Role of (Public) Procurement in the Realization of objectives of 2040 .

Professor Benon C Basheka, PhDDEAN, SCHOOL OF BUSINESS AND MANAGEMENT

UGANDA TECHNOLOGY AND MANAGEMENT UNIVERSITYbbasheka@yahoo.co.uk, Mobile: +256782459354

INTRODUCTION• The procurement function, represented by

procurement professionals, does not take a leading role in many government agencies.

• There is often lack of procurement considerations in organizational planning and the setting of organizational strategy.

• The failure to even recognize procurement as a profession; yet it keeps being fingered as the source of most problems in government implementation is worthy noting

In the Literature,• A significant amount of procurement literature

reflects concern over perceptions of the field as a merely clerical or tactical function.

• One group of authors captured this when they described public procurement as the “Rodney Dangerfield” of governmental activities; that is, it gets no respect due to its routine and mundane features (Gordon, Zemansky & Sekwat, 2000).

However,….• Other authors like (McCue & Gianakis, 2001;

Matthews, 2005) argue that, procurement is becoming more strategic.

• In all these divergent views in the literature, in the context of our debate today, there is urgent need for procurement leadership if the aspirations of the Vision 2040 are to be realized

• Ammer (1974) over 30 years ago, surveyed industry executives to investigate, among other questions, their perceptions of the purchasing (procurement) function.

He found that general managers saw:-

(1) Leadership as an unimportant characteristic for purchasing managers;

(2) Purchasing as having little interaction with the mainstream of management; and

(3) Little involvement by purchasing in strategic decisions.

McCue and Gianakis (2001),• Concluded from a survey of procurement

professionals that these professionals did not consider planning—an activity aligned with strategy and leadership—a major component of their duties.

• The respondents also found planning to be insignificant compared to other steps in the procurement process.

• A later study by Johnson, Leenders & McCue, 2003) developed similar conclusions, finding that procurement managers and offices have relatively little to do with major organizational activities.

• Taken together, this body of research indicates that procurement is still considered by many both within and outside the field to be a routine function with little relation with organizational strategy and leadership.

• Most people see procurement as dealing mainly with questions of means (how to do something) rather than with questions of ends (what to do).

• In order for procurement to be recognized as a strategic function, its professionals must participate in strategic decisions involving ends.

• Procurement needs to be redefined or recognized as a strategic activity, thereby elevating its members in prestige and importance BUT most importantly the profession must contribute to government objectives.

Government…• Is the means by which state policy is enforced, as

well as the mechanism for determining the policy of the state.

• Government of any kind affects every human activity in many important ways

• Good things in society are done by administrators (including procurement professionals) but also all the bad things and problems in society they take blame

• Governments historically acquire goods, works and services to perform their functions.

Governments …..• Use public procurement to undertake public

works, build roads, provide health care, and provide education and public order (Errigde & Mcllroy, 2002).

• All public activities undertaken by government require an efficient and effective public procurement system

• Willbrougby (1927) had long conceived supply as part of the critical five areas that needed to occupy the study of public administration.

How central is Public Procurement?• If the procurement function fails to deliver quality

goods and services in a timely fashion and at an economical price then the performance of government suffers" (Coggburn, 2003, p. 4).

• The effective delivery of public services often require the coordinated delivery of materials and the like which the state purchasing apparatus must accomplish (Hunja, 2003).

• It is difficult to imagine how government can deliver substantial improvements in the wellbeing of its citizens without a public expenditure system that includes effective public procurement policies

Vision 2040• Vision 2040 is a policy document by the Ugandan

government with aspirations being :-– change the country from a predominantly low

income to a competitive upper middle income country with a per capita income of USD 9,500

• The vision sets out the goals and targets to be achieved for the desired socio-economic transformation

• The aspirations have been arrived at following a nation-wide consultative process, and it reflects the collective understanding, aspirations and determination of Ugandans

Vision 2040 is • Conceptualized around strengthening the

fundamentals of the economy to harness the abundant opportunities around the country

• The opportunities include:– Oil and Gas– Tourism, Minerals– ICT business– Abundant labor force– Geographical location and trade– Water resources– Industrialization and Agriculture

The fundamentals of the Vision are:-– Infrastructure (energy, transport, water, oil and gas

and ICT)– Science, Technology, Engineering and Innovation

(STEI)– Land, Urban development– Human resources– Peace, security and Defense

For procurement to • Be central in the attainment of Vision 2040 it

must be:– Of the right type and form– Well governed-efficiency and effectiveness– Managed by the right people with a good ideology• Working under the right policies and frameworks• Exercise a multiple set of skills and capacities• Working for the good of their country• Professional

Public procurement• Refers to the process through which the state

(government) acquires goods, works and services needed to discharge its public functions.

