The Impact Of The Use Of Tendering And Competitive Bidding In Public Sector Procurement (A Case Study Of Ministry Of Works, Imo State)

Project and Seminar Material for Purchasing and Supply (PS)

Abstract

The subject water of this study is the impact of the use of tendering and competitive bidding in the public sector procurement. A case study of ministry of works, Imo State, Owerri. Among the objectives in stated in chapter one of the study.

In other to attain to the objectives a research questions was constructed to enable the researcher collect relevant information in the subject matter. The researcher review related literature and some facts drawn from the research methodology, the population and size etc. Chapter four contains the researchers presentation and analysis of data.

Finally chapter five is about conclusion, summary and recommendation.

Table Of Content

Preliminary Page(s)

• Title page
• Approval page
• Dedication
• Acknowledgement
• Abstract

Chapter One

1.0 Introduction

• 1.1 Background of the study
• 1.2 Statement of the problem
• 1.3 Objective of the study
• 1.4 Research Question
• 1.5 Statement of the study
• 1.6 Significance of the study
• 1.7 Scope of the study
• 1.8 Limitation of the study
• 1.9 Definition of terms

Chapter Two

2.0 Literature Review

• 2.1 introduction
• 2.1.1 Meaning of tendering and competitive bidding
• 2.2 Method of tendering and competitive bidding
• 2.3 Public sector tendering procedures
• 2.4 Purchasing policies in the public sectors
• 2.5 General procedures of competitive
• 2.6 Tender document
• 2.7 Pr-qualification for tenders
• 2.8 Tenders board and tenders

Chapter Three

3.0 Research Design and Methodology

• 3.1 Introduction
• 3.2 Research design
• 3.3 Source/method of data collection
• 3.4 Population and sample size
• 3.5 Sample techniques
• 3.6 Validity and reliability of measuring instrument
• 3.7 Method of data analysis.

Chapter Four

4.0 Presentation and Analysis of Data

• 4.1 Introduction
• 4.2 Presentation of data
• 4.3 Analysis of data
• 4.4 Test of hypothesis
• 4.5 Interpretation of result

Chapter Five

5.0 Summary, Conclusion and Recommendation

• 5.1 Introduction
• 5.2 Summary of finding
• 5.3 Conclusion
• 5.4 Recommendation
• Reference
• Appendix

Chapter One

1.0 Introduction

1.1 Background Of The Study

The dictionary of purchasing and supply management defined tendering and competitive bidding as offers from tenderers 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 subsequent contract. (1979),

Harris and Ronald Caffer defined competitive bidding as an invitation by an organization (that is the client) to supplier to submit its quotation for a job or services required by the client organization the whose main aim is to determine the performance abilities of the supplier.

Tendering and competitive bidding 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.

Tendering is widely used in pubic sector to ensure observance of the principles of public accountability. It may also be used by private sector organization more especially in respect of construction and service contracts 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 and efficient of tendering and competitive bidding in improving public sector procurement.

1.2 Statement Of Problems

The problems of tendering and competitive bidding and its implications on public sector procurement which has been identified by many 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:

1. A great numbers of problems have bedeviled sector tendering which has great effect in the quality of contract entered by the public sector organization. The entire contract system has gone bad as a result of mis -management, corruption mis -application of rules and regulation set to be adhered to in contracting for goods and services.
2. 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 mess of our public sector tendering.
3. The out data nature of our financial regulation which guide the operations of 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.
4. 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 lowest 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 negotiation.

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 future 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 effort and other vital services.

1.3 Objective Of The Study

In most public establishment there is a wide misunderstanding of tendering and competitive bidding as a tool for public sector procurement.

1. To examine the use of tendering in improving the efficiency and effectiveness of public sector procurement.
2. To find out the reason why there is misunderstanding of competitive bidding.
3. To determine whether or not there is need for an independent unit to be created with trained and qualified professional to handle public sector procurement.
4. To examine the procedures and processes of tendering and contract awards and the skills of officers involved in public tendering and contract management.

