PROCUREMENT ACT; How far with implementation?

Comment and Analysis Page, Graphic Business, September 2/2008

Article: Charles Benoni Okine

CORRUPTION has been one of the most endemic practices in all facets of every economy across the world. From the United States of America (USA) to the United Kingdom (UK), from Iraq to Azerbaijan, from South Africa to Ghana, corruption exists although it varies in form from one state to the other.
The difference in corruption in each country is dependent on systems available which includes laws as it relates to public sector spending among others.
In many countries including Ghana, procurement is seen as one of the areas where money belonging to the taxpayers leak badly. This is because, procurements are made with the perception that; “its government's money” and, therefore, no proper laid down procedures are followed. I other instances prices are heavily inflated. There is also the practice where projects and contracts are given to cronies, family members and close relations.
For instance public procurement accounts for between 50-70% of the national budget (after deduction of personnel emoluments), and about 80% of national tax revenue. It represents about 24% of total imports and also accounts for about 17% of Gross Domestic Product (GDP), an indication that those of the 'bad' one who are in charge of procurement and cut corners make a fortune.
It was against this background among others that the government mooted the idea to pass a law to specifically deal with procurement in the country. After a series of public education and debates on the matter in Parliament amidst protestations from some civil society groups, the Public Procurement Act (Act 663), was promulgated in 2003. Primarily, the Act is to promote and safeguard transparency and accountability as far as procurement of goods, works and services, financed from public funds are concerned. Its object is linked directly to poverty reduction because it is largely assumed that savings made by blocking all the loopholes in the procurement process could help make economic use of funds to benefit many.
At a public forum of the PPA, the Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu noted that the construction of public schools, hospitals, roads and drilling of boreholes, as well as the acquisition of medicine and textbooks must all go through the public procurement process. This is because the performance of a country's procurement system can be determined on whether available funds are sufficient to construct 100 or 200 schools. Therefore, the ability of government to meet its economic and social development aspirations are thus closely related to how well procurement is carried out.
So that the passage of the Act gave rise to the authority which also set the tone for a grand take-off of effective procurement management in Ghana. Government, through the PPA, has since not relented in efforts to make the reforms work.

Challenges:

Today compliance is to a large extent in full force but not without its attendant challenges which are being experienced from all angles.
For instance there is the issue of delays in the release of funds from the entities to the suppliers and in the end they tend to shy away from dealing with public institutions. Their action may be understandable because most of the suppliers go for credit from the banks at a cost and are supposed to pay at a particular time. What is unfortunate in many cases is that although the law makes room for the suppliers to charge the cost of the delays to the entities, this is not the case in many instances.
There is also the issue of procedure. The various procedures to follow are normally regulated through circulars from Ministry of Finance and the problem is evident in the sense that, there are a lot of delays as a result of the bureaucracy which is very synonymous with the civil service. In the end projects delay at the expense of national development.
There is another challenge where after prospective suppliers have travelled far and near to buy the tender documents, they are told there is none available to even buy. Pay bribes to access it. This practice is also an attempt to ward-off other competitors to favour cronies and relatives. One cannot rule out political influence in such cases because a politician in a high place may be interested and would want to have a project reserved for him/her.
Even when one has braved the storm to get the document and even submit the tender document, there is another challenge. The Act stipulates a period not exceeding four weeks and at least six weeks for National Competitive Tender (NCT) and International Competitive Tender (ICT) respectively. Unfortunately, however, there are complains the period for response as publicised goes contrary to the terms of the Act in that, it is at times too short. According to Section 45C of the Act, a maximum period of 4 weeks (for NCT) and at least six weeks (for ICT) be allowed for the submission of tenders to allow for sufficient time for the invitation to get to all and preparations made for the tender. Compliance would at least allow suppliers to do proper sourcing for the best in terms of quality and price.
It was also learnt from the forum that delays in evaluation and its associated cost of participation in Tenders are seriously impacting on the number of companies which subject themselves to the frustrations and disappointments in tender participation. There is the problem of the cost of tender document: Is it possible that purchasing entities can have procurement plans at the commencement of a procurement year, and based on that negotiate a one package deal with a supplier through competitive tendering. Instead of advertising for every single item at different times of the year, the publications are duplicated, sale and purchase, the processes of preparation, securing bid securities, evaluation and notification among others make the cost of participating in tenders nothing attractive, thus keeping some potential suppliers out of the race.
There is the challenge of evaluation of tenders which are also said to be over delayed by some institutions. In this case when a respondent has not been responsive or looses the tender, the notification is not done on time although the law stipulates so unambiguously.
But in every human institution, there are challenges and this procurement Act is no exception. It is right to argue that after five years, some of these teething problems should have to be surmounted to ensure that the corrupt practices that are associated with the Act were removed.
In many of the entities, no professionals are available to handle procurement and it will be in the interest of the country to ensure that professionals are trained to handle procurement in the right way that will help the country to make savings by reducing the corrupt practices associated with procurement.
Punishment in any form is said to be a deterrent to wrong doing. However, many corrupt people are not sentenced to that number of years that will serve as a deterrent to them not to repeat that practice.
For instance if an ordinary thief is sentenced to more than 10 year imprison and a top official who embezzled 10,000 times that amount the thief stole is given far fewer years, to what extent is corruption in high places being made unattractive.
It is against this background that the laws to deter people from being corrupt must be stringent enough. The government can save billions of cedis every year from procurements done the right way.
Quite apart from this, there are a number of ongoing policy initiatives as follows;

Update On Framework Contracting

PPA introduced the concept of framework contracting to entities and Industrial and Commercial Associations at two forums organised in 2007. This concept is meant to address the repetitive procurement of common user items, in order to reap the benefits of economies of scale, while still operating in accordance with Act 663. PPA started a nation-wide education of entities this year, to explain how the concept would be operationalised. This took the form of direct interaction with all entities on the basis of their sector Ministries.
Each sector has been requested to constitute its Departments and Agencies into a cluster and to appoint an entity among them as facilitator of framework Agreements for their common user items, on behalf of the others. So far 25 Ministries, 6 RCCs and all CHASS associations have been covered. As a result, the Western Region Conference of Headmasters has taken the lead in its implementation, by forming 7 clusters.

