Evaluation Of The Use Of Tenders In A Public Sector Procurement

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Evaluation Of The Use Of Tenders In A Public Sector Procurement


Abstract


The subject matter of this study is to carefully evaluate the use of tenders in the public sector procurement. In a bid for better understanding of public procurement as to the Nigerian content backed by the Nigerian procurement Act of 2007. This research work will be focusing on the Bureau for public procurement (BPP) Lion building Enugu as a public sector as a case study. This research work will also take a close look at the various terms that are associated with public procurement.

The objectives of this study is to closely examine the evaluation of the use of tenders and tendering in improving efficiency and effectiveness in the public sector, public sector contract management and public sector administration. In other to attain to the set objectives of this study, research questions were carefully constructed to enable the researcher collect relevant data/information on the subject matter. Attempts were also made to review related literature and opinions of professionals, experts and consultants especially on the following areas.

Meaning of tenders and tendering, evaluation of tenders and tender in the public sector purchasing, tendering documents, pre-qualification for tenders and tenders board.

During the field work, all collected data will be presented, analyzed and discussions were held on some of the findings and conclusion was made. Based on the conclusions recommendations were made in assisting the development of the public sector tendering and if carefully followed it will ensure accountability and also reduce the rate of frequent abandonment of contracts after contractors has been fully mobilized.


Chapter One


Introduction

1.1 Background of the Study

Tender to a layman means many things such as to pamper a child, something that is young and so on. But in this context, tender is defined as “An offer made in writing by one party to another to execute certain supply contract/commodity slated at a stated cost”.

Tendering is the process of making an offer, bid or proposal or expressing interest in response to an invitation or request for tender.

The dictionary of purchasing and supply management defines tender and tendering as offers from without callous, usually in sealed envelope, delivered by a time and date specified in the invitation to tendering from supply of goods and services. Uzor (2004:440) in CIPS, tendering can be defined as the public release by an organization of the requirements of goods or services for a project in order to allow formal bids to be made to supply the goods or services. Lyson (1996) also defined tendering as a purchase procedure whereby potential suppliers are invited to make a form and unequivocal offer of the price and terms which on acceptance shall be the basis of the subsequent contract. Chilaka o. and Amanze c. defines tender as an offer to sell at the right price indicated and can be converted into a contract by acceptance in the form of a buyers order.

Tender as an offer to sell at the price indicate and can be converted into a contract by accepting the offer in the form of a buyers order.

Perhaps, tendering is the very first opportunity for the buyers to have a full detail of the supplier and for the suppliers to improve their services level is the most important element. The public sector management has in their part made numerous contributions to effective and efficient management of contract in the public sector. Several restrictions has been made to see that tenders and tendering are dully observed. For instance, no contract work involving construction shall be considered by tenders board unless for the reasons as:

(a) The land has been acquired and the topography map on soil tested except where it has been approved by the Architect and it is not necessary. The document relating to the land, the survey map, the soil, test report or certificate of example by the architect should then pay off contract document to be presented to the board. See newly reviewed financial regulations (2000)

  1. Architect design
  2. Structure design
  3. Mechanical design
  4. Bill of qualities

Furthermore, in chapter 32 of financial regulation (2000) the conditions governing the local purchase of stores are set out and subject to those condition all local purchases of stores etc and all work and service costing over N500,000 must be obtained by contract after public tender. It must be recorded that tendering has been misused, mis-managed or even mis-understood.

This single cause of poor contract collection of mobilization fees is carefully considered. The essence of this research therefore is to examine on evaluation of the use of effective an efficient tendering in improving public sector contract management and administration.


1.2 Statement of the Study

(a) A greater number of problem have bedeviled public sector tender which has had great affection on public sector procurement. The quality of contract entered by the public sector organization. The entire contract system has gone sour as a result of mis-management, corruption, misapplication of rule and regulation set to be adhered to in contracting for goods and services.

(b) Another problem facing public sector tendering is the issue of Nigeria factor where the nation suffer while the individual grows, selfishness, political consideration, godfatherism, embezzlement of public fund, contract abandonment, etc.. all these have in no small measure affected the quality of tendering which in turn affect the quality of public sector.

