
MDF outsourced services namely catering, cleaning, weapon maintenance, and
construction. Internal Audit Report (2014) observed that catering services proved to be
expensive almost thrice the in house cost from which went up from K3,500 and K5,500
to K9,000.00 and K15,000.00 per day per soldier and officer respectively.
Armory repair is core business to any military since the weapon technicians deploy with
troops in any operations. Outsourcing of catering and workshop services affects training
and operations which calls for strict military discipline during real operations. While out
sourcing of cleaning services was ideal and cost effective since cleaning is not a core
53
service. Harris (2006) expounds that outsourcing core competences results in poor
services and results in loss of business to competitors.
According to MDF Compliance Audit Report (2014) MDF accumulated an outstanding
bill amounting MDF K281 million as a result of un-procedure procurement and
outsourcing core competent services. The Audit observed that was costly to outsource
catering and construction services since while MDF has qualified and competent staff
than the contracted service providers.
2.17.1 MDF OUTSOURCED PROJECTS.
a. Hans Building Contractors, maintenance and painting works K191 million.
b. Two Rivers, construction Blantyre camp, K150 million
c. Fortune Suppliers, renovations Offices, K45 million.
d. Hotel Victoria, catering services to three units K150 million/ month.
e. Vehicle workshop, spray painting, approximately K100 million monthly.
f. Maintenance of offices and houses at Zomba air base K100 million.
54
2.18 INEFFICIENCY OF GOVERNMENT PAYMENT SYSTEM (IFMIS)
The government of Malawi use Integrated Financial Management Information System
(IFMIS) a system which was bought from Tanzania in 2005 The system is centrally
controlled whereby all the payments are made by the Accountant General office.
(Staffun 2000) conducted a survey in some African countries to access the
effectiveness of the government payment system.it was noted that the system was a
success in Tanzania Botswana and Namibia.
Tanzania is the role model of IFIMIS despite following centralised system whereby
payments go through the Central Tender Board for certification using a radio link to the
central procurement office. The payment process is supposed to ready within 48 hours
in Malawi the process takes more than one year due to lack of electronic facilities and
qualified staff, Public Eye, (15 May 2014) Cashgate Scandal.
The ACB Report (2013) observed that MDF made fraud payments to suppliers who had
not delivered products or services contrary to Section 24 (1) of the Corrupt Practice Act
(2004).
According to Baker Report, Malawi lost approximately K124 million through corrupt
transactions since IFMIS was introduced in 2005. K92 million was stolen during late
president Mutharika’s reign from 2005 to 2012 and K38 million during former president
Joyce Banda period from 2012 to 2014. The accounts officers from the Accountant
General and MDF were coordinating with public procurement officers to pay suppliers
for products or services not delivered. Using IMFIS Finance sections were mandated to
print cheques and immediately issue to suppliers for payments. Reserve Bank had no
verification policy hence suppliers were able to withdraw monies exceeding the
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approved ceiling of K500,000.00.Many authors noted that IMFIS system if properly
managed can help add value to the public sector by monitoring and controlling all
purchasing transactions. In Malawi the system was abused by the accounts and
observed by Baker Report that accountants were sharing secret pin codes and also that
that the government bought the equipments and did not train the user staff on the
technicalities of the equipment.
Gondwe, The Daily Nation,( 21 March 2015) informed parliament that Malawi will
migrate from IFMIS and install a new system Enterprise Resource Planning after
observing that IFMIS has deficiencies and the software was relatively slow capacity.
The Baker Audit (2014) and National Audit (2014) both reports documented that MDF
was the worst culprit following illegal payment transactions worth K20 billion using
IFMIS. The money lost could have helped improve the Malawi economy such as
purchasing modern military equipments. Cram (2000) states that putting a lead on
procurement fraud will help poor countries develop quality services to the population.
2.19 CORRUPTION IN CENTRALISED PROCUREMENT
The researcher noted that corruption has different meanings in different societies and
organisations. In Malawi and Africa in general corruption is regarded as theft and
normally associated with procurement process in private sectors. Malawi Corruption
Procurement Act (2004) defines Corruption is the offering, giving, receiving, obtaining or
soliciting of any advantage in order to influence the action of any public officer or any
other person in the discharge of duties of that public officer, official or other person.
Malawi Government Corrupt procurement Act (2004).
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The International Police (Interpol) (2014) defines corruption as any course of action or
failure to act by individuals, public or private in violation of the law or trust for profit or
gains.
According to Global Corruption Barometer (2014), Malawi is ranked 110 th among 175
countries in terms of corruption perception indicating that Malawi went down on the
ladder from 37 to 33 on the index in 2014 signifying that corruption level has increased.
According to Lambert and Sonin (2003) corruption is common in big contracts where
bidders and government procurement staff collide to steal public resources. Both
authors agree that the syndicates have strong bonds and it is complicated and difficult
to burst as it involves the suppliers with the support of the government officials. This is
common in military procurement process whereby defense projects are relatively capital
intensive and increases willingness of firms to bribe government officials. Suppliers,
military authorities and government officials collude to make personal gains in return as
suppliers who offer high kickbacks as incentives to win the tender bids.
According to ACB Corruption Survey Report (2010) it was observed that corruption is
common at IPC section because it (IPC) is mandated to examine, evaluate and select a
successful bidder as stipulated in Section 8 (3) (c) of the Public Procurement Act,(2003)
hence suppliers bribe the IPC officers in order to win bids and tenders.
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The National Audit Report (2014) documented that MDF failed to account for K2.9
billion and that the MDF refused to produce supporting documents for verification to the
ACB.
Corruption is conducted worldwide including the developed countries face serious
problems fighting corruption. In 2011 the USA department of justice prosecuted and
convicted 1107 public officials from the USA government and military officials for acts of
corruption. Jimmie Jackson Malawi Nation (13 December 2013).
ODDP 2014 and Baker Audit Report documented MDF as the most corrupt
procurement entity following embezzlement of over expenditure of K20 billion.
Finally, Adekanye (1999) states that most of the military procurement has lack legal
institutions to ensure and enforce accountability.is weak and further concludes that
absence of transparence and accountability mechanisms in the defence budgetary
process allows for the systematic manipulation of military data by corrupt officials.
