examining the role of good governance in public

EXAMINING THE ROLE OF GOOD GOVERNANCE IN PUBLICPROCUREMENT AT MINISTRY OF HEALTH AND SOCIAL

WELFARE

EXAMINING THE ROLE OF GOOD GOVERNANCE IN PUBLICPROCUREMENT AT MINISTRY OF HEALTH AND SOCIAL

WELFARE

By

Sarah Patrick Swai

A Dissertation Submitted in Partial Fulfillment of the Requirements for thedegree of Master of Science in Procurement & Supply Chain Management ofMzumbe University

2013

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CERTIFICATION

We the undersigned, certify that, we have read and hereby recommend for

acceptance by the Mzumbe University, a dissertation entitled Examining the Role of

Good Governance in Public Procurement at Ministry of Health and Social

Welfare, in partial fulfillment of the requirement for the award of Masters of Science

degree in Procurement & Supply Chain Management of Mzumbe University.

Signature____________________Major Supervisor

Signature__________________________Internal Examiner

Accepted for the Board of…………………………………

______________________________________________________

DEAN/DIRECTOR, FACULTY/DIRECTORATE/SCHOOL/BOARD

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DECLARATIONA ND COPYRIGHT

I, Sarah Patrick Swai, declare that this dissertation is my own original work and that

it has not been presented and will not be presented to any other University for the

similar or any other award.

Signature.............................................................

Date…………………………………………

©

This dissertation is a copyright material protected under the Berne Convention, the

Copyright Act 1999 and other international and national enactments, in that behalf,

on intellectual property. It may not be reproduced by any means in full or in part,

except for short extracts in fair dealings, for research or private study, critical

scholarly review or discourse with an acknowledgement, without the written

permission of Mzumbe University, on behalf of the author.

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ACKNOWLEDGEMENT

I wish first of all to thanks the Almighty God for giving me good health and strength

that enabled me to work with comfort throughout the period of field work.

I am grateful for the support I got from my supervisor Mrs Makawa Newa Laurent of

Mzumbe University. She has been very helpful and has supported me from the

beginning till the accomplishment of the final report. I must acknowledge that apart

from the scheduled time she even used her personal time to assist me all the way.

Sharing her valuable knowledge and expertise with me has been the bridge to the

completion of this report.

Many thanks to the Management of Ministry of Health and Social Welfare who

allowed me to carry out this study at their premises. I would also like to thank my

friends for their support and encouragement during my studies till the completion of

this dissertation.

My thanks also go to my lovely son Galton and my dear brothers and sisters

(Goodluck, Baraka, Valentine, Anna, Eugenia and Janeth)for their Moral support and

comfort during my study.

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DEDICATION

I dedicate this report to my beloved parents, the late Baba Patrick Swai and the late

Mama Valentina Swai who taught me how to saw seeds of education.

Lastly to my darling husband Albin Kimosso who encouraged me to complete my

study.

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ABSTRACT

This study aimed at examining the Role of Good Governance in Public Procurement

in the Ministry of Health and Social Welfare and 45 respondents included in the

study. The research design used was case study design on which a single unit was

selected for study and data collection was done through primary and secondary data

through the use of data collection methods such as interviews, questionnaires and

documentary review. Analysis of the collected data was conducted through the use of

Statistical Package of Social Science (SPSS) and Microsoft Excel.

It was revealed that good governance plays a positive role on purchasing in supply

chain management. Ministry of Health and Social Welfare should embrace the

elements of good governance. The study insisted on application of E-procurement,

the direct network links between computers and trading partners. It was revealed that

transparency maintained through advertisement, evaluation of tender as well as

auditing.

The study recommends that Promoting transparency and accountability, capable and

competent public administration, and the rule of law must be at the forefront of

development policies. Policy planning and decision-making are the key concern to

public administration which is part and parcel of procurement. Good public

management and administration, with emphasis on accountability and responsiveness

to customer needs is crucial. Building the capacity of service providers it is important

that Ministry of Health and Social Welfare, the government and other stakeholders to

organizes training sections for contractors, surveyors, architects, consultants and

suppliers.

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TABLE OF CONTENTS

CERTIFICATION .................................................................................................................... i

DECLARATIONA ND COPYRIGHT.................................................................................... ii

ACKNOWLEDGEMENT...................................................................................................... iii

DEDICATION........................................................................................................................ iv

ABSTRACT .............................................................................................................................v

TABLE OF CONTENTS........................................................................................................ vi

LIST OF TABLES....................................................................................................................ix

LIST OF FIGURES ...................................................................................................................x

LIST OF ABBREVIATIONS AND ACRONYMS .................................................................xi

CHAPTER ONE: PROBLEM SETTING.............................................................................1

1.0 Introduction ...............................................................................................................1

1.1 Background Information ...........................................................................................1

1.2 Statement of the Problem ..........................................................................................2

1.3 Objectives of the Study .............................................................................................2

1.3.1 Main Objective .........................................................................................................2

1.3.2 Specific Objectives....................................................................................................2

1.4 Research Questions ...................................................................................................3

1.5 Significance of the Study...........................................................................................3

1.6 Scope and delimitation of the study ..........................................................................4

1.7 Limitations of the study.............................................................................................4

CHAPTER TWO: LITERATURE REVIEW.......................................................................5

2.0 Introduction ...............................................................................................................5

2.1 Theoretical Literature Review...................................................................................5

2.1.1 Agency Theory ..........................................................................................................5

2.1.2 Stakeholder Theory ...................................................................................................5

2.1.3 Stewardship Theory...................................................................................................6

2.1.3 Resource Dependency Theory...................................................................................6

2.2.1 Various Stages of the Procurement Process ..............................................................6

2.2.1.1 Supplier Evaluation and Selection.............................................................................6

2.2.1.2 The final selection ...................................................................................................10

2.2.2 Good governance in Public Procurement ................................................................10

2.2.2.1 Consequences of poor governance in public procurement ......................................11

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2.2.3 Measures Taken to Ensure Good Governance in Public Procurement....................12

2.2.3.1 Accountability and Transparency............................................................................12

2.2.3.2 Procurement Audits ................................................................................................13

2.2.4 The role of procurement audit in fighting corruption..............................................16

2.3 Challenges Facing Public Procurement...................................................................17

2.4 Empirical Literature ‘Review ..................................................................................22

2.5 Conceptual Framework ...........................................................................................24

CHAPTER THREE: RESEARCH METHODOLOGY ....................................................26

3.0 Introduction .............................................................................................................26

3.1 Research Design ......................................................................................................26

3.2 Area of the Study.....................................................................................................26

3.3 Study Population .....................................................................................................26

3.4 Sample and Sampling techniques ............................................................................26

3.5 Types and sources of Data.......................................................................................27

3.5.1 Data Collection Methods.........................................................................................27

3.5.2 Questionnaire...........................................................................................................27

3.5.3 Documentary Sources..............................................................................................28

3.6 Data Reliability and Validity...................................................................................28

3.7 Data Presentation and Analysis ...............................................................................28

CHAPTER FOUR: DATA ANALYSIS, DISCUSSIONS OF THE FINDINGS..............30

4.0 Introduction .............................................................................................................30

4.1 Respondent’s Characteristics...................................................................................30

4.1.1 Gender of the respondents .......................................................................................30

4.1.2 Age of respondents ..................................................................................................31

4.1.3 Duration of work of respondents .............................................................................32

4.2 Major Findings of the study ....................................................................................32

4.2.1 Awareness on good governance in public procurement ..........................................32

4.2.2 Knowing about good governance in public procurement........................................33

4.2.3 Aspects of good governance enhance public procurement......................................34

4. 2.4 Measures used to ensure transparency, accountability and participation in

public procurement..................................................................................................35

4.3 The extent to which transparency can enhance public procurement of the Ministry36

4.2.1 Competitiveness and Fairness .................................................................................38

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4.3 Effectiveness good governance in enhancing public procurement..........................39

4.4 The extent to which transparency enhances public procurement ............................41

4.5 Influence of Good Governance on Public Procurement Accountability .................41

4.6 Compliance with Public Procurement Act ..............................................................42

4.7 Completion of Contracts on Schedule and within Cost...........................................43

4.8 Challenges faced by MHSW in procurement ..........................................................45

4.8.1 E-procurement well developed at Ministry of Health and Social Welfare..............45

4.9 Measures to be taken by the ministry to overcome the challenges..........................46

4.9.1 Monitoring of day-to-day contract performance and compliance ...........................46

4.9.2 Procurement Planning and Negotiation...................................................................47

4.9.3 Education and sensitization on procurement and supply chain management..........49

4.9.4 Improvement of e-procurement ...............................................................................50

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION............52

5.0 Introduction .............................................................................................................52

5.2 Summary of the Findings ........................................................................................52

5.3 Conclusion...............................................................................................................54

5.4 Recommendations ...................................................................................................55

5.5 Policy Implications..................................................................................................58

5.6 Limitation of the study ............................................................................................60

5.7 Areas for Further Research......................................................................................61

REFERENCES: .....................................................................................................................62

APPENDIXES........................................................................................................................65

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LIST OF TABLES

Table 4.1:Gender of Respondents....................................................................................31

Table 4.2: Age of respondents .........................................................................................31

Table 4.3: Duration of work of respondents ....................................................................32

Table 4.4: Measures used to ensure transparency, accountability and participation .......36

Table 4.5: Respondents view on tenders being advertised in the local media.................41

Table 4.6: Influence of Good Governance on Public Procurement Accountability ........42

Table 4.7: E-procurement well developed at Ministry of Health and Social Welfare.....46

Table 4.8: Improvement of e-procurement ......................................................................51

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LIST OF FIGURES

Figure 4.1: Awareness on good governance in public procurement .............................33

Figure 4.2: Respondents knowing about good governance in public procurement.......34

Figure 4.3: Aspects of good governance enhance public procurement .........................35

Figure4.4: the extent to which transparency can enhance public procurement of the

Ministry.......................................................................................................37

Figure 4.5: Respondents views on competitiveness and Fairness .................................38

Figure 4.6: Effective is the role of good governance in enhancing public

procurement ................................................................................................40

Figure 4.7: Respondent’s views on Compliance with Public Procurement Act............43

Figure 4.8: Respondents perception completion of Contracts on Schedule and

within Cost ..................................................................................................44

Figure 4.9: Monitoring of day-to-day contract performance and compliance ..............47

Table 4.10: Respondents view on whether procurement planning and negotiation.......48

Figure 4.11: Education and sensitization on procurement and supply chain

management ................................................................................................50

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LIST OF ABBREVIATIONS AND ACRONYMS

AFDB The African Development Bank

AVL Approved Vendor List

LOR List of Requirement

OECD The Organization for Economic Co-operation and Development

PPOA Public Procurement Oversight Authority

PPRA Public Procurement Regulatory Authority

RFI Request for Information

RFQ Request for Quotation

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CHAPTER ONE

PROBLEM SETTING

1.0 Introduction

This chapter presents the introductory part of the study covering the background

information, statement of the problem, research questions, research objectives,

significance and scope and delimitation and limitations of the study.

1.1 Background Information

Efficient Public Procurement systems are essential to the achievement of

development goals. Public procurement mechanisms are key elements to the overall

efficiency of public sector management because they can contribute to a better

allocation of resources towards development objectives and improved governance in

the public sector. Weak and corrupted procurement systems often lead to a waste of

public financial resources and higher transaction costs and, therefore, undermine

development efforts; The African Development Bank (ADB, 2009).