(c) The out date nature of our financial or stores regulation which guides the operations of public procurement as well as public sector tendering gin the greatest problem of our public sector tendering and therefore has serious implication on the efficiency and effectiveness of public sector contract management and administration.


1.3 Objectives of the Study

  1. To examine an evaluation of the use of tender or tendering in improving efficiency and effectiveness of public sector contract management and administration.
  2. To examine the reasons behind the failure of public sectors tender as well as public sector contract and those of the private sector organization.
  3. To examine the impact of poorly managed tendering on the public sector contract administration and management.
  4. To examine the impact of political corrupt godfatherism and Nigeria factor in public tendering in the public sector.
  5. To suggest ways of improving public contract management through efficient and effective tender.
  6. To examine the procedure and processes of tendering and contract award and the skills needed of officers involved in public tender and contract management.
  7. To suggest ways of improving public sector tender, attain better ways of contacting for goods and services that will benefit the tax payers, the government and the service providers.

1.4 Relevance to the Study

An evaluation of the use of tenders in public sector procurement cannot be overstated. This has become more important these days where replacement costs are usually higher than the initial estimated cost.

When the need to reach the rural areas through development project that touch the lives of the rural masses has increased.

Thus, the study is relevant in the following ways:

  1. This study if relevant because it will help the researcher in acquiring skills and experience in conducting practical investigation on important issues especially on tenders and tendering and other related matter in the public and private sector in the future.
  2. The study will give the researcher an insight on how tender and public sector contract are administered and managed.
  3. This research work is also very essential to the researcher as it is one of the important requirement for the awards of the higher national diploma in purchasing and supply management.
  4. When this study is completed, it will provide useful information to the public sector organization that is involved in one form of contract administration and management.
  5. This study when completed will not only provide new and indepth insight as per the weakness and current tendering and contract practices and procedures. This research work will expose the weakness of the system but will also be helpful to the system, the organizations, both private and public sector and to the other student who may be interested in further research into public sector tendering and contract management and administration.

1.5 Research Question

In order to collect all the relevant information on the subject matter of this research work the following questions were developed by the researcher.

  1. Does tender have a role to play in improving the efficiency and effectiveness of public sector?
  2. Can the current tendering sector organize, eliminate corruption and build accountability and transparency in public sector?
  3. Are the officers handling tender in the public sector qualified?
  4. Are the composition of tenders board in the state in-line with the provision of the financial regulation (2000)?
  5. What is the factor responsible for poor tender management in the public sector?

1.6 Research Hypothesis

The following hypothesis will be listed in the course of the study.

  1. HO: Tender has a role to play in improving the efficiency and effectiveness of the public sector.
    HI: Tender has a role to play improving the efficiency and effectiveness of the public sector.
  2. HO: Current process or procedures as used by the public sector organization help to eliminate corruption and build transparency and accountability.
    H1: Current process or procedures as used by the public sector organization help to eliminate corruption and build transparency and accountability.

1.7 The Scope of the Study

This study has been limited to the public sector organization and has not crossed borders of the other sectors of the economy as to allow for more detailed investigation into the impact of tendering on public sector contract management and administration in Nigeria.

For proper understanding of the impact of tendering in the management and administration of the public sector contract, this study would have covered all the ministries department, agencies, board, even the local government areas in the country, but the researcher after due consideration of various variables and implication decided to concentrate on the study of the implications of efficient and effectiveness of tender in the administration and management of contract in the Bureau for public procurement Enugu, Enugu state.

In doing this, the researcher concerted on most of the department and units that have one or other things that has to do with the subject matter of this study. These departments or units include administration, engineering, planning, finance of these areas will give a great insight as to what takes place in other ministries, departments, boards, agencies etc.


1.8 Definition of Terms

1. Tender:

Offer to supply goods and services stating a price at which offer is made in response to an invitation to submit such an offer in competition with others.

2. Quotation:

This is a formal statement prepared by contractor or supplier to his customer includes cost estimates specification and other key information about an agreement between two parties.

3. Government:

An institution that is vested with the power to govern and direct affairs of the state.

4.Evaluation:

The process of finding out and deciding the amount and value of something.