Sustainable Public Procurement

At the UN World Summit on Sustainable Development in Johannesburg in 2002, all governments were called upon to shift from unsustainable patterns of consumption and production to Sustainable Consumption and Production. In order to accelerate the shift towards Sustainable Consumption and Production (SCP), governments were called upon to promote the development of a 10-year framework of programmes (10-YFP) on SCP. The international collective effort to develop the 10-YFP is named the “Marrakech Process.
The Marrakech Process has established seven task forces with focus on specific SCP issues, as part of the strategy to implement the 10-YFP. One of these task forces is the Marrakech Task Force on Sustainable Public Procurement (MTF-SPP). Its focus is on Sustainable Public Procurement. (The other task forces are: Co-operation with Africa, Sustainable Products, Sustainable Lifestyles, Sustainable Tourism, Sustainable Buildings & Construction, and Education for Sustainable Consumption).
Ladies and gentlemen, Ghana is represented on the MTF-SPP by the PPA.

Appeals and Complaints

The inauguration of the Appeals and Complaints Panel of the Authority in February, 2007 has had a positive impact on the success of the implementation process of Act 663. A number of suppliers and contractors have had occasions to use the appeals process to lodge complaints on tenders they had participated in and felt the Entities concerned had inappropriately acted against their submissions.
The Appeals and Complaints process has enhanced transparency in the procurement system. Tenderers now feel more empowered to readily seek administrative review of procurement complaints, without fear of victimisation in future tenders.

Capacity Development

The object of the Authority's Capacity Development Policy has been to equip and train the Entities at all levels to develop their skills and expertise to effectively undertake their procurement activities.
In 2007, the Authority through its short term training programme trained as much as 7000 procurement practitioners and members of Entity Tender Committees. This is an ongoing programme which will cover all identified stakeholders in the public procurement system. These cover suppliers, contractors, consultants, civil society organisations, the Media , oversight bodies and institutions (including the Judiciary, Police, Parliamentarians, CHRAG, and SFO). I am happy to announce that funding has been secured from GTZ of Germany to continue this programme from September this year.
It is about to implement a medium and long term training programme in earnest. This programme, supported by MiDA / MCC has a component which covers intensive training for procurement practitioners with varied academic and professional backgrounds who will want to attain academic and professional qualifications in procurement among others.


Development of Supplier Database and Price Database

The Authority, in fulfilment of its statutory function under Section 3(p) of Act 663 has developed and posted at its website a database of suppliers, contractors and consultants. This should afford Entities easy access to a large pool of service providers when using Request for Quotation and Restricted Tendering procurement methods.
With regards to the price database, a contract is to be awarded for its development for common use items (goods), providing average prices for these supplies. The database will assist Entities in their procurement planning, and ensure the achievement of value-for-money.

Conclusion:

The implementation of the Act has come far and this is manifest from the PPA’s international recognition.
This is to the extent that Ghana’s achievements in the implementation of the Procurement Act as a tool for checking corruption in the country have been recognised by the Organisation for Economic Co-operation and Development- Development Assistance Committee (OECD-DAC) of the World Bank.
For instance in May 2006, the Public Procurement Authority (PPA) successfully launched its Public Procurement Monitoring and Evaluation (PPME) assessment tool, strategically designed to capture qualitative and quantitative data that is used in measuring performance and compliance levels of entities as prescribed by the Public Procurement Act of 2003 (Act 663).
Last year, there was a joint assessment team by the World Bank, which used the OECD-DAC methodology to assess Ghana's performance and compliance out of which Ghana scored a record 70 per cent.
The team also validated the use of PPA's PPME tool to ascertain the degree of conformity with the OECD methodology and the record has been regarded as unprecedented in the world of public procurement reforms.
It was a result of the quality and practicability of this tool in determining the performance and compliance of entities for the effective implementation of Ghana's Public Procurement Law that PPA's Chief Executive Officer had been invited as a Guest Speaker to share with the rest of the world the strides Ghana was making in the area of public procurement.
Mr A.B. Adjei has been nominated by the OECD to share Ghana's experiences and progress in PPME at the 3rd International Conference on Good Governance scheduled for Asuncion, Paraguay, South America, on September 2, 2008.
On the other hand, the PPA, for its part, has hosted public procurement regulatory organisations across Africa, including the Public Procurement Regulatory Authority, Tanzania and the Zambian Ministry of Finance and Economic Planning.
The Liberian Public Procurement Authority has also been billed to be on a one-week study tour to PPA in September, 2008.
It is therefore, expected that should all endeavour to support the Act, Ghana will be the beneficiary. The greedy few who feed fat on corruption because of their insatiable taste for money will be wiped out or will have no place to practice their selfish trade.