1.4 Research Questions

Based on the project topic and objective of the research, the following questions were developed by the researcher.

1. Does tendering have a role to play in improving the efficiency and effectiveness of public sector procurement?
2. What qualifies a bidder to be invited to bid?
3. Has there been an instance where the lowest bidders are not offered the job.
4. Can the current tendering process or procedures as used by the public sector organization eliminate corruption and build accountability and transparency in the public sector?
5. Are the officers handling tendering in the public sector qualified?

1.5 Statement Of Hypothesis

Based on the research questions formulated the following hypothesis were formulated.

Hypothesis One

Ho: Tendering is not an effective tool in public sector procurement
Hi: Tendering is an effective tool in public sector procurement.

1.6 Significance Of The Study

The significance of this research work is to help the researcher to know the significance of this study inorder to discover whether there will be need for effective and efficient use of tendering and competitive bidding 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.

1. This research work will be beneficial to the ministry of works, the researcher himself and also to the public and private organization and under study.
2. Its create opportunity for unknown contractor or supplier to become known especially when it is successful.
3. It makes public accountability possible.
4. The research work allows keen competition which may produce cheaper tender figure.
5. It is an opportunity to get genuine tenders who are actually interested in the project.
6. Lastly, the research work is a pre-frequisite for the award of Higher National Diploma

1.7 Scope Of The Study

This study has been limited to the public sector organization. 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 department, 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 will give a great insight as what, takes place in other ministries departments, board, agencies etc.

1.8 Limitation Of The Study

In the process of conducting this study the researcher has confronted with the various problems, among them are

1. 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 limits the level of investigation, the research intended to carry out.
2. 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.
3. Lastly many officials changed 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 Definition Of Terms

Bid:

A quotation for a price or other conditions for contracts whether for payment or acceptance.

Lead Time:

This is the internal between when a need is perceived and the fulfillment or satisfaction of that need.

Tender:

It is the procedure through potential supplier 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 contact in competition with others.

Competitive Bidding:

This is one of the methods by which the right price can be obtained.

Quotation:

A form statement prepared by a contractor/supplier to his customer that includes cost estimates specification and other key information about an agreement between the two parties.

Government:

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

Evaluation:

These are primarily oriented towards evaluating the performance of managers and executives. Also a preliminary evaluation of the health care system.

Negotiation:

This is a process that involves communication, discussion ad bargaining with the objective of reaching an agreement.

Analysis:

The process of breaking components into separate parts or units in order to examine each unit and constitute critically.

Certificate:

Act of licensing by a document formular testing the fulfillment of conditions.

Procedure:

This is a system or pattern of performing a work, service, suppliers etc.

Performance Bonds:

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

Specification:

Lamar lee Jr and Donald N. Dobler in their book, purchasing and materials management defined speciation as detailed descriptions of the materials, parts and components used in making a product.

Sourcing:

The identification or development of suitable sources of supply and sourcing requires supply market research.

Sourcing Policy:

Polices are developed to guide the purchasing function in respect of who may be the major sources of organizational supplies.

Quality:

According to A.M Uzor (2009) the dictionary definition of quality is “fitness, merit, excellence”, this is the definition most people have in mind when they think of quality.

Price:

The amount of money for which a thing is offered sold or brought.

Price Analysis:

According to Obuseh Raphael (2009) price analysis is defined as the breaking down of a quoted price into its constituent elements )or component parts etc) for the purpose of determining the reasonableness or otherwise of the proposed charged.

Standardization:

The application of specifications and standardization play an important role in the quest for the “right” quality. Good specifications helping setting the functional conflicts of design, sales, manufacturing and purchasing.

Chapter Five

5.0 Summary, Conclusion And Recommendation

5.1 Introduction

This chapter deals with the summary of finding that is the summary of those major highlight of the study.
From chapter one to five, talks about the conclusion which is usually drawn from chapter two and four and finally recommendations which aims at solving the problems that warranted the study in the first instance.

