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47 views60 pagesGovernment Procurement
introduction to public procurement
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berhe2121Copyright
© © All Rights Reserved
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/ 60
Ethiopian Defence University
College of Management
es
Senavrs anens wince:
O° ETHIOPIAN DEFENCE UNIVERSITY
S
¢
Department of Logistics and Supply Chain Management
Instructor Information
Name: Berhe G.
Office Location: Research and Community Service
Phone NO.: +251-967-261091
Email: betheg21@gmail.com D
€ Government Procurement
* Course Title : Government Procurement
* Course code: LSCM-M 2081 ra
* Credit Hours: 2 a?
Course Content oe
+ Chapter One: Introduction to Government Procurement
* Chapter Two: Govestiment Purchasing Planning
+ Chapter Three: Ajproved Methods of Ethiopian Government
o Purchasing
* Chapter fale: Tender Document Preparation and Bidding Process
Assessment
* Quiz 1: 10% " Group Project: 15 9%
= Mid Exam : 25% * Final Exam: 40 %
* Individual Assignment : 10 % Government Procurement
Chapter ‘One
Introduction to Government Procurement
Outline: sf
1, Introduction
11. Nature of Gevénment Purchasing
12, Principles of Government Purchasing
13. Governfient Purchasing vs. Industrial Purchasing
1.4. Genéral Problems in Government Purchasing Government Procurement
Chapter Two
Government Procurement Planning
Outline:
24. Procurement Cyelé' ‘ee Procurement Plan
2.2. Planning the Procurement
Contents. of the Procurement Plan
ude aoe sin government purchasing planning A
© Government Procurement
Chapter Three
oP
Approved methods of Ethiopian Government Purchasing
Outline:
3a. Introduction to Tendering”
3.2. Considerations in Goyéinment Purchasing
3.3. Alternative Method of Government Purchasing: Conditions
and Proceduress*
3.3.1. Open Tefidering: fe
Competitive Bidding
3.3.2. Two-stage Tendering
3.3.3. Request for Proposals
3.3.4. Restricted Tendering
3.3.5. Request for Quotations
3.3.6. Direct Contracting / Direct Purchasing
3.3.7. Single Source Procurement 5 hy ¥
@ covernment Procurement
Chapter Four
Tender Document Preparation and Bidding Process
Outline: s
‘4.1. Preparation of a Bidding Documents\*
4.2, Purpose of the Standard Bidding Document
43. When to Use the Standard Bidding Document for Goods
44, Structure and Contents of'the Standard Bidding Document
4.5. A Winning Bid Documient
46. BidFormats
4.7. Payment for Bid’Documents
4.8. Summary ofthe Bidding Process
4.8.1. Selection of Bidders
4.8.2. Bid Announcement/Invitation for Bid
Sell of Bidding Document
Bid Preparation and Submission
Bidding Period and Bid Receipts
Bid Opening
Bid Evaluation
.8.8. Bid Acceptance and Contract Award and Purchase Order Placement Government Procurement
Chapter One
ss
Introduction to Government Procurement
Outline: ev
1, Introduction &
11, Nature of Govérnment Purchasing
1.2. Principles.of Government Purchasing
1.3. Goverafient Purchasing vs. Industrial Purchasing
1.4. Genéral Problems in Government Purchasing GP
Introduction
* What is procurement?
Procurement is obtaining goods, works, consultancy or other services
through purchasing, hiring or obtaining by any other contractual means.
Procurement is a critical business progeSs that enables an organization to
secure a wide range of externally prbvided resource (and value) efficiently
isposal.
>
Efficient procurement practiges, in both private and public, play a key role
in modern economies asithey ensure reduction of wasteful activities.
and effectively, from need to
Procurement is thesprocess of acquisition of goods, materials, works or
services of the,xight quality in the right quantity from the right source
delivered to gh right place at the right time and right price.
Public procurement is a process where by a government obtains goods,
works and services that demand simple to complex procedures and legal
systems at an optimum cost and effective operations so as to deliver world
class public social services.
Government procurement refers to the process by which government
agencies purchase goods, services, or works from external sources GP Procurement and Purchasing
Purchasing is a reactive buying where as Procurement is a proactive buying.
Procurement is a strategic function that involves a comprehensive approach to
acquiring goods and services, while purclidsing is a tactical function that focuses
on the operational aspects of buying®ased on immediate requirements.
