the effect of corruption in the public procurement …
TRANSCRIPT
THE EFFECT OF CORRUPTION IN THE PUBLIC PROCUREMENT PROCESS
IN AN ORGANISATION
(A CASE STUDY: CIVIL AVIATION AUTHORITY, UGANDA)
BY
KATO MATHEW AHIMBISIBWE
BSP/42305/91/DU
A DISSERTATION SUBMITTED TO THE SCHOOL OF BUSINESS AND
MANAGEMENT IN PARTIAL FULFILLMENT OF THE REQUIREMENT
FOR THE BACHELOR'S DERGREE IN SUPPLIES AND
PROCUREMENT MANAGEMENT AT KAMPALA
INTERNATIONAL UNIVERSITY
OCTOBER 2011
DECLARATION (A)
This dissertation is my original work and .has not been submitted before
by any other student, University or institution of higher learning for the
awards of diploma or degree.
NAME KATO MATHEW AHIMBISIBWE
REG No BSP/42305/91/DU
SIGNATURE ........ ~ ................... .
DATE ...... ~ 9. ... / .. ~! ..... f ... ~.Q'.l J ........... .
ii
DECLARATION (B)
I confirm that the work presented in this dissertation / report was carried out
by the candidate under my supervision and now is ready for submission to the
research committee of Kampala International University with my approval.
NAME OF SUPERVISOR: HENRY 0. BARASA
SIGNATURE:
DATE: .... ! .. '.b.. , ... ~ -';½?. J..(.: ...... .
iii
DEDICATION
To my late father AHIMBISIBWE RICHARD RURANGARANGA, my mother
AHIMBISIBWE EVELYN KUZA and beloved aunt TUKAMUHEBWE ROSE
KELLEN and my fiancee WACHEGE CHRISTINE NJOKI and my hallowed
sisters, NYANGOMA RACHEAL and NYAMWIZA RONAH. God bless you all for
you have been there in all my hardships
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ACKNOWLEDGEMENT
I acknowledge and pass specialized gratitude to my supervisor HENNRY
OCHIENO BARASA. It's your understanding that enabled me to accomplish
this research dissertation as I appreciate you greatly. At the same time
appreciation to my Aunt TUKAMUHEBWA ROSE KELLEN, uncle BAKASHABA
KENNETH and Guardians MR. MAWANDA MICHEAL, IDDI TABAN, MADAM
KWERA IRENE, MR. EDWARD MUHWEZI for the spiritual support they
collectively have a hand in the success of my education up-to-date. Thank you
so much and let the good Lord God reward you for your support.
V
TABLE OF CONTENTS
DECLARATION (A) ........................................................................................... ii
DECLARATION (B) .......................................................................................... iii
DEDICATION .................................................................................................. iv
ACKNOWLEDGEMENT .................................................................................... v
TABLE OF CONTENTS .................................................................................... vi
LIST OF TABLES ............................................................................................ xi
LIST OF FIGURES ......................................................................................... xii
ACRONYMS .................................................................................................. xiii
CONCEPT DEFINITIONS ................................................................................ xv
CHAPTER ONE ................................................................................................ l
INTRODUCTION .............................................................................................. 1
1.0 INTRODUCTION ........................................................................................ 1
1.1 BACKGROUND .......................................................................................... 1
1.2 THEORETICAL .......................................................................................... 5
1.2.1 DEMAND THEORIES .............................................................................. 5
1.2.2 SUPPLY THEORIES ................................................................................ 6
1.2.3 ETHICS-BASED THEORIES .................................................................... 7
1.2 PROBLEM STATEMENT ............................................................................. 8
1.3.0 OBJECTIVES OF THE STUDY .............................................................. 10
1.3.1 GENERAL OBJECTIVES ....................................................................... 10
1.3.2 SPECIFIC OBJECTIVE .......................................................................... 10
1.4 RESEARCH QUESTIONS ......................................................................... 10
1.5 SCOPE OF THE STUDY ........................................................................... 11
1.6 SIGNIFICANCE OF THE STUDY ............................................................... 11
1.7 CONCEPTUAL FRAMEWORK ................................................................... 12
vi
CHAPTER TWO ............................................................................................. 13
LITERATURE REVIEW ................................................................................... 14
2.0 INTRODUCTION ...................................................................................... 14
2.1 DESCRIPTION ......................................................................................... 14
2.2.0 TYPOLOGIES FORMS AND MANIFESTATIONS OF CORRUPTION ......... 14
2.2. 1.0 TYPOLOGIES OF PROCUREMENT ..................................................... 15
2.2.1.1 POLITICAL CORRUPTION VERSUS BUREAUCRATIC CORRUPTION ... 15
2.2.1.2 CONTROLLED VERSUS UNCONTROLLED CORRUPTION .................. 16
2.2.2.0 FORMS AND MANIFESTATIONS OF CORRUPTION ............................ 17
2.2.2.1 BRIBERY ........................................................................................... 17
2.2.2.2 EMBEZZLEMENT .............................................................................. 17
2.2.2.3 FRAUD .............................................................................................. 18
2.2.2.4 ECONOMIC EXTORTION ................................................................... 18
2.2.2.5 FAVOURITISM ................................................................................... 18
2.3.0 REASONS FOR CORRUPTION ............................................................... 19
2.3.1 GREED ................................................................................................. 19
2.3.2DISCRETION ......................................................................................... 19
2.3.3 WEAK ACCOUNTING SYSTEM .............................................................. 20
2.3.4 HUMAN CAPACITY ............................................................................... 20
2.3.5 RELUCTANCE BY GOVERNMENT ANTI-CORRUPTION INSTITUTIONS TO
TACKLE THE 'BIG FISH': ............................................................................... 21
2.3.6 MONITORING AND FUNCTIONING INSTITUTIONS ................................ 21
2.3.7 LOW REMUNERATION AND POVERTY ................................................. 22
2.3.8 DONOR MONEY ................................................................................... 22
2.4.0 PROCUREMENT PROCEDURES USED IN UGANDA .............................. 22
2.4.1 PROCUREMENT PLANS AND BUDGET ................................................. 22
2.4.2 PROCUREMENT REQUISITIONS ........................................................... 23
2.4.3 REVIEW OF SPECIFICATIONS, TERMS OF REFERENCE, OR SCOPE OF
WORKS ......................................................................................................... 23
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2.4.4 PREPARATION OF BIDDING DOCUMENTS ........................................... 24
2.4.5 ADVERTISEMENT AND INVITATION TO BID ......................................... 24
2.4.7 EVALUATION OF BIDS ......................................................................... 25
2.4.8 REVIEW OF EVALUATION REPORT ...................................................... 25
2.4.9 SIGNING THE CONTRACT .................................................................... 26
2.4.10 CONTRACT MANAGEMENT ................................................................ 26
2.4.11 CONTRACT PERFORMANCE EVALUATION ......................................... 26
2.5.0 THE RELATIONSHIP BETWEEN CORRUPTION AND PROCUREMENT
PROCESS ...................................................................................................... 27
2.5.1 BID-RIGGING SCHEME ........................................................................ 27
2.5.2 THE PRE-SOLICITATION PHASE .......................................................... 28
2.5.3 THE SOLICITATION PHASE .................................................................. 28
2.5.4 FICTITIOUS SUPPLIERS ....................................................................... 29
2.5.5 OTHER METHODS ............................................................................... 29
2.5.6 THE SUBMISSION PHASE .................................................................... 30
2.6.0 HOW CAN CORRUPTION BE REDUCED IN THE PROCUREMENT ......... 30
2.6.1 THE LEGAL FRAMEWORK. ................................................................... 31
2.6.2 THE INSTITUTIONAL FRAMEWORK. ..................................................... 32
2.6.3.0 OTHER ANTI-CORRUPTION INITIATIVES ........................................... 34
2.6.3.1 CIVIL SOCIETY .................................................................................. 34
2.6.3.2 THE ANTI-CORRUPTION COALITION UGANDA (ACCU) ...................... 35
2.6.3.3 TRANSPARENCY INTERNATIONAL .................................................... 35
2.6.3.4 UGANDA DEBT NETWORK (UDN) ...................................................... 35
2.6.3.5 MEDIA ............................................................................................... 35
2.6.3.6 PARLIAMENTARY APPROACHES ....................................................... 36
2.6.3.7 PARLIAMENTARY BUDGET OFFICE .................................................. 36
2.6.3.8 THE INSTITUTE OF CORPORATE GOVERNANCE OF UGANDA (ICG).36
CHAPTER THREE .......................................................................................... 37
RESEARCH METHODOLOGY ........................................................................ 37
3.0 INTRODUCTION ...................................................................................... 37
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3.1 RESEARCH DESIGN ................................................................................ 37
3.2 THE STUDY POPULATION ....................................................................... 37
3.3 THE SAMPLING TECHNIQUE .................................................................. 38
3.4 THE SAMPLE SIZE OR COMPOSITION .................................................... 38
3.5 SOURCES OF DATA ................................................................................ 38
3.5.1 PRIMARY SOURCE ............................................................................... 39
3.5.2 SECONDARY SOURCE ......................................................................... 39
3.6 RESEARCH POPULATION ........................................................................ 39
3.7 DATA COLLECTION METHODS AND INSTRUMENTS ............................... 39
3.7.1 QUESTIONNAIRES ............................................................................... 39
3.7.2 INTERVIEWS ........................................................................................ 40
3.7.3 DOCUMENTARY REVIEW .................................................................... .40
3.8 THE RESEARCH PROCEDURE AND ETHICAL ASPECTS ........................ .40
3.9 DATA ANALYSIS ...................................................................................... 40
3.10 CHALLENGES ENCOUNTERED ............................................................. 41
3.11 SOLUTIONS TO THE ABOVE CHALLENGES ........................................ 41
CHAPTER FOUR ............................................................................................ 42
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA ..................... .42
4.0 INTRODUCTION ...................................................................................... 42
CHAPTER FIVE ............................................................................................. 62
FINDINGS, CONCLUSIONS, RECOMMENDATIONS ....................................... 62
5.0 INTRODUCTION ...................................................................................... 62
5.1 EMERGING ISSUES ................................................................................ 62
5.2 FINDINGS: .............................................................................................. 63
5.3 CONCLUSIONS ........................................................................................ 65
5.4 RECOMMENDATIONS ............................................................................. 66
5.3.1 SHORT TERM RECOMMENDATIONS .................................................... 66
5.3.1.1 CENTRAL GOVERNMENT / PUBLIC SERVICE MINISTRY .................. 66
5.3.1.2 ADDRESS THE WELFARE OF PUBLIC SERVANTS ............................. 68
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5.3.1.3 PPDA ................................................................................................. 69
5.3.1.4 CIVIL SOCIETY .................................................................................. 71
5.3.2 LONG TERM RECOMMENDATIONS ...................................................... 71
REFERENCES ............................................................................................... 72
APPENDICES ................................................................................................ 74
APPENDIX A:RESEACH QUESTIONNAIRE ..................................................... 74
APPENDIX B:KEY INFORMANT INTERVIEW GUIDE ....................................... 88
APPENDIX C:(TABLE 6) TIME FRAME OF THE STUDY .................................. 92
X
LIST OF TABLES
TABLE 1: SHOWING SUMMARY OF THE RESPONDENTS
TABLE 2: SHOWING PERSONAL INFORMATION OF THE RESPONDENTS
TABLE 3: SHOWING THE INFLUENCE OF CORRUPTION IN PUBLIC
PROCUREMENT
TABLE 4: SHOWING THE EFFECTS OF REFORMED LAWS AND
REGULATIONS ON THE PROCUREMENT PROCESS
TABLE 5: SHOWING THE REASONS FOR COMPETITIVE ADVANTAGE OF
MEDIUM FIRMS OVER SMALL FIRMS IN PROCUREMENT
TABLE 6: SHOWINS THE TIME FRAME OF THE STUDY
TABLE 7: SHOWING THE BUDGET ESTIMATE FOR IMPLEMENTATION IN
UGANDA SHILLINGS
xi
LIST OF FIGURES
FIGURE 1: SHOWING THE LOCATION OF CIVIL AVIATION AUTHORITY
FIGURE 2: SHOWING THE CONCEPTUAL FRAMEWORK
FIGURE 3: SHOWING THE PARTICIPATION OF BIG AND MEDIUM FIRMS
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ACRONYMS
ACC: ANTI CORRUPTION COALITION UGANDA
AG: AUDITOR GENERAL
AO: ACCOUNTING OFFICER
AU: AFRICAN UNION
APNAC: AFRICAN PARLIAMENTARIES NETWORK AGAINST CORRUPTION
CAA: CIVIL AVIATION AUTHORITY
CC: CONTRACTS COMMITEE
CHOGM: COMMON WEALTH HEADS OF GOVERNMENT MEETING
CIPS: CHARTERED INTITUTE OF PURCHASING AND SUPPLIES
CILT: CHARTERED INSTITUTE OF LOGISTICS AND TRANSPORT
CPA: CERTIFIED PUBLIC ACCOUNTING
CSO: CIVIL SOCIETY ORGANIZATION
DEi: DIRECTORATE OF ETHICS AND INTEGRITY
ERD: ECONOMIC RELATIONS DEVELOPMENT
GoU: GOVERNMENT of UGANDA
ICG: INSTITUTE OF COOPERATE GOVERNANCE OF UGANDA
IGG: INSPECTOR GENERAL OF GOVERNMENT
INT: INSTITUTIONAL INTEGRITY
MP: MEMBER OF PARLIAMENT
NIS: NATIONAL INTEGRITY SURVEY
OECD: ORGANIZATION OF ECONOMIC COOPERATION AND
DEVELOPMENT
PAC: PARLIAMENT ACCOUNT COMMITEE
PBO: PARLIAMENTARY BUDGET OFFICE
PCA: PENAL CODE ACT
PDE: PROCUREMENT AND DISPOSAL ENTITY
PDU: PROCUREMENT AND DISPOSAL UNIT
PFAA:PUBLIC FINANCE AND ACCOUNTABILITY ACT
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PPDA:
UDN:
UN:
URA:
UTODA:
VAT:
WB:
PUBLIC PROCUREMENT AND DISPOSAL OF PUBLIC ASSETS
UGANDA DEBT NETWORK
UNITED NATION
UGANDA REVENUE AUTHORITY
UGANDA TAXI OF DRIVERS ASSOCIATION
VALUE ADDED TAX
WORLD BANK
xiv
CONCEPT DEFINITIONS
CONCEPT DEFINITION
Accounting Officer "Accounting Officer" means the Accounting Officer of a procuring and disposing
entity so appointed by the Secretary to the Treasury, and for the avoidance of
doubt includes the Accounting Officer of a Local Government or a statutory body.