During the last decade public procurement has gained attention amongst developing

countries than ever before. With procurement accounting for about 20% of all

government expenditure worldwide. Mlinga (2009) pointed out that, many

governments have embarked on reforms in their procurement systems particularly

streamlining and harmonizing the regulatory (legal) and institutional (structural)

framework. In some countries the reforms have gone further to address the

effectiveness and competence of the contracting authorities i.e. “Procurement

Operations and Market Practices” and “Integrity of Public Procurement Systems”

though some analysts are associating the success of the latter with issues like the

overall level of corruption in a country and effectiveness of the organs responsible

for addressing corruption.

In Tanzania, as part of reforms in public procurement to make it transparent,

accountable and capable of delivering better value for money, the Public

Procurement Regulatory Authority (PPRA) was set up under the Public Procurement

Act (2004). Among the various responsibilities of the PPRA is to ensure that

procurement in public institutions is done under good governance principles.

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Public procurement is the government activity most vulnerable to Corruption.

However; transparency and accountability have been recognized as key conditions

for promoting integrity and efficiency in public procurement. Also, there is need to

balance all good governance imperatives so as to ensure overall value for money and

reduce risks to integrity in public procurement while pursuing other aims of public

procurement efficiently (The Organization for Economic Co-Operation and

Development (OECD), 2004). Therefore this study is aimed at examine the role of

good governance in public procurement in Tanzania specifically at the Ministry of

health and social welfare.

1.2 Statement of the Problem

Today, in many countries, public procurement has become an issue of public

attention and debate, and has been subjected to reforms, restructuring, rules and

regulations (Tukamuhabwa, 2012). However, there is a growing feeling, supported

by empirical cases, that many of the reforms have embraced the regulatory aspects of

public procurement giving little attention if at all, to the contribution of good

governance structure to effective public procurement.

Therefore, since the public procurement is a strategic activity which requires

managerial skills and competence so that it contributes fully towards delivery of

strategic objectives. In this case, the researcher aim at filling this gap in knowledge

by discussing the contribution of good governance structures to effective

procurement practices in public institutions.

1.3 Objectives of the Study

1.3.1 Main Objective

The main objective of this study is to examine the role of good governance in public

procurement in Tanzania specifically to the Ministry of health and social welfare.

1.3.2 Specific ObjectivesThe study is guided by the following specific objectives

(i) To assess the extent to which transparency can enhance public procurement of

the Ministry.

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(ii) To assess the extent to which accountability can enhance public procurement of

the Ministry.

(iii) To assess the extent to which participation can enhance public procurement of

the Ministry.

1.4 Research Questions

The study was guided by the following research questions

1.4.1 Main Research Question

What is the role of good governance in public procurement specifically to the

Ministry of Health and Social Welfare?

1.4.2 Specific Research Questions

(i) To what extent can transparency enhance public procurement of the Ministry?

(ii) To what extent can accountability enhance public procurement of the Ministry?

(iii)To what extent can participation enhance public procurement of the Ministry?

1.5 Significance of the Study

It is expected that findings from this study will help the management and member of

staff of public procurement entities, PPRA and other stakeholders in public

procurement to become aware of the extent of good governance practices in public

institutions, the impact of good governance of public procurement practices and the

factors which hinder good governance practices in public institutions.

Also, the findings of the study will serve as a stepping stone for future researchers on

the same or similar topics by providing them with a source of empirical literature

review. Also, successful completion of the study will enable the researcher to

partially fulfill the requirements for the award of a Master’s of Science degree in

Procurement supply chain Management offered by Mzumbe University.

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1.6 Scope and delimitation of the study

To address the delimitations, the first strategy was to conduct a case study based in

Dar es salaam in order to save time and financial related problems, also in order to

establish trust and transparency, potential participants were informed on information

sheets and during initial meetings participants were informed that the research was

independent, and it had nothing to do with their jobs and examples of how

confidentiality and anonymity would be assured were given. To further reassure

participants, the interview questions were circulated to participants before consent

was given and the details of a university member who could be contacted if a

participant wanted to complain about the research process were distributed. In

addition, to give participants some control over the interview process, the choice of

when and where the interview would take place was left to each individual. In terms

of scheduling interviews, several participants preferred to be interviewed at the end

of their first working session, meaning 1300 pm.

1.7 Limitations of the study

The main limitations of this study are generally; the scarcity of resources specifically

financial resources and inadequacy of allocated time for the research work. Time

based limitation as most of expected respondents are busy with their daily activities

this had drawn backs the effectiveness of data collection process.

To overcome the above two limitations the study was centered to only the Ministry

of Health and Social Welfare.

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CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter presents the theoretical literature and empirical literature reviewed by

the researcher during the study. It also contains conceptual framework of the study.

2.1 Theoretical Literature Review

The study was guided by the following theories;

2.1.1 Agency Theory

The principal-agent theory is the starting point for debate on the issue of governance.

Jensen and Meckling (2006) describe principal-agency relationship as a contract

under which one or more persons (principal) engage another person (agent) to

perform some service on their behalf, which involves delegating some decision-

making authority to the agent. The application of the agency theory in public

procurement is that public procurement entities (agents) engaged by the government

(the principal) are responsible for ensuring that they conduct the procurement

function according to guidelines set by the government and by adhering to the

principles and guidelines of procurement as stipulated in the Public Procurement Act

of 2004.

2.1.2 Stakeholder Theory

The stakeholder theory stipulates that a multipurpose corporate entity invariably

seeks to provide a balance between the interests of its diverse stakeholders in order to

ensure that each interest constituency receives some degree of satisfaction (Abrams,

2001). The stakeholder theory stipulates that managers of the firm operate in a

manner that safeguards all the stakeholders of the firm.

Stakeholder theory highlights the responsibility of the firm to its various stakeholders

and pushes the management of the firm to design and employ appropriate measures

to safeguard the interests of all stakeholders of the firm. That is, the management of

the firm must act is a way that guarantees the interests of all the stakeholders of the

firm in a fair manner (Donaldson and Davis, 2001). The application of the

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stakeholder’s theory in public procurement is that the stakeholders of public entities

(including the management and procurement practitioners) must act in a way that

safeguards the interest of their organization and the interests of other stakeholders in

public procurement such as the government, suppliers, and members of the general

public.

2.1.3 Stewardship Theory

According to the stewardship theory, a manager’s objective is primarily to maximise

the firm’s performance. The stewardship theory advocates for involvement of non-

executive directors in decision-making within the firm and separation of power

among various stakeholders of the firm (Donaldson and Davis, 2001). One key

distinguishing feature of the theory of stewardship is that it eliminates lack of trust

among stakeholders.

The application of the Stewardship Theory on public procurement is that it ensures

that the primary objective behind all decisions made by management of a public

institution with regard to public procurement is to maximize the performance of the

institution. That is, decisions made by the management of a public institution with

regard to the award of public tenders must aim to maximize the performance of the

firm.

2.1.3 Resource Dependency Theory

This theory advocates for separation of ownership and control and reduction of

external influences in decision-making within the firm. The application of this theory

in public procurement is that it ensures that there is separation of powers and

authority in award of public tenders and that the decision of awarding public tenders

is not influenced by external forces.

2.2 Procurement Concepts

2.2.1 Various Stages of the Procurement Process

2.2.1.1 Supplier Evaluation and Selection

Among the most significance parts of the procurement process is supplier evaluation

and selection. Monczka et al. (2005) state that the first step involves recognizing

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there is a requirement to evaluate and select a supplier for an item or service. The

recognition that a need exists to evaluate suppliers can come about in many different

ways. Supplier selection begins with formulation of the criteria that will be used to

select suppliers.

The second step in the model is to identify key sourcing requirements. These

according to Telgen et al. (2005) are the Programme of Requirements. They add that

a distinction is made between functional and technical requirement specifications.

Functional requirement specifications describe what the good or service actually has

to do or provide. Technical requirement specifications describe which

product/service is looked for. They include management capability; employee

capabilities; cost structure; total quality performance, systems and philosophy;

process and technology capability; environmental regulation compliance; financial

stability; production scheduling and control systems; supplier’s sourcing strategies,

policies and techniques and Longer-term relationship potential (Monczka et al.

2005).

Nellore et al. (2009) add that a specification is a document that is used to build a

product. To strengthen communication and avoid confusion-related errors, redundant

statements need to be minimized. They cite Clark and Wheelwright (2003) who point

to four modes of communication that have great significance in the relation between

specifications and the suppliers.

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Figure 2.1: Supplier selection and evaluation framework

Source: Mandal and Deshmukh, 2004

According to Mandal and Deshmukh (2004), before developing any framework it is

necessary to understand the significance of each criterion and the role which it plays

in the vendor selection process. It is also necessary to visualize the levels of

importance and relationships of criteria among themselves. The multi-criteria nature

of decision-making has been the focus of multiple papers since the 1960 (Aissaoui, et

al. 2007).

Mandal and Deshmukh (2004) opine that, attitude and willingness is one of the most

important criteria to be considered. It is very difficult to quantify or measure. It is an

effect of so many other variables such as financial position, geographical location,

production facilities, capacity utilization, labour relations, etc. A qualitative analysis

based on fuzzy set theory may be useful for measuring this attribute.

Sarkar and Mohapatra (2006) adopt a fuzzy theoretical approach towards the

problem of imprecision that usually occurs when eliciting expert opinion. They also

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observe that many factors such as reputation and trustworthiness elude quantification

and thereby present measurement difficulties. Also, often quantification and

measurement of a factor for a supplier are practically impossible due to time or

monetary constraints.

The third step in supplier selection and evaluation entails determining the sourcing

strategy. No single sourcing strategy approach will satisfy the requirements of all

purchases (Telgen et al. 2005; Monczka et al. 2005). Because of this, the

procurement strategy adopted for a particular item or service will influence the

approach taken during the supplier evaluation and selection process.

Some of the decisions that a purchaser has to make when developing a sourcing

strategy include: single versus multiple sources; short-term versus long-term

contracts etc. It entails a clear understanding of the differentiations in purchasing.

The sector in which the buying organization operates; the supply market; the product

market; the product or service that is purchased and the buying situation (Telgen. et

al. 2005). The fourth step is to identify potential supply sources. The degree to which

a buyer must search for information or the effort put forth toward the search is a

function of several variables, including how well the existing suppliers can satisfy

cost, quality, or other performance variables. Sources of information that is helpful

when seeking to identify potential supply sources (Telgen et al, 2005).

The fifth step is pre-qualification. The concern of this phase is to limit suppliers in

selection pool. By means of a Request for Information (RFI), a purchaser obtains

some basic information from a selection of suppliers about their organization and/or

their product range (Telgen et al. 2005). Due to limited resources and variability in

the performance of suppliers, purchasers perform a first cut of potential supply

sources. Next, a Request for Quotation (RFQ) accompanied by a List of

Requirements (LOR) is used to ask suppliers to submit an offer. In practice, a

quotation is sometimes also referred to as bid or tender (Telgen et al. 2005). De Boer

et al. (2001) have summarized this phase as sorting rather than ranking and define

pre-qualification as the process of reducing the set of all suppliers to a smaller set of

acceptable suppliers.

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Sarkar and Mohapatra (2006) however suggest that pre- selection/qualification of

suppliers has a number of elements in common with supply base reduction. A pre-

requisite for developing a strong buyer supplier relationship they argue is to have a

small number of suppliers. In most procurement entities, the number of registered

suppliers is large, but only a small fraction of suppliers get the business year after

year. Sarkar and Mohapatra (2006) proceed to observe that much of the information

on unknown suppliers collected through internet, peer feedback and onsite visit will

lack quantitative measurement. Even information on known suppliers may not have

been stored in a form that lends itself to quantitative conversion. To evaluate these

suppliers against the factors, the buying team has to resort to subjective, qualitative

assessment.