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2.19.1 CORRUPTION CASES INVOLVING MDF
i. USA, Colby (2011). Army Fraud Unit recovers U$ 1.6 billion. Inflated prices
for purchase of weapons and rations for troops in Iraq and Afghanistan.
ii. RSA, Rocky (2004) South African Arms Deal, purchase of weaponry by
government officials worth U$ 4.8 billion in 1999. The Schabir Shaik was
convicted.
iii. Namibia, Poly Tech (Chinese State Company) contract to supply military
equipment to Namibia Army valued at U$ 126.4 million. Polytech bribed
General Martin Shali with U$ 500,000 to inflate the prices.
iv. MDF Corruption Cases. ACB Report. (2014)/ Malawi Gazzette MG/02/25.
(A). S.F International U$7.5 million supplier using different cheques
investigations on going.
(b). Procurement of patrol boats without supporting documents January
(2013).
(c). Thuso Group dubious contract worth K900 million contracts to supply
blank ammunition.
(d). Top Prima and Rummage to supply goods worth K16 billion ($50 million)
(e). Payments to IPS Logistics for goods not delivered amounting to K3 billion
(f). Payments to Thuso Group amounting to K1.5 billion (goods not delivered)
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According to Janes (1989) military projects are capital intensive hence their willingness
of firms to bribe government officials to favor them (suppliers) win contracts, access to
information on design and specifications also encourages corruption.
IPS managing director Lutepo confused during a radio interview with Zodiac Radio
Station (ZBS) that he benefitted Cashgate resources. Baker Tilly Report noted that
Lutepo had ten standing contracts with MDF during the audit period. ZBS Radio News,
(Friday 21 November 2014)
List of MDF corruption files under ACB investigation:
According to Baker Tilly Report (2014), the government and Ministry of Finance were
responsible for authorizing Reserve Bank to effect payment of hefty amounts in clearly
flawed procedures. KACHINGWE (2014) citing fraudulent payments to MDF suppliers
worth K5 billion drawn from MDF Account Number One (ANO) which is meant for
emergency security operations only..
2.20 INTERNAL PROCUREMENT COMMITTEE (IPC)
The IPCs were established by Malawi Government (2003) and allocated in all
procurement committees entities PEs with a mandate of approving procurement
decisions and to ensure procurement activities are conducted in compliance with the
PPA (2003). The composition of the committee is outlined by the PPA and the head of
the PE chairs the committee and it has one procurement professional (secretary) and
none from accounts section.
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The key functions of IPC are as follows:
i. Verification of procurement plans,
ii. Stock levels and processing tender bids.
iii. Assessing quality and prices of goods procured.
iv. Conducting opening of tender bids.
2.21 PUBLIC PROCUREMENT PRINCIPLES
Public procurement principles are guidelines that have to be followed by a procuring
entity when procurement is undertaken. Dobler et al. (1990) document that every
government has got procurement principles which must be adhered to by procuring
entities. The authors’ emphases that regardless of the organisation whether private or
public organisation the procurement objectives are similar and must be adhered to. This
calls for the procurement entities to procure goods and/or service of the right quality,
quantity, from the recommended source, right price, timely delivered and at the right
place. Malawi government PPA (2003) and ODDP mandated to monitor all procurement
activities to ensure the procurement activities are done following legal procedures and
also to enhance transparency, accountability and non- descriptive procurement in the
government institutions and agencies.
Figure 4, shows diagrammatic presentation of the public procurement.
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2.22 PROCUEMENT PERFORMANCE
Purchasing performance refers to the quantitative or qualitative assessment of the
degree to which the purchasing functions and those employed therein achieve the
assigned objectives Krudsen (1999). According to Weele (2005) purchasing
performance is a tool meant to enable the purchasing function achieves pre- determined
goals using the minimum available resources. While Castrol (1990) states that
procurement performance is a yardstick for measuring operation ability of resources
acquired to accomplish assigned mission. Emphasis is on service delivery which is key
to logistics operations, Chiunge (1993) defines it (service delivery) as the pre-planned
periodic arrangement for delivery of goods and services to the users. The service
delivery is ideal to military operations as it gauges how best the troops can be best
served in actual operations. Jekke (2013) notes that an organisation can only know how
it is performing unless it has purchasing performance measures in process.
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Figure 2.3 detailed Public Procurement Process
Source- Saunders et al (2009)
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Procurement planning refers to the preparation and arrangement of a project or work to
be done. Planning describes and identifies various resources to carry out project
activities and how those tasks should be managed and accomplished. Booth (2010)
explains the procurement planning should begin at the design stage of the project cycle
where by identification and preparations are done and he also emphasis that the
procurement planning can only be a success if the procuring entity understands the total
cost of the organisation.
Procuring entity should make procurement plan to ensure that the value for money is
achieve (PPA, 2004). The benefits of procurement plan to the organisation are as
follows:
Avoiding emergency procurement, timely deliveries and availability of goods and
services as per arrangement.
Aggregating procurement operations both within and between procuring entities
to enhance greater economies of scale due to requirement consolidation.
Obtaining value for money and cost minimization therefore operating within the
budget achieving price reduction through bulk purchases.
Avoiding breaking down of procurement process allowing production continuity.
Integrating procurement activities such as proper selection of procurement
methods and contract methods to be applied.
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2.23 EMPIRICAL REVIEW
In this section, the author reviews how the MDF and other military procurement entities
in Africa conduct their procurement process and their shortfalls in comparison with the
Public Procurement Act (2003) and Desk Regulations (2004) procurement regulations.
The National Audit Report (2013) and The Baker Tilly Audit Report (2014) revealed that
the MDF procurement process had failed to fully implement the PPA (2003) and adhere
to the ODDP regulations as stipulated the Desk Instructions for Public Procurement
(2004). Repeated tendencies of maverick purchasing and also lack of procurement
proficiency in the organisation. The reports further reveals that in general the MDF
procurement process was below standard and failed to adhere to the PPA (2003) as
evidenced by massive fraud and corrupt procurement process, lack of procurement
planning, illegal ward of contracts and approval of Tender Boards, poor contact
management, and failure to adhere to PPA (2003) and procurement methods.
2.24 SUMMARY OF LITERATURE REVIEW
Literature review has examined previous studies on the benefits of centralised
procurement in the public sector (MDF). The benefits and challenges of centralised
procurement to the MDF have also been looked into. The roles of the other procurement
functions such as IPC. PU and ODPP have also been clarified. The review highlights
the relevance of the research study. The next chapter covers research design,
paradigms, theoretical framework, methodology, sampling and data collection methods.