5. Negotiation:

Seeking agreement between the purchaser and the contractor or supplier in the form of a dialogue in order to reach an acceptable terms and conditions prior to concluding a contract.

6. Analysis:

The process of breaking components into separated parts or unites in other to examine each unit and constitute critically.

7. Certificate:

Act of licensing by a document formally testing the fulfillment of condition.

8. Procedures:

A way or system or the pattern of performing a task, work or service etc.

9. Performance:

This is an undertaken to perform a contract as required and failure to perform as required the client will be compensated by the supplier or contractor.

10. Specification:

This is a detailed requirement of a job/supplies/contract which the contractor or the supplier must comply with. It is what the supplier must supply to the buyer as described by the buyer.

11. Standardization:

This is the process of developing and implementing technical standards in other to meet the quality of the commodity and services both for the buyer and the seller.


1.10 Organization of the Study

This study is organized in five chapters. Chapter One covers background to the study, statement of the problem, research objectives, research questions, significance of the study, scope of the study, limitations the study and definition of significant terms. Chapter two covers literature review, Chapter Three covers Research Methodology, Chapter four data Analysis, Presentation and Interpretation while Chapter five covers summary of the findings, discussions, conclusions and recommendations.


Chapter Five


Summary of Findings, Discussions, Conclusions and Recommendations

5.1 Summary of Findings

The study found out that, majority of the officers are not reasonably remunerated considering their level of education despite handling tenders worth millions of shillings and that majority of officer’s levels of education is not adequate to handle such tenders.

The study also found out that, tendering processes were well managed and duration significantly influence the effectiveness of tendering process in Central region. Favoritism, tribalism, politics prevalence were low, but were present in tendering process. ethical practices in tendering do not significantly influence the effectiveness of tendering in the agency. In addition, sometimes Government tendering procedures were not followed.

Record management was found to be good in Enugu north, Nsukka and Ezeagu. On training, majority of officers had never been trained on tendering process. Among those who were trained, they felt that the training improved their performance in handling tendering process.

In terms of availability of ICT specialists, most of the departments had ICT specialists with and computers were used in stages of tendering. ICT was highly used in tendering in Central region and use of ICT in tendering significantly influence the effectiveness of tendering in the agency.


5.2 Discussions

On demographic characterises of the respondents, the following were the findings:

This study found that, 65% were male and 35% female. This indicates that majority of officers at Ezeagu, Enugu north and Nsukka from central region were male. The distribution of the officers was 31% work at Ezeagu, 19% Nsukka and 50% Enugu north. This indicates majority of workers were from Enugu north. On terms of service, 92% of the respondents were on permanent and pensionable employment terms and 4% were on contract and 4% are casual. The age distributions, 4% of the respondents were aged between 31 and 40 years, 58% were aged between 41and 50 years and 38% were aged between 50years and above. This indicated majority of officers were aged 41 years and above implying the workforce was not young.

On education level, 4% of the respondents had attained masters, 38% a Bachelor’s degree, 23% a diploma and 35% o-level. This shows that majority of officer’s levels of education is NOT adequate This concurs with the findings of Ahmed, Irfan, and Parasuraman, (1994) which found out that, the procurement Tendering system is manned by junior officers, who were therefore powerless to correct any anomalies and could easily be manipulated by their seniors and powerful politicians.

On income of the officers, 27% of the respondents earn below 50,000, 38% up to 50,000, 8%from 50,001-75,000, 12% form 75,001-100,000 and 15% above 100,000. This indicates that majority of the officers are not reasonably remunerated considering their level of education.

77% of the respondents were directly or indirectly involved in the tendering process and only 23% are not.
The researcher sought to find out on the effectiveness of tendering process in the three road construction agencies, 88% of the respondents felt that the tendering process is effective and 12% said it’s not effective. In addition, 46% felt that, the organizational income increased due effective tendering, 12% felt it decreased, 19% felt it did not change while 23% don’t know. On transparency, 19% of the respondents agree that tendering should be free and fair 81% strongly agree. In connection to this, 19% of the respondents felt that tendering process wastes time and 81% felt it does not waste time. The majority of those who felt it wastes time felt the reason was that, bidding process that takes a lot of time. 65% of the respondents felt that tendering add value while 35% felt tendering does not add any value for money. The main reason for justifying tendering was that it increases in competition thus lowering the price. This agrees with the International Principles that state that open tendering reduces wastes.