Both procurement and purchasing are essential components of the supply chain
management process, going together to ensure that organizations obtain the
goods and services,thi8y need efficiently and effectively.
Ss GP
Key Differences of Purchasing and Procurement
Purchasing Procurement
_|* Focuses on the transactional aspect of |* Encompasses the entire process of acquiring
a buying goods or services, including issuing | goods, services, or works, including strategic
3 purchase orders and managing supplier | iffanning, sourcing, negotiation, and supplier
transactions. management.
+ Tactical in nature and focuses ongthe|* Strategic in nature and involves long-term
§ operational aspects of buying gosds or| planning, supplier relationship management,
& services based on immediate ,siteds and| risk assessment, and cost optimization.
Zz requirements. eo + Strategic emphasis is key variable
+__Emphasis on today is key-Wariable
3 + Aims to acquire gogds or services at the |* Aims to optimize costs, improve quality,
ae best possible prig# quality, and delivery| ensure timely delivery, manage tisks, and
3 terms to fulfill mediate requirements. enhance supplier relationships to meet
8 q! ppl ips
= S organizational goals.
O |= Price is key variable + Total cost and value are key variables
@ |* Focuses on managing day-to-day |+ Emphasizes building and maintaining
B44 interactions with suppliers to ensure timely | strategic relationships with suppliers to
a8 order fulfillment and transactional | achieve long-term value and mutual benefit.
oe efficiency. + Relationship b/n buyer and supplier is Win-
O73 |+ R/ship b/n buyer & supplier is Win- Lose | Win
a + Focuses on the transactional aspects of |+ Focuses on the entire supply chain, including
2 buying goods or services, such as| supplier selection, negotiation, contract
3 requisition processing, order placement,| management, and performance evaluation.
and invoice reconciliation. GP Government Vs.
Industrial Purchasing
Government purchasing and industrial purchasing are two
distinct procurement processes with different goals, stakeholders,
and regulations. PF
Government Purchasing is characterized by stringent regulations,
transparency, and accountability. ensure the responsible use of public
funds, while Industrial Purchasitig is more focused on meeting the needs of
es
private businesses and industries i in a cost-effective and efficient manner.
&
* There are basic difference b/n government and industrial buying.
1. Purpose of piocurement
2. Policy difference
3. Priority difference
4. Transparency difference
5. Financial administration difference
6. Attitude about suppliers (domestic preference)
7. Interaction with suppliers GP Government Vs. Industrial Purchasing
3
The primary purpose of public sector | In the private sector, procurement
Purpose of | Procurement is to acquire goods, seryices, | aims to support _ business
pe end works) to) meet the of| operations, minimize costs, and
government agencies and deljvtr public} maximize value for_—_the
services efficiently and effeetively. organization.
Public procurement pdlicies are often| Procurement policies are driven
Policy | governed by legal frameworks that | by business objectives, _cost-
; emphasize transparency, accountability, | efficiency, and the need to
Difference | ong complias ith public procurement | maintain competitiveness in the
regulation’ market.
Public? procurement often prioritizes | Procurement priorities are more
Priority factors such as transparency, fairness, | focused on achieving cost savings,
. value for money, and compliance with | quality products or services, and
LUC meeting the needs of the business.
Transparency | Transparency is a critical aspect of public] While transparency is also
Difference |sector procurement to _ensure| important in the private sector,
accountability, prevent corruption, and|the level of disclosure and
maintain public trust in the procurement | reporting requirements may be
process. different and driven more by
internal business considerati GP Government Vs. Industrial Purchasing
with Suppliers
formalized, governed by procurement
rules and regulations, and focused on
compliance with public
requirements.
procurement
Financial | Public sector procurement involves | Financial administration in the private
Administration | complex financial administration sector focuses on optimizing costs,
Difference | processes to ensure compliance wih] managing budgets, and achieving financial
budgetary constraints, _udit | targets to support business operations and
requirements, and Public, thancial profitability.
management standards.
+ Funded by taxes money or
government budgets:
Attitude about | Public procuremefit may involve policies | In the private sector, the focus is often on
Suppliers | that prioritige domestic suppliers to | selecting suppliers based on factors such as
(Domestic | support industries, create jobs, and | quality, price, reliability, and innovation,
Preference) _| stimulat®economic growth. regardless of their geographic location.