Authority "Authority" means Civil Aviation Authority
Award "award" means a decision by a Tender Board established under the Local
Governments Act, 1997 or Contracts Committee provided for in paragraph (b) of
section 24, or any other subsidiary body of a procuring and disposing entity to
which a Contracts Committee or a Tender Board may delegate powers of
adjudication and award within a specified financial threshold, to determine the
successful bidder;
Bid "bid" means an offer to provide or to acquire works, services or supplies or any
combination thereof, and shall include pre-qualification where applicable;
Bid Notice "Bid Notice" means any advertisement by which eligible providers are invited to
submit written offers to provide or acquire works, services and supplies, or any
combination of them in case of procurement and disposal respectively;
Bidder "bidder" means a physical or artificial person intending to participate or
participating in public procurement or disposal proceedings;
, Bribery The promise, offer or giving of any benefit that improperly affects the actions or
decisions of a public official. A bribe may be given to a public servant (direct), or
to another person or entity (indirect). A bribe may consist of money, inside
information, gifts, entertainment, sexual or other favors, a job, company shares,
etc.
Contract "Contract" means an agreement between a procuring and disposing entity and a
provider, resulting from the application of the appropriate and approved
procurement or disposal procedures and proceedings as the case may be,
concluded in pursuance of a bid award decision of a Contracts Committee or any
other appropriate authority.
Contracts Committee People who approve or reject contracts
Corruption The Inspectorate of Government Act 2002 defines corruption as "abuse of public
office for private gain and includes but is not limited to embezzlement, bribery,
nepotism, influence peddling, theft of public funds or assets, fraud, forgery,
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causing financial or property loss, and false accounting in public affairs."
Disposal "disposal" means the divestiture of public assets, including intellectual and
proprietary rights and goodwill, and any other rights of a procuring and disposing
entity by any means, including sale, rental, lease, franchise, auction, or any
combination however classified
Procurement "procurement" means acquisition by purchase, rental, lease, hire purchase,
license, tenancy, franchise, or any other contractual means, of any type of works,
services or supplies or any combination;
Procurement and Disposal Unit "Procurement and Disposal Unit" means a division in each procuring and
disposing entity responsible for the execution of the procurement and disposal
function;
Procurement Process "procurement process" means the successive stages in the procurement cycle
including planning, choice of procedure, measures to solicit offers from bidders,
examination and evaluation of those offers, award of contract, and contract
management;
Procuring and Disposal Entity "procuring and disposing entity" means a statutory body, department of the
central government, local government and any other body or unit established anc
mandated by government to carry out public functions; "provider" means a
' natural person or an incorporated body including a consultant, contractor or f
supplier licensed by a competent authority to undertake business activities; ' ' Public funds "public funds" means monetary resources appropriated to procuring and
disposing entities through budgetary processes, including the Consolidated Fund,
grants and credits put at the disposal of the procuring and disposing entities by
foreign donors; and revenues generated by the procuring and disposing entities;
Procurement corruption This includes the offering, giving, receiving or soliciting; directly or indirectly, of
anything of value to influence the action of a public official in the procurement
process or in contract execution
Services "services" means any object of procurement or disposal other than works and
supplies, and includes professional, non professional and commercial types of
services as well as supplies and works which are incidental to, but not exceeding
the value of those services; !
Solicitation documents "solicitation documents" means bidding documents or any other documents j inviting bidders to participate in procurement or disposal proceedings; and
includes documents inviting potential bidders to pre-qualify, and standard biddin : '
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'
documents;
Specifications "specifications" means the description of an object of procurement or disposal in
accordance with national and international standards adopted and approved by
the Authority, after consultation with the National Bureau of Standards, or other
appropriate trade associations and professions, the use of which shall be
mandatory in all bidding documents; i
Supplies "supplies" means goods, raw materials, products, equipment or objects of any
kind and description in solid, liquid or gaseous form, or in the form of electricity,
or intellectual and proprietary rights as well as works or services incidental to the
provision of those supplies where the value of the works or services does not
exceed the value of the supplies; 11tender11 means 11 bid 11;
User Department "User Department" means any department, division, branch or section of the
procuring and disposing entity, including any project unit working under the
authority of the procuring and disposing entity, which initiates procurement and
disposal requirements and is the user of the requirements;
Diversion of funds Use of public funds on items other than that which is budgeted and/approved.
Example: Money meant for Repair of roads used in paying allowances.
Embezzlement Theft of resources by persons entrusted with authority and control over these
valuable resources.
Extortion This is intentionally gaining some advantage, material or immaterial, from anothe
person or entity by placing illegitimate pressure in the form of threats or I intimidation to force him/her to hand over the benefit. This coercion can be undel
the threat of physical harm, violence or restraint and may even be a threat that a •
third party will suffer injury. The accused must intend his/her words to be I interpreted and act as a threat(s). S/He must also intend to gain some advantage I as a result of the threat while knowing that the threat is illegal. Example: A persori
is threatened with arrest unless s/he pays a border official in order to enter the '
country. ~
Favouritism The provision of services or resources according to personal affiliations such as
family ties, party affiliation, tribe, religion, sect and other preferential groupings.
Example: A public servant provides extraordinary services, commissions, jobs and
favors to political allies, family and friends, while ordinary members of the public
do not receive this special treatment.
Fraud Fraud is deliberately deceiving another person in order to damage them - usually,I
to obtain property or services unjustly. Fraud can be accomplished through the ai<i
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Fraudulent Practice
Nepotism
PPDA
Pre-qualification
of forged objects. In the Criminal Law of Jurisdictions, it is called "theft by
deception".
"fraudulent practice" includes a misrepresentation of facts in order to influence a
procurement or disposal process or the execution of a contract to the detriment
the procuring or disposing entity, and includes collusive practices among bidders
prior to or after bid submission designed to establish bid prices at artificial non
competitive levels and to deprive the procuring and disposing entity of the
benefits of free and open competition;
Ensuring that family members are appointed to the public service or that family
members receive contracts from state resources. Similar to conflict of interest an<
favouritism. For example, a head of department appoints his/her brother's child t
a position even if more suitable candidates applied for the same position.
Public Procurement and Disposal of Public Assets Authority (PPDA) is a regulatory
body in the public procurement and disposal sector in Uganda under PPDA Act Ne .
1 of 2003.
"pre-qualification" means a screening process designed to ensure that invitation4
to bid are confined to capable providers; I i
xviii
CHAPTER ONE
INTRODUCTION
1.0 INTRODUCTION
This chapter was to provide a basis for the study, it provided the background
to the study, statement of the problem, purpose of the study, objectives of the
study, research questions, scope of the study and significance of the study.
1.1 BACKGROUND
Public procurement has a long history. It was written on a red clay tablet,
which found in Syria, the earliest procurement order dates from between 2400
and 2800 B.C. The order was for "50 jars of fragrant smooth oil for 600 small
weights in grain" (Coe, 1989, p. 87). Other evidence of historical procurement
comprises the development of the silk trade between China and a Greek colony
in 800 B.C. (Khi V. Thai, 2001).
Corruption comes from a Latin word 'corrumpere' which means to breal(
something and during the action of corruption, the law, legal rule , a moral
norm and in worse situations communities and human personalities are
broken (Farida & Ahmadi-Esfahani, 2006).
Internationally the World Bank (WB) has launched a probe into the scam
relating to the post flood rehabilitation project. The department of institutional
integrity (INT), an anti-fraud wing of the World Bank, has started quizzing the
members of a government commission that came up with the findings of the
investigation into the fraudulent bids of the roads and highways division. The
INT investigates allegations of fraud or corruption in World Bank Group
financed operations, such as bid manipulation, bid collusion, coercive
practices, fraudulent bids and fraud in contract performance. The Economic
Relations Division (ERD), though in a belated acknowledgement, constituted a
three member probe commission to investigate into the irregularities involving
14 road contracts of the division. Although details of the probe report were not
1
available, a source close to the commission said the probe body found
substantial evidence of fraudulent practices in the road contracts. Similar
corruption charges were proved to be true in case of the delinquent ministry
Ministry of Health and Family Welfare that relentlessly tried to pass the blame
onto the shoulders of other government agency for the wrongdoing while the
deadline expired.
For example Bangladesh enacted the groundbreaking public procurement act
2006 in a bid to curb corruption in public procurement estimated US$3.0
billion a year. The Washington-based multilateral lending agency cancelled 14
road contracts under the roads and highway because of corrupt bidding in
November 2005. Two government officials have since been fired and the WB
planned to ban the involvement of private firms in future World Bank
contracts. The World Bank's top executive, Paul Wolfowitz, is learnt to have
launched a crusade against corruption in the borrowing member countries,
including Bangladesh and also withheld loans. Similar punitive actions were
taken against other borrowing countries, such as India, Chad, Kenya,
Argentina and Congo. (Financial Express, 2006)
When drawn down to the Africa, A 2002 internal audit report revealed
significant procurement irregularities at Karle-Bu, Ghana's premier teaching
hospital. The largest discrepancies were found in the procurement processes of
the Supplies Department, the director of which allegedly ordered a 17-year
supply of 'Post Operative Charts'. The quantity was said to last until 2019, but
this type of chart was globally banned in 1989, at least 10 years before the
purchase took place. In 1999, 190,000 of these charts were ordered, and
despite the excess supply and the obsolete nature of the charts, a further
50,000 were ordered the following year. Additional obsolete items were also
said to be purchased in excessive quantities. In the report, it further emerged
that purchase requisitions were not used as a part of the procurement process
and no maximum or minimum levels of stock were identified, meaning that
2
stocks were purchased arbitrarily. Meanwhile a severe shortage of essential
medicines prevailed than has been planned efficiently in the budget. (A case
study from Ghana: A 2002 internal audit report)
In Uganda public procurement is increasingly recognized as a profession that
plays a significant role in the successful management of public resources and a
number of countries have also become more aware of the importance of
procurement as an area vulnerable to mismanagement and corruption, and
have thus instituted efforts to integrate procurement in a more strategic view of
government efforts (Organization of Economic Cooperation and Development
(OECD), 2007). As part of the efforts to adopt a long term and strategic view of
their procurement needs and management, most countries have resorted to
turning to their annual procurement plans as a possible 'problem-solver.'
Public procurement, at the local government level, is believed to be one of the
principle areas where corruption in Uganda takes place ("National Public
Procurement Integrity Baseline Survey," 2006). Corruption is disastrous to the
sound functioning of any government department. Corruption has been an
intractable problem in many developing countries; especially where it has
become systematic to the point where many in government have a stake. It
diverts decision-making and the provision of services from those who need
them to those who can afford them (Langseth, Kato, Kisubi & Pope, 1997).
There is no universal definition of corruption, but it is generally agreed that
corruption is the illegal use of public power by a public official for private gain.
Corruption is defined as the misuse of entrusted power for private gain.
According to the Utstein Anti-Corruption Resource Centrel corruption is a
phenomenon that is multi-faceted: it is diverse and complex in terms of actors,
initiators, profiteers, causes and consequences. Currently there is no
conformity on the exact definition of corruption. In this paper, the working
definition of corruption will be the misuse of entrusted power for private gain.
(Utstein Anti-corruption Training Course, Part 1 (2003), p. 3.)
3
Corruption involves the behavior of officials in the public and private sectors to
improperly and unlawfully enrich themselves and / or those close to them, or
induce others to do so, by misusing the position for which they are placed
(Asian Development Bank, 2003). When this unlawful and improper behavior is
applied to the public acquisition process, it becomes public procurement
corruption. It essentially entails deliberate failure to follow the expected
minimum standard behavior in managing the acquisition process by
government agencies and departments. Corruption takes place once the
procurement laws and regulations are broken for the benefit of an individual or
group of individuals against the public interest and need of internal customers.
The World Bank extends the definition of procurement corruption to include
the offering, giving, receiving or soliciting; directly or indirectly, of anything of
value to influence the action of a public official in the procurement process or
in contract execution (World Bank, 2004). A broad definition of public sector
corruption is the abuse of authority by bureaucratic officials who exploit their
powers of discretion, delegated to them by the government, to further their own
interests by engaging in illegal, or unauthorized, rent-seeking activities
(Blackburn, Bose, & Haque,2005).
Public Procurement corruption can be classified to include (1) supplier induced
corruption as a result of stringent competition for government contracts
(source), (2) Public official induced corruption through creating bureaucratic
hurdles that would necessitate seeking faster services (source). It may also be
(3) politically induced corruption where contractors with political connections
receive favors for the fear of political persecution (source). In many less
developed countries, one of the prevalent forms of corruption is called "speed
corruption" (Bose, 2004, and Marjit et al; 2000). This involves the capacity to
harass, delay or withhold decisions handed down by procurement officials
unless a bribe is given. In Uganda's case, officials in the finance and accounts
departments may delay or fail to process the payments for providers until a
4
bribe is paid or promised. It may also involve the engineers, in case of
construction projects failing to issue a certificate of completion or issuing them
when the works have not been completed. The most common forms of
procurement corruption in Uganda include violations of procurement
procedures, the use of high-ranking officials to influence procurement decision
making and bribery-induced violations of procurement procedures by
government officials in collaboration with providers (Basheka, 2009).
The Uganda 3rd Integrity Survey Report, (2008) identifies new forms of
corruption and prominent among them included "Syndicate corruption"; and
"Management by Crisis". The former involves networks of strategically placed
public officials who collude to embezzle public funds with impunity. Under
management 'by crisis' syndrome, public officials deliberately delay to plan in
time in order to create a crisis and stampede the procurement process.
Demand for, and payment of, bribes has changed from covert to overt actions.
Public officials are openly asking for bribes in exchange for services while the
clients are openly paying without complaining. In this survey, it was revealed
that in Uganda, there is now a shift in the middle age crisis from previous 40-
45 years to 25-30 years. This has been due to peer pressure among the young
generation who has succumbed to flamboyant lifestyles provided by the private
sector. This has encouraged them to live beyond their means hence engaging in
acts of corruption.
1.2 THEORETICAL
Theories on procurement corruption broadly fall under three categories:
demand theories, supply theories, and ethics theories.
1.2.1 DEMAND THEORIES
Broadly, these models of corruption take two approaches: resource-allocation
models, which assess the consequences of the allocation of resources to rent
seeking activities, and principal-agent relationship models (Jain, 1998).
5
Resource-allocation models are based on the premise that rent-seeking is one
aspect of any economic activity and thus part of a firm's resources are devoted
to this activity (Krueger, 1974). In a competitive world rent seeking
opportunities are created either by agents through government policy or by
underlying societal characteristics (Mauro, 1995). Rents are shared between
agents and firms in the form of proceeds of corruption. Principal-agent models
of corruption concern the misuse of power by a ruling government, which is
motivated either by the desire to get re-elected or for issues of self interest.
Economic policies motivated by self interest lead to the misallocation of
resources towards the highest rent-yielding projects (Jain, 1998). As a second
aspect of this model, bureaucratic corruption arises from an agent's incentive
to disregard the principal's interest due to information asymmetry and the
principal's inability to monitor the agent's behavior. Demand models clearly
indicate that agent behavior is the central determinant of corruption and thus
demand theorists argue that anti-corruption efforts should be aimed at
controlling agent behavior.
1.2.2 SUPPLY THEORIES
Supply-side theorists put the onus of combating corruption on supplier firms.