The study sought to find to find out to what extent does duration taken influences effectiveness of tendering Process in Enugu state. This study found out that, 73% of the tendering process takes 1-3 months while 15% take 4-6 months. In addition, 4% of the respondents felt that, the tendering process was very poorly managed, 4% poorly managed, 61% well managed, 31% very well managed. This shows that, majority of officers felt the tendering processes were well managed. On the influence of duration in tendering processes, 8% of the Respondents felt that duration taken influence the effectiveness in tendering process, 58% felt it does not and 34% did not have any opinion.

Hypothesis one sought to test whether there is significant relationship between duration of tendering and effectiveness of tendering. The calculated Pearson product Moment Correlation coefficient of 0,93031 at 3 degrees of freedom implies that, there is a very strong positive correlation between duration of the tendering process and effectiveness of the tendering process. In addition, computed t-value of 4.3959 lies in the rejected area at 0.05 significant level. Therefore, the null hypothesis was rejected and we accepted the alternative hypothesis which means that, duration of tendering significantly influence the effectiveness of tendering in the agency.

The researcher further sought to find out if ethical practices influence effectiveness in the tendering process in Central Region in Nyeri County. On favoritism, this study found out that 4% of the respondents rate favoritism in tendering process as very high, 11% high, 19% moderate, 8% low and 58% very low. This indicates that, though favoritism is low, it is present in tendering process.

On tribalism, 8% of the respondents rate tribalism in the tendering process as very high 19% moderate, 15% low and 58% very low. This indicates that tribalism though not high in tendering processes its present.

On political interference, 4% of the respondents said that politics affects the tendering process profoundly, 27% say averagely and 69% say below average. This shows that though politics is present in tendering process it is not so pronounced.

On aggregate, 4 % of respondents felt that unethical practices, that is tribalism, favoritism and political influence, are very high in tendering process, 5% felt are high, 22% felt are moderate, 31 % are low while 37 % felt are very low in the tendering process. This indicates that, though there is unethical practices in the agency, the prevalence of such practices are low.

This finding concurs partly with World Bank (2008) findings which noted that, an unethical practice in Public Procurement was also facilitated by lack of transparency in the system; the applicable procedures were invariably inaccessible. On what can be done to improve the Tendering process in, majority felt recruitment of professionals to handle procurement, synchronize procurement procedure to be installed and more training to be done to those who handle procurement and those involved in tendering process.

The study hypothesis two sought to test whether there is significant relationship between ethical practices in tendering and effectiveness of tendering in the agency. The calculated Pearson product Moment Correlation coefficient of -0.6517 at 3 degrees of freedom implies that, there is a strong negative correlation between ethical practices in tendering process and effectiveness of the tendering process. In addition, computed t-value of -1.4882 lies in the accepted area at 0.05 significant level. Therefore, the null hypothesis was accepted and we rejected the alternative hypothesis which means that, unethical practices in tendering do not significantly influence the effectiveness of tendering in the agency.

The researcher also sought to establish how training of employees influences effectiveness of the Tendering process in Central Region in Nyeri County. This study found out that, only 4% of the officers had attained a masters degree, 38% a bachelor’s degree, 23% a diploma and 35% o- level. This shows majority of officers levels of education is not adequate. On training, 4% of the respondents attend training regularly, 8% quarterly, 15% yearly and 73% have never been trained.Thisshowsmajorityofofficershaveneverbeentrainedontenderingprocess.Ontheeffectiveness of the training respondents who were trained felt that the training improved their performance. This concurs with Landale (2006), who found out that, training is the process of acquiring knowledge and skills by the Team who participate in the public tendering process for efficient and effective service delivery. On how training helped in tendering process in the organization, those trained said that, learning of the Public Procurement Act of regulating tendering and procurement as a whole has helped in learning rules and procedure of tendering.