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2.25 FURTHER RESEARCH
In line with the recommendations for further study, it would be of great benefit to MDF if
workable centralised purchasing system was in place. There is need to continue
collected data from other military institutions worldwide and also all MDF units to assess
the extent to which areas require improvements to achieve value for money. While, it is
obvious that units would opt for decentralised purchasing so that they can manage own
accounts and purchase items of their choice. The changes of procurement system t
should not just be made to benefit individual interest but benefit the MDF achieves value
for money.
2.26 IDENTIFICATION OF GAPS IN RELATION TO THE PROPOSED RESEARCH
The issue of public procurement has been extensively researched in many countries
following the introduction of democratic governments. However, the researcher
observed that there was knowledge gap whereby military practice centralised
procurement in the MDF. Very little has been written on military procurement in Malawi.
The researcher had difficulties to collect data concerning military purchases because of
the secrecy of the Defence procurement policies.
Information regarding challenges being faced by the DOL regarding corruption cases
and outstanding payments was not readily available.
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2.27 SUMMARY AND CONCLUSION
The general conclusion of the chapter is that there is several procurement systems
open to public institutions and military in particular. Selection of the strategy lies upon
the management authorities and financial muscle of the organisation. While in the
military the nature of operation will be the deciding factor.
McCue (2008) observed that organisations believe that changing purchasing strategies
is a cost saving measure and can improve service delivery. While OECD argues that a
system that applies both patterns of centralised and decentralised to bear positive
results to different types of organisations. This area requires further study if it can
improve service delivery and add value to the military operations.
The large part of literature reviewed concentrated on advantages and disadvantages of
centralised and decentralised purchasing structures in the public institution. The
literature revealed that centralised purchasing if correctly utilized can bring an impact to
the MDF. However, it should be noted that both strategies (centralised and
decentralised) have benefits and shortfalls. It was observed that centralised
procurement has brought positive impact to MDF in terms of delivery service and cost
savings
Nevertheless, there are also many challenges associated with centralization of
procurement, the main concern being that system is prone to corruption following
interference by the politicians who have an interest in the high spending military
procurement activities.
It is quite contrary to private sector whereby emphasis is based on cost saving and high
profit margin, it has been observed in the review that with public procurement emphasis
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is on value for money, transparency and accountability. While, correct specification and
delivery service is significant to military procurement strategies.
Finally, authors do agree that centralised procurement alone is not a solution to the
procurement challenges. It is obvious that adopting centralised procurement will
completely eradicate corruption in the MDF. Centralised purchase will encourage
complete control and instill transparency and accountability.
The next chapter covers research design/ methodology which include essential issues
concerning overall research strategy, sampling, data collection, reliability and finally
validity of research findings.
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CHAPTER 3: METHODOLOGY
3.0 Introduction
The previous chapter highlighted the impact of centralized procurement in the public
sector as researched by various authors. This chapter will therefore outline the
methodology that the research followed. The discussion in this chapter will also touch
on issues of data collection methods as well as data sampling methods. This research
was guided by a standard of ethics which will be detailed further in the chapter.
Collis and Hussey 2003 defines research methodology as the overall approach to the
research process, from theoretical underpinning to the collection and analysis of the
data and further, refers to methods as the means by which data can be collected. Thus
according to Creswell (2009) methodology, concerns why data was collected, data
collection system, data analysis, data interpretation and validation.
This chapter will highlight and discuss the methodological frameworks that were
employed during the study.
3. 1 Research philosophy
According to Gray (2010) and Saunders (2003) there are three types of philosophies
and each of them has an influence on data collection method. The philosophies are
Positivism, where a research is based on proving a given theory (an observable social
reality) similar to those followed by natural and physical scientist. The second one is
phenomenology, where the research intent is to discover the details why things are
happening the way they are. The third one is Realism which is the combination of the
two (positivism and phenomenology).
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The study adopted an Interpretivist methodology because the research intent is to
discover the details why things are happening the way they are, in this case it concerns
the impacts of centralised procurement in the MDF hence it falls under the category of
social sciences.
This Research is based on qualitative as opposed to quantitative method since the
study is concerned with qualitative phenomenon and involves investigating the impact of
centralised procurement system adopted by the MDF as opposed to decentralised
system. The study therefore, concerns analyzing factors contributing to procurement
challenges and benefits hence it is feasible.
Greener (2008) highlights that Qualitative approach concerns subjective assessment of
attitudes, opinions, behavior and that it focuses on (text) as opposed to numbers. C. R
KOTHARI (2004) explains that quantitative research concerns on measurement of
quantity or amount expressed in terms of quantity.
Below is a research onion which was used to confirm the design and choice of the
methodology.
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Figure 3.0. Research Onion Source: Saunders et al, 2003
Source, Sunders, et al (2009)
3. 2 Research Approach
There are two research approaches namely Deductive and Inductive. Deductive
approach is used when one develops a theory or study and hypothesis and designs a
research strategy to test that hypothesis while the with Inductive approach the
researcher starts with data collection, and generalizes from a sample to a population
based on the outcome of findings Saunders et al (2003). The authors further conclude
that the deductive approach seem to be closely connected with the quantitative data
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and is commonly used while the inductive approach is more aligned with
phenomenology.
It has been observed that many authors prefer a mixture of approaches in business and
management research because the combination of the approaches can help to address
the study objectives and answering respective research questions.Hussey (2003)
explains that all the three methods have own advantages and disadvantages and
concludes that only the two paradigms (positivist and phenomenological) are common
in most of the studies.
The researcher used inductive approach since the research focuses on the
organization business problems and economics, the approach is ideal for the study
because it focuses on investigating the impact of CPS (centralised procurement system)
therefore it concerns social sciences. The author therefore, believes CPS falls under the
category of social sciences which can be understood by combining the views and
perceptions of the staff responsible for procurement within the MDF.
The study therefore, is paradigm using exploratory research strategy as it is aimed at
investigating the impact of CPS in the MDF. The research project was conducted as a
survey, which according to Saunders et al (2009) comprise a cross-sectional design in
relation to which data is collected predominantly by questionnaire or by structured
interviews. Hussy (2003) noted that surveys are positivistic methodologies where
sample of subjects are drawn from a population and studied to have a conclusion
concerning the opinion of the population. Surveys provide a detailed and straight
forward approach to the study attitudes, values, beliefs and motives at a low cost
Saunders (2009). The researcher chooses this methodology since surveys are ideal to
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collect data from the general population. The methods used in positivist and
phenomenological are given in Table 2
Table 2.0 Research Process
Positivist Approaches to social science phenomenological
-Associated
Methodologies
-Cross Sectional
Studies
-Experimental Studies
-Surveys
Associated
Methodologies
-Action Research
-Case Studies
-Ethnography
-Feminist
Perspective
-Grounded Theory
-Hermeneutics
-Participative
Inquiry
Source: Hussey et al (2003)
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3.3 Research Paradigm
Research Paradigms are considered as the philosophical underlying behind any
successful research study. Crowther (2009) and Collis both stresses that the
advantages of research paradigm is that it acts as the guiding framework that directs
how the study should be conducted whilst taking into consideration the peoples
philosophies and assumptions about the environment and the nature of their
knowledge.