As per George Moody Stuart (1997), firms pay bribes by their own volition and
primarily for three reasons: to counterbalance poor quality or high pricing, to
create a market for redundant goods, or to stay in competition. On the basis of
an empirical examination of the 19 biggest exporting countries during 1992-95,
Johan G. Lambsdorff (1998) observed that exporting countries that rank highly
on a corruption scale attracted a larger market share in corrupt importing
countries. He concludes that the inclination to offer bribes therefore emerges
as the sovereign choice of exporters.
More recent theories support a more middle-of the- road approach and observe
that corrupt behavior is characterized by the decision calculus of both the
payee and the payer based on value maximization. Klaus Abbinik, Bernd
6
Irlenbusch, and Elke Renner (2002) developed an experimental game for
analyzing corrupt behavior at the micro level. According to these researchers
the essential characteristics of corruption are reciprocity relations (since no
corrupt contract can be legally enforceable), negative welfare effects, and
sanctions in the case when corrupt practices are discovered. Based on their
experiments using game theory they concluded that reciprocity alone
establishes stable relations between the payee and the payer and negative
externalities like welfare effects have no impact on the level of cooperation.
Additionally, the threat of drastic penalties significantly reduces the level of
reciprocal cooperation. However, the payer-payee pair has a tendency to
underestimate the overall probability of sanctions, which diminishes the
deterrence to some extent. Academic opinion is divided on predicting country
behaviors. At one end Klitch (1996) suggests that payer states are motivated to
deter the corrupt behavior by ideological motivations. Others attribute
economic reasons as guiding factors behind country behavior. As per Philip
Nichols ( 1999), payer states are guided by enlightened self interest, which in
turn is dependent on the economic and military interdependence with the
payee state. Some commentators take a more utilitarian approach. Kevin Davis
(2002) states that a payer state will deter bribery if the service sought through
bribery can be obtained at the same quality standards elsewhere where bribery
is not required.
1.2.3 ETHICS-BASED THEORIES
Contrary to utilitarian theories, ethics-based theories advocate self regulation
by the agencies involved in procurement processes. Susan Rose Ackermann
(2002) argues that multinational businesses have two types of obligations to
refrain from corrupt practices. First, businesses have an obligation to maintain
market efficiency. Bribery undermines market efficiency and leaves the entire
market system open to charges of immorality and illegitimacy. Second, firms
are dependent for their success not only on the existence of a functioning
market system but also on a state that facilitates market activity and
7
maintains order and stability. Therefore businesses have an obligation not to
undermine the legitimacy of the state by indulging in unethical practices.
Ethics theories have influenced the creation of instruments like codes of
conduct, integrity pacts, and self-regulation rules. These instruments are
detailed in subsequent sections.
1.2 PROBLEM STATEMENT
Public procurement is one of the sectors most affected by corruption in
Uganda. According to the 2007 African Peer Review Mechanism Report,
Uganda loses USD 258.6 million annually through corruption and
procurement malfeasance. The report further estimates that if the country
could eliminate corruption in public procurement, it would save USD 15.2
million a year. In the assessment of the country's Auditor General,
procurement accounts for 70% of public spending, of which an estimated 20%
is lost via corruption. In June 2008, a senior World Bank official stated that
high level corruption in procurement deals had been responsible for a loss of
USD 300 million since 2005. He added that 70% of government contracts were
not awarded according to established procedures, while half of the national
budget is spent on procurement deals. (Please see the 2008 Global Integrity
report: http:/ /report.globalintegrity.org/Uganda/2008).
The US-Department of State Investment Climate Statements for 2009 also
notes that government procurement is not transparent, particularly for defence
items. In previous years, several high-profile government tenders for
infrastructure projects were suspended due to allegations of corruption.
http://www.state.gov/ e/ eeb /rls/ othr /ics/2009 /index.htm).
The 2006 World Bank-IFC survey indicates that close to half of the firms
questioned expect to give a gift to secure a government contract. Companies
further report the gift value to amount to approximately more than 5% of the
contract value. A baseline survey of National Public Procurement Integrity
8
conducted in 2006 by the Procurement and Disposal of Assets Authority
(PPDA), the Inspectorate of Government (IGG) and USAID reports that illegal
payments to secure government contract at both the local and the central
levels are even higher, representing approximately 7 to 9% of the contract
value. The survey further estimates that direct losses due to corruption in
procurement - at both the central and the local levels - amounted to between
USD 64-85 million in 2004-2005. The majority of respondents identified the
secretary to the Tender Board and Tender Board members as being most
corrupt.
(http:/ /www.ppda.go.ug/downloads/Integrity%20survey%20FINAL%20REPOR
T%202007.pdf).
The PPDA, IGG and USAID survey identifies the lack of effective reporting
systems, poor record management by state organs, the weakness of the
judiciary, the poor investigation of corruption cases, and the lack of effective
systems to punish corrupt officials, greed, a weak accounting system and a
lack of effective monitoring, functioning institutions, human capacity, low
remuneration and poverty, and donor money as majors factors contributing to
the high prevalence of corruption in public procurement.
The country scores strongly in terms of the quality of its anti-corruption law;
Major anti-corruption legislation includes the Penal Code Act (PCA) and the
Prevention of Corruption Act which criminalize the offering or receipt of bribes,
with penalties reaching up to 10 years in prison. The Inspectorate of
Government Act 2002 (IGG Act), the Public Finance and Accountability Act
2003 (PFAA), the Leadership Code Act 2002 (LCA), and the Public Prosecution
and Disposal of Public Assets Act 2003 further constitute Uganda's legal
framework against corruption. Additional policy measures have translated into
the adoption of a code of conduct for public officials (including wealth
declarations), and measures aimed at promoting greater transparency in
procurement and the management of public finances. Uganda has signed and
9
ratified both the UN and the AU conventions against corruption, but they are
not yet fully domesticated into Ugandan law. The Global Integrity 2008 report
underscores this gap despite Uganda's strong legal anti-corruption framework
in place but there is still the rampant corruption in the public procurement
process hence fueling up the researcher to carry out this research.
1.3.0 OBJECTIVES OF THE STUDY
The objective of the study was to establish the effect of corruption in public
procurement process in an organization. The researcher was interested in the
study because corruption in Uganda is often severely fueled by lack of respect
for clearly laid down Public Procurement principles and guidelines. By the end
of this study the researcher expected to find out the effect of corruption in the
public procurement process in an organization.
1.3.1 GENERAL OBJECTIVES
The effect of corruption in the public procurement process in an organization
1.3.2 SPECIFIC OBJECTIVE
The objectives of this study were to:
► Explore the different types of corruption that affect the public
procurement process in an organization
► Establish the effects of corruption in the public procurement process in
an organization
► Find out the possible solutions to corruption in the public procurement
process in an organization
1.4 RESEARCH QUESTIONS
The study was guided by the following research questions:
► What are the different types of corruption that affect the public
procurement process in an organization?
10
► What are the effects of corruption in the public procurement process in
an organization?
► What are the possible solutions of corruption in the public procurement
process in an organization?
1.5 SCOPE OF THE STUDY
The study was limited to the effects of corruption in the public procurement
procedures in Civil Aviation Authority.
The study was carried out in civil aviation authority at Entebbe International
Airport in Entebbe district which located in the south-east of Kampala district
because this is where the head offices are located.
Figure 1: showing the location of Civil Aviation Authority
This study was conducted for a period of fourteen months. Therefore this
period was to outline the contribution of corruption in the public procurement
procedures in Civil Aviation Authority.
1.6 SIGNIFICANCE OF THE STUDY
The results of this study were to benefit in the following ways:
► This study was to help add to the existing pool of knowledge or literature
in the field of public procurement and governance by drawing specific examples
11
from public institutions like Civil Aviation Authority. Putting in mind that
procurement research is relatively new in Uganda.
► The study was to be helpful to policy makers in the area of public
procurement who would use the findings to design appropriate policies that
would ensure awareness like the procurement sensitization program.
► Procurement practitioners and officers together with other public officers
in departments and bodies related to procurement operations / function, for
instance; contracts committee, evaluation committees, user departments and
accounting officers to ensure that they would be aware of their roles and
responsibilities.
► The study was to be helpful to students, lecturers and tutors of diploma,
undergraduate in the field of procurement, Chartered Institute of Purchasing
and Supply (CIPS), Chartered Institute for Logistics and Transport (CILT) for
areas of further research.
► The study was to the researcher to get his Bachelor's Degree in supplies
and procurement management as part of the academic requirement.
1.7 CONCEPTUAL FRAMEWORK
A conceptual framework was hypothesized to influence the effect of corruption
in the procurement process in Civil Aviation Authority; of which corruption was
defined as favoritism, unfairness, bribery and discrimination; procurement
process as procurement plan, procurement method, evaluation of bids and
contract management and performance. However the relationship was modified
by poor incentives, lack of trainings and conflict of interest.
12
Figure 2: showing the conceptual framework
INDEPENDENT VARIABLE DEPENDENT VARIABLE
I ~1 CORRUPTION I · PROCUREMENTPROCESS
I
•
I EMBEZZLEMENT
I EXTRANE1us VARIBLE PROCUREMENT PLAN
► POOR
ECONOMIC INCENTIVES PROCUREMENT METHOD
EXTORTION
► LACK OF
I BRIBERY
I TRAINNINGS
____. EVALUATION OF BIDS
► CONFLICT OF
I FRAUD
I INTEREST CONTRACT
MANAGEMENT AND PERFORMANCE
(SOURCE: RESEARCHER 2011)
13
2.0 INTRODUCTION
CHAPTER TWO
LITERATURE REVIEW
This chapter reviewed literature authorized by various scholars in respect of
the study variables and objectives. The data was then be analyzed and
interpreted to establish the effect of corruption in the procurement process in
Civil Aviation Authority.
2.1 DESCRIPTION
There are different vocabularies used to describe corruption in Uganda. Some
of these are bribery, extortion (money and other resources extracted by the use
of coercion, violence or threats), embezzlement (theft of public resources by
public officials. It is when a state official steals from the public institution in
which he/ she is employed, betrayal of trust, unfair advantages, financial
malpractices, soda, lunch , kintu kidogo, dash, gratification, brown envelopes,
tips, emoluments, greasing, softening the ground, inducements, sub-payments,
side payments, irregular payments, payment under the table, undocumented
extra payments, facilitation payments, mobilization fees, "routine governmental
action," revised estimates, padded contracts, over(under)-invoicing, cash
commissions, kickbacks, payoffs, covert exchanges, shady deals, cover-ups,
collusion, "10% rule" (bribe surcharge), "50% rule" (sharing bribe within the
hierarchy), "let's keep our secret," "highly classified" transactions, customary
gift-giving, tribute culture, nepotism(a special form of favoritism in which an
office holder prefers his/her kinfolk and family members).
2.2.0 TYPOLOGIES FORMS AND MANIFESTATIONS OF CORRUPTION
There are several types, forms and manifestations of corruption in
procurement, such as political versus bureaucratic corruption, bribery,
extortion, favoritism, and embezzlement. All these types, forms and
manifestations are present in Uganda; the main reasons for corruption
14
occurring in Uganda are attitude, greed, a weak accounting system and a lack
of effective monitoring and functioning institutions, human capacity, low
remuneration and poverty, and donor money. While corruption may manifest
itself in a simple and straightforward manner, in many cases it carried out
through complex methods involving cross-border transactions. Delivery of
justice and other services by Government to the population can be negatively
affected by corruption. Its effects are more devastating on the bidders who are
not capable of legal aid. Corruption also hinders investment, proper trade and
genuine economic activities. It creates unfair competition whereby genuine
bidders in the economy fail to compete. Corruption is not unique to public
organizations in Uganda. It is now recognized as a serious and pervasive
international problem with diverse political, economic and social implications
within the procurement. (Uganda Debt Network 2009 Report)
2.2.1.0 TYPOLOGIES OF PROCUREMENT
2.2.1.1 POLITICAL CORRUPTION VERSUS BUREAUCRATIC CORRUPTION
One of the most important distinctions that can be made is political corruption
versus bureaucratic corruption. Political corruption or grand corruption refers
to when political decision-mal,ers use their political powers in order of
sustaining their own powers, wealth, and status. It takes place at the highest
levels of the political system. Bureaucratic corruption, on the other hand,
implies corruption in the public administration, and can also be labeled petty
corruption (even though bureaucratic corruption can also be grand sometimes,
depending on the amount of public officers or resources involved). However, to
make a distinction between political and bureaucratic corruption is not easy
and is rather vague, because it entails making a clear distinction between
politics and administration, which in most political systems is unclear. When
both political corruption and bureaucratic corruption are present, it is called
systemic corruption.
15
This is more than often the case in developing countries. Political corruption
and bureaucratic corruption tend to enforce each other. Both political and
bureaucratic corruption is present in Uganda. An example of political
corruption can be read in The New Vision that the Auditor General {AG) has
brought to light that staff members of the Uganda Revenue Authority {URA)
have lost billions of Shillings due to tax evasion and fraudulent dealings. The
AG has found "ghost policemen" on the URA payroll. A case of bureaucratic
corruption can be shown in the next example.
In the district of Hoima five local councillors are put under investigation for
alleged misappropriation of Ush 350,000 each. The money was given to them
as an allowance for a business trip. However they allegedly did not attend the
trip and pocketed the money. {The New Vision, 9 September 2003, p. 4)
2.2.1.2 CONTROLLED VERSUS UNCONTROLLED CORRUPTION
When you are talking about controlled corruption, this means that the regime
has complete control over processes and proceeds of corruption. In cases of
controlled corruption, bureaucratic corruption is often kept to a minimum.
Uncontrolled corruption means that, as opposed to controlled corruption,
corruption is disorganized; meaning that for instance paying a bribe will not
automatically guarantee that services will be rendered, and that paying one
bribe will be enough. As far as we know there is no serious indication of largely
controlled corruption in Uganda. The GoU does not have strict control of the
processes and proceeds of corruption. As mentioned in the chapter on
corruption in JLOS paying a bribe will not automatically guarantee that
services will be rendered. The "price" of a bribe can, of course, become
customary after a while, and as a result becomes commonly known. An
example of a price of a bribe that has become customary is manifest in the
Judiciary. Court officials ask money for transport costs. Mention has been
made that Ush 1,000 must be paid in Court. In the report of a survey on
integrity in Uganda's Judicial System the official and unofficial amount of a
bribe are indicated
16
2.2.2.0 FORMS AND MANIFESTATIONS OF CORRUPTION
2.2.2.1 BRIBERY
Bribery is the act of offering someone money or other goods in order to
persuade him or her to do something for you in return. Both giving a bribe and
taking a bribe is considered to be corruption. Bribery is also known as
kickbacks, baksheesh, sweeteners and grease money. Taking and giving bribes
in Uganda is very common, even though there is a perceived reduction in
bribery, as stated in the National Integrity Survey. The Economist estimated in
2002 that bribes in Uganda increase a company's costs with 8%. This has a
negative impact on economic growth, because inflows of foreign investment are
closely correlated with low levels of corruption, according to the Economist.