2.2.1.2 The final selection

This phase constitutes the sixth and seventh step in the Monczka et al. (2005)

process. According to Monczka et al. (2005), this is supplier evaluation and selection

using a list of so called approved suppliers from the approved vendor list (AVL).

Hence, supplier selection comprises more than one decision. Within purchasing

management, one of the prime functions is supplier selection.

Supplier selection is one of the most important decision making problems since

selecting the right suppliers significantly reduces the purchasing costs and improves

corporate competitiveness. Vokurka et al. (2006) states that, it is probable that of all

responsibilities which may be said to belong to the purchasing officers, there is none

more important than the selection of a proper source.

2.2.2 Good governance in Public Procurement

Lack of adherence to good governance in public procurement often results in the

misuse of public office for private gain. Absence of good governance in public

procurement also undermines fair competition and equal treatment of bidders. Bad

governance in public procurement comes in the form of exerting undue influence in

the procurement process especially during the evaluation and selection stage.

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Absence of good governance practices in public procurement often results in

corruption, favouratism and poor delivery of goods and services due to award of

contracts to unqualified contractors. In the long run, this results in distortion of the

competitive process and poses a fundamental obstacles in delivery of public services

and the functioning of the government as a whole (PPRA, 2010).

2.2.2.1 Consequences of poor governance in public procurement

One of the consequences of poor governance in public procurement is that it fosters

the proliferation of corruption where by, bidders try to use corruption to obtain

favours from those who make decisions of awarding public tenders. Corruption in

public procurement is more rampant where principles of good governance

(accountability and transparency) are weak or are not adhered to by decision makers

(Vishney 2003). Due to corruption in public procurement, public tenders are awarded

to suppliers who don’t meet the set requirements and the suppliers deliver goods and

services which are below standard. Corruption in public procurement tends to thrive

in areas where separation of powers are weak and a few public officials have

enormous influence on the decision making process of awarding public tenders

(Vishney 2003).

Rose-Ackerman (2007) affirms that in order to be eligible for a corrupt transaction,

the bribee must necessarily be in a position of power, created either by the market

imperfections or an institutional position which grants him discretionary authority.

She further imputes that for any bribe to be feasible, it is necessary for it to earn

excess profits.

The imperative of secrecy entails potentially important cost of corruption, namely its

hostility to change and innovation. Keeping corruption secret requires keeping down

the number of people involved in giving and receiving bribes. The elite must then

include only a small oligarchy of politicians and businessmen and refuse entry to

newcomers (Vishney, 2003).

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2.2.3 Measures Taken to Ensure Good Governance in Public Procurement

2.2.3.1 Accountability and Transparency

According to Søreide (2005), transparency and accountability are the best measures

to ensure good governance in public procurement. Transparency in public

procurement enables all participants to know and understand the actual means and

processes by which contracts are awarded and managed. This requires the release as

a minimum, of information sufficient to allow participants know how the system is

intended to work.

Transparency ensures that laws, regulations, guidelines, processes, plans and

decisions are made in public procurement are accessible to the public at large or

“representatives” of the public so that processes and decisions can be monitored,

reviewed, commented upon and influenced by the stakeholders, and decision makers

can be held accountable for them (Søreide, 2005).

It is essential that transparency be created from the very beginning of the public

procurement process and decision making process to ensure that the process is not

influenced by external forces and decisions are made on fair grounds. The

transparent process may appear time consuming and costly at the outset, but it is

irreplaceable and will in fact save time as well as costs in the long run (Søreide,

2005).

From agency theory perspective, Trepte (2005) notes that the transparency is

significant because it makes visible what would otherwise be concealed and allows

the actions of the agent to be verified objectively. Where the actions of the agent can

be verified, the opportunity for corruption, assuming that effective enforcement

procedures exist, is significantly reduced.

Beth (2005) emphasize transparency as the most effective pillars to good governance

in public procurement due to the perceived benefits as follows: availability of

information on the various steps involved in the procurement process can enable

potential suppliers to make informed decisions about whether to bid and how to

improve relevance of their bids by addressing governments needs and priorities.

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Moreover, when governments provide feedback on the outcome of tender award, it

helps bidders to prepare better bids in the future; transparent procurement contributes

to a more efficient allocation of resources through increased competition and

budgetary savings for governments; as companies develop confidence in

participating in procurement practices, the number of bidders expands, yielding

stringer competition.

2.2.3.2 Procurement Audits

Another measure taken to ensure good governance in public procurement is

conducting procurement audits. In procurement audit, procurement activities have to

be audited to establish whether the procurement process complied with procurement

laws and regulations (Trionfetti, 2000). In Tanzania, the Public Procurement Act

2004 gives the Procurement Regulatory Authority (PPRA) the powers to conduct

procurement audit.

Section 6 (2) (f) of the Public Procurement Act 2004 stipulates that; PPRA has the

authority to commission and undertake investigations in public procurement matters

and institute procurement audits. PPRA conducts procurement audits on all

Ministries, Departments and Agencies (MDAs). Procurement audit is conducted

annually and is documented in the Annual procurement Audit published every year

by PPRA.

The Public Procurement Act 2004 empowers PPRA to institute procurement audit at

the following stages of the public procurement process; during the bid preparatory

process, contract audits in the course of the execution of an awarded bid and

performance audit after the completion of the contract in respect of any procurement

or disposal, as may be required (PPA, 2004). In Nigeria, section article (p) of their

Public Procurement Act 2007, empowers the Nigeria Bureau of Public Procurement

(NBPP) to conduct procurement audits. The bureau performs procurement audits and

submits such report to the National Assembly bi-annually; In Botswana, the Public

Procurement Board is not empowered to undertake procurement audit (Aissaoui,

2007).

14

In Kenya, Public Procurement and Disposal Act 2005 empowers the Public

Procurement Oversight Authority (PPOA) to conduct procurement audit. The law

empowers the Controller and Auditor General or an auditor authorized by the

Controller and Auditor-General to audit the accounts of public procuring entities and

contractors relating to the contract.

In Malawi, the Public Procurement Act 2003 empowers the Auditor General to

conduct procurement audit. In Section 39 of Public Procurement Act 2003, it says;

Procurement activities shall be subject to regular auditing by the Auditor General to

ensure that public funds are expended for their intended purpose, and with a view to

maximizing value received by the public purchaser (Aissaoui, 2007).

The literature above shows how those different countries conduct procurement audits

as a way of ensuring good governance in public procurement and ensure that public

procurement is conducted in a transparent manner. Procurement audits also help to

ensure that there is value for money, fair competition and accountability in the use of

public funds (Aissaoui, 2007). As a starting point for a procurement auditing,

auditors hold on to the traditional assumptions about the behavior of the staff with

respect to organization’s business and should not commence audit planning with the

suspicion of corruption. However, at the stage of familiarization of the organization

and its operations, they should remain alert to the opportunities for corruption

(Armstrong, 2005).

One of the objectives of procurement audit is to assess the opportunities of

corruption in … (name the function or operation under audit) of the … (name) the

organization and to evaluate the efficacy of the existing control environment in

preventing it. The corruption audit planning process would also pass through the

familiar audit planning stages. However, it will have some specific features as

discussed below (Armstrong, 2005). The audit criteria for corruption audit should be

developed in the light of good management practices accepted in the field of

operation under audit. The auditors should familiarize themselves with the lead

practices. The audit criteria, as the term itself specifies, acts as a benchmark to see if

the organization’s systems and procedures comply with them (Armstrong, 2005).

15

However, it has been noted that some countries went further to explain how

procurement audit would be done. For instance, in Botswana the procurement law is

more explicit on how it would be conducting the procurement audit. It clearly states

how the Auditor General and the Head of public procurement body would work in

conducting the exercise (Armstrong, 2005).

It is very important to clearly come out with the relations in terms of offices that will

be working hand in hand to avoid blame shifting which is common in public service.

Secondly, it is important to define the reporting/feedbacking procedure. In Nigeria

and Botswana, they have their public procurement laws detailing the reporting

procedure of the audit exercise (ibid).

In Nigeria, the Bureau has to report to Parliament bi-annually. However, it could be

assumed that Finance and Audit Acts of the respective countries have defined the

reporting procedures in auditing. Thirdly, the public procurement law has to be clear

on what stage(s) procurement audit would be conducted. A number of countries

sampled have detailed the stage s procurement audit would be conducted (ibid).

In Botswana and Uganda, procurement audit is conducted at bid preparatory stage,

during execution (contract audit) and after the procurement activity (performance

auditing). In Ghana, they conduct annual procurement audit and specific ones when

need arises. The Malawian Public Procurement Act 2003 only says that procurement

activities would be subjected to regular auditing (Jones, 2004).

The Audit Act defines regular auditing as an annual exercise. However, the Auditor

General is empowered to carryout audit at any time. Fourthly, the issue of

cooperation with the Auditor General or hired auditors in the exercise of

procurement audit is critical to be in the public procurement law. This is especially

important in those countries where the Auditor General or hired auditors on behalf of

the latter (Jones, 2004).

There some con tractors and government official that would hinder the exercise.

Therefore, those that are to carry out the exercise have to be empowered by the law.

16

For example in Malawi, Botswana and Kenya the law clear states that stakeholders

have to cooperate with those empowered to conduct procurement audit. Suppliers

and consultants can also be visited by auditors during the procurement audit (Jones,

2004).

However, it is good to come out clear on how discipline and enforcement measures

would be implemented in the way Botswana public procurement law h as done. In

conclusion, it is of paramount importance that public procurement laws of countries

be clear on a number of issues like; who would conduct procurement audit.

Secondly, the relation of the mainly players in conducting this exercise has to be

clearly defined.

2.2.4 The role of procurement audit in fighting corruption

Corruption is a highly complex phenomenon. The parties involved leave very little

telltale in the form of irrefutable hard evidence. Most of the corruption takes place in

an informal manner and under the dark cover of isolated contacts. At times it does

not even require a spoken word. Auditors know that they cannot physically see all

transactions and all situations (Beth, 2005).

Corruption requires a multifaceted attack. It requires, for example, a set of

regulations against corrupt practices, a code of conduct for employees and vendors,

awareness raising campaigns, training of staff, internal controls, sanctions and

incentives, protection of whistleblowers and an open approach towards information

reporting. Audit is only one such mechanism (Beth, 2005).

The reporting results of corruption audit would follow the usual audit report format.

However, the focus of the report would be recommendations to plug-in holes in the

organizations’ operations, systems, procedures, rules and regulations that can provide

opportunities for corruption. The audit report should not and cannot point finger to

any particular person with charges of corruption (Beth, 2005). The role of corruption

audit report is mostly to prevent corruption or to suggest steps for minimizing

opportunities for corruption. It is generally understood that performance auditing can

17

help detect corruption. A properly planned and executed performance audit would

highlight areas of diseconomy, inefficiency and failure to achieve results and impact.

2.3 Challenges Facing Public Procurement

Public procurement is an important function of government for several reasons. First,

the sheer magnitude of procurement outlays has a great impact on the economy and

needs to be well managed. Indeed, in all countries in the world, estimates of the

financial activities of government procurement managers are believed to be in the

order of 10% – 30 % of GNP (Callender and Mathews, 2000). Efficiently handling

this size of procurement outlays has been a policy and management concern as well

as a challenge for public procurement practitioners.