Saunders (2009) categorizes the paradigms in three levels as follows:
Level 1. (Philosophical) reflecting basic beliefs of the world.
Level 2. (Social level), guidelines of how the study is to be conducted.
Level 3. (Technical level) choosing methods and techniques ideal for the study.
3.4 Research Design
According to Gray (2010) defines research design as the overarching plan for the
collection, measurement and analysis of data. Oppenheim (2000) also states that the
findings should be precise data required to achieve objectives. Saunders (2000) also
emphasizes needs to have a clear analysis of the methods which will be used in the
research when collecting data.
The researcher used several data collecting strategies for this study namely,
(Triangulation) questionnaires and interviews. The questionnaires were designed with
the aim of gathering information relevant to each research question. The questionnaires
consisted of sections A, B, C and D. One questionnaire was designed for DOL officers,
one for DOF members, one for IPC members, and one for ACB and ODPP.
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The research started with the selection of the general research topic, research problem,
reviewing literate pertaining to research topic and determining state of the field,
objective of the research literature review, search design, data collection and data
analysis preparation, interpretation conclusions and recommendation which included
limitations and constraints as well as a presenting proposals for future research. An
overview of the design is presented in the figure below.
Table 3 Research Design
Source: Collis and Hussey (2003)
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3.5 Triangulation
Research triangulation in simple terms can be defined as the use of different research
approaches, methods and technics in the same study Collis and Hussey, (2003). This
helps to overcome reliability problems due to potential bias of adopting a single method
approach.
Triangulation is the use of more than one investigation to research the question in order
to enhance confidence in the findings. Data triangulation refers to where data is
collected over different frames or from different sources, while Methodological
triangulation refers to the use of more than one specific research method such as using
both a quantitative and qualitative techniques for data collection of a similar research.
In this study possible bias was medicated by collecting and using data from all levels
across the MDF rank structure starting from heads of departments, IPC members
through to user units who are the customers to DOL hence it is called data triangulation.
According to Dezin (1970) the three types of triangulation technics are as follows;
Investigator , the use of more than one researcher in the field to gather and
interpret data
Theoretical, the use of more than one theoretical position in interpreting data
Methodological, the use of more than one method for gathering data
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3.6 Research Sample
According to Gray (2010) selection of a sample in a research is critical as it determines
success of any study and it should be carefully planned as an integral part of the overall
research design. The sampling strategy must include details on:
Size of the sample
The composition of the sample
Methods of selecting samples.
Hussey (2003) however argues that a good sample should not be biased and it should
be large to include needs of the investigation of the study. The researcher used a
purposive sampling method to come up with the number or participants who the
research knew they had some experience on centralized procurement in public sector
with an emphasis on MDF and that they could give valid and valuable information. The
targeted logistics, finance, IPC and government departments concerned with public
procurement such as ODPP and the ACB. In this way the researcher managed to get
first-hand information regarding centralized procurement. The researcher targeted DOL,
DOF and IPC because these participants play a key role are the rightful people involved
in the procurement activities for the MDF using centralized procurement system.
3.7 Research Credibility
To achieve validity and reliability, the author framed the questions clear and straight
forward pattern which could be understood by the respondents of all levels. Additionally,
the author used semi-structured interviews and open ended questions where the
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researcher was not sure of the response or when a detailed answer was required or
whereby the researcher wanted to probe for more details. Saunders et al, (2003).
3.8 Research Size Sample
The semi – structured questionnaire interviews were administered by the author to the
procurement staff and heads of the selected departments. This ensured that the right
respondent answered accordingly. Furthermore, follow up questions could be used
according to the respondents response as a value adding to the data. The questionnaire
was designed to accumulate detailed information from the key players involved in the
centralised procurement system.
The study was administered as follows:
DOL staff -5
DOF staff -5
ODPP staff -2
National Audit -2
ACB staff -1
Other units -5
Systematic sampling was used to ensure that each targeted strata of the procurement is
taken into account. In this case, it allowed all the participants concerned with
purchasing to be involved in the study and this include the statutory corporations
(ODDP and ACB).
3.9 Data Collection.
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Saunders (2009) indicates that there are two sources of data collection namely primary
and secondary. These two data sources key to the study because they were used to
enable the researcher identify the benefits, challenges and impacts of centralised
procurement to the MDF. The findings from these sources were also used as bases for
conclusion and recommendations.
3.9.1 Primary Data.
Creswell (2009) and Kothari (2008) define primary data as the data that is collected for
a specific problem at hand, using procedures that are in line with the research problem
and. The main point being that the data is collected for the first time. In this study, the
primary data was collected through questionnaires which were prepared by the
researcher and interviews were conducted with MDF officers and other staff members
from the public sector. Collis and Hussey (2003) define a questionnaire as a list of
carefully structured questions, chosen after considerable testing, with a view to eliciting
reliable responses from a chosen sample
3.9.2 Secondary Data.
Secondary data is the data that is already in existence. It had a wide range of sources
such as books, internet, previous reports, magazines, Archives, journals and
newspapers. The researcher used the internet, books, journals, Supply Chain
Magazines, Government Annual Reports, articles from Malawi Daily Times Newspapers
and Nation daily Times including some dissertations by previous writers to conduct the
study. According to Lysons (2009) secondary data is economical since the data is
readily available and therefore time effective on the part of the researcher since he will
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only spend time on analyzing data. The other advantages being breadth of the data
since there is a large amount of data on every topic. The main disadvantage of
secondary data is that it cannot be easily accessed and also quality of data sourced
from internet is of low quality which cannot be ideal for research topic.
3.9.3 In– depth Interview.
Saunders (2010) and Kahn & Cannel, (1957) the authors state that an interview is a
purposely discussion between two or more people and that the main purpose is to
gather valid and reliable data that are relevant to research questions and objectives
respectively.