One of the most infamous cases of bribery was that of Judas Iscariot, the
disciple who betrayed Jesus Christ. Judas was paid 30 pieces of silver by the
chief priests and elders of Jerusalem to disclose the location of Christ during
the night so that he could be captured and executed.
2.2.2.2 EMBEZZLEMENT
Embezzlement is theft of public resources by public officials. As an effect of
embezzlement misappropriation of public funds is taking place. However, from
a strict legal point of view embezzlement is not corruption; because it does not
involve a civilian (corruption normally involves a civilian agent and a state
agent). Embezzlement can therefore consider being theft. Embezzlement is also
a very common practice in Uganda, especially at the local government level. In
the New Vision, for instance, it was stated that Ush 15 billionl 7 for classroom
construction was unaccounted for in 28 districts. The funds allegedly have
been misappropriated due to corruption and shoddy work. (The New Vision, 14
August 20
17
2.2.2.3 FRAUD
Fraud covers both bribery and embezzlement. It is an economic crime that
involves some kind of deceit. Individual enrichment is normally considered to
be the case in relation to fraud, but it can also be collective. Collective fraud, of
extractive corruption, is used is used by the ruling group to increase the
benefits for the rulers.
2.2.2.4 ECONOMIC EXTORTION
Extortion entails the use of force to extract money. It is very similar to bribery
only the money is extracted with more violence. In procurement employees in a
company ask money from suppliers for bribe
2.2.2.5 FAVOURITISM
Favouritism is also known as cronyism and entails to grant offices or benefits
to friends and relatives, regardless of their abilities. Favouritism can be
considered a corrupt act because it involves the abuse of power. A special form
of favoritism is nepotism. Nepotism means that an office holder will favour his
relatives and family members, and for instance nominate them to prominent
positions. An example of favoritism is set out below.
Tender for management of the Taxi Park in Lyantonde.
The majority of the Town Council Tender Board decided to use their numbers to
award the tender to Ml s UTODA PUT SAFE in total disregard of the regulations
in place, even when it was obvious that this firm had lost. The matter was
referred to the (now former) Central Tender Board and it ruled that the tender
had to be awarded to the winner in accordance with the regulations and the set
terms. However, the majority of the Town Council Tender Board insisted that the
tender would be awarded to their favourite firm. (A paper presented on types of
cases the Inspectorate of Government has been handling in local governments,
Jotham Tumwesigye IGG).
18
All typologies, forms and manifestations of corruption are present in Uganda,
be it that some types are present in a greater degree than others, e.g.
favoritism/nepotism is very common within public procurement. It needs to be
mentioned that these typologies and the like are applicable to the whole society
and are much embedded within society. Therefore corruption can be
considered endemic.
2.3.0 REASONS FOR CORRUPTION
The types of corruption mentioned above apply to both the national and local
levels of procurement, and throughout this paper they will be cited where
necessary. Next to these types of corruption lie several reasons for their
occurrence, which by themselves are not corrupt practices, but are an
incentive for corrupt practices. The main reasons are attitude, greed, a weak
accounting system and a lack of effective monitoring and functioning
institutions, human capacity, low remuneration and poverty, and donor
money.
2.3.1 GREED
Greed is a factor that contributes to corruption enduring. However, it needs to
be stated that greed is not a trademark that only Ugandans possess. Greed is a
symptom that is embedded in human nature.
2.3.2DISCRETION
The discretionary authority of public officials often represents a golden
opportunity to obtain bribes. Discretionary power is at its greatest when the
public demand and the public preferences are delegated to the public agent
and defined during a bilateral bargaining process. Then the civil servant is
choosing the private part, while price and other contract conditions are the
result of the negotiation process. The discretionary authority includes
19
► The power of invitation
► The power of short-listing or pre-qualification
► The choice of technology
► Confidential information
► Modifications of the contract
► Bilateral negotiation of governmental contracts
2.3.3 WEAK ACCOUNTING SYSTEM
There is still a matter of a weak accounting system. A weak accounting system
has often been used as an excuse for not being able to account for public
funds. Very often taxes deducted from payments to contractors of government
jobs are never remitted to the Uganda Revenue Authority. The weaknesses in
accounting do not only have consequences for the level of tax collection, but it
also has implications for the execution of programmes in ministries, such as
Education, Justice and Internal Affairs. According to the Inspectorate of
Government, a weal-: accounting system and the ability to manage public funds
is due to the lack of human capacity.
2.3.4 HUMAN CAPACITY
There is a serious lack of capacity. Local government councils are for example
elected every four years, but most of the time, these officials is not competent
and no training is provided for them in advance. Another example is the
amount of training investigators of the Inspectorate of Government get. It has
been said that after two weeks they are considered to be "competent"
investigators. As a result, however, these officials are not up to the task of
investigating properly and following up on more high profile cases in public
organizations of which most affected is the procurement department.
20
2.3.5 RELUCTANCE BY GOVERNMENT ANTI-CORRUPTION INSTITUTIONS
TO TACKLE THE 'BIG FISH':
Many believe that the functioning of the anti corruption institutions is far from
optimal. The IGG has problems with dealing with high profile cases. For
instance, several months after the former Vice President Gilbert Bukenya
procurement saga story about the procurement of the CHOGM cars was
broken, little has been done.
2.3.6 MONITORING AND FUNCTIONING INSTITUTIONS
According to Uganda Debt Network (UDN) there is still a weak functioning
accountability system, but it is improving, especially due to the half year
reports of the IGG; more corrupt officials have been exposed. However, the
functioning of the institutions is far from optimal. The IGG has problems with
dealing with high profile cases. For instance, in May 2003 the IGG received a
complaint that teachers were not given the freedom of choice with regard to the
procurement of primary school text books and teachers' guides, and that they
were being forced to procure instructional materials only from Longman and
Macmillan Publishers. The IGG acted immediately upon this complaint, but as
can be read in their report only local individuals were interviewed and
punished, while the multinational publishing companies were not questioned
for their possible breach of integrity.
In the constitution it is stated that all persons placed in positions of leadership
and responsibility shall, in their work, be answerable to the people. Therefore
the public can monitor their political leaders. However, UDN found that the
public does not hold their political leaders accountable, even though they have
a right to do so. Therefore they have implemented an anti-corruption campaign
at the grassroots level. The aim of this anticorruption campaign is to mobilize
individuals at the grassroots to participate actively in holding their public
officials at both the central and local level accountable for their actions. As a
21
result of this campaign people started mobilizing and demanded the finances to
be put to use.
2.3.7 LOW REMUNERATION AND POVERTY
As has been stated in the several reports, such as the National Integrity Survey
(NIS), for low remuneration is still considered one of the major incentives to
become corrupt, especially in relation to the poor. Most Ugandans are
becoming poorer, even though the economy is growing. It has been estimated
that the proportion of Ugandans living under the absolute poverty line has
increased from 34% in 1999 to 38% currently. Next to poverty, and low
remuneration, bad conditions and terms of employment also play a role in
corruption arising and subsisting.
2.3.8 DONOR MONEY
It has been argued that the inflow of donor money in the form of budget aid
makes sure that corruption subsists. The absorption capacity of government
institutions is too limited due to an underdeveloped financial management
system and therefore opportunities for misuse of public funds are abundant.
Some donors do not seem to tal{e the issue of accountability serious enough,
which again creates an opportunity for the misuse of funds and grants.
2.4.0 PROCUREMENT PROCEDURES USED IN UGANDA
The procurement procedures used in Uganda follows the procurement cycle
which is a 15-stage process, the Procurement and Disposal Entity (PDE) has to
observe and follow lest they will be answerable to the Public Procurement and
Disposal of Public Asset Act (PPDA) because the cycle is in line with the basic
principles of procurement and disposal of public assets Act.
2.4.1 PROCUREMENT PLANS AND BUDGET
According to Basheka (2000) Procurement planning is the primary function
that sets the stage for subsequent procurement activities. A mistake in
22
procurement planning therefore has wide and serious implications on public
procurement, measured from the two indicators of accountability and
participation (Dye & Stapeithurst, 1997). The planning function encompasses
defining an organization's goals, establishing an overall strategy for achieving
those goals, and developing a comprehensive hierarchy of plans to integrate
and coordinate the activities (Robbins, 2001). According to regulation 96 of the
Public Procurement and Disposal of Public Asset (PPDA), Act (2003) user
department shall prepare a multi annual work plan for procurement based on
the approved budget, which shall be submitted to the Public Procurement and
Disposal Unit (PPDU) for execution.
Planning is a legal requirement in all-public entities in Uganda according to
Section 34(2) of the Public Procurement and Disposal of Public Asset (PPDA)
Act (2003). As such, the government on its part has directed all accounting
officers to prepare procurement plans as part of their budget submissions. This
has now become a requirement every financial year that procurement plans
form part of the budget framework of each entity (Bakunzi, 2008).
2.4.2 PROCUREMENT REQUISITIONS
Procurement requisition filled with clear specifications, terms of reference or
scope of works is raised. User departments raise requisitions with clear
specifications based on technical knowledge of the users and the requirement
at hand. This is aimed at avoiding confusion in the Procurement and Disposal
Unit (PDU), which may lead to time wastage and wrong deliveries. The raised
requisitions should pass through the accounts department for confirmation of
availability of funds for the given procurement.
2.4.3 REVIEW OF SPECIFICATIONS, TERMS OF REFERENCE, OR SCOPE
OF WORKS
These are reviewed to confirm whether they have been made rightly by the user
departments. And to make sure that Organization spends on the right good or
service. The Contracts Committee also does approval of the procurement
23
method and evaluation criteria at this stage. This is done to ensure that the
right method is used as required by the procurement thresholds.
2.4.4 PREPARATION OF BIDDING DOCUMENTS
This is done by the Procurement and Disposal Unit (PDU) and these
documents involve instruction to bidders, the price schedule, terms and
conditions of the contract. The bidding documents should first be approved by
the Contracts Committee (CC) to ensure their proper drafting and these guide
the providers on which basis to submit their bids to Procurement and Disposal
Unit (PDU). According to Agaba (2006), procurement policies concerning
standard bidding documents were to be put in place so as to guide the various
Procurement and Disposal Entities (PDEs) because there was lack of standard
bidding documents. He further emphasized that each Procurement and
Disposal Entity (PDE) had to file a report on a monthly basis so as to check
compliance with the legal framework. The bidding period shall start on the date
of expiry the advertising period.
2.4.5 ADVERTISEMENT AND INVITATION TO BID
These are drafted in form of bid notices by the Procurement and Disposal Unit
(PDU) in accordance with Regulation 140 of the Public Procurement and
Disposal of Public Asset (PPDA) Act (2003). The bid notice is then published in
at least one Newspaper of wide circulation in case of open bidding to reach
sufficient prospective bidders to ensure effective competition. The advertising
period shall start on the date the first bid notice is first published in a
newspaper of wide circulation and the advertising period shall not be included
in the calculation of the bidding period.
2.4.6 RECEIPT AND OPENING OF BIDS
Procurement and Disposal Unit (PDU) should ensure that an Officer is
available at the location of submission, to receive bids and issue receipts for
each bid received, stating the date and time of receipt. Bidding shall be closed
24
at the precise date and time of the closing deadline and a representative of the
Contract Committee shall witness the closing process. Opening of bids is done
immediately after receipt of bids in the presence of suppliers' representatives in
case of open or restricted bidding. Where bid opening is not done immediately
after the bid closing, the received bids shall be moved to a secure location and
opened later in the presence of a member of Contract Committee.
2.4.7 EVALUATION OF BIDS
The evaluation shall be conducted in accordance with the methodology and
criteria stated in the solicitation document and a written evaluation report
shall be produced according to Regulation 168 of the Procurement and
Disposal of Public Asset (PPDA) Act, (2003). This is done by the Evaluation
Committee whose membership is recommended by Procurement and Disposal
Unity and approved by the Contracts Committee. The number of members to
the Evaluation Committee shall depend on the value and complexity of the
procurement requirement, but shall in all cases be a minimum of three. The
members should be of an appropriate level of seniority and experience, with the
relevant type of skills depending on the value and complexity of procurement
requirement Regulation 169(4). A member to the Contracts Committee shall
not a member of an evaluation team in order to maintain independence of
functions and powers (Regulation 169(7).
2.4.8 REVIEW OF EVALUATION REPORT
The chairperson of the Evaluation Committee should ensure that the final
evaluation report is prepared accurately and on time according to Regulation
170 (1) of the Procurement and Disposal of Public Asset (PPDA) Act, (2003).
This should be signed by all members of the Evaluation Committee and shall
state any disagreements, including reasons, discussions held on the issue and
the names of those holding alternative views. The report shall be submitted to
Contacts Committee who will either approve or reject the decisions reached by
25
the Evaluation Committee and go ahead to award the contract to the best
evaluated bidder.
2.4.9 SIGNING THE CONTRACT
This is done by the Accounting Officer (AO) who also communicates award to
the best-evaluated bidder. A bidder may seek administrative review for any
omission or breach by a PDE of the Act, or any regulations or guidelines
including the best practices. The complaint may be submitted in writing to the
Accounting Officer within 15 working days from the date the bidder first
becomes aware of the circumstances giving rise to the complaint. (Section 89 &
90 of the Public Procurement Disposal Asset (PPDA) Act, (2003)
2.4.10 CONTRACT MANAGEMENT
This responsibility shall pass from the Procurement and Disposal Unit (PDU) to
the User after the placement of the contract. A user department shall nominate
a member of staff with appropriate skills and experience as a contract
manager. Procurement and Disposal (PDU) shall provide a copy of the contract
to a user department upon which a contract manager shall prepare a contract
implementation plan and forward a copy to the Procurement Disposal Unit for
monitoring purposes (Regulation 258). This is to ensure that items of the right
quality and quantity are delivered. Public procurement management includes
broad management Functions of planning, organization and leadership,
staffing, controlling and communicating procurement processes and activities
across the spectrum of the upstream supply chain activities of both public and
private organizations.
2.4.11 CONTRACT PERFORMANCE EVALUATION
The user department and the Procurement and disposal unit do this in order to
assess the providers' performance of the contract. This assists Procurement
Disposal Unit in future decision making as regards the supplier sourcing and
prequalification. The perceived benefits of an efficient procurement
26
management, given that public procurement contributes to the broader social
economic goals of a country (Thai, 2004).
2.5.0 THE RELATIONSHIP BETWEEN CORRUPTION AND PROCUREMENT
PROCESS
According to Mulinde Musoke editor procurement news magazine (June 2011
volume 5 - Issue 24 Pg 42) in the article 'Tender crime' cited that corruption is
one of the oldest white-collar crimes known to mankind. The tradition of
paying off of public officials or company employees for preferential treatment
roots itself from the crudest business system developed. Bribery could be
mankind's second oldest profession. He went forward to point out some of the
corruption vises that are involved in the bidding/ tendering/ procurement
process thus;
2.5.1 BID-RIGGING SCHEME
The competitive bidding process, in which several suppliers or contractors are
vying for contracts in what can be a very cutthroat environment, can be tailor
made for bribery. Any advantage one vendor can gain over his competitors in
this arena is extremely valuable. The benefit of "inside influence" can ensure
that a vendor will win a sought-after contract. Many vendors are willing to pay
for this influence.