Interaction | Interactions with suppliers are often | Interactions with suppliers in the private
sector may be more flexible, relationship-
driven, and focused long-term
partnerships to achieve mutual business
goals and objectives.
Stakeholders
Involves government agencies, public
institutions, and suppliers who fulfill
government contracts
Involves private companies,
manufacturers, distributors, and suppliers
who provide goods and services to meet
business needs. GP |
Introduction to Public Procurement
Public procurement is a fundamental process through which governments and public
sector organizations acquire goods, services, and works from external suppliers to
fulfill cheir operational needs and deliver public services.
The term government purchasing is synonymous used with the terms government
procurement. ss
Meaning os
s
“Public procurement” is the x pbcess of the acquisition, usually by means of a
contractual arrangement affét public competition, of goods, services, works and
other supplies by the public service
Government procyréinent is the formal process through which official
government agenéfes obtain goods and services, including construction services
and public w
Government procurement is also the process by which a government obtains the
use of or acquires goods and services or any combination thereof, for
governmental purposes and not with a view to commercial sale or resale of use
in the production or supply of goods or services for commercial sale or resale.
“Public procurement” is a practice of acquiring goods and services by using
public funds through applying government legislatives.
The Ethiopian proclamation No. 649/209 defined public procurement as
procurement made by a public body using public fund. 4 GP_ Introduction to Public Procurement
It is a critical function that involves following specific regulations, guidelines,
and procedures to ensure transparency, fairness, and efficiency in the
purchasing process.
+ It involves a series of steps from id
contracts and managing supplier relatighiships.
+ Effective public procurement is“essential for ensuring transparency,
§
accountability, value for money, and the efficient allocation of public
of
of
oe
* Overall, public progerement plays a critical role in the functioning of
governments and ptiblic sector organizations, impacting the delivery of public
services, infrastfucture development, and economic growth.
2
ing requirements to awarding
resources.
+ By upholding best practices and principles, public procurement can contribute
to good governance, accountability, and the effective use of public resources
for the benefit of society. GP Introduction to Public Procurement
+ Public Procurements undertaken by Public bodies using Public funds,
except when a specific waiver is issued by the ministry of finance and
economic corporation in the interest sf National Security or National
Defense, concerning the use of the Proclamation and Directive.
+ “Public body or Procuring Entity" means any public body, which is partly or
wholly financed by Federah°Government budget, like higher education
institutions and public institutions.
oe
+ “Public fund” meafis any monetary resource appropriated to a public body
from the Fedesat Government treasury or aid grants and credits put at the
disposal of the public bodies by foreign donors through the Federal
Government or internal revenue of the public body. (GP } Introduction to Public Procurement
Public Body Public Fund
+ A public body refers to an organization or| § |* A public fund refers to a pool of money or
entity that is established by the| & | financial resources that are controlled or
government to perform specific functions | & |.\“managed by the government or a public
or services on behalf of the public. Ai} _ entity for specific purposes.
+ Public bodies can vary widely in their scope], |+ Public funds are typically collected from
and responsibilities, such as regulatory | 3 taxes, fees, or other sources and are
agencies, public’ services progiders,| &+ | alloewed to finance public services,
government departments, or (Statutory é infrastructure projects, social welfare
corporations S programs, or other government initiatives
* Public bodies are typiéally owned or + Public funds are managed according to
controlled by thes\government and|{& | budgetary regulations, financial laws, and
J | government policies to ensure transparency
operate with public funds.
a
and accountability in their use.
Public bodies are accountable to the
+ Public funds are used to support public
Examples| Accountability |Ownership| Functions | Definition.
government, the public, or specific services, infrastructure development,
regulatory bodies depending on their| | education, healthcare, social security, and
mandate > | other public welfare programs.
* Government ministries, regulatory * Government budgets, pension funds,
commissions, public schools, and public
hospitals
Example
sovereign wealth funds, and funds dedicated
to specific public projects or initiatives.
1 _GP Why we study Public Procurement
+ In the European Union (EU) over 250,000 public organizations spend around 2
trillion ¢ annually, which is about 149 of GDP, procuring works, supplies, and
services. Also, in countries outside the EU, around rave of the GDP is spent by
public organizations.