5.2 Summary Finding

This research work takes a close look at the use of tendering and competitive bidding in public sector procurement.

1. At the beginning of this study, the chapter one of this research work presents the general introduction of the subject matter of the study, background, objective of the study, research question, statement of hypothesis, significance of the study, scope of the study, limitation of the study and definition of terms.
2. Chapter two of this work reviews related literatures and views of professional, especially in the areas that related to the subject matter of the study.
3. Chapter two examines the research design, source of data collection, population and sample size, sample techniques, data analysis and research instrument used by the researcher.
4. Chapter four furthermore, analyzed and presented various data gathered, the questionnaire was analyzed in simple percentages based on the response gotten from the respondents, and the hypothesis was tested using chi-square distribution.
5. Finally chapter five presents the researcher summary, conclusion and recommendation based on the findings made by the researcher in the course of this study.

5.3 Conclusion

Based on the findings, gotten from chapter four the following conclusion were drawn from chapter two and four.

1. A well managed tender and tendering will ensure fairness and transparency in the management of public sector contract.
2. Departments/units such as legal service purchasing and administration, finance, Engineering and personal play a vital roles if the objective of public sector tendering are to be achieved and the constant abandonment of contracts by contractors after the contract has been mobilized with reduced greatly, today the appointments to be tender committee is basically political consideration.
3. Tenders are the means through which the buyer obtains prices as well as supplier conditions to execute a purchase contract.
4. Tendering is widely used in the public sector to ensure observance of the principle of public accounted.
5. We also find out that apart from competitive bidding, there is another method that can be used by a buyer to get a fair price.
6. We also conclude that when normal competitive bidding by suppliers do not yield a good result, negotiation becomes the ultimate road to follow for a compromise.
7. The process that will ensure fairness in the management of contracts in the public sector are regarded and followed at all contracts, in most cases tendered before they are awarded for, therefore make the process of tendering very effective.
8. We also find out that the lowest price quoted tender that meets the entire requirement is recommend.

5.4 Recommendation

Based on the problems identified and conclusion drawn by the researcher in the course of carry as this research work.

The ministry should consider the following.

1. The ministry should make sure that the laid down rules and regulations are applied in its tendering and competitive bidding activities as this will ensure transparency accountability and reduce frequent abandonment of contracts after the contractors hand been mobilized.
2. The ministry should re-engineer the processes of tendering and competitive bidding. This is to in corporate into the processes monitory and evaluation elements that will ensure that the most competent contractor does not only with the contract but executed the state to earn creditably for the best of the tax payers.
3. Also there is need to standardize the process and the documentations, of tendering and competitive in the ministry in particular and in other public fairness to both potential and actual contractors of the ministry and the other hand reduces a situation in which contractors abandon project after the collection of millions of naira as mobilization fees.
4. Added to this, is the end to include clauses that will enable the government establishment (the ministry inclusion) to terminate, recover and take legal action for breach after any contractors who fails to perform according to standard or abandon project.
5. There is need to dis-emphasis political linage tribalism, Godfathers as the basis for appointment into the tender committee of the ministry as the current situation builds corruption and mis-management of public finance. Appointments should be based on part records of honesty, hard working, experience and passion of necessarily skills and education in contract management.
6. The ministry should avoid a supply that is prove to strike.
7. The ministry should be extremely careful when awarding contract to ensure that the contract will be awarded to the bidder who satisfied all requirement of the buyer.
8. On-receipt of quotations or tenders, the buyer should check them properly to make sure that what is contained there in the tender conform to the actual requirement of the ministry. Such cross checking should not be limited to the enquiry but against the initial request from the user department.
9. If there are differences between what is contained there in the tender and the requirement of the ministry, all the department concerned with in the organization should come together for discussions, corrections and adjustment or to dropt the supplier.
10. To ensure that accurate information of the suppliers tenders are obtained, the ministry should prepared a comparative summary sheet i.e, quotation/tenders comprise sheet which will show all the important aspects of the contract.

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