In the competitive bidding process, all bidders are legally supposed to be
placed on the same plane of equality, bidding according to the same terms and
conditions. Each bidder competes for a contract based on the specification set
forth by the purchasing company.
Vendors submit confidential bids stating the price at which they will complete
a project in accordance with the purchaser's specifications. The way
competitive bidding is rigged depends largely upon the level of influence of the
corrupt employee. The more power a person has over the bidding process, the
more likely the person can influence the selection of a supplier. Therefore,
employees involved in bid-rigging schemes, like those in kickback schemes,
27
tend to have a good measure of influence or access to the p the competitive
bidding process. Potential targets for accepting bribes include buyers,
contracting officials, engineers, technical representatives, quality or product
assurance representatives, subcontractor liaison employees, anyone else with
authority over the awarding of contracts.
Bid-rigging schemes can be categorized based on the stage of bidding at which
the fraudster exerts his influence. Bid-rigging schemes usually occur in the
pre-solicitation phase, the solicitation phase, or the submission phase of the
bidding process.
2.5.2 THE PRE-SOLICITATION PHASE
In the pre-solicitation phase of the competitive bidding process-before bids are
officially sought for a project bribery schemes can be broken down into two
distinct types. The first is the need recognition scheme, where an employee of a
purchasing company is paid to convince his company that a particular project
is necessary. The second reason to bribe someone in the pre-solicitation phase
is to have the specifications of the contract tailored to the strength of a
particular supplier.
2.5.3 THE SOLICITATION PHASE
In the solicitation phase of the competitive bidding process fraudster attempt to
influence the selection of a contractor by restricting the pool of competitors
from who bids are sought. In other words, a corrupt vendor pays an employee
of the purchasing company to ensure that one or more of more of the vendor's
competitors do not get to bid on the contract. Therefore, the corrupt vendor is
able to improve his chances of winning the job.
One type of scheme involves the sales representative who deals on behalf of a
number of potential bidders. The sales representative bribes a contracting
official to rig the solicitation, ensuring that only those companies represented
by him get to submit bids. It is not uncommon in some sectors for buyers to
"require" bidders to be represented by certain sales or manufacturing
28
representatives. These representatives pay a kickback to the buyer to protect
their clients' interests. The result of this transaction is that the purchasing
company is deprived of the ability to get the best the best price on its price on
its contract. Typically, the group of 'protected' vendors will not actually
compete against each other for the purchaser's contracts, but engage in 'bid
pooling'.
'Bid pooling is a process by which several bidders conspire to split contracts up
and ensure that each gets a certain amount of work. Instead of submitting
confidential bids, the vendors discuss what their bids will be so they can
guarantee that each vendor will win a share of the purchasing company's
business.'
2.5.4 FICTITIOUS SUPPLIERS
Another way to eliminate competition in the solicitation phase of the selection
process is to solicit bids from fictitious suppliers. A supplier could submit
quotes in the names of several different companies and could even perform
work under these various names.
The employee will use the quotes from several of his friend's fictitious
companies to demonstrate price reasonableness on the final contracts. In other
words, the fictitious price quotes were used to validate the actual prices.
2.5.5 OTHER METHODS
In some cases, competition for a contract can be limited by severely restricting
the time for submitting bids. Certain suppliers are given advance notice of
contracts before bids are solicited. These suppliers are therefore able to begin
preparing their bids ahead of time. With the sort time frame for developing bid
proposals, the supplier with advance knowledge of the contract will have a
decided advantage over his competition. Bribed purchasing officials can also
restrict competition for their conspirators by soliciting bids in obscure
publications where other vendors are unlikely to see them. Again, this is done
to eliminate potential rivals and create an advantage for the corrupt suppliers
29
Some schemes have also involved the publication of bid solicitation during
holiday periods when those suppliers not 'in the know' are unlikely to be
looking for potential contracts
In more blatant cases, the bids of outsiders are accepted but are 'lost' or
improperly disqualified by the corrupt employee of the purchaser. Typically,
when a vendor bribes an employee of the purchasing company to assist him in
any kind of solicitation scheme, the cost of the bribe is included in the corrupt
vendor's bid. Therefore, the purchasing company ends up bearing the cost of
the illicit payment in the form of a higher contract price.
2.5.6 THE SUBMISSION PHASE
In the actual submission phase of the process, where bids are proffered to the
buyer, several schemes may be used to win a contract for a particular supplier.
The principle offence tends to be abuse of the sealed bid process.
Competitive bids are confidential; they are, of course, supposed to remain
sealed until a specified date at which time all bids are opened and reviewed by
the purchasing company. The person or persons who have access to sealed
bids are often the targets of unethical vendors seeking an advantage in the
process.
Vendors also bribe employees of the purchaser for information on how to
'prepare their bid. Other reasons to bribe employees of the purchaser include
ensuring receipt of a late bid log, to extend the bid opening date, and to control
bid openings.
2.6.0 HOW CAN CORRUPTION BE REDUCED IN THE PROCUREMENT
PROCESS?
There has been tangible progress m establishing the required legal and
institutional framework to counter corruption. But these efforts have yielded
limited results, and recent developments raise doubts about the sincerity of
government efforts to effectively address corruption. In some cases, government
30
actions and decisions have clearly contradicted national anticorruption
policies.
2.6.1 THE LEGAL FRAMEWORK
According to a detailed 2006 TI study on the implementation of anti-corruption
laws in Uganda, the country already has in place the necessary legislative
measures to fight corruption but needs to strengthen measures on protection
of witnesses, participation of civil society, criminal prosecution and sanctions,
seizures and confiscation of property and financial records, and the payment of
compensation. Important pieces of anti-corruption legislation are also still
pending. (http://www. transparency. org/ content/ download/ 18030/244101)
Anti-money laundering legislation, though drafted, has not been presented for
public review or to parliament. The US Secretary of State Investment climate
statement notes that although some officials expected this legislation to pass in
2009, others sources within the country believed that high-level officials were
stalling the legislation because it could have damage private interests who
benefit from the status quo. Existing provisions on the protection of witnesses
and informers need to be reinforced and strengthened. The long awaited
Whistle Blowers Protection Bill, 2008, was drafted by the Ministry of Ethics
and Integrity last year and was tabled before the Parliament of Uganda earlier
this year, as per Uganda's commitment to do so in its Millennium Challenge
Corporation Anti-Corruption Threshold Country Plan. According to the above
mentioned Transparency International report, legislative and other measures in
Uganda on international cooperation and mutual legal assistance are limited.
When they do exist, they are outdated and not tailored to countering
corruption.
31
2.6.2 THE INSTITUTIONAL FRAMEWORK
The legal framework has laid the ground for several anti-corruption institutions
such as the Inspectorate of Government (IG), the Directorate of Public
Prosecutions (DPP) and the Auditor General (AG).
THE INSPECTORATE OF GOVERNMENT (IGG)
The IGG was established in 1986 and has developed into an independent
public office in charge of protecting and promoting human rights and the rule
of law in Uganda. It enforces the LCA and the IGG Act, and also functions as
an ombudsman, with the power to investigate, arrest and prosecute corruption
cases, abuses of authority and public office. It has established a hotline
through which the public can report corruption cases anonymously. The
inspector general is appointed by the president. Though past criticism has
focused on an apparent reluctance to address corruption cases involving high
ranking officials, the IGG has lately taken a stronger stance, as demonstrated
by the investigation of Solicitor General Lucien Tibaruha over alleged abuse of
office. The IGG's effectiveness, however, has been hampered by a lack of
qualified staff and sufficient funding. Its independence has also been
questioned and IGG recommendations are rarely followed-up by parliament or
by the executive. The IGG has also experienced difficulties in implementing
asset declaration provisions, as many members of parliament have refused to
submit income information.
THE DIRECTORATE OF ETHICS AND INTEGRITY (DEI)
The DEI was also established in 1986 with a view to coordinating government
efforts against corruption through the Inter Agency Forum. Within its mandate,
DEI has acquired considerable resources and materials on ethics and
corruption in Uganda and has established a resource centre. In June 2004, it
launched a four year strategy to combat corruption and rebuild integrity in
public office, aiming at improving the coordination of existing laws and at
involving the public in anticorruption efforts.
32
THE INTER AGENCY FORUM
The Forum is chaired by the DEI and is composed of Uganda's major anti
corruption institutions, including the judiciary and the police. It has been
established to ensure effective coordination of agencies on corruption issues
and has allowed inter-agency dialogue in the design and implementation of
national anti-corruption strategies. However, a lack of funding and capacity
has constrained its effectiveness.
THE DIRECTORATE OF PUBLIC PROSECUTION (DPP)
The DPP has a mandate over all prosecutions in the country, including cases of
corruption and bribery. It does not have the power to conduct investigations,
but it can direct the police to investigate any information of a criminal nature
and initiate criminal proceedings against any person in any court except a
court martial. The DPP works in close collaboration with the Police Criminal
Investigation Department and with the judiciary. Its director is appointed by
the president on the recommendation of the public service and with the
approval of parliament. It is not perceived to be a corrupt institution but faces
major capacity challenges.
THE AUDITOR GENERAL (AG)
The AG audits and reports on the public accounts of all public offices, as well
as those of local councils. It submits audit reports to the parliament and other
relevant authorities at the local level. Yet the institution appears to be largely
ignored by the executive and lacks resources and capacity to conduct thorough
audits at the local level.
THE PUBLIC PROCUREMENT AND DISPOSAL OF PUBLIC ASSETS
AUTHORITY
The PPDA is an independent agency established in 2003 that sets the rules
and regulations for procurement. Open domestic bidding methods is the rule
33
and sole sourcing is legally limited. The PPDA publishes procurement
guidelines, open opportunities, contract awards and other related information
on its website, provides advice, guidance and capacity training, while also
monitoring and evaluating compliance. It has the power to blacklist corrupt
providers and maintains a list of suspended providers. A register of providers
has been established to ensure that data is available and open to all
stakeholders involved in procurement processes. The PPDA has also
introduced a complaints mechanism. In spite of its comprehensive mandate,
the PPDA, like many other government institutions, is both under-staffed and
under-resourced. According to Global Integrity 2007, blacklisted companies
have sometimes been able to circumvent disciplinary measures, including by
bribing their way into bidding processes.
(http:/ /report.globalintegrity.org/Uganda/2007).
In spite of a relatively strong legal and institutional framework, the
effectiveness of anti-corruption efforts is hampered by the general lack of
coordination of understaffed and under-financed institutions. The general lack
of government actions and follow up on anticorruption agencies'
recommendations questions the political will to effectively address corruption
challenges in the country.
2.6.3.0 OTHER ANTI-CORRUPTION INITIATIVES
2.6.3.1 CIVIL SOCIETY
The right of association is guaranteed by the constitution and Uganda has a
vibrant civil society that addresses politically sensitive issues. According to the
Bertelsmann Foundation report from 2008, however, civil society organizations
are vulnerable to legal restrictions such as the manipulation of registration
requirements or to provisions that can be used to interpret CSO activities as
detrimental to state security and interests. Many civil society organizations are
involved in anticorruption work.
34
2.6.3.2 THE ANTI-CORRUPTION COALITION UGANDA (ACCU)
The Anti-Corruption Coalition Uganda (ACCU) is an umbrella group of about
70 CSOs seeking to curb corruption and eradicate poverty. The ACCU
organizes an anti-corruption week every year in December and began in 2008
the "Name and Shame" book, where civil servants convicted for corruption are
named.
2.6.3.3 TRANSPARENCY INTERNATIONAL
Transparency International has a chapter m Uganda, which is active in
advocacy around the implementation of anti-corruption laws and conventions,
public policy monitoring, and the organization of trainings and workshops.
2.6.3.4 UGANDA DEBT NETWORK (UDN)
The Uganda Debt Network (UDN) is a coalition of NGOs, institutions and
individuals formed in 1998. It focuses on lobbying debt relief and advocacy for
pro-poor policies. It also monitors use of public resources and ensures
borrowed and national resources are managed in an open, accountable
manner.
2.6.3.5 MEDIA
As for freedom of association, freedom of speech and freedom of the press,
these are guaranteed by the constitution. An independent print media is, at
times, highly critical of government. Recently, however, the government has
shown signs of growing intolerance towards independent media and has
supported legislation restricting press freedom. There have also been instances
where journalists have been selectively harassed when opposing NRM officials.
The Worldwide Press Freedom Index 2008 ranks Uganda 112th out of 195
countries and refers to the media landscape as "partly free".
35
2.6.3.6 PARLIAMENTARY APPROACHES
There have been recent initiatives to strengthen the role of parliament in the
fight against corruption. Uganda was one of the first chapters of the African
Parliamentarians Network against Corruption Uganda Chapter (APNAC)
established in Africa in 2000. It mainly focuses on networking and advocacy,
especially with regard to the implementation of the UN and AU anti-corruption
conventions.
2.6.3. 7 PARLIAMENTARY BUDGET OFFICE
A Parliamentary Budget Office has also been established to strengthen the
capacity of the Parliament Account Committees (PAC) to carry out its budget
oversight responsibility. As budget processes are overly complex and Members
of Parliament (MP) often lack the technical capacity to fully play their oversight
role, Uganda has created an independent Parliamentary Budget Office (PBO)
which supports parliamentarians throughout the budget process with
expertise, analysis and reports on key budget related issues.
(http:/ /www2.gtz.de/genderprsp/english/papers/working__groups/Hannington
_Asha ba_3A.pdf1.
2.6.3.8 THE INSTITUTE OF CORPORATE GOVERNANCE OF UGANDA (ICG)
The ICG has developed guidelines with minimum standards for corporate
governance that are based on the OECD and the CACG standards. The
institute raises awareness about corporate social responsibility and fraud
through workshops and lectures.
36
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 INTRODUCTION
This chapter describes how the research was conducted. It gave an
explicit description of the research design, the study population, sample
size and selection, methods of data; sampling methods and data
collection instruments, research procedure and ethical process.
3.1 RESEARCH DESIGN
Descriptive research design was used in the study. It purely based on
questionnaires. Descriptive research design involved a systematic
collection and presentation of data and it gave a clear insight with an aim
to discover the extent of the problem. Quantitative research approaches
were used to obtain the data that can be measured in numerical figures.
The variables were to be critically identified and helped in explaining the
attitudes and behaviors of the subjects basing on data collected.
3.2 THE STUDY POPULATION
The study population was seventy three (85) respondents that is to say
forty three (43) officials were selected from the Procurement and Disposal
Entity, thirty (30) officials from auditing department and twelve (12) from
accounts department in which the researcher generalized the results and
was to be from Civil Aviation Authority.