Structured interviews (face-to-face) were conducted with the ODPP, ACB and MDF
procurement staff. It was therefore the researchers opinion that the in- depth interview
would strengthen and add value to the quality of the research study.
3.10 LIMITATION AND DELIMITATION
Limitation
Limitations are factors that hinder the progress of any activity and in this study the
progress of the research. The researcher in this case or any other researcher has no
control over these factors only the acts of God or naturally they are force majure state.
Limitation can affect the outcome of the research. The researcher faced many
challenges in the whole research process.
(i) Nature of institution
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The study involved a military institution the research was vulnerable to ‘Participants
bias’ which could have an effected the end result of the study. Initially the participants
were reluctant to cooperate for fear of being cautioned if they disclose any information
concerning military procurement as it concerns national security measures. The matter
was resolved after being assured that the study meant for academic purposes and that
the possible positive results were to benefit the organisation. Following the clarification
of the study purpose all respondents made a remarkable contribution.
(ii) Participant bias
The researcher is a member of the core management team (DOL) and may be bias
on the way he handles the research study. However, the researcher as a
professional procurement officer based his findings on what the respondents said
and not on personal opinion and or thoughts.
(iii) Busy schedules
Meeting with respondents on scheduled dates and timings for interviews, was a big
challenge due to the busy schedules of the (MDF) officers since always committed
participating in field exercises, training and or attending meeting. As a result several
interviews had to be rescheduled and this affected the whole programme of the
research.
(iv) Financial
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The research was an academic one and had no financial founding which
could have been used to procure needed resources and travel expenses
hence the research was localized within Lilongwe
(v) TimeTime available to this research was not enough because the research was
conducted whilst the researcher was deployed on a peacekeeping mission to
Lesotho. This affected progress of the study since the researcher had to
travel from Lesotho to collect data and also attend classes
(vi) Scarcity of information concerning military procurement
The concept of military procurement is new and there was little information
related to centralised procurement system within the MDF. So the researcher
had to source the information from other military institutions in Africa and
overseas.
(vii) Red Tapes in officesThe researchers had at times difficulties to meet senior officers or to get
information because of gatekeepers. The researcher was denied access to
interview the concerned officers to the extent that the researcher could not
make appointments by telephone in this circumstance
(b) DELIMITATIONS
Delimitations are the areas the researcher had decided to concentrate on during the
research process. In this case the researcher decided to find the benefits and
challenges of the centralised procurement in the MDF and not the public sector as a
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whole. The reason behind this decision was that it would have been time consuming
and costly for the researcher to cover the entire public sector.
The limitation and delimitation play a key role in any research project because they
enable the researcher identify likely threats to be encountered during the study.
3.11 VALIDITY AND RELIABITY
(a) Validity
The validity of the questionnaires and interviews was based on the fact that researcher
specifically targeted officers who were involved in the procurement process of the MDF
and were eager learn the findings. In return the data provided was valid as they could
not cheat.
(b) ReliabilityThis was based on the available secondary data, the researcher had the reliability on
books, newspapers, Government Reports and Procurement Regulation Acts because
they are internationally recognized and are published by reputable institutions.
3.12 Ethical Considerations
Research Ethics are the moral principles guiding the planning and conduct of research,
(Economic and Social Research Council, (2004). Holman, (1991) argues that the moral
principles should include conducting a research in a responsible and morally defensible
way.
The researcher strictly considered that ethical principles were observed and adhered to
throughout the course of the study as follows; that there is no harm to participants,
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whether there is lack of informed consent, no invasion of privacy and whether deception
is involved, data and identity of participants not to be disclosed. (Gray (2010).
The researcher ensured that these principles were adhered to by always informing the
research participant of the background and purpose of the research. The questionnaire
that was administered had a cover page that introduced the researcher. There was no
form of any physical or psychological harm to the participants; they all took part in the
research willingly. The researcher made it clear that no rewards either in form of
monetary, training opportunity and or promotions would be given for participation in the
study
3.13 Summary
This chapter looked at the research methods that the researcher adopted, data
collection methods, sample size, limitations of methodology and targeted respondents.
The research was a case study research and data was collected using semi –
structured face to face interviews. The next chapter 4 will highlight the findings of the
research that was conducted regarding Data collection and Analysis
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CHAPTER 4
DATA ANALYSIS AND RESEARCH FINDINGS
INTRODUCTION
The previous chapter showed various approaches throughout the whole process
of gathering appropriate research data. This chapter presents data analysis and
research findings based on the research questions outlined in chapter one. This
study is entirely based on investigating the impact of centralised procurement in
the MDF.
The chapter analyses and discusses the findings based on the theories and
models (discussed in chapter 2) and relates them with the research objectives
and research questions. It should be noted that data findings of this research
were from the primary and secondary data used in chapter two. The researcher
used questionnaires and interviews (in-depth) as methods of correcting primary
data. The researcher also used books, internet, journals, newspaper and
previous research works (students) work as methods of collecting secondary
data
The main objective of the study was to investigate the impact of centralised
procurement in the Malawi Defence Force. Specifically, the study involved the
following objectives.
To evaluate challenges of centralized procurement system in the MDF.
To assess role of centralised system in stemming or encouraging
corruption in procurement practice in the MDF
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To explore whether the procurement at MDF complied with the Malawi
Public Procurement Act of 2003, and its regulations of 2004.
To recommend strategies which can enable MDF improve the current
procurement practices to achieve value for money
4.1 Data Analysis
Saunders (2009) and Kvale (1996) define data analysis as an interrelated and
interactive process that involves data collection, development and verification.
Both authors agree that data analysis helps to shape the direction of the
research. Huberman (1994) indicate that data analysis involves reducing the
collected data, displaying it and making conclusions and concluded that the
process is ongoing and can be done before, during and after data collection
process. Rossman (1999) states that conceptualization is used to have the
feelings of the participants in qualitative research and is done in a normal
environment there in.
The researcher sent 10 questionnaires to MDF staff members working under
DOL and DOF with the aim of evaluating the benefits and challenges of
centralized procurement system in the MDF
The researcher interviewed ODPP Officers in order to determine MDF
compliance to procurement regulations in accordance with the PPA (2003). A
group of four senior officers were interviewed. Their response was based mainly
on 2013/2014 Financial Audit and Baker Tilly Audit (2014).