• Public Procurement is both a field of study and an area of practice and as an area of practice it is as old as governments and has moved the long journey of civilization

As a practice area,• Public Procurement has been part and parcel of

the history of public administration-management of public affairs

• Both the theory and practice parts of procurement are central to Vision 2040

• Unlike commercial transacting in the private sector, public procurement is often a highly structured, and regulated function done following specific detailed procedures

• Many regulatory instruments focus on the rules governing the process leading up to the conclusion of the contract, in particular the process through which a supplier is identified and a contract awarded to that supplier

Public Procurement• Links the government’s development agenda and

PFM system with social & economic outcomes.• It cuts across many other aspects of public sector

management, but sometimes misunderstood to be simply a narrow procedural activity

• The objective of procurement is the achievement of the best value-for-money outcomes through processes that are- transparent, Efficient, facilitate equal access and open competition, and promote innovation.

Uganda’s Vision 2040• Identifies core Projects that need to be started;

all of which require an excellent procurement system

• The vision identifies the following projects:– A Hi-tech ICT city and associated ICT infrastructure– Large irrigation schemes in different parts of the

country– Phosphate industry in Tororo– Iron ore industry in Muko-Kabale– Five regional cities (Gulu, Mbale, Kampala, mbarara

and Arua)

…..• Five strategic cities (Hoima, Nakasongola, Fort

portal, Moroto and Jinja)• Four International Airports• A standard gauge railway network with high

speed trains• Oil refinery and associated pipeline infrastructure• Multi-lane paved national road network linking

major towns, cities and other strategic locations

• Globally competitive skills development centres• Nuclear power and hydro-power plants (Ayago,

Isimba, Karuma and Murchison Bay)• Science and Technology parks in each regional

city• International and national referral hospitals in

each regional centers– What about regional universities of science and

technology?

Vision identifies some key strategies and Policy Reforms needed-

– Review the architecture of government service delivery system to act as a unit, harness synergies and deliver public services efficiently and effectively-(teaching and practices of public procurement become critical)

– Pursue policies aimed at leapfrogging especially in the areas of science and technology, innovation, engineering, human resource development, public sector management, and private sector development

• Develop and implement a national science and technology and engineering system that will help in initiating, importing, and diffusing new technologies-[Procurement will be central in this goal at each of the stages]

• Front-load investments in infrastructure targeting areas of maximum opportunities with focus on oil, energy, transport and ICT-[Can these be possible without a sound public procurement system?]

• Accelerate industrialization through upgrading and diversification to effectively harness local resources, off shoring industries and develop industrial clusters along value chains

• Make land reforms to facilitate faster acquisition of land for planned urbanization, infrastructure development, and agricultural commercialization among other developments-[Refer to recent PPDA amendments on procurement of land]

• Strengthen the three arms of government and ensure checks and balances and taking decisions that have national interest-ministers will not be members of parliament to foster separation of powers, and second, the judiciary will be reformed to make it more independent and proactive

• Develop and nurture a national value system to change citizen’s mindsets, promote patriotism, enhance national identity, and nurture a conducive ideological orientation

• Accelerate government reforms in the education system and the curriculum to obtain a globally competitive human resource skills relevant to the development paradigm-[Are Procurement people in Uganda adequately prepared?]

• Review and strengthen foreign policy to enhance collaboration in accordance with existing and future agreements, standards etc-[procurement will take a regional and global dimension]

• Directly invest in strategic areas to stimulate the economy and facilitate private sector growth

• Develop and implement a specific policy to attract and retain top rated professionals in the universities to make Uganda a centre of excellence in the region-china has that strategy but the situation in Uganda is different

For Procurement to • Be a vehicle for Vision 2040 attainment, it must

be well governed, BUT:-

– Some questions on whether public

procurement is well governed in Uganda have

been raised

–Policy makers must understand the centrality

of this function to government goals

–Professionals must be true servants

Globally,• Public Procurement regulations have been amended and

procurement is one of the fastest growing professions in

the world and the professionals are diverse in terms of:– Age

– Gender

– Experience and exposure

– Educational attainment

– Level of Professionalization

– Trust

– Competence and skills

In Uganda, it is common to hear of :-– Procurement Fraud and corruption e.g. construction

sector?