37
TABLE 1: Showing summary of the respondents
RESPONDENTSNCATEGORY FREQUENCY PERCENTAGE
Procurement and Disposal Unit 43 50.6
Auditing Department 30 35.3
Accounts Department 12 14.1
TOTAL 85 100
3.3 THE SAMPLING TECHNIQUE
The sample technique was comprised of convenience sampling, whereby
the researcher selected those respondents who were easy to approach
and willing to give data. The researcher used purposive sampling
technique whereby the researcher used his own judgment on deciding
whom to include in the study, then quota sampling technique where
survey research used, voluntary sampling whereby the researcher got
any willing respondent to give the required data.
3.4 THE SAMPLE SIZE OR COMPOSITION
Sampling method and how to select the respondents included simple or
non restricted random selection. Under this each element or unit of the
population where given the equal chance of being selected or included in
the research that was carried out. The selections of any one was in no
way tie with the selection of the other every member of the group, hence
the sample probability was selected without biases.
3.5 SOURCES OF DATA
The sources of data were both primary and secondary.
38
3.5.1 PRIMARY SOURCE
Primary .source refers to raw data collected through personal interviews,
through questionnaires. It also described how data was observed and
recorded by the researcher for the first time to their knowledge and data
was collected using, questionnaires interviews and observation methods.
3.5.2 SECONDARY SOURCE
This provided data by reading related documents from the public
procurement institutions and other related institutions like Chartered
Institute for Purchasing and Supplies (CIPS) and Chartered Institute for
Logistics and Transport, Public Procurement and Disposal of public
Assets Act (PPDA Act), public procurement journals and other related
data.
3.6 RESEARCH POPULATION
The study was conducted in Entebbe at Civil Aviation Authority. It acted
as a representative of all other public organizations in Uganda.
3.7 DATA COLLECTION METHODS AND INSTRUMENTS
In conducting the study, the data was collected using questionnaires,
interviews and observation. This helped in collecting detailed data from
the respondents
3.7.1 QUESTIONNAIRES
This refers to the collection of items to which the respondents were
required to fill in the questions asked by the researcher. Questionnaires
were aimed at getting all necessary information from respondents. This
method was used because it was helpful in obtaining quantitative and
qualitative information with accuracy and completeness.
39
3.7.2 INTERVIEWS
Interviews method refers to where there is a personal verbal
communication in which one person or a group of people asks questions
intended to obtain data. The researcher used interviews to acquire
information which was not acquired easily through questionnaires.
Interviews were used because it saves time when the interview schedules
are structured and you get first hand information from the respondents
and it enabled the researcher to probe more for clarification.
3.7.3 DOCUMENTARY REVIEW
This method involved reading documents related to corruption in public
procurement. It was advantageous because it enabled the researcher to
get the first hand information through critical examination of recorded
information. It was also used to cross check information received from
the researcher procedures.
3.8 THE RESEARCH PROCEDURE AND ETHICAL ASPECTS
The researcher got an approval of the research proposal by the
supervisor and often obtained an introductory letter from the faculty of
Business and Administration which introduced the researcher to Civil
Aviation Authority where the researcher carried out the research; this
enabled the researcher to get the data needed.
3.9 DATA ANALYSIS
After collecting data, preliminary data processing was commenced, it
included checking interview schedules assigning serial numbers
extracting initials summaries sorting and filling. The person's correlation
coefficient and the decision coefficient were computed to determine the
strength of variables under each objective.
40
3.10 CHALLENGES ENCOUNTERED
► The time allowed for research was short for the researcher to be
able to obtain the total relevant information from number of
respondents.
► The other challenge was obtaining information from the staff of
Civil Aviation Authority as well as financial problems.
3.11 SOLUTIONS TO THE ABOVE CHALLENGES
► The researcher planned to use his time effectively as well as
efficiently to gather the needed facts within the given time frame.
► The researcher also used probe questions to get the hidden
information due to fear among employees.
► The researcher used the funds available in an economical way.
41
CHAPTER FOUR
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
4.0 INTRODUCTION
The purpose of this chapter 1s to show what was obtained and
interpreted after computation of the data, findings laid out in the
purpose of the study and answer the hypothesis that were formulated at
the beginning of the study. Variables included corruption and
procurement process. Data obtained was summarized and presented as
shown below then followed by an explanation.
I. PERSONAL INFORMATION OF THE RESPONDENT
The personal data examined m the study included Gender, Age,
Professional training, marital status, working department, position in the
department, level of education, how long you have worked with authority
and nationality.
Table 2: showing personal information of the respondents
QUESTION CODING CATEGORY FREQUENCY PERCENTAGE
(100) %
GENDER MALE .................. 1 46 54.1
FEMALE .............. 2 39 51.9
AGE 18-24 .................. 1 3 3.5
25-29 .................. 2 10 11.8
30-34 .................. 3 18 21.2
42
35-39 ................. .4 12 14.1
40-44 ................ 5 11 12.9
45-49 ................. 6 21 24.7
50-above ............. 7 10 11.8
LEVEL OF EDUCATION PhD ..................... 1 None 0
Masters ............... 2 15 17.6
Degree ................ 3 43 50.6
Diploma ............. .4 17 20
10 (CIPS, CILT) 11.8
Other specify ....... 5
PROFESSIONAL TRAINING CIPS .................... 1 39 45.9
CILT.. .................. 2 15 17.6
CPA. .................... 3 10 11.8
ACCA ................. .4 5 5.9
43
Others specify .... .5 12 (CCA, CISCO, 14.1
SECRETARIATE)
None 4 4.7
MARITAL STATUS Single .................... 1 25 29.4
Married ................. 2 37 43.5
Separated ............. .3 16 18.8
Divorced ............... .4 5 5.9
Widowed ............... 5 2 2.4
Widower ................ 6 None 0
WORKING DEPARTMENT Procurement .......... 1 50 58.9
Accounts ............... 2 20 23.5
Auditing ............... .3 15 17.6
POSITION IN THE DEPARTMENT 3 3.5
Head .................... 1
Assistant.. ............. 2 3 3.5
Clerical ................ 3 6 7.1
44
Other (specify) ............... 4 73 (C.C MEMBERS, E.C 85.9
MEMBERS,
SECRETARIES, STORE
MANAGER AND
ASSISTANTS,
LOGISTICS MANAGER
AND ASSISTANTS)
HOW LONG YOU HAVE WORKED 1-2yrs ................... 1 13 15.3 WITH AUTHORITY
3-5yrs .................. 2 25 29.4
6-above ............... 3 47 55.3
NATIONALITY Ugandan 82 96.5
Non-Ugandan 3 3.5
(SOURCE: RESEARCHER 2011}
45
II. INFLUENCE OF CORRUPTION IN PUBLIC PROCUREMENT
Table 3: showing the influence of corruption in public procurement
B QUESTION CODING CATEGORY FREQUENCY PERCENTAGE (100)
%
1 What forms of corruption Bribery .................... 1 85 33.1 are you aware of in Public
Procurement?
Embezzlement of public 85 33.1 funds ........... 2
Extortion ................ .3 20 7.8
Inflation of tender 67 26.1
costs .................... .4
None 0
Others (Specify) ..... .5
2 What is your view on 57 67.1 corruption? .
Bad ......................... 1
Not so bad ............. 2 6 7.1
Good .................... .3 15 17.6
Not so good ........... .4 7 8.2
3 Give reasons for your Bad It leads to poor performance of the
answer in B2. suppliers
46
Not so bad Not sure
Good To the suppliers they get what they
want easily.
Not so good Not sure
4 In your opinion, what 48 56.5
should be done to Public
officials who are found to Arrested and
engage in corruption? charged ................ l
Dismissed 25 29.4
immediately ............. 2
10 11.8
Refund misappropriated
resources ............... 3
2 (confiscate all their 2.4
property, confiscate their Other (specify) ........ .4 education papers)
5 In the last one year, was 85 100
any public procurement :
implemented in the Yes ........................ l
authority?
No ........................ 2 0 0
.
6 If Yes, which ones? 0 0
Road works ............. 1
47
0 0
Cleaning services .... 2
85 100
Stationery .............. .3
Consultancy ......... .4 0 0
0 0
None ..................... 5
Others (Specify) ...... 6 0 0
7 In the public 0 0 procurement which was
implemented in the Yes .......................... 1
authority, were there any
incidences of corruption
that influenced the award
of the contract (s)? C
No .......................... 2 85 85
8 What was the effect of 0 0 those corrupt incidences
on the quality of the Poor quality
product/ service? services .................. 1
48
Conflict between service 0 0 providers/ suppliers and the
authority .............. 2
0 0
Increased cost of
service .................... 3
Delayed provision of a 0 0 service ................. .4
No effect at all .......... 5 0 0
Others (Specify) ........ 6 0 0
'
9 In the public 85 100 procurement that was
implemented in the Yes ........................ 1
authority during the last
year was the staff
49
involved in monitoring? No .......................... 2 0 0
10 Where monitoring was 56 65.9
done, how effective was
it? Improved quality of service/
goods ......... 1
Reduced cost of the 0 0 ' service .................... 2
Timely completion of 0 0
Projects ................... 3
Others (Specify) ...... .4 29 (low lead time, 34.1
strengthen buyer-seller
relationship)
11 Where the staff did not 0 0
monitorthe public
procurement what was Poor quality
the outcome in terms of services .................. 1
quality of product?
Inflated costs of 0 0
projects ................ 2
Delay in completion of 0 0
projects ................... 3
50
Others (Specify) ...... .4 0 0
12 When irregularities are 3 3.5 detected in awarding
public contracts in the Reject the project ..... 1
authority, how can the
staff react?
Report to 36 42.4 authorities ............. 2
Organize staff disobedience 0 0 ........... 3
. 46 54.1
Do nothing ............ .4
0 0
Other ( specify) ...... 5
13 Have there been any 85 100 cases in the authority
where irregularities were Yes ....................... 1
detected in awarding
contracts for public
procurement?
No .......................... 2 0 0 "
51
14 If Yes, what action did the 31 36.5
staff take? Rejected the
project. .................... 1
Reported to 21 24.7
authorities ............. 2
Organized staff disobedience 0 0
........... 3
Did nothing ............ .4 29 34.1
Other ( specify) ........ 5 4 (procurement officer 4.7
involved was dismissed
and related staff)
15 For those whose 4 13.8
response is "Did nothing"
in 813; what were the Do not know action to
reasons? take ........................ 1
f
Fear retribution ...... 2 18 62.1 ;
'
Apathy (I don't care 7 24.1
attitude) ............. 3
Other (specify) ....... .4 0 0
;
52
16 What challenges do staff 41 48.2 face in monitoring public
procurement? Lack of information on the
procurement ......... 1
Inadequate knowledge of 18 21.2 the procurement
process .................. 2
Apathy (I don't care 26 30.6 attitude) ............. 3
0 0
Cost of monitoring ........... .4
Others (specify ........ .5 0 0
17 How can the staff be 26 30.6 empowered to be able to
monitor public Sensitization .......... !
procurement in the
authority? Participation in planning the 59 69.4 procurements ......... 2
Others (Specify) ....... 3 0 0 '
'
(SOURCE: RESEARCHER 2011)
53
STAFF OPINION ON THE EFFECTS OF REFORMED LAWS AND
REGULATIONS ON THE PROCUREMENT PROCESS
Table 4: showing the effects of reformed laws and regulations on the
procurement process
EFFECTS OF REFORMED LAWS FREQUENCY PERCENTAGE(%)
1 Increased competitiveness 42 49.4
2 Promoted Transparency 31 36.5
3 Improved accountability 12 14.1
TOTAL 85 100
(SOURCE: REASERCHER 2011)
From the information obtained from the research indicates that there has
been a great improvement since the introduction of the laws thus new
reforms
According to the information obtained, 49.4% stated that the reforms
had increased competitiveness in the bidders who are interested in the
tenders, 36.5% sought that the reforms brought or promoted
transparency in the procurement process and lastly 14.1 % pointed out
that since the introduction of the reforms there has been an
improvement of the accountability in the public sectors/ organizations.
54
TRANSPARENCY
Staff all noted that there has been significant improvement in the
procurement process, although some challenges remain. As a measure of
transparency, tenders are advertised, winners of contracts are displayed
on public notice boards and procurements being made are also
displayed. There is provision for discontented participants (bidders) to
appeal. Transparency has also greatly improved in that bids are now
openly handled during the procurement process and the winner in the
end is also openly announced to the rest of the participating
stakeholders. The reforms professionalized the procurement sector.
During the tender board era, there were no clear systems to follow to
reach a decision and the members of the board could not be held
responsible for flawed outcomes, hence, rampant corruption and political
interference in awarding contracts. However, although standardization of
procedures has reportedly created transparency, staffs contend that
there is still corruption at the stage of awarding of contracts.
According to one of the respondents in the authority, transparency is still
being constrained by ineptitude and virtual unseriousness as some of the
members of the evaluation committees are chosen arbitrarily without
them having the required technical skills. Among a section of public
organization, procurement reforms have not helped to improve the level
of transparency in procurement:
There is lack of transparency in the award of contract because
procurement officers normally award contract to contractors well known to
them. There is therefore no competitiveness in awarding of these contracts.
There is also doubt whether objective reviews of bids is done because why
are the same people who do shoddy works given more contracts? We also
doubt if suppliers are genuine as value for money has been highly
questionable in most of the cases. (Source: respondent, 2011).
55
It is however, the view of some procurement unit staff also that there has
been significant improvement in the transparency of the procurement
process. For example, they contend that the influence of politicians on
procurement processes and contract allocation has been reduced
significantly. The following observation was made about improvement in
procurement by the procurement unit staff:
There used to be a perception that corruption used to influence the outcome
of a procurement decision. This is not the case anymore because the
regulations have streamlined procurement activities thus minimizing
corruption. The law has been able to curb down on corruption in the
different procurement stages. Procurement activities are now more
transparent. For example jobs are advertised in the media so as to put
everything in the open. During evaluation, companies that do not go
through are informed as to where they went wrong. There is also
competitive bidding. A score sheet is a predetermined criteria used to
select best suited companies. When contracts are awarded user
departments give certificate of completion of projects and submit
monitoring reports. (Source: Respondent, 2011 ).
While the above quotation illustrates the ideal, there could still be
challenges in following the laws which affect the application of
procurement laws and plugging gaps which can be exploited by corrupt
officials. Although, the reforms have generally brought about
transparency, at evaluation stage, the bidders are not informed of the
criteria used, neither is the evaluation report availed to the competitors.
Whereas the reforms were meant to promote transparency, most
procurement officials do not fully comply with some PPDA regulations.
For example, where the requirement is to advertise for two weeks in all
the major papers, sometimes only advertise once in one newspaper
56
usually in the New Vision. As a result, a number of potential service
providers / suppliers miss the opportunity. On the other hand, this
provision is a challenge to service providers/ suppliers who do not buy
newspapers everyday and those who cannot read or write. Secondly, it is
required that after awarding the contracts, all participants (bidders); the
winner and the losers should be notified of the results. However, in most
cases the procurement officers tend to only notify the winners. The
procurement officials reiterated that it was difficult for them to comply
with all the regulations because advertising and communications are
costly, yet, they are poorly facilitated. They therefore choose to display
the results on public notice boards. Although the procedures require
advertising, there were reportedly high incidences of non response to call
for bid.