The researcher also interviewed ACB and National Audit Officers in order to
determine the involvement and incompetence of the DOL and DOF in the corrupt
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procurement processes alias ‘Cashgate scandal’ resulting from the corrupt
procurement procedures in the public sector as documented in the 2013/2014
finance audit report.
4.2 Findings from in- depth Interview
4.2.0 Introduction
This part gives summaries of interview findings. Each interview has its own summary.
Major issues in the descriptive interview were derived from these in- depth interviews
findings.
Following the interaction and interviews with the participants as stated above, there was
a clear proof that the information available was valid and reliable. The researcher had
established the findings by analyzing question by question with their response as
follows:
4.2.2. From Office of Director of Public Procurement.
This section is based on research objective number three, “To explore whether the
procurement at MDF complied with the PPA of 2003 and its regulations of 2004”
The Desk Instructions for public Procurement are meant to provide detailed guidance on
the procurement procedures to be followed by all public procurement entities. Ministries
receive funding from the government to procure goods and services as per budget
respective plan. It has been observed that procurement units (PU) are overwhelmed
with the funding resulting to developing a tendency of spending beyond the allocated
budgets.
87
Ministries are strongly advised to conduct procurement planning and also follow ODDP
guide lines of having an effective IPC to budge and facilitate all procurement activities.
MDF is strongly advised to conduct performance review meetings to evaluate all
procurement activities conducted against the initial budget. It was noted MDF had an
over expenditure during the 2013/ 2014 and 2014 2015 financial budget.
Most of the MDF top management is not conversant with the importance of procurement
procedures. There is little time allocated to management training compared to core
duties (security related functions). MDF should strive to promote administrative training
in areas such as Public Financial Management, Public Procurement and Public Audit.
Guidelines, PPA (2003) and Desk Instructions, acknowledge positive progress made by
MDF since the organisation adopted CPS.However, a challenge faced by MDF is lack of
procurement plans. The IPC has no full control of procurement activities. There is also
lack of qualified procurement and finance officers conversant with ODDP and public
procurement regulations which can enable MDF achieve value for money.
4.2.3. From National Audit Department.
The main challenges in MDF include lack of qualified staff in the Finance section to
conduct audit reports and advise the authorities accordingly on financial matters such
as budget management and internal audit activities.
It was learnt that both internal and external audit were not conducted as per schedule
hence fraud and corrupt reports had increased during the past 5 years. There is no
close work relationship between the key players of the procurement activities (DOL and
DOF). Payments were made to suppliers without supporting documents and or before
deliveries of the products or services. Bake Tilly Report (2014).
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The MDF budgetary allocation is monthly, not timely and lower than the approved
budget. In actual fact the allocation is insufficient to enable MDF to pay the suppliers in
return. Interference by the top authority prioritizing payments to suppliers is a big
setback. Other shortfalls include processing large payments beyond the recommended
government ceiling levels of K3 million, printing, processing payments to ‘ghost
suppliers’ and finally failure to account for MDF resources amounting to K2.9 billion
during the ‘Cashgate’ episode.
4.2.4. Anti- Corruption Bureau (ACB).
The objective of this section is “To assess the role of centralised system in stemming or
encouraging corruption in procurement practice in the MDF”.
The team acknowledges positive strides made by DOL since the introduction of
centralised procurement. However, the group had mixed reactions on the performance
and integrity of the DOL staff members following the fraud of K2.9 billion from the MDF
account.
According to Audit Report (2013/ 2014) the DOF and IPC coordinated to process illegal
payments to suppliers without supporting documents. Furthermore, large payments
exceeding the government ceiling was a serious violation of PPA 2003 and Fiscal
Regulations Act 2000. A spirit of conflict of interest encourages a fertile ground to
corruption such as making payments to undelivered products and authorities directing
payments to suppliers at an exorbitant price.
The team further agreed that conducting quarterly internal auditing close monitoring of
procurement activities is the best measure to stem out corruption in MDF. The
researcher further asked several questions to assess the respondent’s opinion and their
89
views on the integrity and behavior of IPC and DOL. The findings were that the
members had committed serious offence for encouraging corruption by failing to report
the atrocities. The interviewees further concluded that there was no reason to blame the
system itself (centralised procurement system) for the corruption cases but the
members concerned.
4.2.5 Summary Findings from in- depth Interview
The centralised procurement system is best suit for MDF despite being a military
institution, however MDF should adopt a hybrid system (combined centralised and
decentralised procurement) as this system would allow user units purchase low value
items locally. The benefits being short lead time response and also supplier loyalty
especially the Small Scale Entrepreneurs.
MDF being a public institution should conduct procurement activities in a transparent
and accountable atmosphere. Furthermore, it was a grave mistake for MDF refusing to
surrender procurement documents to be audited since any public entity is subject to
PPA 2003 and is therefore subject to audited. The IPC should be independent and
allowed to operate without any interference from the authority when making strategic
procurement decisions. The top authority should endeavor to train officers at all levels
PPA to curtail corruption within the procurement process as documented in the Baker
Tilly Report 2003.
90
4.2.6 Findings from Participants
This section is based on research objective number one “To evaluate challenges of
centralized procurement system in the MDF”.
The key question of the objective was to understand if the MDF members understand
the shortfalls of centralised procurement system. Strategic planning and
interdepartmental relationship is the main focus of this research. The findings revealed
that the participants had a good understanding of the questions (participants) despite
having mixed opinions on the issue. The participants managed to present challenges
and benefits of centralised procurement as follows:
4.3 Challenges of centralised procurement system
I. High corruption level, since orders are consolidated hence suppliers prefer to
bribe procurement officers so that they can stand a chance of winning high value
tender bids.
II. Long lead time, due to distance and chain to process requisition, the delivery
performance on time is compromised. This can result in jeopardizing military
operations. An example is fuel and spare parts being procured by DOL and are
delivered to user units after a week or two.
III. High cost resulting from transport and other overhead cost incurred from storage,
handling and security.
IV. Low empathy level, (understanding of customer needs) can easily be jeopardized
due to communication breakdown in the process.
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4.4 Benefits of centralised procurement system
i. Economies of scale, MDF was benefiting from large discounts following large
orders to suppliers. This gave a chance for MDF to utilize the large discounts
for other development projects or welfare of the troops.
ii. Lower administrative costs achieved due to the consolidated orders in terms
of operating inventories in all the units, currently MDF has only two
warehouse reducing overhead costs.
iii. Control of activities, through the response it was established that participants
supported the system that with the thin budget allocation MDF is able to
monitor and control purchasing activities.
iv. The participants also cited advantages of implementing key procurement
strategies such as ‘Just in Time’ (JIT) principles and Vendor Inventory
Management (VIM).
v. Cost effective due to high discount achieved from volume orders.
vi. Enhanced customer supplier relationship, supplier will prove to be royal in
order to maintain a good image. A joint problem solving is achieved due to the
long term relationship.