The study sought to find out how record management influences effectiveness in tendering process. The finding of this study reveals that, record management is good in Enugu north, Nsukka and EZEAGU with 31% of the respondents’ rating accuracy and completeness of the record in the organization as very accurate and complete and 69% moderately accurate and complete. This finding tends to disagree with by the Association for Information and image (AIIM) that states that developing countries have several record management problems.

Lastly, the study sought to determine how ICT use influence effectiveness of the tendering process. This study found out that, 96% of the officers have computers in their office while only 4% did not have.

In terms of availability of ICT specialists, most of the departments have ICT specialists. 15% of the departments did not have IT specialist, 69% had 1-5 IT specialists, 8% had 6-10 and 8% had between 11-20 IT specialists. On usage of computers, 96% of the respondents use computers in stages of tendering while 4% did not. This shows that ICT is highly used in tendering process. Study hypothesis three sought to test whether there is significant influence of ICT use on effectiveness of tendering process.

The calculated Pearson product Moment Correlation coefficient of 0.9093 at 3 degrees of freedom implies that, there is a very strong positive correlation between use of ICT in tendering process and effectiveness of the tendering process. In addition, computed t-value of 3.7847 lies in the rejected area at 0.05 significant level. Therefore, the null hypothesis was rejected and we accepted the alternative hypothesis which means that, use of ICT in tendering significantly influence the effectiveness of tendering in the agency.


5.3 Conclusions of the Study

Based on the findings from the study, it’s concluded that, majority of officers at Ezeagu, Enugu north and Nsukka from Central region were male and majority of workers were from Enugu north. On terms of service, majority of the officers were on permanent and pensionable employment terms and majority of were aged 41 years and above implying the workforce was not young. In addition, majority of officers’ levels of education is not adequate as 35 percent had o-level and 23 percent diplomas. On remuneration, majority of the officers were not reasonably remunerated yet they were responsible for procurement of goods, services and works of higher value
Majority of officers felt the tendering processes were well managed and duration significantly influence the effectiveness of tendering process in Central region and favoritism, tribalism, politics are low, but are present in tendering process and unethical practices in tendering do not significantly influence the effectiveness of tendering in the agency.. In addition, sometimes Government tendering procedures were not followed.

Record management is good in Enugu north, Nsukka and Ezeagu.

On training, majority of officers have never been trained on tendering process. Respondents who were trained felt that the training improved their performance.

In terms of availability of ICT specialists, most of the departments have ICT specialists with 96% of the respondents using computers in stages of tendering. Therefore ICT is highly used in tendering in Central region and use of ICT in tendering significantly influence the effectiveness of tendering in the agency.


5.4 Recommendations

From the results of the study, the researcher makes the following recommendations to the management of Ezeagu, Enugu north and Nsukka.

  1. All the employees involved in tendering process should advance their level of education especially those with o-level and Diplomas as their highest education qualification. The Ministry of Roads, EZEAGU, Nsukka and Enugu north heads should ensure this is done in order to improve effectiveness and efficiency in tendering process,
  2. The Government should improve remuneration of all staff involved in tendering process since they handle large sums of tenders of very high Value to avoid being corrupt,
  3. Ezeagu, Enugu north and Nsukka management should ensure that procurement policies and regulations are adhered to,
  4. The agency should train all the procurement staff and persons involved in the tendering process in order to provide them with skills and knowledge of procurement process.
  5. Lastly payments for Sale of tenders should be done online to add more value in the Tendering process this will greatly improve efficiency and effectiveness of tendering process.

Evaluation Of The Use Of Tenders In A Public Sector Procurement


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Evaluation Of The Use Of Tenders In A Public Sector Procurement


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Frequently Asked Questions


Does tender advertising enhance value for money in public procurement?

The analysis of data was mainly based on descriptive and inferential statistics. The findings show that tender advertising, tender evaluation, tender award, and tender negotiation are significant factors that enhance value for money in public procurement.

Which factors enhance value for money in public procurement?

The findings show that tender advertising, tender evaluation, tender award, and tender negotiation are significant factors that enhance value for money in public procurement. Conversely, the tendering document was not a significant factor to predict the value for money.

Does the tendering document predict value for money in Tanzania?

Conversely, the tendering document was not a significant factor to predict the value for money. Procuring entities in Tanzania need to put more efforts to administer properly tender advertising, tender evaluation, tender award, and tender negotiation to achieve the best value for money.