+ Expenditure on public procurement take pits share from the annual Government
budget; &
gets cS
+ 649% of the Annual budget, 97
+ 14% of the GDP — »*
The difficulty of sourcing fuiids, the susceptibility of funds to misuse and the size of
government spending mike i important.
Public procurementc&&penditure forms a significant part of the Government budget
and constitutes, ¥ignificant investment.
Those investments, both in physical infrastructure and in strengthened institutional
and human capacities, lay foundations for national development.
In procurement terms, those inputs procured by public entity are generally grouped
into three categories types as follows.
+ Goods
Works and
+ Services (Consultancy and non-Consultancy service). GP Definitions
* Goods
+ All items, supplies, materials, equipment and furniture, computer, IT and
telecommunications equipment; software, office supplies; household appliances
and furniture; goods and equipment needed in the project implementation
(e.g,, medical equipment and supplies, blaiikets, tents, and materials for construction,
printed materials, and other similar eqitipment and materials).
+ Works s
+ Goods are tangible progsicts that are produced to satisfy the needs and
wants of consumers,
+ Infrastructure proje¢ts to construct, rehabilitate, demolish, repair, restore, or
maintain buildings, roads and bridges, etc., or civil works components of
informatiorftechnology projects (e.g. building data centers), irrigation, flood
control and drainage, water supply, sanitation, school buildings, etc.
* Services
+ Services are intangible products that are provided to consumers in
exchange for payment.
* They include a wide range of activities such as healthcare, education,
banking, transportation, etc.
Intellectual and non-intellectual services not covered under goods and works: (GP ] Importance of Public Procurement
Expenditure on public procurement take the lion share from the annual Government
budget;
+ 6490 of the Annual budget,
* 149 of the GDP sf
Support the country’s economic developmesit by ensuring economy, efficiency and
effectiveness in the execution of public pgoturement,
It serves as a Government Policy Instfument in terms of encouraging local producers
and small and micro-enterprises
* In Addition It helps: oe
To enhance the capacityof Local producers, suppliers, contractors and consultants
+ To attract Foreign Birect Investment
* To Enhance Geol governance
+ To build Trt between Government and Donors and increase the flow of Official
Development Assistance (ODA) through Bilateral and Multilateral Channels
To Create a conducive environment for various partnership arrangements between the
Government and the private Sector
To Reduce Trade and non Trade Barriers with in the framework of enhancing the
competition policy
+ As one of the Government Policy instrument to protect the environment by
encouraging the purchase of environment friendly goods only GP Objectives of Public Procurement
* To award timely and cost-effective contracts to qualified contractors,
suppliers and service providers.
* To support government and public sexyices operations,
* To ensure that works, goods, and services needed by a public body are
procured with due attention to. e¢onomy and efficiency.
+ To ensure that the funds ase used for the planned works, goods, and
eS
services x
* To provide equal oppartunity for all potential bidders and consultants
to compete for a gotitract.
+ To encourage development of domestic contractors and manufacturers.
* To ensure that the procurement process is transparent
* Government procurement plays a vital role in the efficient functioning of
public services by ensuring that government agencies obtain goods and
services in a cost-effective and transparent manner.
+ By following established procurement procedures and regulations,
governments can promote competition, support economic development, and
uphold public trust in the expenditure of public funds. 2 GP
Public Vs Private Sector Procurement
+ Public and private sector procurement have some key differences due to their
distinct objectives, priorities, and operating environments.
+ Public Sector Procurement: Transparency & Accountability, Legal & Regulatory
Framework, Public Interest, Bureaucracy,
Profits
* Private Sector Procurement:
‘akeholder Involvement
entation, Competitive Advantage,
Flexibility, Risk Appetite, Supplier Relationships
* Both public and private sector procifement share common goals such as obtaining
goods and services efficiently,
Private Procurement™ Public Procurement
+ Private entities may or x ot seek social|* Public procurement focused primarily on a
benefit; however, it jashot their primary
business objective, ©
* Complies primiily with
commercial law with respect to the formation
of contracts, but their methods of
procurement are governed by company policy.
contract or
social benefit while private sector
procurement is profit center.
+ The two main reasons for acquiring goods
and services are:
1. For supporting government operations
2. To provide public services
+ Private sector procurement is funded by
owners or shareholders of the company
+ Procurement practitioners answer only to
management, and are responsible for their
actions.
