Public procurement, value for money

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The 2014 National Budget and ZimAsset are demanding value-for-money public procurement.

PURCHASING & SUPPLY
with Nyasha Chizu

The Finance minister reported that the public procurement process was affecting project implementation in Zimbabwe and part of the solution was the review of the procurement law. It is, however, critical to identify the source of inefficiency in public procurement in order to address the inadequacies effectively that affects public project implementation.

It is also necessary to identify the process of balancing public procurement objectives of value for money – economic efficiency; integrity – avoiding corruption and conflict of interest, accountability, equal opportunities and equal treatment for providers, fair treatment of suppliers, efficient implementation of industrial, social and environmental objectives – horizontal policies in procurement, and opening up public markets to international trade.

Project performance is affected by flout or inefficient procurement process, pre-tender activities of procurement planning and post-tender activities of project management are more critical. When it comes to issues of procurement fraud, the pre-tender and the post-tender phases are internationally recognised as public procurement “grey areas”. The tendering process is the highly regulated process in most countries. The writer is not implying that the procurement process is therefore efficient; the process provides an audit trail that can be reviewed to identify irregularities.

Procurement process must have direct relationships with public finance management and project management. The procurement function must produce procurement plans that feed into the budget. The efficiency of the procurement process is reviewed with reference to the budget and post-project activities of contract management. The current procurement laws do not have a relationship with the public finance management system and consequently, project management is therefore compromised.

The value for money principle can be assessed by a review of the procurement award in line with the procurement plan and budget. It also requires review of contract and project management with relation to the budget. An efficient procurement system is capable of rejecting compliant offers on the economic basis without compromising the equal opportunity and equal treatment of providers, fair treatment of suppliers and the integrity of the procurement process.

Budgets and procurement plans also provide the basis for due diligence on cost for sole tenders.

Objectives of public procurement are all centred on the value for money principle. Elimination of corruption – integrity in procurement and opening up trade to international trade directly support value for money principle. Competitive bidding – equal treatment and transparency are also complimentary to the value for money principle.

It must be noted that although open tendering is the default public procurement method, the UNCITRAL Model law now provide in addition, procurement framework for restricted tendering, request for quotation, request for quotation with negotiation, two stage tendering, request for proposal with dialogue, competitive negotiation, electronic reverse auction and single source procurement.

The additional public procurement provisions have been structured to ensure value for money principle and the other procurement objectives such as integrity and transparency are enshrined to cover most procurement circumstances.

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