Do public buyers use discriminatory criteria in tendering procedures?

In the selection phase, public buyers must avoid the use of discriminatory criteria in their tendering procedures, to assure fairness and equal treatment of bidders (Bergman et al., 2013; De Carolis, 2014).

Is competitive tendering an effective tool in public sector procurement?

ATLANTIC INTERNATIONAL UNIVERSITY – SCHOOL OF BUSINESS AND ECONOMICS These questionnaires were designed solely to help undertake a research into the topic: competitive tendering, an effective tool in ensuring value for money in public sector procurement.

How can we achieve value for money in the tendering process?

Preventing waste and fostering competition, transparency and accountability during the tendering process are key conditions to achieving value for money.

What is value for money in public procurement?

As such, value for money does not necessarily mean that a tender must be awarded to the lowest tenderer (Civil Service College, 2010). Value for money in public procurement is achieved through pursuing the lowest whole of life cost, clearly defining relevant benefits and delivering on time.

Should public procurement be guided by principles?

This notion is fully supported by Walker et al, who states that public procurement must be guided by principles of transparency, accountability, and achieving value for money for citizens and tax payers1.

How can we improve value for money in public procurement?

Measures to enhance value for money in public procurement From table 4.6 above, the highest ranked measure was ‘Pre-disclose the selection criteria to bidders and to forbid the procurement entity to change them once the process has started’ with a mean value of 3.85 and a standard deviation of 0.863.

What are the factors affecting the performance of Public Procurement?

Quality, timeliness, and appropriateness of the procured inputs largely determine whether the public investment will succeed. Efficient public procurement system is therefore vital for achieving Value for Money and hence accelerated growth and development of the country.

What is value for money in procurement?

Value for money is therefore not a choice of goods or services which is based on the lowest bid price but a choice based on the whole life costs of the project or service. Given the limited resources available to government, ensuring VFM in procurement is key to ensuring the optimum utilization of scarce budgetary resources.

Why Procurement and purchasing functions are important for businesses?

This article highlights the importance of having an effective procurement or purchasing functions within the business, and how they will optimize the supply chain performance, and in turn, elevate the position of business and push them to stay ahead of the curve.

How are tender documents processed in the assembly industry?

Thus tender documents are processed manually. According to the findings it was also realized that the assembly is able to get value for the money it spends as the competitive tendering methods are used.

Does competitive tendering ensure value for money in public sector procurement?

Global Journal of Management Studies and Re se arches, 1 (4) 2014 SUMMARY OF FINDINGS The entire research focused on Competitive Tendering, An effective tool in ensuring value for money in public sector procurement of which the Ahanta West District Assembly was the study area.

What are the basic principles of tendering?

It’s comprehensible that tendering is based on the principles of competition, fairness and accountability, transparency and openness and probity since the whole process is aimed at ensuring best value for money and not necessarily the lowest price.

Does the organization use open tendering?

More so it was revealed that the organization does not have permanent suppliers which confirm the point that they use open tendering. In addition, it was found out that tender documents are most often obtained from the organization’s premises. Thus tender documents are processed manually.

When can you exclude a tenderer from the procurement process?

You can only exclude a tenderer from the procurement process where there are no other means to ensure compliance i.e. where a conflict cannot be suitably managed. You have a duty to treat all tenderers equally. 7.

Does tender advertising enhance value for money in public procurement?

The analysis of data was mainly based on descriptive and inferential statistics. The findings show that tender advertising, tender evaluation, tender award, and tender negotiation are significant factors that enhance value for money in public procurement.

What are the different types of tendering procedures?

Types of public tendering procedures. The standard way of awarding contracts is through competitive tendering. Within competitive tendering there are different types of public procurement procedures. Open procedure. In an open procedure anyone may submit a full tender. This procedure is used most frequently. Restricted procedure

What is the minimum number of bidders for a tender?

In limiting the number of bidders who will proceed through to the tender stage, the minimum number of qualified bidders should be as follows: Restricted Procedure – where an above threshold advert is required, the minimum number of tenderers should be five. In other cases three or 4 may be regarded as sufficient; 

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