= Funds used in public procurement are
primarily from taxes and/or grants and loans.
+ Public sector procurement practitioners are
public servants and are accountable for what
they do or fail to do when managing public
funds. GP | The similarity and difference between Public Vs Private purchasing
Similarity b/n Gov't or public and
Private Purchase
The difference in Government and
psivate purchasing are based on:
Objective is to identify series of needed
material and to acquire these item where
needed as economical as possible. ss
Policy and procedure must conform to tend
business practice.
gw and
Purchase utilizes professional
model method.
Both are concerned with byging the six right .
The primary objective” is to obtain the
maximum value fog @ich dollar spent.
@o? Size of purchasing
S + Legal restriction
* Solicitation of vendors
+ Security
+ Regulation
Source of fund ( GP Nature of Government Procurement (GP)
The nature of government procurement is characterized by its focus on
transparency, public interest, competition, and compliance with regulations
to ensure the efficient and effective use of public funds.
The nature of gov't procurement is chagatterized by several key aspects:
Regulation and Compliance: s
+ GP is subject to strict regulations and guidelines to ensure transparency,
fairness, and accountability. itt the procurement process.
+ "These regulations oftén include procedures for competitive bidding,
evaluation criteriagind rules to prevent corruption and favoritism.
Public Interest: 6
+ GPis conduéted with the public interest in mind.
+ Public fufids are used to procure goods and services that benefit the
community, such as infrastructure projects, healthcare services, and
public utilities.
Transparency:
+ GP processes are designed to be transparent to the public.
+ This transparency helps ensure that the procurement process is fair,
competitive, and free from corruption. ( GP Nature of Government Procurement (GP)
4
Competition:
+ GP often involves competitive bidding processes where multiple
suppliers or contractors compete to win, the contract.
+ This competition helps drive down costs and ensures that the
government receives value for motley.
Social and Environmental ConsidefStions:
* GP may also consider social and environmental factors in the decision-
making process. s
+ Governments may prioritize suppliers who meet certain social
responsibility criteria or have environmentally friendly practices.
Long-Term RelagiGnships:
+ GP oftenctivolves long-term relationships with suppliers or contractors,
especially for large projects or ongoing services.
+ Building strong partnerships with suppliers can help ensure the quality
and efficiency of government procurement.
Risk Management:
* GP involves managing various risks, such as financial risks, legal risks,
and risks related to the quality and timeliness of goods and services.
+ Government agencies must carefully assess and mitigate these risks to
ensure successful procurement outcomes. GP The principles of public procurement
+ According to the proclamation (2009) and directive (zo10), any authority and
execution of procurement must comply with the following principles:
+ Government purchasing is based on the four principles of:
1. Achieve maximum value co money (Economy, Efficiency, and
Effectiveness) o
o
2. Fairness or Non Djgérimination
oe
3 Transparency
‘A Accountability and Ethical Standards
5. Domestic Preference
* For procurement of other products 15%,
* For construction and consultancy services 7.5%
For drugs or pharmaceutical products or medical equipment's 25%.
+ For small and micro enterprises 3% GP The principles of public procurement
1. Achieve maximum value for money (Economy, Efficiency, and
Effectiveness) .
we
* Value implies: Right Price, Right Quillity, Right Time, Right Place, and
Right Quantity. &
+ Value for money refers to getting the desired outcomes at the best possible
ptice. This does not necessarily mean choosing the cheapest price. For
complex purchases, value may imply more than just price, for example, since
quality issues also need to be addressed.
* It means the buyer will weight up the benefits of the purchase against the
cost of the purchase. The ultimate purpose of sound procurement is to obtain
maximum value for money. GP The principles of public procurement
Moreover, lowest initial price may not equate to lowest cost over the
operating life of the item procured. But the basic point is the same: the
ultimate purpose of sound procurement is,to obtain maximum value for
money. s
When assessing value for money the gever will weigh up the benefits of the
purchase against the cost of the pure
Factors that the buyer may consider ae assessing value for money :
ea
The wider
benefits to the state
*] Running Costs
RS
&
Fitness for purpose Warranty
Quality Assurance Strategic
Partnerships
Advantages of =
buying locally Environmental
Considerations
Capacity Energy Disposal
of Supplier | | Conservation || Values 28 GP
The principles of public procurement
2. Fairness: Good procurement is non-discriminatory, impartial, consistent, and
therefore reliable.