It should be noted that both strategies have own challenges and benefits but the key
point is good procurement planning and coordination in the whole supply chain
management (SCM) process.
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4.5 Findings from Participants
This section is based on research objective number four “To recommend strategies
which can enable MDF improve the current procurement practices to achieve value for
money”. Firstly, the researcher wanted to know if the participants understood the term
‘strategies’ which they managed to define it (strategies) correctly. Those strategies are
ways of doing things to achieve positive results. A follow- up question was posed to find
out if participants understand the term ‘VFM’. They correctly defined ‘VFM’ as the
process of conducting an activity on a cost effective manner to achieve high profits in
return.
How can adoption of centralised procurement system add value to the MDF?
Through the response it was established that all participants in the DOL had indicated
that they were aware that MDF was practicing centralised procurement system.
According to literature centralised procurement has benefits of achieving economies of
scale, coordination of activities and control of activities. Lysons (2012). To carry out the
objective the researcher was interested in determining the awareness of CPS and
identifying the adherence to the principle.
All participants showed there is awareness responded by supporting the centralised
procurement system being ideal to MDF and had brought the following positive
developments:
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CHAPTER FIVE
CONCLUSION AND RECOMMENDATIONS
5. Introduction
The previous chapter discussed the findings with to the study questions and how they
relate with the identified theories. This chapter brings up a consolidated summary of the
findings of the research upon which conclusions and recommendations and way
forward based on the study findings. Chapter one introduced the topic under study while
chapter two provided literature review. Chapter three provided the Methodology and the
research design. Chapter four provided the analysis of the findings and finally this
chapter five consisting the conclusion and recommendations of the study. This research
was about finding out the impact of centralized procurement system in the public sector
with an emphasis on MDF. The conclusion and recommendations will be based on the
answers and the answers from the research questions and some from the literature
review. It should be established that the impact of centralized procurement in the MDF
can have positive or negative implications.
The findings from the study revealed adoption of centralized procurement system was
the excellent arrangement for MDF organization. The centralized procurement system
has positive implications despite having some shortfalls such as the corruption cases
and over expenditure reports by the DOL and DOL which were isolated case.
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5.1 CONCLUSIONS
The public sectors are financed by the government uses money collected from tax
payers, loans and grants. The money is meant to benefit the local population and also
contribute to the development projects of the country. This being the case, the
government has procurement legislations in place to guide procurement entities assist
the government achieve value for money. This can only be achieved if the PE instills a
policy of transparency, accountability, openness, effectiveness and efficiency in the
procurement process.
Malawi is one of the poorest countries in the world uses seventy percent of her national
budget on public procurement activities. This therefore calls for having a strict measure
in place to monitor and control procurement. The weak payment system in the Ministry
of Finance led to the embezzlement of public funds amounting to K140 billion resulting
in donor governments withdrawing financial aid to Malawi. This was a wakeup call to the
government establishing the importance of employing qualified people in the
procurement and finance departments in order to achieve value for money through the
procurement activities.
Further investigations have revealed that failure by the government to provide sufficient
funding for MDF to pay outstanding payments has contributed to the corruption and
failure to comply with the PPA 2003. The suppliers tend to use politicians and or top
MDF management to receive payments on time. Hence, the public accountants
resolved to facilitated payments to ‘ghost workers’ taking advantage of the weak
payment system.
95
The security of the country depends on having a qualified military and fully equipped
with high technology facilities readily available to deploy within a short period. These
calls for a healthy financial backing to enable MDF acquire essential logistics
requirements since military procurement is costly. Therefore, procurement performance
measurement is essential in establishing a procurement system that is transparent and
corrupt free.
5.2 Recommendations
The researcher has the following recommendations set for Malawi Defence Force to in
order to ensure the best procurement process of using centralized procurement system
to achieve positive implications as far as procurement is concerned.
5.2.1 for Policy Makers (Malawi Government)
A policy to employ only qualified procuring and financial personnel conversant with the
PPA and finance regulation to avoid the repetition of Cashgate theft scandal. The
qualified members will be in a position to advise and guide the authorities on matters
concerning corruption and procurement planning.
The government should train or hire services of forensic accountants to work hand in
hand with internal auditors. These accountants can be retained to investigate and
analyse financial evidences. The accountants will also play a critical role of assisting in
legal proceedings testifying in court as expert witnesses and preparing visual aids to
support trial evidence. These officers could play critical role during the ongoing cash
gate which are taking long to conclude due to lack of qualified human resources such as
lawyers and forensic experts. Qualified PE, Funding Public
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5.2.2 for the Commanders
The commanders and Heads should not interfere with procurement as established in
the study. It has been observed that commanders take a great influence in supplier
selection awarding contracts to friends and political leaders. The organisation should
draw job description as a way of promoting transparency and accountability.
MDF should improve e- business by introducing modern electronic facilities in the DOL
and DOF so that all procurement transactions can be monitored by the management.
This development can help achieve benefits of that transparency and accountability
5.2.3 for the Procurement Entities.
The procuring officers should be conversant with the government procurement
regulations and should be qualified from recognized institutions such as Chartered
Institution in Purchasing and Supplies (CIPS).
Any procuring officers who have a previous record of corruption should be barred from
conducting any procurement activities in the public sector as the might entice fellow
officer to indulge in corruption.
5.2.4 for the Finance Officers
MDF should employ qualified Finance Officers capable of monitoring and supervising
(hands on) financial transactions in the organisation to prevent a repetition of Cashgate.
Should be able to conduct Internal Audit to determine theft an early stage to enable
MDF achieve VFM.
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5.2.5 for IPC
The IPC members to be conversant with public procurement procedures and should be
given basic SCM lessons upon being appointed as IPC members. The IPC should be
allowed to work independently to create a transparent and corrupt free working
environment.
MDF should be allowed to increase size of her IPC so that all arms and user units which
require specialized procuring officers such as aircraft and naval engineers.
The IPC members should take legal oaths to instill fiscal discipline and integrity.