Second, public procurement has been utilized as an important tool for achieving

economic, social and other objectives (Arrowsmith, 1998; Thai, 2001). In its report

to the Congress, the Commission on Government Procurement states: “[T]he

magnitude of the Government’s outlays for procurement and grants creates

opportunities for implementing selected national policies” (Federal Acquisition

Institute, 1999, p. 1.8). The World Bank’s Procurement Under IBRD Loans and

IBRD Credits specifies following four major concerns or objectives of public

procurement for projects funded by its loans:

Ensuring that the loan is used to buy only those goods and services needed

for the project;

Ensuring fair competition for all qualified bidders from the World Bank’s

eligible countries;

Promoting transparency or integrity; and

Encouraging development of indigenous contractors and manufacturers by

allowing local buyers to build in a margin of preference for local contractors

and manufacturers (Tucker, 1998).

Third, due to many reasons (including greater scrutiny of taxpayers and competing

vendors), public procurement has been perceived as an area of waste and corruption.

The District of Columbia, USA government wasted hundreds of thousands of dollars

in revenue by selling used emergency vehicles for “bargain basement prices” in

18

auctions run by untrained staffers (Nakamura, 2004). In a 2 1/2-year period studied

by the city’s Inspector General's Office, the city sold 11 fire trucks for a total of

$3,125 while similar vehicles in make and model had been sold on the Internet for a

total of $360,875. Corruptions and bribes are widespread in government contracts

(International Transparency, undated; and see www.transparency.org). In the United

States, corruptions in government contracts have been regularly reported in

newspapers; and the first week of September 2004 witnessed the reporting of a flurry

of criminal prosecutions against state officials for violations of state procurement

laws. Separate newspapers reported on bidding scandals from Illinois, Connecticut,

Wisconsin, and Maryland (see www.aba.org). Similar newspaper reports can be

found in many countries. Overcoming the negative perception -- and the objective

reality, to a certain extent – is one of the biggest challenges in public procurement.

Fourth, as many countries have moved to a regional and or global economy, public

procurement practitioners face another challenge that is, how to comply with their

government’s procurement regulations and social and economic procurement goals

without violating regional and/or international trade agreements. For example, how

to comply with national economic policies (in nurturing domestic firms), without

dealing unfairly with foreign firms as provided in regional trade agreements and/or

the World Trade Organization (WTO) agreements is not easy, which requires a

careful study of trade agreements in order to take advantages of special provisions.

The WTO Agreement on Government Procurement (GPA) Article XVI provides:

“Entities shall not, in the qualification and selection of suppliers, products or

services, or in the evaluation of tenders and award of contracts, impose, seek or

consider offsets.” Without careful examination of GPA provisions, procurement

practitioners in developing countries may not use an exception: However, GPA

Article XVI.2 “expressly allows for the use of offsets by developing countries”

(Arrowsmith, 2003, p.165). Properly using ‘offsets’ is a major challenge for public

procurement practitioners. Similarly, the World Trade Organization's general rule

requiring that contracts be advertised for a period of no less than 40 days from the

date of publication of the notice to the tender submission deadline. The 40-day

requirement would hinder a speedy procurement. The 40-day standard period,

19

however, may be reduced in certain cases to 24 days or 10 days, as set out in GPA

Article XI.3.

Fifth, in developed as well as developing countries, disregarding their economic,

social, and political environment, a sound procurement system has accomplish two

sets of requirements: management requirements and policy requirements. The

procurement management requirements normally include quality, timeliness, cost

(more than just the price), minimizing business, financial and technical risks,

maximizing competition, and maintaining integrity. The procurement policy

requirements normally include economic goals (preferring domestic or local firms),

environment protection or green procurement (promoting the use of recycled goods),

social goals (assisting minority and woman-owned business concerns), and

international trade agreements. It is very difficult for policy makers and public

procurement practitioners to make an optimal decision, as there are always tradeoffs

among these goals (Federal Acquisition Institute, 1999; Thai, 2001).

Finally, facing the challenges above and others, including rapid developments in

technology (which have led to new procurement methods), public procurement

cannot be perceived as mere a ‘clerical routine,’ as procurement practitioners are and

should be involved in strategic procurement planning (Office of Management and

Budget, 1997; Hinson & McCue, 2004). In recent years, public procurement

practitioners have forcefully challenged the perceived clerical task of public

procurement. According to a recent unscientific survey of 704 members at the

National Institute of Governmental Purchasing, Inc., 83% of respondents contended

that the major role of current purchasing is tactical (www.nigp.org). Thus, making

public procurement a recognized profession is another challenge. Building a body of

public procurement knowledge, one of attributes of a profession, is very critical.

Trade Practices, private sector in Tanzania participation in public procurement,

particularly goods and services, is very minimal. Local traders, suppliers,

consultants, contractors, architects and engineers have not built enough capacity to

participate in tenders advertised internationally and locally particularly when the

values are large. Local suppliers and contractors often do not have the capacity to

20

raise credit, bid bonds and securities from local banks and insurance companies, in

part due to the high rates of interest charged (UNDP, 2009)

Suppliers who would like to participate in public procurement find the procurement

procedures irrational and cumbersome. They are sometimes excluded when the

procurement is too big and they are apprehensive of unfamiliar procedures. They are

not well informed of how the procurement process functions, which renders the

process open to abuse. The private sector does not believe the public procurement

process can move without a “push”. The private sector, however, would embrace

clear, easy-to-follow guidelines if this minimises costs and facilitates business. There

are indications that over and under-invoicing in imports and local procurement are

common practices. This is attributed to mainly inside dealings. However, long time

lags and delays on the part of government to pay suppliers are some of the causes for

over-invoicing. Under invoicing is due to uncertainties relating to a supplier’s

chances of winning a tender bid (UNDP, 2009).

There is evidence of malpractice that affects public sector procurement; e.g. vehicle

repair documents are often not used. Sometimes invoices, receipts and other

documents are faked. In other instances of government procurement, documents are

“chased” by suppliers pushing them through the process in person. The assumption

is that “chasing” will not be successful without bribes, commonly known as the “kitu

kidogo” or “speed money” (UNDP, 2009).

Financial Framework, most banks in the country have international connections.

They are able to issue letters of credit, bid bonds and other guarantees for compliance

with tenders. The credit worthiness of the banks is guaranteed in that the Bank of

Uganda supervises and ensures that only credit worthy and professionally managed

banks are licensed to operate in the country. High interest rates (e.g. 18% – 25%)

appear to be a hindrance for national suppliers to access credit. Similarly, some

national bidders find the 10% requirement for bid bond too high, and they end up not

participating in tenders advertised locally.

21

The Institutional Framework, the Central Tender Board (CTB) was the main overseer

of the public procurement process in Uganda. The CTB derived its authority from the

Tender Board Regulations of 1977 established under the Public Finance Act. Cap.

149. The Central Tender Board was established to regulate and control: the purchase

or sale of government stores and equipment; and the award of government contracts

for goods` services or works (UNDP, 2009).

It approved purchases submitted to it by procuring entities. Such procurements were

for goods, works and services above the threshold of Shillings 1 million for goods

and Shillings 2 million for works and services. The Government Central Purchasing

Corporation (GCPC) was set up by Statute No. 3 of 1990. The objectives of the

GCPC were to procure government goods and services at the fairest prices, to ensure

government gets value for money and to carry out the procurement functions

expeditiously. It acquired goods, supplied them to government departments and

advised government on procurement policy and practices (UNDP, 2009).

The Swiss Procurement Company (SWIPCO), a private contractor, performed the

following functions under Contract with the Ministry of Finance: Advised the CTB

to ensure that the professional capacity of the Board is strengthened and extended;

Assisted procuring entities in preparing tender documents, performing evaluations,

drafting contracts and supervising contract performance; and provided training on

procurement to staff at different levels of government (UNDP, 2009).

The Central Tender Board, which oversaw the procurement process in the country,

had a set of disparate, (in the sense that the District Governments were not covered)

and outdated procurement regulations and procedures. The responsibility for

procurement was inconsistent among various procuring entities within the system.

The government system operated through cash budgets that, because of a lack of

coherent management attention to problems caused by this in the procurement area,

made it an unreliable business partner. These problems were compounded by

impoverished management practices in the procurement sub-system both at the

central and district administrations (UNDP, 2009).

22

Bureaucratic delays and lack of institutional co-ordination characterised the current

procurement system in the country. Malpractice and unethical conduct also saddled

the system. There was a high incidence of vested interests, interference and insider

dealings. There were occasional cases of retroactive approvals of contract awards

(UNDP, 2009).

Procurement knowledge and expertise at policy and operational levels were

inadequate. This implies that the personnel involved were severely handicapped

concerning the requisite procurement skills. Analysis had also revealed that apart

from World Bank documents, the procurement system in the country lacked standard

documents for use in specific contract situations. The lack of focus in the existing

regulations and guidelines were giving rise to decisions, which were devoid of

objectivity, accountability and transparency and resulted in a high incidence of

corruption and high expenditure (UNDP, 2009).

2.4 Empirical Literature ‘Review

This section presents the empirical literature review on public procurement and good

governance.

2.4.1 Sustainable Public procurement as an approach to good governance

Adjei, A.B. (2010) in his paper titled; Sustainable Public Procurement: A New

Approach to Good Governance asserted that an efficient and effective public

procurement system is good governance tool that:

Promotes effective and efficient procurement practices and systems to enable

government to deliver the services demanded by its constituents in a timely

manner;

Seeks to achieve value for money based on whole life cost;

Enhances competitiveness among suppliers through its policies and practices;

Adopts high standards of equity to ensure fairness and transparency, and to

avoid corruption in its practices;

Ensures accountability through good record keeping, auditing, and

transparent review procedures, among others;

23

Ensures uniformity for all public procurement by entities through regulations

and use of standard documents;

Ensures that public procurement complies with provisions of the country’s

public procurement law as well as the constitution;

Enhances quality and quantity of government projects delivered. Even though

the above issues are elements of efficient public procurement systems, they

are at the heart of good governance.

Government procurement therefore needs to consider sustainability issues as it is the

only way that it can be sure to offer real value for money over a longer term without

compromising environmental and social responsibilities. This would ensure that

development targets are achieved through the acquisition of goods, works and

services without much damage to society and the environment.

2.4.2 Review of good governance in Public Procurement in East Africa:

Odhiambo and Kamau, (2003) in their research programme titled:The Integration of

Developing Countries into the World Trading System:Lesson from Tanzania,Kenya

and Uganda revealed that good governance is a fundamental building block of a just

and economically efficient public procurement system. Studies of public

procurement in the three countries have shown that corruption in public procurement

has mainly been through hidden violation of the laid down procurement rules. In this

case procurement officers may be involved in malpractices, such as misusing the

power of invitation by only inviting preferred firms, favouring certain firms at the

short-listing stage, to design tender documents in favour of particular firms or release

confidential information. While corrupt procurement officers can in their own

interest choose to violate procurement rules, they work in most cases under the

influence of powerful politicians.

Since mid-1999, the three East African countries have identified and implemented an

extensive set of measures in the area of governance, including anti-corruption

measures. In Kenya, the Government established the Kenya Anti-Corruption

Authority to fight corruption head-on. Although this organisation has since been

outlawed, there exists a police unit to fight against corruption. In Uganda, there is a

24

Ministry of Ethics and Integrity that is charged with the responsibility of cultivating

moral and ethical integrity in all public activities. The Ministry works closely with

the police and other lawenforcing agencies to ensure transparency and accountability

in public undertakings. In Tanzania, there is the Tanzania Anti-Corruption Authority

established in 1999.

The three governments are also at different stages in preparing legislation on the

Code of Ethics for all public office holders and working out modalities in the form of

a “wealth disclosure” system for all senior civil servants. In Tanzania, exclusive

preference is given to local persons or firms, if the financial resources are exclusively

provided for by a Tanzanian public body and where the procurement value of works,

goods or services does not exceed an amount specified in the regulations. It is a

requirement in both Uganda and Tanzania that a written explanation be given for the

exclusion of international firms and persons in the tendering process.

