USE OF TENDERING AND COMPETITIVE BIDDING IN PUBLIC SECTOR PROCUREMENT
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Abstract
The subject matter of this study is the use of tendering and competitive bidding in the public sector procurement. A case study of ministry of works, Imo Srate, Owerri. Among the objectives is stated in chapter one of the study. In other to attain to the objectives a research questions was constricted to enable the researcher collect relevant information in the subject matter. The researcher reviewer related iterative and some facts drawn from the work in chapter two. Chapter three welcomes the research methodology; the population and size etc. chapter four contains the researcher’s presentation and analysis of data.
Finally chapter five is about conclusion, summary and recommendations
TABLE OF CONTENT
Title page
Approval page
Dedication
Acknowledgment
Abstract
Table of content
CHAPETR ONE
1.0 INTRODUCTION
1.1 Background of the study
1.2 Statement of problem
1.3 Objective of the study
1.4 Research Hypotheses
1.5 Significance of the study
1.6 Scope and limitation of the study
1.7 Definition of terms
1.8 Organization of the study
CHAPETR TWO
2.0 LITERATURE REVIEW
CHAPETR THREE
3.0 Research methodology
3.1 sources of data collection
3.3 Population of the study
3.4 Sampling and sampling distribution
3.5 Validation of research instrument
3.6 Method of data analysis
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS AND INTERPRETATION
4.1 Introductions
4.2 Data analysis
CHAPTER FIVE
5.1 Introduction
5.2 Summary
5.3 Conclusion
5.4 Recommendation
Appendix
CHAPTER ONE
INTRODUCTION
- Background of the study
T The dictionary of purchasing and supply management defines tendering and competitive bidding as offers from tenderness without callous, usually in scaled enveloped delivered by a time and date specified in the invitation to tendering for supply of goods and services.
Uzor (2004:440) in (Lysons 1996:42) defined tendering as a purchase procedure whereby potential suppliers are invited to make a firm and unequivocal offer of the price and terms which on acceptance shall be the basic of the subsequent contract.
Public procurement is the process of purchasing goods or services by the public sector, the aim of which is to secure the best value for public money. Public procurement involves the expenditure of large sums of public money, and given its magnitude, can impact on the structure and functioning of competition in a market more generally. It is critical, therefore, to protect the integrity of the public procurement process, so as to maximise the resulting benefits for society and to protect competitive markets. Procurement is the process of purchasing goods or services. The primary objective of an effective procurement policy is the promotion of efficiency, i.e. the selection of the supplier with the lowest price or, more generally, the achievement of the best “value for money”. Both public and private organizations often rely upon a competitive bidding process to achieve better value for money in their procurement activities. Low prices and/or better products are desirable because they result in resources either being saved or freed up for use on other goods and services. However, the competitive process can achieve lower prices or better quality and innovation only when companies genuinely compete, that is, they set their terms and conditions honestly and independently. Public procurement comprises government purchasing of goods and services required for State activities which accordingly aims to secure the best value for public money. Public procurement generally accounts for a large share of public expenditure in a domestic economy: in OECD countries, public procurement accounts for approximately 15% of GDP. In many non-OECD countries that figure is even higher. Due to the magnitude of the spending involved, public procurement can have a market impact beyond the mere quantities of goods and services purchased: through its procurement policies, the public sector can affect the structure of the market and the incentives of firms to compete more or less fiercely in the long run. Procurement policy therefore may be used to shape the longer term effects on competition in an industry or sector. (2) While collusive or corrupt conduct may occur during any procurement procedure, whether public or private, certain aspects of the public procurement process render it particularly vulnerable to distortion via anticompetitive conduct. On the one hand, the sheer volume of high value public procurement projects – many of which relate to sectors that have, historically, been prone to anticompetitive conduct – creates attractive opportunities for corruption and collusion. On the other hand, public entities are typically more constrained as to their range of permissible actions than private procurers, because of the highly regulated nature of public procurement, and therefore have limited strategic options available to address these threats. Collusion and corruption can arise in any procurement procedure, whether occurring in the public or private sectors. Yet, the distinctiveness of public procurement renders it particularly vulnerable to anticompetitive and corrupt practices, and magnifies the resultant harm. It is for this reason that the problems of collusion and corruption within the field of public procurement specifically have merited particular attention by the OECD Competition Committee in its work. Frank Harris and Ronald Mc Caffer defined competitive bidding as an invitation by an organization (i.e the client) to supplier to submit its quotation for a job or services required by the client organization the whose main objective is to determine the performance abilities of the supplier. Tendering and competitive biding is usually required when an organization or a firm needed supply of certain goods such as furniture, generating set, caterpillars, vehicles, drugs, medical equipment, and computers etc. Tendering is widely used in the public sector to ensure observance of the principles of public accountability. It many also be used by private sector organization more especially in respect of construction and services contracts to obtain prices and terms of the contract. According to Compton and Jessap (1989) such tenders are opened only at the time and data specified by the tender panel of qualified persons who records the necessary details the essence of this research therefore is to examine the use of effective bidding in improving public sector procurement.