COMPETITION
The transparency was meant to bring on board more actors. The staff
interviewed was of the opinion that reforms increased competitiveness.
Competition has boosted quality of service/ products in that most service
providers/ suppliers when they win contracts endeavor to provide quality
work/ quality products so that they qualify for pre-qualifications in
subsequent years. The staff interviewed was of the view that reforms had
improved on the quality of services / products. However, the technicality
of the procurement process seemingly has created less competition to
players of modest education fail to comprehend the technical
requirements.
Secondly, although the guidelines do not favour any participating party
(small, big, foreign or local), some provisions within the procurement
process like the requirement for bid security; experience in work being
tendered; capacity; financial and human resource capacity have given
advantage to bigger firms over small firms which has impended growth of
57
small firms in procurement. A big proportion of the staff interviewed was
of the opinion that medium firms had advantage over the small ones. The
perception is that tight competition contributed to sub-standard work/
sub-standard products, the bidders quote low to out-compete other
service providers/ suppliers but after winning the contracts they do poor
work because the money quoted is not enough to do quality work. The
stiff competition has created a scenario where participating firms fear
that their bid documents might be tampered with so almost all the firms
submit their bids at the very last minute causing stampede at the
receiving office.
Accountability
The staff is still adamant about demanding for accountability from
service providers / suppliers. Reportedly, because "even if reported
nothing will be done" no action will be tal<en on culprits even if corrupt
practices were reported. Respondents also picked out accountability as a
big challenge due to limited or low supervision of works being
undertaken. The monitoring staff does only irregular check due to
perceived lack of facilitation and there are no efforts at times in properly
verifying standards of works before making recommendations for
approval. Again this is an area where money ostensibly changes hands
the most and thus clouding the judgment of the monitoring staff. During
the research, one of the Engineers in the authority made the following
statement to point out the challenge they face in monitoring approved
work:
Implementation of contracts is very hard. There is normally political
intervention on some contracts. For example politicians pressure us to keep
quiet about non-performing contracts or shoddy works by some service
providers. Again service providers corrupt monitoring committees so as to
cover up shoddy works. (Source: Respondent, 2011)
58
HI SMALL FIRMS VERSUS MEDIUM FIRMS
PARTICIPATION OF SMALL AND MEDIUM ENTERPRISES IN
PROCUREMENT
There is a widely held view that the small firms are suffering due to the
complexity of the bid document currently in operation. It is perceived
that while small firms might have the capacity to execute assignments;
interpretation of the bid document and submitting, competitive technical
and financial are still a major challenge.
In this case therefore, the medium term firms with more years of
experience and better resource outlay (including human resource) seem
to out compete the smaller ones. This however is a perception and was
also based on interviews with procurement department staff as no
statistics were procured.
COMPETITION OF MEDIUM AND SMALL FIRMS IN PUBLIC
PROCUREMENT
The survey sought to find out whether the small and medium firms were
competing fairly in the public procurement. Figure below shows the
results.
Figure 3: showing the participation of big and medium firms
59
PARTICIPATION OF SMALL AND MEDIUM FIRMS
mYES
111NO
Accordingly, 58.8% said that there is no fair competition in public
procurement among the medium and small firms. The respondents, who
said that there was unfair competition in public procurement among the
small and medium firms, were further asked what factors contributed to
the unfair competition and almost all of the respondents said that the
medium firms have competitive advantage over the small firms. The
respondents who said that medium firms had a competitive advantage
over the small firms were further asked which factors contributed to this
scenario and Table below shows the findings.
Table 5: showing the reasons for competitive advantage of medium firms
over small firms in procurement
REASONS FOR COMPETITIVE ADVANTAGE OF MEDIUM FIRMS OVER SMALL RESPONDENTS
FIRMS IN PROCUREMENT. NO. %
Big have big Financial base 11 22
Big firms are more experienced 10 20
Big firms can afford Exorbitant bid securities 8 16
Big firms can give bigger bribes 6 12
60
Big firms have capacity in terms of resources 5 10
Big companies are more formal 4 8
Big firms are Technically known 3 6
Terms and conditions are the same 2 4
Both follow same process 1 2
Total so 100
(SOURCE: RESEARCHER 2011)
According to the results, 22% of the respondents said that medium firms
have big financial base. 20% said that medium firms are more
experienced. 16% said medium firms can afford exorbitant bid securities.
12% said that medium firms can afford to give bigger bribes, while 10%
said that medium firms have capacity in terms of resources. Others were:
medium firms are more formal (8%); medium firms are technically known
(6%); Terms and conditions are the same (4%); and both follow the same
process (2%).
These views were also corroborated by procurement unit staff who noted
that medium firms have several advantages over small ones particularly
in the area of financial and human resource capacity to execute
minimum conditions such as bid securities, VAT Registration and
returns to URA, among others.
61
CHAPTER FIVE
FINDINGS, CONCLUSIONS, RECOMMENDATIONS
5.0 INTRODUCTION
This chapter covers Discussions of the emerging issues, findings,
conclusions, recommendations and topics for future research studies.
5.1 EMERGING ISSUES
The efficacy, functionality and versatility of the procurement system is a
function of good governance. Achieving effective procurement in Uganda
is thus not possible without putting attention to good governance
infrastructure. The other important issue which needs to be factored into
procurement reforms and management is the aspect of political will
which should translate into effective punitive mechanism for people
convicted of procurement corruption and giving PPDA the authority to do
its work without undue political interference. The current survey also
indicate that collaborative mechanisms which involve the Public
procurement and Disposal of Public Assets Authority, the other key anti
corruption agencies and institutions, the local civil society and
community action groups is paramount to achieving progress in
monitoring procurement and achieving value for money in public
procurement. Again it is imperative to point it out straight away that
addressing corruption in procurement requires the participation and
cooperation of all stakeholders. Considering that most of the wastage of
public resources and graft in public service has to do with one kind of
procurement or the other, it is important that practical initiatives with
the required political good will from government are conceptualized.
62
5.2 FINDINGS:
Civil Aviation Authority is recommended to undertake a limited piece of
research to develop "A framework for analyzing and assessing the
effect of corruption in the procurement process in an organization".
This report summarizes that framework and the work that has led up to
it resulted from interviewing-based research and discussion with a few
key stakeholders. Due to lack of time the recommendations in it have not
been tested through group discussion. In carrying out this work it has
been necessary to consider:
• The context for this work
• The nature of 'procurement process'
• The problems associated with procurement operations in this work
From there I have gone on to consider what a framework for this work
might look like and have made some recommendations for future
practice of procurement profession in Civil Aviation Authority
The current context
There is already a substantial amount of work that impinges on these
issues. The revised National Strategy for efficient and effective
procurement is contributing towards increased efforts on sustainable
procurement as well as supporting momentum towards recognizing and
incorporating wider social impacts into public sector procurement
decisions. Consultation for the revised national Strategy highlighted a
need for Authority to demonstrate more leadership in putting its own
house in order, leading amongst other things to the formation of a
transparent Procurement plate form.
Issues of concern include:
• Fair and ethical trade
• Human rights and core labor standards
• Innovation
• Regeneration
63
• Sustainable procurement.
The 'Social Issues in Purchasing' guidance focuses "on the different
stages of the procurement process, and the way transparent issues can
legitimately be incorporated into the purchasing cycle". It is "intended as
a general guide for procurement and policy practitioners to show the
positive actions that they can take to incorporate relevant actions" This
two-pronged approach is important for knowledge transfer and cascading
practice through the relevant chains.
I would say that reduction of corruption as being part of the wider
process of increasing transparency in procurement with a focus on the
following:
Setting up strong anti-corruption departments in public
organizations that will help in creating transparency.
Formulating anti-procurement corruption policies and
strengthening the enforcers.
Addressing the negative impacts of the vice to the staff in public
organizations.
As with the introduction of any new way of working, three issues need to
be considered:
Policy
Infrastructure
Engagement
It is necessary to have clear Policy guidelines agreed by those
responsible for the organization in question (CAA).
The Infrastructure is needed to ensure the policy can be put into effect
and the Engagement of stakeholders within and outside the organization
is crucial to ensure that the policy does not merely remain on paper. For
example The Public Procurement Civil Aviation Authority considers risk
64
assessment (impact, likelihood, etc) is a key tool to sensible decision
making.
Therefore, such guidance needs to be backed by measures to ensure
these issues become embedded within the procurement cycle and are not
'add-on's' where risk is insufficiently addressed or where procurement
decisions favor the status quo or 'comfort zone' due to inadequate
information.
Options are being explored to ensure the most efficient procurement in
Civil Aviation Authority for !CT to be incorporated in the procurement
practices, transparent evaluation of bids, involvement of the head of
departments in the process and double checks to ensure accountability
in the Authority.
5.3 CONCLUSIONS
This paper proposes a conceptual framework for Civil Aviation Authority
to promote procurement policies for efficient procurement practices.
Policy statement on procurement practices at Civil Aviation Authority
should embrace sound policies and get committed to ensure
accessibility, availability, safety, efficiency, effectiveness of the
procurement process.
However, the procurement department of Civil Aviation Authority lacks
the depth of procurement competition, practical experience, technical
skills, or sufficient capital to response to the challenges of reconstructing
the procurement institution. Wore the local governments as procurement
is concern, face the capacity constraints, credibility and local investment
climate to facilitate a transformation, achievement in involving bottom up
strategies of basic procurement practices and policies shorting to budget
efficiency as programs are sabotage by extensive levels of corruption.
The Government of Uganda to be committed to develop a monitoring and
evaluation program and a procurement information system that provides
65
information support to the decision-making process at each level of the
system. Thus a system that integrates data collection, processing, and
use of the information necessary for improving service effectiveness and
efficiency through better management at all levels of public sector.
5.4 RECOMMENDATIONS
The following short term and long term recommendations arises for the
current study. It is important to point out that the complexity of
corruption in procurement and the fact that many categories of actors
are involved also calls for recommendations which takes these factors
into consideration. Shielding public servants from prosecution when they
are implicated in procurement related corruption only sends wrong
messages and enhances corruption. The following recommendations are
made:
5.3.1 SHORT TERM RECOMMENDATIONS
5.3.1.1 CENTRAL GOVERNMENT / PUBLIC SERVICE MINISTRY
Strengthen the linkage among Anti corruption institutions notably the
Inspectorate of Government, the Auditor General, the PPDA, The
Directorate of Ethics and Integrity, the criminal Investigations
Directorate of the Police, and the Public Accounts Committee of
Parliament. It is noted that the forum for anti corruption organization is
already established but it is currently a loose institution. The forum
should be revived and made to meet regularly to respond to pertinent
issues. The leadership of the forum can be rotated across the various
anti-corruption agencies.
The corrupt public officials who are identified should be isolated so that
they are denied space to enjoy their loot. This is a best practice in
countries like Singapore and through this community action they have
succeeded in stamping out corruption. These officials should be
66
investigated prosecuted, imprisoned and made to return the assets
acquired through corruption. The aim is to implement laws that make
corruption a very high-risk undertaking. Corruption has escalated in
Uganda largely because of lack of effective sanctions against
unscrupulous and corrupt public officials
Support the effective operation of the anti corruption court. This can be
done through review of the constitutional rights regarding application for
bails by persons convicted of corruption. Bail should only be applicable
to non-convicts.
It is imperative that government develops mechanism to address the
entrenched nature of corruption. It is also foolhardy to expect public
servants to behave differently when corruption pervades the entire
society. Addressing procurement corruption is thus also incumbent upon
the socio-economic and macro economic situation within the country. A
number of issues therefore comes to mind: macroeconomic policies
which puts money into the pockets of people; well targeted micro finance
program which makes Income generating activities accessible to people,
promotion of a good climate for conducting business, clear and
supportive regulatory frameworks and public officials, and equitable
access to public resources across regions, communities and individuals.
Tightening the loopholes in the public expenditure management systems
It is reported that government loses a lot of money through leakages in
the financial management systems and public expenditure processes.
There is need to plug these gaps if wastage in public resources are to be
handled. As already said above this can be done through making
corruption a high risk venture. There is also need to strengthen the
inspectorate functions, including supervision, audit, and disciplinary
actions on errant officials.
67
5.3.1.2 ADDRESS THE WELFARE OF PUBLIC SERVANTS
Though welfare is not directly linked to procurement, it affects the
psychological stature of public servants. The public servants must be
motivated, hold positive attitudes and improve willingness to effectively
provide public services. Unfortunately public servants in Uganda operate
under poor working conditions which include low remunerations, lack of
decent housing, and high cost of transport, all which combine to increase
stress of the public servants:
Public service pay reform: This is crucial to the long term fight against
corruption. Most public servants indicated that their current salaries
cannot meet their current needs which lead to asking for gratification as
a supplement. Available evidence also suggests that the current salaries
and remunerations of public servants are too low and not congruent with
the cost of living. It is recognizable that African families are big and
public servants cannot be divorced from their social and family
responsibility. It is also preposterous to expect that public servants will
give their best efforts and not be tempted to steal when they are being
poorly remunerated. There is therefore need to build sufficient systems,
improve remuneration of public servants so that they are motivated to
carry out assignments objectively and professionally.
Social insurance: Many public servants steal or get embroiled in
corruption to improve their social welfare. Where social and health
insurance are well implemented and regulated, it is possible that these
social safety nets will mal-ce crucial contribution to addressing corruption
in the general society and also in public procurement. It is imperative
that social insurance schemes should make it easier for the subscribers
68
to access their savings for developmental activity including business
investment and housing purposes, even when they are still actively
employed.
Medical insurance: It is imperative that public servants and their
immediate family should be given adequate medical insurance which
covers both out-patient and in-patient care. This would act as a strong
motivation for public service employment and significantly minimize
corruption tendencies among public servants.
Housing: It is recommended that public servants access decent
accommodation. This can be done through facilitating them to acquire
mortgages which they can use to acquire own accommodation. Similarly
it is proposed that public vehicles be disposed off a11.d instead public
servants be encouraged to acquire won vehicles. This would improve
vehicle sustainability.
5.3.1.3 PPDA
Implement affirmative action to encourage local firms (small, medium
and big) to compete for contracts. Work out a mechanism of building the
capacity and supporting the participation of local firms in the
procurement process but put quality consideration as the most
important issue in contracts award. This therefore implies that training
and sensitization should be very strong for local firm to compete
effectively and yet produce quality works. This leads to capacity building,
employment creation and economic development.
Translation of PPDA guidelines into local languages would go a long way
in increasing public knowledge on public procurement processes. It is
important to point out that there are many service provider organization
69
led by entrepreneurs who do not have a very good command of the
English language
Review the time available to evaluate tenders, to reduce costs of doing
business. In some countries such as Rwanda it takes only three steps in
two days to establish a business while in Uganda it tal(es 28 steps in 25
days. It is proposed that the 25 steps be reduced using the "caravan
approach:' where there is one stop centre for licensing businesses.