2.5 Conceptual Framework

The study will be guided by the conceptual framework below. According to the

conceptual framework below, the three principles of good governance; transparency,

accountability and participation result in good governance, which enhances the

effectiveness of public procurement.

25

Figure 2.2: Conceptual framework

Independent variables Dependent

variable

Source: Researcher (2013)

Transparency

Principles of good

Good governance

Effective publicprocurement

Participation

Accountability

26

CHAPTER THREE

RESEARCH METHODOLOGY

3.0 Introduction

This chapter presents the overall research design, location of the study, sample of the

study, sample size, sampling techniques that were used to select respondents, data

collection methods that were used to collect information and data analysis.

3.1 Research Design

A case study design was used. The case study was used in this particular study to allow

detailed data collection and analysis within a short period. Since variables are not

expected to change overtime, data were collected only once from the respondents.

3.2 Area of the Study

The study was conducted in Dar es Salaam, Tanzania at the Ministry of Health and

social welfare. But the study also involved respondents from PPRA which has the

sole responsibility to ensure that public procurement is being conducted effectively,

and one of its objectives is to ensure that public procurement is performed in a free

and transparent manner.

3.3 Study Population

Population refers an entire group of individuals, events or objects having common

observable characteristics. In other words, population is the aggregate of all who

conform to a given specification (Kothari, ibid). This study involved members of

staff in the Procurement Departments of the Ministry of health and social welfare

and also some few members of staff of PPRA.

3.4 Sample and Sampling techniques

According to Kothari (ibid), sampling refers the process of picking up few or small

units out of whole population for study. Such unit is expected to be a representative

of the whole population. The researcher used purposive sampling to select

respondents from among the population of the study based on their line of duties and

responsibility concerning prevention of corruption in public procurement. The

27

researcher selected a sample of 40 respondents from the Ministries, and 5 members

of staff from PPRA making a total of 45 respondents.

3.5 Types and sources of Data

The study mainly used primary data collected from respondents at their respective

offices as well as secondary data which was collected from various published and un

published sources.

3.5.1 Data Collection Methods

During the study, both primary and secondary data collection methods were used.

Primary data collection methods that used by the researcher to collect data include;

questionnaires and interviews. Questionnaires were designed and given out to

respondents for the purpose of having all questions answered. Questionnaires were

relatively cheap to formulate, distribute and save time. In interviewing tools the

study involved face to face contact. It provided the advantage of first hand

information as a result of the interaction between the researcher and the interviewer.

It also helped the interviewer to evaluate the knowledge and attitude towards the

topic. The researcher observed the different activities taking place in the company to

get further information relating to problem. It also allowed judgment by sight about

the relationship between variables.

The only secondary data collection method that was used to select data during the

study is documentation, which involved perusal of Procurement Audit and other

reports. Review of related literature was done and secondary data was extracted.

Among the many documents that were reviewed include: magazines, journals and

internet information. The above documents were reviewed and background

information pertaining Procurement on supply chain management.

3.5.2 Questionnaire

According Kothari (2006), a questionnaire is a method of collecting data which uses

a set of question for collecting data in carrying out social science research. By this

method, data is collected with the help of question. Respondents have to answer

questions on their own and bring back to the researcher. Both open ended and closed

28

ended questions since closed ended questionnaires restricted respondents to choose

among alternative, while open ended questionnaires enabled respondents to give

more explanation based on their experience, and perceptions. The advantage of using

closed-end questions is that it helped to avoid ambiguity in answering questions

while open-ended questions enabled respondents to give detailed answers.

3.5.3 Documentary Sources

Documentation will involve perusal of various documents and literature on the

subject matter. The researcher consulted various reports, records, Acts, regulations,

journals and websites. This method of data collection is suitable because the

researcher may fail to get information through other data collection methods since

respondents may not be able to provide all the required information.

3.6 Data Reliability and Validity

Kothari (2006) defines reliability as the quality of consistency of a study or

measurement. Kothari comments that a measuring instrument is reliable if it provides

similar results. That means if the same or different researcher repeats the study, it

should produce more or less results. In order to ascertain reliability of the study, a

pilot study was conducted with a few respondents. This implies that the researcher

wants to measure what is supposed to be measures. So if whatever the researcher

uses in the study enables her to get what she wants to measures, then, there is

validity. This allowed for corrections to be done before questionnaires are distributed

to respondents. The data collected confirmed to test a validity and reliability. The

data was valid because of the use of questionnaires, observation and interview

methods in the study designed to capture all the information that fulfilled the study

objectives were questionnaire were applied the researcher used the interviewing

techniques and observations.

3.7 Data Presentation and Analysis

The collected data were analyzed to obtain answers to all questions and all responses

were properly arranged so as to avoid misconception of the respondent’s ideas during

report writing. To make the research understandable the researcher used both

29

quantitative and qualitative data analysis methods using descriptive statistical

methods and narrative form respectively. Having gathered the data from the primary

and secondary sources, the data was assembled together, edited, organized by the use

of tabulations and statements. Appropriate analytical methods were then applied so

as to manipulate the data so that their inter-relationship and quantitative meaning

derived. Simple tabulation was some of the statistical tools that are to be used to

summarize the data. The researcher also used inductive reasoning to get a clear

understanding about the general instructions of the topic.

30

CHAPTER FOUR

DATA ANALYSIS, DISCUSSIONS OF THE FINDINGS

4.0 Introduction

This chapter presents the findings that were intended at examining the role of good

governance in public procurement in the Ministry of Health and Social Welfare. The

specific objectives of the study were to assess the extent to which transparency can

enhance public procurement of the Ministry, to assess the extent to which

transparency can enhance public procurement of the Ministry and to assess the extent

to which participation can enhance public procurement accountability of the

Ministry. The collected data had been analyzed where editing, coding and

classification had been done. Data cleaning which include editing and coding were

done in order o examine the collected raw data being free from errors and omissions

and make corrections as well as to assist the researcher to put respondents into

limited number of classes that were appropriate to the research problem. Data

classification was done on the basis of common characteristics with the help of

statistical package for scientific studies (SPSS). Tabulation was applied in order to

compliment explanatory and descriptive elements. The study was done at the

Ministry of Health and Social Welfare with the sample size of 45 respondents.

4.1 Respondent’s Characteristics

Population of the study taken hereunder as the sample study provide the following

characteristics that are descriptively presented with respect to gender, marital status,

Academic qualification and Age of the respondents.

4.1.1 Gender of the respondents

In this study gender were unevenly distributed by both male and female respondents,

this suggest that researcher were not biased in inclusion of both sex.

31

Table 4.1:Gender of Respondents

Gender Frequency Percentages (%)

Female 20 44.5%

Male 25 55.5%

Total 45 100

Source: Field Data, 2013

The Findings revealed that majority of the respondents (55.5%) were male

respondents followed by female respondents 44.5%. It implies that most of the

respondents who were invited in this study were male which translate directly that

most of employee’s at the Ministry of Health and Social welfare are male.

4.1.2 Age of respondents

Table 4.2: Age of respondents

Age bracket Frequency Percentage (%)

Between 18-25 years 9 20

Between 25-35years 21 47

35 years and above 15 33

Total 45 100


The findings showed that 20% of the respondents were between 18 to 25 years, 47%

were between 25 to 35 years and constituted the majority. 33% were between

35years and above, however this indicates that the information got is viable because

all respondents are of mid age and well educated.

32

4.1.3 Duration of work of respondents

Table 4.3: Duration of work of respondents

Respondents Frequency Percentage (%)



More than 10 years 30 50

Total 45 100


From the table above, findings show that 50% of the employees in the organization

had served for more than ten years and above. This thus revealed that most of the

employees involved in the supply chain are experienced once performing their duties

with confidence and perfection.

4.2 Major Findings of the study

4.2.1. Awareness on good governance in public procurement

The aim was to examine if respondents were aware of the importance of good

governance on public procurement at the Ministry of Health and Social Welfare.

Organization and procurement stage differ in degree of uniformity, complexity,

number of people involved and movement of efforts required to make a good

decision. There are basic activities that must be taken to complete a purchase. Buyers

have always had to follow some basic steps. Advancements have provided an

alternative to an endless time taking purchase stages because formerly processing a

purchase order regardless of the value, size and importance of the item in question

required on to strictly follow suits, all these steps can be effectively managed when

good governance is in place.

33

Figure 4.1: Awareness on good governance in public procurement


From the above table 49% agree that they were strongly aware on good governance

in public procurement and they believed that has eased the buying process of the

organization, 38% agree that they were aware, 13% they were partially aware, while

0% who aware not aware of role of good governance on procurement. This implies

that good governance has eased the buying process of the organization

4.2.2 Knowing about good governance in public procurement

The study sought to investigates about how the respondents at the Ministry of Health

and Social Welfare to know about the importance of good governance on

procurement activities. Results are as indicated in figure below.

Aware38%

Partially Aware13%

33












StronglyAaware

49%

Partially Aware13%

Not Aware0%

33












34

Figure 4.2: respondents knowing about good governance in public procurement


The findings revealed that 37% of the respondents agreed that they know about good

governance in public procurement through on job training, 17% agreed that they

knew about good governance in public procurement through professional training,

27% through workshops and seminars and 19% through online or distance training.

During the administration of this study many respondents agreed that they were

familiar about thr influence of good governance on procurement as they argued that

it has improved on the organizational purchase function through cost reduction.

4.2.3 Aspects of good governance enhance public procurement

This was among the key objective of the study whereby respondents were asked to

provide information on whether the aspects of good governance were useful

mechanism in managing public procurement. Data collection was done through the

use of questionnaires and interviews as well as documentary reviewed.

0

5

10

15

20

25

30

35

40

By on-jobtraining

Byprofessional

training

Throughworkshops

andseminars

Online ordistancetraining

37

17

27

19

35

Figure 4.3: Aspects of good governance enhance public procurement


From figure above 16% of the respondents agree that the aspects of good governance

were useful mechanism in managing public procurement since the most

critical/major objective of procurement is to shorten the response time to customers

demand and reduce corruption on investment, 32% agreed that the aspects of good

governance in an average were useful mechanism in managing public procurement ,

17% were not sure and 21% they said somehow, while 14 said that not all aspects of

good governance were useful mechanism in managing public procurement.

4. 2.4 Measures used to ensure transparency, accountability and participation

in public procurement

Respondents were asked to rank the following measures as used to ensure

transparency, accountability and participation in public procurement at the ministry

of health and social welfare.

Not at all14%

Somehow21%

Not sure17%

Average32%

Maximum16%

36

Table 4.4: Measures used to ensure transparency, accountability andparticipation

Measure Ranks in (%)

Checking if tenders were advertised properly 19%

Checking if tender documents were submitted properly 39%

Checking if tenders are evaluated properly 15%

Checking if tender was awarded in a transparent manner 11%

Checking if goods/services were delivered as promised 16%


39% which is the majority of the respondents agree that measures most often used to

ensure transparency, accountability and participation in public procurement at the

ministry of health and social welfare was checking if tender documents were

submitted properly, with no time delay which lastly increased flexibility and

responsiveness of the whole supply chain system, followed by 19% agreed that

Checking if tenders were advertised properly was often, also 16% agreed that

Checking if goods/services were delivered as promised were somehow used, and

Checking if tender was awarded in a transparent manner was used with 16% of

response this indicates that transparency was not highly used compared to other

measures which implies that the statement is true.