- STATEMENT OF PROBLEMS
The problems of tending and competitive bidding and its implications on public sector procurement has been identified by many as not only enormous but complex now that there is serious needs on the part of our various government to provide more services with little funds and issue of corruption in our “public life” some of the problems are
(i) A great numbers of problems have bedeviled sector tendering which has great affection in the quality of contract entered by the public sector organization.
The entire contract system has gone sour as a result of mis management, corruption mis application of rules and regulation set to be adhered to in contracting for goods and services.
(ii) The negligent on the part of the various authorities to ensure a uniform codes standard of practice and professional ethics of conduct all have made a complete miss of our public sector tendering.
(iii) The out data nature of our financial regulation which guide the operations public procurement as well as public sector tendering in the greatest problem of our public sector tendering and therefore has serious implications on the efficiency and effectiveness of public sector contract management and administration.
(iv) Competitive bidding in public sector procurement usually ends with the lowest price bidder getting the award of the purchasing firm gains a population for negotiation with the towerst bidder after bids are opened. This will make future bidders not to offer their best price initially, believing that they do better in any subsequent negotiation. They will adopt a system of submitting a bid low enough to allow them to be included in any negotiations. But their initial bid will not be as low as when it is anticipated that the award be made to be the lowest bidder without further negotiation. Competitive bidding tends to put great pressure on suppliers to reduce their cost to be able to bed low but profitable prices. This cost pressure may result sacrifice in product quality development efforts and other vital services.
- OBEJCTIVES OF THE STUDY
In most public establishment there is a wide misunderstanding of tendering and competitive bidding as a tool for public sector procurement.
(i) To examine the use of tendering in improving the efficiency and effectiveness of public sector procurement.
(ii) To find out the reason why there is misunderstanding of competitive bidding.
(iii) Determine whether or not there is need for an independent unit to be created with trained and qualified professional to handle public sector procurement.
(iv) To examine the procedures and processes of tendering and contract
awards and the skills of officers involved in public tendering and contract management.
- RESEARCH QUESTIONS
Based on the project topic and objective of the research, the following question were developed by the researcher:-
(i) Does tendering have a role to play in improving the efficiency and effectiveness of public sector procurement?
(ii) What qualifies a bidder to be invited to bid?
(iii) Has there been instances where the lowest bidders are not offered the job?
(iv) Can the current tendering process or procedures as used by the public sector organization eliminate corruption and build accountability and transparently in the public sector?
(v) Are the officers handling tendering in the public sector qualify?
1.5 STATEMENT OF HYPOTHESIS
Based on the research question formulated the following hypothesis are formulated.
HYPOTHESIS ONE
H0: tendering is an effective tool in public sector procurement
H1: tendering is an effective tool in public sector procurement.
HYPOTHESIS TWO
H0: There is no effective method the ministry adopt other than competitive bidding
H1: there is another effective method the ministry adopt other than competitive bidding
1.6 SIGNIFICANCE OF THE STUDY
The significance of this research work is to help the research or showers to know the significance of this. Study to discover whether there will need for effective and efficient use of tendering and competitive in the ministry. At the end of this work the ministry will be able and capable of ensuring that. There is effective and efficient use of tendering and competitive bidding in ministry.
(i) This research work be beneficial to the ministry of works the researcher himself and also to the public and private organization under study.
(ii) It creates opportunity for unknown contactor or supplier to become known especially when it is successful.
(iii) It makes public accountability possible
(iv) The research work allows keen competition which may produce cheaper tender figure.
(v) It is an opportunity to get genuine tenderers who are actually interested in the project.