°
+ It offers equal opportunity for all interested contractors, suppliers and
consultants by providing a level yplaying field on which to compete and
thereby, directly expands the abl
getting value for money. >
It provides open and efféétive competition by
+ Treating all suppliers consistently and equitability
+ Avoiding biased specifications
. Adequately testing the market
+ Using‘transparent and open purchasing process
3. Transparency:
lic body’s options and opportunities for
+ Good procurement establishes and then maintains rules and procedures
that are accessible, predictable and unambiguous.
It should be fair and seen to be fair. GP The principles of public procurement
4
Accountability and Ethical Standards: Good procurement holds its
practitioners and other officers responsible for enforcing and obeying the
oO
rules. It makes them subject to challegg and to sanction, if appropriate, for
neglecting or bending those rules. i
Accountability is a hey aduemen to individual and institutional
probity, a key decéirent to collusion and corruption, and a key
prerequisite fogocuement credibility.
+ All p@Sturement officers and other staff should adhere to the
professional ethical code.
Procurement Code of Ethic:
: It is a serious breach of the public trust to
subvert the public procurement process by directing procurement to
certain favored vendors, or to tamper with the competitive bidding
process, whether it’s done for kickbacks, friendship or any other reason GP The principles of public procurement
Domestic Preference in Procurement:
* Domestic preference, also known as local preference or Buy American
policies, is a procurement strategy employed, by governments to prioritize the
purchase of goods, services, or works-iroduced or provided by domestic
suppliers or within the country's bordel’.
* This policy is often implementgd to support local industries, stimulate
economic growth, create jobs, arid ensure national security interests.
=
Domestic preference &
Ss
+ In addition to 39 domestic preference a letter of guarantee written by a competent body
organizing and overseéiiig small and micro enterprises shall be accepted
* Bid security, iS
+ Performance security
+ Advance payment guarantee
+ Obtain bidding documents free of fee
+ The preference to be granted to drugs, medical equipments or other products shall be
effective where it is certified by a Competent/certified/ auditor that no less than 3596 of the
total value of such products is added in Ethiopia.
a GP Summary of the principles of public procurement
+ Achieve maximum value for money in procurement. i.e. insure economy,
efficiency and effectiveness.
+ No Candidate Shall be discriminated,or excluded from participating in
public procurement on the ground of nationality or other reasons which
are not related to the evaluatign’ criteria except in accordance with the
rule of preference provided inthe proclamation
+ Support the country’s eéSnomic development by ensuring economy,
efficiency and effectiyéhiess in the execution of public procurement
* Any criteria applied in making procurement decisions and decisions
taken on each grocurement must be made transparent to all concerned
parties.
+ Ensure accountability for decisions made and measures taken in the
execution of public procurement.
+ Encourage local producers, companies and small and micro-enterprises
which support the national economy through the application of
preferential treatment granted by the Proclamation.
32 GP _ General Problems in Government Purchasing
+ Government purchasing, despite its importance in acquiring goods and services for public use,
faces various challenges and problems.
Size of Purchase : Large purchases can intimidate smaller suppliers and discourage them from
participating in the bidding process, leading to limigéd competition. This can result in higher
prices and reduced quality due to lack of competitive pressure.
+ Legal Restrictions (Budget and Regulations)«Budget constraints and complex regulations can
create inefficiencies in the procurement®process. Strict budget limitations may limit the
government's ability to acquire thebest goods or services, while overly burdensome
regulations can slow down the progéss and increase costs.
* Security and Open Informatigal Inadequate security measures and open access to sensitive
information can compromige the integrity of the procurement process. Ensuring the
confidentiality of informition is crucial to prevent leaks and maii
* Diffusion of Authosify + Ambiguity in deci
delays in the prociirement process. Clearly defining roles and responsibilities helps streamline
decision-making and prevent misunderstandings.
ain fair competition.
making authority can lead to confusion and
Government Power (Rule and Monopoly): Government dominance i
create monopolies, limiting competition and potentially leading to ineffi
certain sectors can
and inflated
prices. Ensuring fair competition and preventing monopolistic practices is essential for
efficient procurement.
Procedural Detail and Supplier Irritation: Overly detailed procedures can frustrate suppliers,
leading to reluctance to participate in government tenders. Complex procedures can increase
costs for both suppliers and the government and result in longer procurement cycles.