The researcher in this case wanted to find out whether the same rules apply to all

suppliers of goods, works and services and whether these rules are publicized as the

basis of procurement decisions. The descriptions of the various items were mostly

agreed upon by all respondents. The analysis reveals some efforts of transparency

such as advertising using the appropriate medium were used by the ministry,

utilization of the PPA website for notice and debriefing of unsuccessful bidders.

4.3 The extent to which transparency can enhance public procurement of the

Ministry

The study aimed at examining the extent to which transparency can enhance public

procurement at the Ministry of Health and Social Welfare as it believed that

37

transparency serves as the mirror for the process of public procurement of which

trust is created for the process. Thus, Public procurement Act endorse the use of

Standard Tender Documents (STDs), advertising procurement opportunities, public

opening, publication of contract awards, resolving disputes and complains, and

effective monitoring.

Figure4.4: the extent to which transparency can enhance public procurement of

the Ministry


The findings revealed that 22% of the respondents strongly agreed that transparency

can enhance public procurement at the Ministry of Health and Social Welfare. 29%

agree, 37% which are the majority were not sure which implies that respondents are

not sure whether transparency can enhance public procurement at the Ministry of

Health and Social Welfare. While, 7% and 5% respectively disagreed.

The study found out that effective monitoring and auditing of procurement activities

were conducted. To guard against this phenomenon the public procurement act

provides that Procurements using other uncompetitive methods (Price Quotation,

38

Sole source etc) are vigorously monitored and evaluated by Audit Agency to ensure

transparency. A position further supported by Schapper, et al (2006) when they

agreed with (Shadrach and Ekeanyanwu, (2003) that e-commerce can be used to

enhance transparency through effective audit and monitoring of low value

transactions. According to them high value and complex procurement procedures

must involve publicly available information on policies, bidding process, evaluation,

and bid results. In summary, transparency was rated high which gives much evidence

to the belief of transparency in public procurement practice at the ministry of Health

and Social Welfare.

4.2.1 Competitiveness and Fairness

The section intended to measure whether Ministry of Health and Social Welfare

demonstrated fairness and whether it actively encouraging greater supplier

participation in the tendering process through transparency and interaction with the

suppliers to make them competitive in the procurement process. Results are indicated

in figure 4.5 below.

Figure 4.5: Respondents views on competitiveness and Fairness


In public procurement in Tanzania Competitiveness and fairness stand to be the

parameter of the Public Procurement Act, to allow as many legal entities to compete

Disagree27%

StrongDisagreed

19%

38









and Social Welfare.











Strong Agreed17%

Agreed26%

Neutral11%

Disagree27%

StrongDisagreed

19%

38









and Social Welfare.











39

for public project in order to instill competition for bidders. Figure above indicate

that there is competition and fairness at the Ministry of Health and Social Welfare

since 17% strongly agreed, 26% agreed and 11% remained silent. However, 27% and

19% respectively disagreed.

This finding mirrors with UNIDO Annual Report (2009) that there is an improved

participation rate of four (4) tenders and responsive rate of three (3) per tender notice

by the suppliers. In summary, competitiveness and fairness had a certain level of

acceptance which suggests that, the public procurement reform ensures increased

competition.

Beside its direct hindrances on access to the public procurement market, lack of

transparency is harmful because it enables a culture in which there are no checks on

corruption. Corruption – the abuse of public office for private gain – is inevitably

harmful for the overall social services in particular as it distorts the size of

government expenditures and the decision-making process for public projects.

Transparency International’s handbook on curbing corruption in public procurement

highlights that each phase of the procurement process is vulnerable to corruption,

from advertising bids to the selection process. This makes efforts to tackle corruption

crucial in any attempt to reform public procurement (UNIDO Annual Report, 2009).

4.3 Effectiveness good governance in enhancing public procurement

This part aimed at investigating the effectiveness good governance in enhancing

public procurement Transparency can be used as a tool aimed directly at reform in

public procurement, but it is important to understand that non compliance in public

procurement does not exist in a vacuum. Results are indicated in figure 4.6 below.

40


procurement


Based on the above findings when respondents were asked on the effectiveness

good governance in enhancing public procurement more than 40% agreed that it was

effective and they commented that it promoted procurement laws more enforceable

and effective right to freedom of information, 29% remained silent, while 8% and

21% respectively said they were not effective, this was due to the fact that they had

experience bribes practices in public offices, when they were asked about the reasons

for these payments, most of them regarded it as something normal, ‘something

everybody does. For this reason, we need to see efforts to improve transparency in

public contracting as part of a broader transparency in procurement.

While narrower transparency efforts, focused on public procurement only, help

Ministry of Health and Social Welfare by improving access and simplifying

procedures, broad efforts to improve transparency have a far-reaching impact in

deterring a culture of secrecy. To this end, a combination of disclosure of documents

related to public procurement, as well as information on assets of public officials as

used to be previously in Tanzania, enables public scrutiny over the procurement

processes. This, in turn, contributes to open competition and improves overall

accountability.

0

Very Effective

Effective

Not sure

Less effective

Not Effective

40


procurement


















accountability.

5 10 15 20 25

19

24

8

21

40


procurement


















accountability.

30

29

41

4.4 The extent to which transparency enhances public procurement

There must be tenders advertised in the local media, bids are then evaluated by the

evaluation committee to come up with the best evaluated bidder, then results must be

put for a certain number of days. All this takes a lot of time

Table 4.5: Respondents view on tenders being advertised in the local media

Responses Frequencies Percentages (%)

Strongly agree 10 22

Agree 5 11

Not sure 3 7

Disagree 17 38

Strongly disagree 10 22

Total 45 100

Source: Field Data (2013)

According to the above Table 4.5 , 22% of the respondents strongly agree that there

must be tenders advertised in the local media, bids are then evaluated by the

evaluation committee to come up with the best evaluated bidder, then results must be

put for a certain number of days in most cases it takes a duration of 60 -90 days . All

this takes a lot of time. 11% agree, 7% are not sure, 38% disagree and 22% strongly

disagree.

4.5 Influence of Good Governance on Public Procurement Accountability

The study sought to investigates as to whether good governance improved public

procurement accountability or not. Respondents were asked provide their views on

how procurement system which is based on good governance can lead into improved

organizational purchase function through like cost reduction and others. Results are

indicated in table 4.5 below.

42

Table 4.6: Influence of Good Governance on Public ProcurementAccountability


Strongly agree 6 10

Agree 17 38

Not sure 14 31

Disagree 5 11


Total 45 100


The findings revealed that 10% of the respondents strongly agreed that good

governance improved public procurement accountability and it has improved on the

organizational purchase function through cost reduction. 38% agreed, 31% were not

sure which implies that respondents are not sure whether good governance improved

public procurement accountability and has led to increase of organizational purchase

function through cost reduction.

It was found out that, accountability is one of the major actions taken by the

practitioners of the public procurement at the Ministry of Health and Social Welfare.

As noted in Table 5 respondents were of the opinion that, procurement practitioners

are held accountable for their actions and inactions was strongly agreed. However in

terms of applying sanctions against procurement entity or staff recorded a total

disapproval, which shows that, taking actions and sanctions against officials is hardly

done. Irrespective of the above mentioned, accountability in general was found out

that practitioners are held accountable for their actions and inaction with regards to

the procurement process.

4.6 Compliance with Public Procurement Act

Furthermore the study looked into respondent’s opinion to find out whether the

Ministry of Health and Social Welfare procurement team complied with terms and

conditions of procurement act or not. Findings are presented in the Figure 4.7 below.

43

Figure 4.7: Respondent’s views on Compliance with Public Procurement Act


The finding exhibited a high proportion 27% agreed and 21% who are the majority

strongly agreed that staff of Ministry of Health and Social Welfare procurement team

complied with terms and conditions of procurement act, 12% of respondents were

not sure with the statement and 23% disagreed and 17% strongly. This implies that

respondents are not sure that procurement team at the Ministry of Health and Social

Welfare procurement complied with terms and conditions of procurement act. Since

the study intended to ascertain whether Ministry of Health and Social Welfare

complied with the regulatory framework of the procurement act or not, As indicated

in figure 7 respondents think Ministry of Health and Social Welfare comply with the

public procurement Act. Ministry of Health and Social Welfare applied appropriate

procurement methods for appropriate thresholds and used Standard Tender

Documents authorised in procurement.

4.7 Completion of Contracts on Schedule and within Cost

On the basis of the completion of contracted projects and its associated cost, the

researcher wanted to find out the proportion of awarded contracts that were able to

meet deadline as planned. Results are indicated in figure 4.8 below.

Disagree23%

Stronglydisagree

17%

43



















Strongly agree21%

Agree27%

Not sure12%

Stronglydisagree

17%

43



















44


within Cost


From the data in the figure 4.7 above concerning the effectiveness of terms and

condition of procurement contracts this proved to be an area of weaknesses for

procurement sector with 29% percent out of 45 respondents reporting “more”

capability, while 47% respondents agreed that terms and conditions are effective and

24% respondents said that they less effective. The study found that the design and

management of mandatory, optional and alternate terms and conditions clauses for

various types of products and services are foundations for contracts risk

management. Contracting should NOT entail the reinvention of terms and conditions

each and every time a purchase is to occur.

Also it was said that standard, legally-approved terms and conditions provide the

organization with significant protection and risk control while greatly speeding up

routine contracting activities. The response shows that certain contractual terms and

conditions were negotiated for products and services that are not pure “commodities”

by nature. The need for negotiation flexibility and variance from standard depends on

issues such as the nature of the purchase, the sourcing strategy itself and the relative

Less Effective24%

44


within Cost

















More Effective29%

Effective47%

Less Effective24%

44


within Cost

















45

power of the supplier versus the buyer. Certainly it is very unwise to ignore these

factors. Even in these instances, standard alternative terms and conditions should be

developed to reduce the risks in the process and to speed up negotiations for the good

of all parties. Some respondents confirmed that contracts were not completed on

schedule and within cost. The disagreement is based on the premise that contracts are

in majority and so has influence the decision of the respondents. The respondents

explained that government grants were not paid on schedule and sometimes not the

amount expected.

4.8 Challenges faced by MHSW in procurement

Findings revealed that procurement system at Ministry of Health and Social Welfare

is not practical well established because of low level of law enforcement and there is

no specific agency that deals with enforcement of public procurement act enabling,

there is need of signatures on many documents as they move from one level to

another especially in public procurement, where as procurement promises to make

procurement processes easier, it’s not clear whether there must be tenders advertised

in the local media, bids are then evaluated by the evaluation committee to come up

with the best evaluated bidder, then results must be put for a certain number of days.

4.8.1 E-procurement well developed at Ministry of Health and Social Welfare

In modern world procurement is done through e-procurement as is considered to e

the easiest model of procuring various materials and supplies and as a useful model

to avoid corruption especially in public offices in country like Tanzania. Because of

the complexity of these relationships, E-procurement must do more than support ad

hoc purchases from a consolidated catalog. Getting real value from E-procurement in

supply-chain scenarios requires a raft of additional services. Results are indicated in

table.

46

Table 4.7: E-procurement well developed at Ministry of Health and SocialWelfare



Agree 23 51.1

Not sure 1 2.2

Disagree 4 5


Total 45 100


The table above shows that 50% of the respondents strongly agree that E-

procurement is not well developed at Ministry of Health and Social Welfare because

there is no enabling law that can govern its use. 45% agree, none is not sure, 2%

disagree and 3% strongly disagree implying that the statement is true.

4.9 Measures to be taken by the ministry to overcome the challenges

4.9.1 Monitoring of day-to-day contract performance and compliance

This question relates to the methods that are used to manage contract in cost effective

way and as tools required to deal with routine contract performance and compliance

monitoring. This essential yet basic capability again proved to be “out of reach” as

respondents and an overwhelming 27% and 31% agreed that that they did not have

the methodology and tools to effectively monitor contract performance and

compliance, rating them, while 5% remained silent which may mean that they don’t

know, while 18% and 19% Ministry of Health and Social Welfare had such capacity.