1.7 SCOPE OF THE STUDY
This study has been limited to the public sector organizations.
Tendering and competitive bidding has play many role in the management and administration of public sector contract, this study would have covered all the ministries departments, Agencies, Boards even the local government areas in this country but the researcher after due considerations of various variables and implications decide to concentrate on the study of the implications of effectiveness and efficient tendering in the administration and management of contract in the ministry of works and housing, Owerri Imo State. In doing this the researcher concentrated on most of the department and units that have one or other things to do with the subject matter of this study.
These departments or units include administration, engineering, planning, finance of these areas well give a great insight as what takes place in other ministries departments, Board, Agencies etc.
1.8 LIMITION OF THE STUDY
In the process of conducting this study the researcher has confronted with the various problems among them are:
(i) It was not easy for the researcher who had to combine attending lectures in school and other activities in school with the various visits to the ministry during this research work. This in no small way limit the level of investigation, the research intended to carry out.
(ii) Yet another limitation faced by the researcher was financial constraints. This made it impossible for the researcher to make all the necessary visits in order to obtain the right quality and quality of information the research of this nature requires.
(iii) Lastly many officials changes with the management and administration of tendering and competitive bidding and public sector contracts were not keen to give out much needed information by way of documents and forms which were classified as “ strictly confidential” by the government.
1.9 DEFINTION OF TERMS
(1) BID: A quotation for a price or other conditions for contracts whether for payment or acceptance.
(2) LEAD TIME: This is the interval between when a need is perceived and the fulfillment or satisfaction of that need.
(3) TENDER: It is the procedure through potential suppler are invited through newspaper and other selected media advertising to make a firm and unequivocal offer of the price and terms which on acceptance, shall be the basis of the subsequent contract in competition with others.
(4) COMPETITIVE BIDDING: This is one of the methods by which the right price can be obtained.
(5) QUOTATION: A formal statement prepared by a contactor/ supplier to his customer that includes cost estimates specification and other key information about an agreement between the two parties.
(6) GOVERNEMNT: An institution with power to govern and direct the affairs of a state.
(7) EVALUATION: The process of finding out and deciding the amount and value of something.
(8) NEGOTIATION: Seeking agreement between the purchaser and the contractor/ supplier on mutually acceptance terms and conditions prior to conclude a contract.
(9) ANALYSIS: The process of breaking components into separate parts or units in order to examine each unit and constitute critically.
(10) CERTIFICATE: Act of licensing by a document formally testing the fulfillment of conditions.
(11) PROCEDURE: A May, system or pattern of performing a work, service, suppliers etc.
(12) PERFORMANCE BONDS: This is an undertaking or security to perform a contract as required and failure to perform as required the client will be compensated by the supplier or contractor.
(13) SPECIFICATION: This is the description of any objective materials or process in sufficient detail requirement of a job/ suppliers or contract which the contractor or the supplier must compile with. It is what the supplier must supply to the buyer as describable by the buyer.
(14) SOURCING: This is a process and procedure used by the buyers to survey, evaluate and determine which supplier that can meet with the best requirement of their organization.
(15) SOURCING POLICY: These are policies developed to guide the purchasing functions in respect of who may be the major sources of the organizational suppliers.
(16) QUALITY: Quality is the fatality of futures and characteristic of a product or a serves that bears in the ability to satisfy a sated or implied needs.
(17) PRICE: This the amount of money for which a thing is offered sold or brought
(18) PRICE ANALYSIS: This is the examination of the sellers price without examination elements of the cost and profit element that make up the price.
(19) FAIR PRICE: A fair price is the lowest price that make it possible for a continuous supply of the right quality materials by the supplier where and when needed.
(20) SELECTIVE TENDER: There a method where only competent suppliers on the approved list of supplies are invited by the buying firm to tender.
(21) FORWARD BUYING: This is a buying practice which embraces the buying of materials in quantity more that it current requirements.
(22) STANDARDIZATION: It is an agreement on definite sizes, design, quality and the like.
(23) CONTRACT: It can be defined as an agreement between two or more persons which is intended by them to have legal consequences.
(24) PRICING: This is the process of determine the price
(25) ORDER: This is an instruction to a manufacturer or trader to supply something
1.10 ORGANIZATION OF THE STUDY
This research work is organized in five chapters, for easy understanding, as follows
Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study.
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