33 (GP ] General Problems in Government Purchasing
* Scope of Application
* Public procurement & property administration Proclamation no 649/2009
applies to all Federal Public Procurement’.
+ That means the proclamation séstricted to all public institution in
which partly or fully fundedby government budget
+ Regional governments arefit enforced to implement the federal
procurement proclamation”
+ The threshold set on, sb8 proclamation isn't updated regularly
* Some other Challenged‘in government purchasing include:
+ Bureaucracy gid Red Tape
+ Lack of Traisparency and Inadequate Competition
+ Risk of Fraud and Mismanagement
+ Budget Constraints
+ Inadequate Planning
+ Supplier Performance Issues
+ Technology and Skills Gap
+ Sustainability and Ethics Concerns GP Some other Challenges in government purchasing include:
+ Bureaucracy and Red Taper
+ Complex procurement processes can lead to delays, inefficiencies, and increased costs.
+ Excessive regulations and paperwork can hinder the timely acquisition of goods and
services. e
+ Lack of Transparency: s
+ Lack of transparency in the procurement pidcess can result in corruption, favoritism, and
lack of accountability. sf
+ Non-transparent practices can updermine public trust in government procurement
: s
activities. SS
+ Inadequate Competitior &
+ Limited competition ingfidding processes can lead to inflated prices and lower quality
goods or services, 9%
+ Lack of competifién can hinder value for money and innovation in government
purchases. ¢
+ Risk of Fraud and Mismanagement:
+ Weak internal controls and oversight can create opportunities for fraud, kickbacks, and
mismanagement of public funds.
+ Inadequate monitoring and auditing may allow for irregularities and unethical practices
to occur.
+ Budget Constraints:
+ Limited budgetary resources can constrain the government's ability to procure necessary
goods and services,
+ Budget cuts or uncertain funding can impact the quality and quantity of purchases. ,. GP Some other Challenges in government purchasing include:
+ Inadequate Planning:
+ Poor planning and forecasting of procurement needs can lead to inefficiencies, delays,
and last-minute purchases.
+ Lack of coordination between departments gan result in redundant purchases or
underutilization of resources. s
+ Supplier Performance Issues: se
+ Non-compliance with contract terms{delays in delivery, or substandard quality by
suppliers can disrupt government gpérations,
+ Inadequate supplier vetting andahonitoring can lead to unsatisfactory performance.
+ Technology and Skills Gap: 2
+ Outdated procurement gyStems and lack of technical expertise can hinder the adoption of
efficient procurementepractices.
+ Insufficient traiping of procurement staff on modern tools and best practices can limit
effectiveness,
+ Sustainability and Ethics Concerns:
+ Lack of consideration for environmental sustainability and ethical sourcing practices in
procurement decisions can have long-term negative impacts.
+ Failure to prioritize social responsibility and ethical standards can lead to reputational
damage.
+ Addressing these challenges requires reforms in procurement policies, increased
transparency, capacity building, enhanced oversight mechanisms, and the adoption of
best practices to promote efficient and effective government purchasing processes. (GP | General Feature of Public Procurement Legal Framework
The Legal Framework
* Public Procurement and Property Administration Proclamation No 649/2009 issued
in Sept.2009
* Public Procurement Directive issued in Name
+ They have been prepared in line withh UNCITRAL Model Law, The World
Bank Guideline and COMESA Regilation and Directive
+ Various Standard Bidding Document:
and Public Procurement Manyif have already been prepared and disseminated to
Procuring Entities. ee
+ The Public Procurement thd Property Administration Regulatory functions are now
administered by Publié Procurement and Property Administration Agency (PPPAA)
+ It is clearly stated the Proclamation and Directive that Open Bidding is a default
method in public Procurement.
+ Advertising the bid opportunities in widely circulated National News paper at least
once is a mandatory requirement by law
+ Procuring Entities can also advertise more than once and by using other Medias
(Television, Radio, Websites)
(Gah comaneicnsaisomeama
including SBD for Framework Agreement (GP ] The Legal framework for public Procurement
The legal framework for public procurement typically encompasses a set of
laws, regulations, directives, and guidelines that govern the procurement
process within a particular jurisdiction.»
Some of the key components of the Legal framework for public Procurement
t The Federal Government of, é