The study found that the organization’s ability and methods for addressing audit

results are weak, as well as for identifying the root cause of issues identified, for

developing effective action plans and for monitoring and controlling the

implementation of those plans. The internal audit function may or may not be

responsible for providing this methodology for organizations. The results are

presented in the Figure 4.9 bellow.

47

Figure 4.9: monitoring of day-to-day contract performance and compliance


Contract life-cycle information generated and produced for contract administrators

and managers. The study sought to investigate information that would include

various alerts, warnings, action messages, recommendations and other information

for those personnel responsible for controlling and managing various elements of

contracts with varying degrees of significance and complexity. This capability should

be in place to help prevent problems and/or respond to issues such as renewal

requirements, contract expiration, contract improvement, etc.

4.9.2 Procurement Planning and Negotiation

The researcher sought to unveil as to whether procurement planning and negotiation

can act as important factor of procurement management at Ministry of Health and

Social Welfare. Both questionnaires and interviews were used as instruments of data

collection from the various respondents who engages themselves in the procurement

activities at the respective ministry. The results are presented in the figure 4.10

05

101520253035

StrognlyAgreed

Agreed NeutralDisagree

StronglyDisagree

2731

5

18 19

48

Table 4.10: Respondents view on whether procurement planning and

negotiation


The findings indicated that 45% respondents strongly agreed that procurement

planning and negotiation can act as important factor of procurement management at

Ministry of Health and Social Welfare, 28 agreed, 13% remained silent, while 10%

and 4% disagreed and they explained that the overall procurement management

process design as “less effective” Within these overall ratings further analysis

evidenced that the planning aspects, contract planning and negotiation planning, both

better practices, can act as a solution towards various challenges,

From the available findings it was revealed that once product or services

requirements, scope, quality, quantity and so forth have been finalized, the

procurement planning as a process and discipline helps the organization to put an

overall plan and project schedule in place for the rest of the procurement process,

right through to post-award management and administration. Tasks included in the

plan are: any finalization of contract requirements and scope, contract negotiation

planning, negotiation and collaboration

This findings indicate that procurement planning help ensure that all key aspects

have been covered and that the company’s objectives and procurement management

45

28

1310 4

05

101520253035404550

StrognlyAgreed

Agreed Neutral Disagree StronglyDisagree

49

and control requirements have been met. The procurement plan and schedule should

be communicated to all key parties. The team should select the most appropriate

contract to work from based on the clearly defined product/service requirements.

This reflects the defined sourcing strategy for the product/service. The study found

that sourcing strategy is typically based on business requirements, a market analysis,

the procurement risk and impact analysis, and the desired business relationship with

the supplier that makes most sense for the organization.

From data viewpoint among the most concerning of all findings was the level of

immaturity in the entire area of post-award contracts management, control and

administration, was the highest risk area within contracting for procurement planning

and negotiation can act as important factor of procurement management at Ministry

of Health and Social Welfare. As Cox (2008) argued that that post-award contract

management activities are intended to help the organization to ensure and to control

performance, scope, quality, costs, service, terms and conditions compliance, and

compliance with a range of other key aspects of agreements, including those relating

to regulatory and environmental concerns. During the administration of this study it

was found that senior executive teams and boards of directors are highly concerned

procurement management structures and responsibilities to be in place to effectively

measure, monitor, manage and control the supplier/contract performance, as well as

the supplier relationship throughout the life of the contract. Contract administration

and control includes actions, either by the purchaser or supplier (the parties to the

contract), from the time the contract is awarded until such time as the deal is

formally closed. This can entail a wide variety of people, functions and activities in

many agreements

4.9.3 Education and sensitization on procurement and supply chain

management.

The study sought to suggest solution against problems associated with procurement

activities at Ministry of Health and Social Welfare, suggesting education and

sensitization as a means towards effective procurement. Results are provided in

Figure 4.11 below:

50

Figure 4.11: Education and sensitization on procurement and supply chain

management


Based on the data available in Figure 4.11 above 51% respondents agreed that

suggesting education and sensitization as a means towards effective procurement,

36% agreed, while, 7 disagreed and 6% were not decided. Respondents were asked

to evaluate the quality, availability, and implementation of training and education

programs for all those personnel involved in key contract procurement planning

process, development, negotiation and contracts management activities. The answers

were not encouraging, so, not only are there gaps in skills and competencies to plan

negotiate and manage procurement contracts, but there is a serious lack of investment

in training and education to improve the capabilities of the people to do this work

effectively and efficiently. It was revealed that personnel who play those roles should

always have qualifications and skills to carry out the task and be provided with

development and training opportunities wherever there is a gap. These expectations

should apply whether it is for direct or indirect purchases, and whether the position

resides in an official “procurement” function or in an end-user or “decentralized”

function, drive very specific requirements.

4.9.4 Improvement of e-procurement

Improvement of e-procurement is among of the major suggestions brought up by

respondents who participated in this study, whereas e-procurement promises to make

procurement processes easier, its implementation in developing countries like

Strognly Agreed51%

Agreed36%

Neutral6%

Disagree7%

StronglyDisagree

0%

51

Tanzania as it seems to be more of a dream than a reality. E-procurement is

considered to be among good governance measures to be taken to enhance public

procurement at the Ministry. Results are indicated in table 4.7 below.

Table 4.8: Improvement of e-procurement



Agree 13 29

Not sure 5 11

Disagree 4 9


Total 45 100


In the table 4.7 above, 51% of the respondents strongly agree that e-procurement

promises to make procurement processes easier and therefore should be improved at

the Ministry of Health and Social Welfare, its implementation in developing

countries like Tanzania will be useful strategy I fighting against corruption. 29%

agree, 5% are not sure and none disagree meaning that where as e-procurement

promises to make procurement processes easier, its implementation and as a useful

tool in fighting against corruption in developing countries like Tanzania. Moreover,

respondents who participated in this study insisted on establishment of enforceable

laws and effective promote right to freedom of information; others insisted on

regular and open publication of information; Effective audit and regulation bodies

with real independence; and an active and engaged civil society and media capable of

challenging corruption

52

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

5.0 Introduction

This chapter presents the summary, conclusions and recommendations with regards

to the research topic. The chapter has three sections, section one presents the

summary of findings, section two provides conclusions drawn from the study and

section three provides recommendations and study limitations as well as areas for

further studies which will contribute to the whole process of examining the

procurement management.

5.2 Summary of the Findings

This study that aimed at examining the Role of Good Governance in Public

Procurement in the Ministry of Health and Social Welfare. Good governance in

procurement process drives the improvement of all elements of supply chain

management process capability. Good Governance provides the overall guidance and

direction for the design or redesign and implementation of realistic, pervasive and

effective procurement policies. Procurement policies should represent management’s

direction, expectations and intent as to how the organization will develop, manage

and control supplier arrangements and the major expenditures, risks and regulatory

requirements that must be addressed, managed, monitored and controlled throughout

the organization. Other procurement management process capabilities should be

clearly aligned with and support the contracting process strategic objectives and

contracts management policies.

The study found out that effective monitoring and auditing of procurement activities

were conducted. To guard against this phenomenon the public procurement act

provides that Procurements using other uncompetitive methods (Price Quotation,


transparency. Some respondents argued that procedure and mechanisms of

procurement established by the Ministry of Health and Social Welfare were not

effective, this was due to the fact that they had experience bribes practices in public

offices, when they were asked about the reasons for these payments, most of them

53

regarded it as something normal, ‘something everybody does. For this reason, we

need to see efforts to improve transparency in public contracting as part of a broader

transparency in procurement. While narrower transparency efforts, focused on public

procurement only, help Ministry of Health and Social Welfare by improving access

and simplifying procedures, broad efforts to improve transparency have a far-

reaching impact in deterring a culture of secrecy.

It was found out that, accountability is one of the major actions taken by the

practitioners of the public procurement at the Ministry of Health and Social Welfare.

Respondents who took part in this study agreed that procurement practitioners were

held accountable for their actions and inactions was strongly agreed. However in

terms of applying sanctions against procurement entity or staff recorded a total

disapproval, which shows that, taking actions and sanctions against officials is hardly

done. Likewise the findings indicated that to certain extent Ministry of Health and

Social Welfare complied with the regulatory framework of the procurement Ministry

of Health and Social Welfare applied appropriate procurement methods for

appropriate thresholds and used Standard Tender Documents authorized in

procurement.

Findings revealed that procurement system at Ministry of Health and Social Welfare

is not practical well established because of low level of law enforcement and there is

no specific agency that deals with enforcement of public procurement act enabling,

also, it was revealed that E- Procurement was underdeveloped, therefore there is a

need of signatures on many documents as they move from one level to another

especially in public procurement because most of the procurement process were

conducted manually, where as procurement promises to make procurement processes

easier, it’s not clear whether there must be tenders advertised in the local media, bids

are then evaluated by the evaluation committee to come up with the best evaluated

bidder, then results must be put for a certain number of days. Also, the study

suggested that, there should be improvement of E-procurement to ease purchasing,

training is required to all officials who are involved in procurement.

54

5.3 Conclusion

In reference to the research objectives set, the researcher concludes that good

governance plays a positive role on purchasing in supply chain management.

Ministry of Health and Social Welfare should embrace the elements of good

governance. However despites the many benefits that accrue from the application of

E-procurement, the direct network links between computers and trading partners are

not widely used because of fear of loss of confidentiality and security due to the

different mode of information attack like hijacking of a website, social engineering

among others.

In developing countries where corruption is still a pervasive issue, transparency

initiatives are key to unlock many challenges facing Ministry of Health and Social

Welfare in benefitting from the public procurement market. Through active

disclosure of documentation and creation of a level playing field for Ministry of

Health and Social Welfare in public procurement, these initiatives can maximise

Ministry of Health and Social Welfare growth, and indirectly contribute to overall

improvement of service delivery. Despite the absence of reliable data on levels of

corruption at the Ministry of Health and Social Welfare, perception surveys indicate

that corruption levels remain an issue in the ministry’s business environment.

Although this paper emphasized the benefits from transparency in public

procurement, if Ministry of Health and Social Welfare is to achieve maximum

benefit from public procurement and contribute to the overall service delivery, these

efforts need to be part of a broader transparency regime as well as a more

comprehensive public procurement reform. In summary, while transparency is

necessary, it is not a sufficient condition to guarantee maximum benefits from public

procurement for Ministry of Health and Social Welfare. Although the challenges

Ministry of Health and Social Welfare face are diverse, and transparency is not the

only solution.

The roles of both donors and government procurements agencies also need to be

enhanced to achieve greater accountability and transparency. At present many donors

seem to focus excessively on strict complacence with the procurement law and

55

regulatory framework rather than on helping strengthen the institution carrying out

day to day procurement operations, so they can achieve better results. Peter Pease

and Khadija Fardi (2010) argued that Public Procurement has been an area that is

prone to mismanagement, corruption, and vendors’ ploys. One of major causes of

public procurement problems is a lack of competent procurement workforce (Thai,

Khi, 2010). In the past it was felt that basic training was sufficient, but now there is

evidence that training is only part of the requirement for creating an effective

procurement professional .The most effective procurement practitioners have a blend

of the competency, good relationship, management and communication skills and an

ability to think laterally(Guinipero and Handfiled, 2004).