– Informal bid opportunity networks and cartels in all

sectors are building up systematically

– Administrative Reviews and Complaints keep flying

everywhere despite it being a sign of openness

– Court cases revolving public procurement are

emerging

It is also now clear that: – Complaints of Procurement delays and bureaucracy

– Procurement professional integrity questions

– Politicians/policy makers have increased their hostility

towards public procurement for failed projects

– ‘Bureaucrats’ accuse procurement of being ‘very

bureaucratic’ and too much rule based hence affecting

service delivery especially if it does not serve their

interests.

The suppliers and academicians have had their serious

issues with this function of government

Informal structures and networks seem to beat formal

structures and in some cases proving to be more

influential.

Public service ‘disease’ entering public procurement-

onslaught on meritocracy and entrenchment of patronage

systems as most accounting officers want their ‘own people’

to manage the public procurement processes in their

entities.

Resources meant for procurement activities are

underutilized and heavily misused

Institutions put in place to be the eyes and ears of

the people are ineffective in facilitating the very

individual and collective action needed to resolve

these problems.

As a result, • Services range from poor to non-existent• Infrastructure cannot be maintained or completed in

the right specifications• Drug supplies for the health facilities are openly

looted• School and other construction buildings, textbooks

being in a mess• Promising projects remain uncompleted due to

procurement related project

Why not Re-think our Public Procurement?

A: Do we have the right infrastructure?– Structures– Processes– Procedures– Practices– Policies– Behavior attributes– Skills and competencies (CSCU)

B: Systemic issues– We need to re-think how to: –Separate politics from public procurement–Reduce wastes and inefficiencies in public

procurement–Reduce the costs of litigation caused by professional

negligence–Reduce supply chain bottlenecks and risks–Contribute to employment and support to SMEs and

local firms through public procurement decisions–Facilitate the development of the private sector

through better procurement policies–Addressing unnecessary delays due to procurement

rigidities

C: Refocus on how to use PP to: –Appropriate legislations and policies– Investing in pre-contract analysis– Invest in monitoring and evaluation –Contribute to expansion of local private sector

through reduced technicalities– Enforcing tax compliance policies of

government– Ensure sustainability through green

procurement practices–Contribute to corporate social responsibility

D: Broadly, we need to rethink –Procurement and improvements in the Roads

sector–Procurement and improvements in Education

sector–Procurement and improvements in the Health

sector–Procurement and improvements in the oil and

gas sector–Procurement and the ICT industry–Procurement and National defense services

• Procurement and regional integration–Role of public procurement in regional

projects–Role of Public Procurement in Regional

trade• Public Procurement and Financial

expenditures of government• Establishing foundations of a good public

procurement system

Note that: • Current Corruption blamed on public procurement is a

symptom of a larger disease — the failure of institutions

and governance, resulting in poor management of

revenues and resources and an absence of delivery of

public goods and services.

• We need to be more strategic and rigorous, identifying

and addressing corruption’s underlying causes and

examining the weaknesses in key institutions and

government policies and practices.

Policy Suggestions• 1. Professionalization of procurement: Can we

accept that public procurement has professionals?2. Composition of procurement structures: Do we need all the structures? Who should exactly be in PDUs?

• 3. Centralization of core projects: Can we centralize core national projects?4. Temporary Committee of Procurement: Can we support the temporary nature of all committees of public procurement?5. Revisit Contracts to foreign companies and providers: How can we build our local capacity?

6. Promoting Value for money: Do the current processes, practices and policies promote value for money?7. Public procurement reporting: Can we have quarterly and yearly reports on the status of public procurement in an entity?8. Corporate governance: How do we reconstitute the board responsible for public procurement?

9. Monitoring and coordination: Can we improve our capacities in this critical area?

10. Role of Politicians in public procurement: What should be the exact role of politicians and technical people in public procurement?

11. PPDA vigilance on complaints: Can PPDA be put to accountability for certain wrongs in PP?

To achieve anything:We need to re-think

• Attitudinal change

• Change of behavior

• New skills set

• Competence –based professional development

• Constant research

• Influencing Policy

Conclusion • Vision 2040 offers immense opportunities for

procurement professionals• The vision requires high level involvement of

procurement professionals• The procurement professionals need to be with a

new set of skills and competencies

• It is the duty of professionals to discuss and advise government of the procurement implications as contained in the vision 2040

• The Policy Makers must come to a true realization that procurement needs to be regarded as central to the success of the plan

• Procurement needs to be recognized by law through passing the long delayed IPPU bill and all of us will be winners!

….

THANK YOU