Funding
5.2.6 for ODDP
The ODDP being the government arm mandated to monitor and report procurement
policies should make continuous follow up to all public procurement entities to ensure
that policies are adhered to in accordance with the PPA 2003. ODDP should be given
powers to suspend or recommend for removal of any procurement officer implicated in
corrupt procurement procedures.
5.3 FURTHER RESEARCH
Military procurement operations to educate both the public and private organizations the
role of Logistics to the military institution with an emphasis on supply chain
management. There is a gap in knowledge concerning logistics operations by the
civilian authorities especially those involved with procurement planning. Military
98
procurement is expensive hence there is a need to have a special funding to enable the
troops deploy anywhere in the world at short notice.
Other crucial areas which require further research include Logistics support to
Peacekeeping Operations and Civil – Military Joint operations during disaster.
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8.0 APPENDICES
QUSTIONNAIRE
An impact Of Centralised Procurement in the Public sector, A Case study of
Malawi Defence Force
This research is being pursued under the program requirements of Master’s
Degree in Supply Management.
The information that will be granted in the process of undertaking this research
will be treated with the highest confidentiality and its use will be for academic
108
purpose.
INSTRUCTIONS
The author used two methods of data collection in this study, Group one is in-
depth interview and Group two questionnaires
Appendix A: In-depth interview with the ODDP
Interviewer: How can adoption of centralized procurement add value to MDF?
From your experience do you think centralized procurement system is value
adding to MDF?
ODDP: indeed, the system has been of benefit to MDF, centralized system has
been cost benefit to MDF, since through economics of scale and managed to
improve suppler-buyer relationship in the case the system has proved to be cost
effective and allowed/enabled monitory of procurement activities in the MDF
Interviewer: in your experience which are do you suggest for MDF to improve for
centralized procurement system to add more value to the organization and why
ODDP: firstly, MDF should employ qualified procurement officers who are
conversant with the procurement ACT (PPA 202) and bring an end to miss-
procurement and corrupt procurement activities.
On the part of “why”. It is qualified procurement officers who can train
subordinates on measures of ending wrong procurement practices such as
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corrupt, poor procurement planning and also help to improve supplier-buyers
relationship.
Interviewer: from your experience, what do you think MDF procurement systems
have failed to develop as it was anticipated by ODDP.
ODDP: The system has made a steady progress since MDF adopted centralized
system in time of having IPC system in place to monitor and advice procurement
activities.
However, the challenge has been that the top management is not conversant with
the importance of procurement in the organization in the case of MDF. The MDF
authority put emphasis on the core duties of security ignoring the administration
areas. It’s a vital for senior officers of all levels to have a knowledge public
financial management, public procurement and public audit, in such a way the
procurement stands will develop and challenges concerning corruption and poor
procurement policies will be eliminated.
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Appendix B. Interview with Anti-Corruption Bureau
Interviewer: In your own opinion what are your views towards the Baker Tilly
Report which documented MDF procurement system as weak and porous due to
poor procurement planning.
Interviewer: Do agree you with the views that corruption level has increased in
MDF following the adoption of centralised procurement system?
Interviewer: Do you think changing procurement system can help improve the
situation in an organisation like MDF?
Interviewer: are there any plans for ACB to conduct awareness campaign lessons
to the public procurement entities MDF inclusive to educate the procurement
officers cornering the challenges of corruption
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QUESTIONNAIRE
APPENDIX D: Questionnaire for Directorate of Logistics (Staff).
Interviewer: Form your experience what are the benefits of outsourcing of
services such as catering and technical works to the MDF
Interviewer: How do you rate the outsourced services (catering, construction, and
maintenance) in terms of quantity, quality and lead time of products and services
rendered
Interviewer: What measures should DOL put in place to promote and protect
whistle blowers in the organisation.
Interviewer: from your opinion do you think there any corrupt procurement
practices observed during the process of outsourcing services to the outside
services providers.
Interviewer: form your experience what are the benefits and challenges of
centralized procurement system to the MDF
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Interviewer: how was the service delivery in the MDF since the adoption of
centralized procure system.
Interviewer: at which level of centralized procurement is prone to corruption and
why is that so.
Interviewer: which system between centralized and decentralized system is ideal
for military organization in the case of MDF
Interviewer: what are the performance levels of centralized procurement system
in terms if provision of logistics support to technical units i.e. MAAW, and Naval
units.
Interviewer: which system between centralized and decentralized procurement
system is ideal for operations such as war and disaster support operations?
Interviewer: what are the challenges and benefits of procurement system MDF is
experiencing to sustain the peacekeepers troops deployed outside Malawi i.e.
DRC and Ivory Coast.
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APPENDIX E: Questionnaire for Internal Procurement Committee
Interviewer: From your experience briefly explain why IPC was introduced
in all Public sectors including MDF
Interviewer: What are the benefits of IPC to the MDF procurement
process?
Interviewer: How often does the IPC converge to approve the requisitions
from user units?
Interviewer: Do you think IPC is well represented taking into consideration
that MDF units have i.e. Air wing and Navy units require products (spare
parts) with high technical specification requirements.
Interviewer: From your option do you thin IPC composition has
representative from technical units- whose products require a specialized
technical procurement offers e.g. Malawi Air wing & navy
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Interviewer: What are some of the benefits and challenges of IPC (to the
centralized procurement system)?
Interviewer: From your experience, do you think adoption of IPC has
achieved/ help to add value to the MDF procurement system.
8.6 FOCUSE GROUP DISCUSSIONS
The previous chapter presented the finding of the research; this chapter will therefore
draw conclusions on the findings. A number of recommendations have been produced
and will be presented in this chapter. The purpose of this research was to establish
whether the current ICT infrastructure in the government can support the e-procurement
systems and whether e-procurement can provide solutions to glaring shortfalls and
inefficacies that are presently being experienced in the public procurement.
According to National Audit Committee quarries (22/08/14) it was documented that MDF
has the outstanding amount of K653, 030,274.45 to pay it suppliers. The report revealed
that MDF award contracts without following competitive bidding process and miss
procurement without legal opinion.
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APPENDIX C: In-depth interview with Nation Audit Office
What is the importance of Audit exercises to the public sector and MDF in
particular
Form your experience why do you think are the contributing factors to the poor
performance by the MDF following reports of over procurement in the system?
Why do you think are the likely causes of the theft incidents in MDF?
What measures should be put in place by the Malawi Government to monitor and
control financial resources in the MDF.
From your experience do you think the corruption in the MDF is connected to the
adoption of CPS?
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