However, Certified Public Procurement Specialists are also required to perform in a

more constructive manner, in Tanzania as it is considered as a poverty-stricken

country. When poverty comes all the ethical values and morality goes in vein. Not

only, has in health services but also in other sectored. Similarly Basheka and Benon

(2008) argued that the quality of public administration must be improved and

accountable, which is an integral part of good governance as well.

Promoting transparency and accountability, capable and competent public

administration, and the rule of law must be at the forefront of development policies.

Policy planning and decision-making are the key concern to public administration

which is part and parcel of procurement. Governance can make a country prosperous

even in a resource poor setting. The connection between corruption and poverty is

therefore clearly visible. Good public management and administration, with

emphasis on accountability and responsiveness to customer needs against the

backdrop of serious accountability scandals, has been seen as an aspect of good

governance by donor agencies supporting reforms in developing countries.

5.4 Recommendations

The results of this study indicated the influence of good governance on public

procurement management. In light of the discussions, findings and the conclusions,

the following recommendations are important for both public and private

organization. These recommendations include:

56

Procurement "training Centres of Expertise" should be established on a

commodity-by-commodity basis which means based on certain

specialization. And these centres of expertise, which can be cross-

disciplinary, should be coordinated by a centre of excellence. This is

important since it seems that procurement professionalism in Tanzania has

not yet fulfilled procurement needs of public sector.

It is obvious that there is a level of mandatory compliance required for the

effective operation of the public procurements based on the provided legal

framework of Tanzania to ensure effective contracts management. Projected

cost avoidance is only realized if the plan is followed.

A Charter for Suppliers should be established for the complete public sector

in Tanzania. It should essentially describe the sector's commitment to

suppliers by defining the generic standards which suppliers can expect from

the operation of public-sector procurement and in turn what will be expected

of them as suppliers to the sector. Suppliers should know what to expect and

what to deliver.

There should be total transparency in connection with procurement decisions.

Hidden opportunities are lost opportunities. Also, there should be a review of

non-core activities to establish candidates for outsourcing evaluation.

Remember, outsourcing doesn't necessarily mean off shoring. Ministry of

Health and Social Welfare can outsource to an operation down the street.

Outsourcing is about doing what makes financial sense.

Electronic procurement systems should be made part and partial of the

decision making as a way of availing reliable information at the Ministry of

Health and Social Welfare and in the other organizations. Managers should

seek to adopt the most appropriate technology that will aid the whole

organization to achieve its objectives.

57

Electronic procurement applications can be used by both public and private

sector. Ministry of Health and Social Welfare should adopt online purchasing

as a way of checking on their total transaction costs since E-procurement

aims at reducing operational costs. Ministry of Health and Social Welfare

should also ensure that the embracement of E-procurement assists in

establishing better working relationships. E-procurement should be geared at

strengthening relationships between employees, employers and suppliers.

The benefits that accrue from application of E-procurement should be

adequately analyzed. That is the organization’s management should be in

position to continuously weigh the benefits that accrue from application of E-

procurement.

Ministry of Health and Social Welfare should ensure strict adherence to the

company’s policies and guideline regarding the application electronic

procurement. That is the employees should execute their duties following the

pre requisites in place. All employees in one way or another should be

involved in the purchasing process especially as far as procedures governing

procurement are in place.

Ministry of Health and Social Welfare and other Public entities must ensure

that suitable candidates are employed on the basis of merit and placed in their

relevant qualifications, skills, and experience with their roles and

responsibilities clearly defined to avoid role conflicts with other professions

and departments. Strategies must also be put in place to retain them. Public

procurement cannot be perceived as a mere ‘clerical routine,’ activity. For an

entity to derive the full benefit of the procurement reform, procurement

function must be placed in strategic management level.

Building the capacity of service providers has been identified as one of the

success factors of public procurement management. It is important that

Ministry of Health and Social Welfare, the government and other

stakeholders to organizes training sections for contractors, surveyors,

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architects, consultants and suppliers in the private sector on tendering

process, and the Appeals, Complaints and Dispute Mechanism. Audit

Service, the Judiciary, and other oversight bodies should be trained on the

procurement process and audit to appreciate the public procurement issues to

enforce accountability to improve compliance.

A thorough training for government procurers should be integrated into

existing programs and modules and supported where applicable by online

education (e-learning) inclusive of case studies tailored to the reality of each

country or region. Training programmes should target suppliers, budget

holders, technical specifiers, commissioners of services as well as those

directly responsible for procurement. The selection process of trainees should

be given careful attention. The entire implementation process, including

training and capacity building, requires robust monitoring and quality

assurance. The results of these processes inform the review of policies and

action plans, as well as ensuring that capacity building programmes continue

to reflect the latest developments of supply chain management

An effective procurement policy must be designed to obtain goods and

services at the lowest possible price or, more generally, to achieve the best

value for money. Vigorous competition among suppliers helps ministries and

other government’s agencies to attain this objective. However, the formal

rules that govern procurement, the way in which an auction is carried out and

the design of the auction itself can all act to hinder competition and help

promote or sustain bid-rigging conspiracies. Bid-rigging conspiracies waste

taxpayers’ money and cause governments to pay far more than a fair price.

5.5 Policy Implications

The purpose of this paper was to examine the role of good governance in public

procurement whereby various dimensions of public procurement practices were

covered. Few elements of policy implication have been generated based on the

findings of the study, this is because public procurement is a relatively new field of

study, and the study of its policy is also immature. The rules guiding government

purchasing and contracting need to be accountable and transparent. This is not only

59

to limit corruption – a central concern with regard to procurement – but to contribute

to a more accountable relationship between a government and its citizens. It is also

important because of the sums involved. In Tanzania as much as 70 per cent is spent

in procurement

As with all policies, governing procurement management policies must be current,

they must reflect the way things are and can be done today, and mirror the current

capabilities of the process and organization. It is unproductive to enforce policies that

cannot be followed because some critical elements of process, or skill, or

organizational design, or information for decision-making, or information

methodologies and tools or systems and data are not in place, or not yet at the desired

level of maturity. Policies should be designed and implemented in line with the

organization’s capabilities to implement and comply. Training and awareness is

another key factor in policy implementation. And it is essential that management

require compliance with policies. Businesses are loaded with failed policy

“guidelines.”

Procurement Management Process Policy should reflect and cover all key aspects of

the supply chain management process in general and procurement in particular,

including expectations for the use of standard terms and conditions, planning,

negotiation planning and negotiation, finalization, and post-award contract

administration and risk management, measurement, and control. Aligned processes,

practices and procedures should be in place to reflect these policies, and to document

the process steps and controls.

1. Design and implement aligned procurement management practices, work

flows and procedures for the process that will enable the achievement of the

overall strategic vision and objectives though standardized procedures.

2. Develop, source and deploy adequate numbers of resources with the

appropriate level of skills and competencies, assign well-defined

responsibilities and accountabilities, and ensure viable organizational

alignment. Typically, these resources should be both central and de-central to

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effectively manage, execute and control the process and to achieve the

strategic objectives.

3. Define information and reporting requirements comprehensively for procure

management. And, provide the support to meet those needs and to ensure that

timely, complete and accurate information is consistently used for decision-

making and reporting, so as to enable the organization to effectively execute,

manage, monitor and control contracting processes and risks.

4. Identify and provide the tools and methodologies for the organization to

extract and manipulate data from various systems so as to produce the

required and defined measures, analyses, controls and reports to manage,

control and monitor contracting expenditures, performance, risk and terms

and conditions

5. Design, develop and implement strategies and detailed, integrated action

plans to achieve the desired levels of performance and process maturity,

actions that address each and all of the six components of contracts

management capability, and cover the immediate, middle and longer term

horizons.

6. Identify the executive management support to make those improvements and

include actions in the plan to achieve and maintain that executive-level

support for the execution of the short-term as well as mid to longer-term

improvement plans.

7. Make appropriate mid to longer-term investments on policies governing

procurement management process capabilities. These investments should be

used to improve strategies, policies, practices, as well as the organizational

tools and technological upgrades needed to achieve the targeted level of

contracts management process performance and control.

5.6 Limitation of the study

i. Time constraint- The study involved collection of data for dissertation apart

from classroom coursework. This required spending much time in the study

area collecting data. Due to the fact that the researcher was also

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accomplishing employer’s tasks, availability of enough time for research

work was questionable. To solve this problem, a researcher used annual leave

including public holidays and week end days for research work.

ii. Lack of seriousness on research response by many participants in the study,

because despite of being aware of the research topic some of them

respondents did not provide detailed opinions/views to some question.

iii. Resistance from other respondents due to lack of trust on the subject matter

on the study, resistance was common among few individuals fearing that the

results might have negative impact on their jobs.

iv. Financial constrain, as the researcher was self-sponsored and in this case has

few sources of funds and that were available affected doing extensive

research. To solve this constrain researcher is expected to cut and

unnecessary cost and at the same and decided to opt for case study instead of

survey.

5.7 Areas for Further Research

The study examined the Role of Good Governance in Public Procurement in the

Ministry of Health and Social Welfare. However, some areas were not covered and

hence being recommended for further research and these include:

Further studies are needed to evaluate procurement implementation within

other government entities that might have varied administrative structures.

Case study to be carried out to the public procuring entity which has high

level of procurement technologies implementation

The effect of E-Procurement on employee performance in the organization.

The impact of E-Procurement on training and tracking of deliveries in supply

chain management. It desires further scrutiny and study so as to generate

more information.

The effect of electronic procurement on SMEs (Small medium enterprises) in

supply chain management.

The effect of e-procurement on price negotiation in supply

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APPENDIXES

Appendix 1: QUESTIONNAIRE

I am a student at Mzumbe University pursuing a Master’s of Science degree in

Procurement and Supply Chain Management. I have prepared this questionnaire for

purpose of collecting data concerning “The Role of Good Governance in Public

Procurement in the Ministry of Health and Social Welfare. Assurance is given that

your personal information will be handled confidentially and it will be used for

academic purposes only.

QUESTIONS

1. Age

a) 18 – 30 years

b) 31 – 45 years

c) above 45 years

2. Gender a) Male

b) Female

3. Level of education

a) Diploma

b) Advanced Diploma or Degree

c) Post Graduate Diploma

d) Masters Degree

4. Rank/position a) Senior position

b) Middle-level position

c) Junior position

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5. Level of work experience in your current position

a) 0 – 5 years

b) 6 – 10 years

c) More than 10 years

6. What is your level of awareness on good governance in public procurement?

a) Strongly aware

b) Aware

c) Partially aware

d) Not aware

7. How did you come to know about good governance in public procurement?

a) By on-job training

b) By professional training

c) Through workshops and seminars

d) Online or distance training

8. To what extent do the following aspects of good governance enhance public

procurement?

1 = Not at all, 2 = Somehow, 3 = Not sure, 4 = Average, 5 = Maximum

Aspect of good governance Rank

Transparency

Accountability

Participation

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Explain your answers above:

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9. Rank the following measures are used to ensure transparency, accountability and

participation in public procurement at the ministry?

1 = Not used at all, 2 = Somehow used, 3 = Not sure, 4 = Often used, 5 = Most

often used

Measure Rank

Checking if tenders were advertised properly

Checking if tender documents were submitted properly

Checking if tenders are evaluated properly

Checking if tender was awarded in a transparent manner

Checking if goods/services were delivered as promised

10. What are challenges faced by the ministry in good governance in public

procurement?

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11. What are measures taken by the ministry to overcome the challenges mentioned

above?

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12. What weaknesses have you observed in public procurement at the ministry?

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13. How effective is the role of good governance in enhancing public procurement

(a) Very Effective

(b) Effective

(c ) Not sure

(d) Less effective

(e) Not Effective

14. What good governance measures should be taken to enhance public procurement

at the Ministry?

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Thank you very much for your cooperation!