Address issues pertaining to independence and transparency of the
contracts committee. Ensure and set strict guidelines for all procurement
units to ensure that members of the contracts committee at all levels are
people who are competent in the relevant fields. Come up with clear
guidelines and procedures to address issue of conflict of interest. There
is also need to halt political interference and instill political
accountability in public service.
Evaluation time frame: It is important that PPDA sponsors a reform in
the law to check on the time tal<:en to initiate and accomplish a public
procurement. There is need to shorten this to increase both efficiency
and reduce costing challenges when proposals might be overtaken by
changes in the economic situation within the country. The good practices
that need to be studied is Rwanda's and Mauritius' procurement
systems.
Sensitization and training on how to prepare bid documents. This can be
done through a number of channels including local radio programmes.
While the country is endowed with a well distributed FM radio stations
the stations have not been well utilized. Hosting talk shows on local
radios throughout the country is one way of enhancing knowledge on
PPDA in the country.
70
5.3.1.4 CIVIL SOCIETY
Empower communities with information to monitor projects under
implementation in their localities. Most of the procurements lack value
for money due to lack of information on the specifications on
procurements.
Set up and facilitate a reporting system and whistle blowing system to
ensure the whistle blowers are protected and well rewarded. This can be
done through establishment of telephone hotline. A competent civil
society organization can be contracted to manage such a system.
5.3.2 LONG TERM RECOMMENDATIONS
Inculcating a National Value System that cherishes morality, integrity
and accountability. This should be done in homes, schools, religious
institutions and tertiary institutions. Corruption in Uganda has been
adopted as an acceptable way of life and institutionalized where the
corrupt are glorified. This can only be reversed by building a National
Value System where there is need for a re-conceptualization of
corruption as a vice.
71
REFERENCES
Public Procurement and Disposal of public Assets Act (2003)
Agaba Edgar and Shipman, Nigel, (2006), Advancing Public Procurement:
Practices, Innovation and Knowledge, the Ugandan experience.
www.ippa.ws
Basheka Benon (2008), Procurement News,
Chow Hury F.L, (2006), Corrupt Bureaucracy and Privatization of Tax
Enforcement,
Delan, J.R (1993) "How do you know when the price is right", Harvard
Business Review September-October Pg. 174.
http://www.tiscali.co.uk 23/9/09
Hunja Robert el al, DAC reference document of the organization of
economic cooperation and development. www.oecd.org/ dac
J.Oloka Onyango and Nansozi.K.muwange (2007), Africa's New
Governance Model Debating Form and Substance. 1st edition, Fountain
Publishers Limited. Kampala Uganda.
Joseph .M. Ntayi et al (2009), Procurement Trends in Uganda, Fountain
Publishers: Kampala.
Kenneth Lyson (2006), Purchasing and Supply Chain Management,
Seventh Edition, Pearson Edition Limited, England.
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Law development Center (2003), Public Procurement and Disposal of
Public Asset Act.
Law Development Center (1997), Popular Version of the Local
Government Act
Robert Anthony, (1998), Accounting principles: Irwin, Chango. 7th
Pathhak Samabesh, Dhaka
Thai, K. V. (2001). "Public Procurement Re-examined". Journal of Public
Procurement, Vol.l No 1, PP 9-50.
Ackerman, S.R. (1998). Corruption & Government-causes, Consequences
and Reform. London: University of Cambridge Press.
Ackerman, S.R. (2002). Grand Corruption and the Ethics of the Global
Business. Journal of Banking & Finance, 26(9), 1889- 1912.
Burguet, R. & Che, Y. K. (2004). Competitive Procurement with
Corruption. The RAND Journal of Economics, 35 (1), 0050- 0068.
Celentani M. & Ganuza J.J. (2002). Corruption and competition in
procurement. European Economic Review, 46, 1273-1303.
Davis, K. E. (2002). Self-Interest and Altruism in the Deterrence of
Transnational Bribery. American Law and economic review, 4(2), 314-
340.
73
APPENDICES
APPENDIX A
RESEACH QUESTIONNAIRE
TO STAFF OF CIVIL AVIATION AUTHORITY
Dear Respondent.
I am KATO MATHEW AHIMBISIBWE, a student of Kampala
International University, I am glad to have you selected as one of the
Respondents as regards the topic of: "EFFECT OF CORRUPTION IN THE
PROCUREMENT PROCESS IN AN ORGANISATION" your observation,
experience and opinion is very important. This research is purely
academic and the information obtained will be treated with
confidentiality.
Please answer/ rate/ indicate/ tick appropriately your response
with respect to the importance of the statements below.
I. PERSONAL INFORMATION OF THE RESPONDENT
A QUESTION CODING CATEGORY
1 Gender
Male ............................................. 1
Female ......................................... 2
74
2 Age
18-24 ............................................ l
25-29 ............................................ 2
30-34 ............................................ 3
35-39 ......................................... .4
40-44 .......................................... 5
45-49 .......................................... 6
50-above ...................................... 7
3 Level of education
PhD ............................................... 1
Masters degree .............................. 2
Bachelor's degree .......................... .3
Diploma ........................................ .4
Secondary school ........................... 5
75
Primary school ............................... 6
Others, specify ............................... 7
4 Professional training
CIPS ............................................... l
CILT.. ............................................. 2
CPA ................................................ 3
ACCA ............................................ .4
Others specify ................................ 5
5 Marital status
Single ............................................... l
Married ............................................ 2
Separated ........................................ 3
Divorced ......................................... .4
Widowed ....................................... .5
6 Working department
76
7
8
9
Position in the department
How long you have worked with
authority
Nationality
77
Procurement ............................. 1
Accounts ...................................... 2
Auditing ...................................... .3
Head ............................................. 1
Assistant. ...................................... 2
Clerical .......................................... 3
Other (specify) ................................ 4
1-2yrs ............................................ 1
3-Syrs ............................................ 2
6-above .......................................... 3
Ugandan ........................................ 1
Non-Ugandan ................................. 2
II. INFLUENCE OF CORRUPTION IN PUBLIC PROCUREMENT AND DISPOSAL
B QUESTION CODING CATEGORY
1 What forms of corruption are you aware of in Bribery ............................................. 1
Public Procurement?
Embezzlement of public funds ........... 2
Extortions ........................................ 3
Inflation of tender costs .................... .4
Others (Specify) .............................. .5
2 What is your view on corruption?
Bad ............................................ 1
Not so bad .................................. 2
Good .......................................... 3
Not so good ................................ .4
3 Give reasons for your answer in B2.
....
....
4 In your opinion, what should be done to
Public officials who are found to engage in
corruption? Arrested and charged ........................ 1
78
Dismissed immediately ..................... 2
Refund misappropriated resources ..... 3
Other (specify) ................................. .4
5 In the last one year, were any public
procurement implemented in the authority? Yes .................................................. 1
No .................................................. 2
6 If Yes, which ones?
Road works ...................................... 1
Cleaning services ............................. 2
Stationery ....................................... .3
Consultancy .................................... .4
None ................................................ 5
Others (Specify) ................................ 6
7 In the public procurements which were
implemented in the authority, were there any
incidences of corruption that influenced the Yes ................................................... 1
79
award of the contract (s)?
No ................................................... 2
8 What was the effect of those corrupt
incidences on the quality of the product/
service? Poor quality services ......................... 1
Conflict between service providers and the
community ................................ 2
Increased cost of service ................... .3
Delayed provision of a service ........... .4
No effect at all. ................................. 5
Others (Specify ................................. 6
9 In the public procurements that were
implemented in the authority during the last
year was the staff involved in monitoring? Yes .................................................. 1 ,
No ................................................... 2
10 Where monitoring was done, how effective
was it? Improved quality of service ............... 1
Reduced cost of the service ................ 2
80
Timely completion of Projects ........... .3
Others (Specify) .............................. .4
11 Where the staff did not monitor the public
procurements what was the outcome in
terms of quality of product? Poor quality services ......................... 1
Inflated costs of projects .................... 2
Delay in completion of projects .......... 3
Others (Specify) ............................... .4
12 When irregularities are detected in awarding
public contracts in the authority, how can the
staff react? Reject the project... ........................... 1
Report to authorities ......................... 2 •·
Organize civil disobedience .............. 3
Do nothing ...................................... .4
Other ( specify) ................................. 5
81
13 Have there been any cases in the authority
where irregularities were detected in
awarding contracts for public procurements? Yes .................................................. l
No .................................................... 2
14 If Yes, what action did the staff take?
Rejected the project ........................... l
Reported to authorities ...................... 2
Organized civil disobedience ............ 3
Did nothing ..................................... .4
Other ( specify) ................................. 5
15 For those whose response is "Did nothing" in
B13; what were the reasons? Do not know action to take ................ l
'
Fear retribution ................................ 2
Apathy (I don't care attitude) ............. 3
Other (specify) ................................. .4
16 What challenges do staff face in monitoring
public procurements? Lack of information on the project.. ... 1
82
Inadequate knowledge of the procurement
process ........................ 2
Apathy (I don't care attitude) ............. 3
Cost of monitoring ............................ 4
Others (specify) ................................. 5
17 How can the staff be empowered to be able
to monitor public procurements in the
authority? Sensitization .................................... 1
Participation in planning the
projects ............................................ 2
Others (Specify) ................................ 3
' .. '
III. PROCUREMENT REFORMS
C QUESTION CODING CATEGORY
1 Gou introduced reforms in
the procurement sector in i
2003. Which specific reforms Enactment of PPDA Act (2003) ..................................... 1
are you aware of?
Abolition of Central purchasing Corporation and
Establishment of procurement Units in Sectors
agencies ...................................................................... 2
83
2
3
4
5
In your opinion how have the
reforms affected your
authority with in
procurement?
Do big and small/medium
firms compete fairly in public
procurement?
If NOT: who has advantage
over the other?
What factors explain the
differences?
Standardization of the procurement process/ Procurement
Guidelines .............................................. 3
Transparency in Evaluation of Tenders ........................ .4
None ........................................................................... 5
Others ........................................................................ 6
Yes ............................................................................. 1
No .............................................................................. 2
Big ............................................................................ 1
Small/medium .......................................................... 2
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·············································································
............................................................................
...........................................................................
6 How have the reforms
changed the behavior of
public officials in Less corrupt.. ............................................................ 1
procurement?
Remained the same .................................................... 2
More corrupt.. ........................................................... 3
7 In your opinion what has
been the effect of the
reformed laws and Promoted transparency .............................................. 1
regulations on procurement
processes.
Increased competitiveness .......................................... 2
Improved accountability ............................................. 3
Other (Specify) .......................................................... .4
8 Overall, what has been the
effect of procurement
reforms on quality of lmproved .................................................................. l
products/ service?
Remained the same ................................................... 2
Deteriorated .............................................................. 3
9 Please explain your answer.
...............................................................................
85
10
(i)
a
b
C
D
(ii)
(iii)
1 ··· .. ·· ........................................................................ .
In the fight against corruption in procurement, Gou has put in place a number of measures. In
your opinion, in what ways have these measures seceded/ failed?
INSTITUTIONS
PPDA)
IGG
DPP
Police
Policies (Advertising,
Open Bidding)
LEGAL FRAMEWORK
SUCCESS WEAKNESS SOLUTIONS
86
a
b
(PPDA Act (2003)
Anti-Corruption Law
(2008)
THANK YOU VERY MUCH FOR YOUR COPERATION
87
APPENDIXB
KEY INFORMANT INTERVIEW GUIDE
I. PERCEPTIONS OF CORRUPTION IN THE PROCUREMENT
PROCESS
1. Understanding of corruption and perception of the prevalence of
corruption in the public sector procurement processes in Public
Organizations
2. Different forms of corruption; corruption forms that exist in the
procurement process in Public Organizations
3. In your opinion, what is the level of prevalence of corruption in Public
Organizations?
4. What factors cause corruption in the procurement and disposal of
public goods and service in Public Organizations?
5. To what extent are public officials responsible for the rent seeking
behavior in the procurement process in Public Organizations?
6. How should public officials that get involved in procurement be
handled in Public Organizations?
7. Which stages of the procurement process are prone to corruption in
Public Organizations? (Probe for ranking)
88
8. What are the main causes of corruption in the procurement process in
Public Organizations?
9. How can corruption at each of the respective stages be best addressed
in Public Organizations? (Probe for stage-specific solution
10. What could be the challenges in implementing such stage-specific
solutions in Public Organizations?
11. GoU has put in place various measures to mitigate corruption in
public procurement. To what extent have the anti-corruption efforts in
public procurement succeeded or failed in Public Organizations?
12. How can these measures be strengthened/made more effective in
addressing corruption in Public Organizations?
13. What kinds of public procurement attract the highest corrupt
tendencies in Public Organizations?
89
II. PROCUREMENT REFORMS
1. Are you aware of the any procurement sector reforms in Public
Organizations?
2. What specific reforms in the procurement sector are you aware of in
Public Organizations?
3. What changes have taken place in the procurement sector in Public
Organizations since the reforms?
i. Changes in practices
ii. Changes in attitudes of officials responsible for public procurement
iii. Changes in laws and regulations
4. What have been the effects of the procurement sector reforms on the
following in Public Organizations?
i. Transparency in awarding contracts
ii. Value for money/ quality of Services provided
5. In your opinion, what are the effects of the new regulations on the
performance of Public Organizations' officers?
6. What have been the main challenges to the procurement sector
reforms and how can the challenges be addressed in Public
Organizations?
90
III. SMALL FIRMS VERSUS BIG FIRMS
1. How is the participation of SMEs and Big firms in the procurement
process in Public Organizations?
2. Establish the participation of SMES and big firms in the procurement
process in Public Organizations.
3. Does any have advantage over the other in winning the tender in
Public Organizations? Probe for the differences (negative and positive).
4. For the respondents who say that the SMEs are disadvantaged in
Public Organizations. How can the process be leveled? (Probe for policies
in place which protects the interest of SMEs?)
5. What in your views are the main obstacles to the participation of small
and medium level firms in the public procurement processes in Public
Organizations?
6. What other initiatives have been done to enhance the participation of
small and medium firms in the procurement process in Public
Organizations?
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APPENDIX C:
(TABLE 6) TIME FRAME OF THE STUDY
ACTIVITY TIME IN MONTHS
1& 3 4&7 8&11 12&14
PROPOSAL WRITING "
DATA COLLECTION "
DATA ANALYSIS " SUBMISIION " II. (TABLE 7) BUDGET ESTIMATE FOR IMPLEMENTATION IN UGANDA SHILLINGS
S/No Item Unit Cost per unit Amount in Shillings
1 Stationery 60,000
2 Transport to field 50,000
3 Printing and 80 500 40,000
photocopying
questionnaires
4 Bidding report 6 25,000 150,000
5 Miscellaneous 50,000
Grand total 350,000
'
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