Transparency in Procurement

Vigilance Awareness Week Nov12 By Ayappan

Defining Procurement
Identifying what is needed; Determining who is the best person or organization to supply this need; and Ensuring what is needed is delivered to the right place, at the right time, for the best price and that all this is done in a fair and open manner

Procurement Cycle
Contract Administration Planning/Designing specifications

Payments

Pre-qualification

Grievance Redressal

Solicitation of Bids

Contract Award

Bids opening and Evaluation

Procurement Impact on the Company

Financial Impact: Unnecessarily high cost of purchases, burdening with financial obligations for purchases that are not needed and early repair costs to repair and maintain. Economic Impact: Burdening with operational, maintenance and debt servicing liability for /purchases and when capital investment levels decrease and threats to business operators. Environmental Impact: It includes bad choices made that have adverse environmental impact. Noncompliance with the countrys (or international) environmental standards, can have environmental or health risks or long-term adverse impact on the environment. Impact on Health and Human Safety: Damage can consist in human health and safety risks due to quality defects, environmentally unacceptable purchase or noncompliance with environmental or health standards. Impact on Innovation: Lack of competition leads to the neglect of innovation. Companies will not spend resources on innovation and innovative companies will feel less inclined to make the necessary investments if they cannot access markets . Erosion of Values: When people observe lack of concern for integrity, common good and corrupt behaviour is not being sanctioned; officials in the companyand economic operators easily reduce their own integrity standards, out of need and often out of greed. Erosion of Trust : When people observe that corrupt behaviour among company officials is not being sanctioned, they conclude quickly that company in general is not to be trusted and that cheating is morally acceptable. Damage to Honest Competitors: Corruption by corrupt bidders, if successful and not sanctioned, damages and possibly destroys the honest competitor and may well lead to job losses on the part of an economic operator who is better and more innovative. Serious Danger to Economic Development: If in the context of purchases , often projects are selected not on merit but by the amount of bribe payments made. Due to this a it may soon end up squandering investment opportunities and external development assistance and thus seriously retard the companys economic development

Good Principles in Procurement

Integrity: Integrity means that the procurement processes are honest and in compliance with the respective laws, that the best available, most suitable technical expertise is employed in a non-discriminatory manner. Transparency: Transparency means that laws, regulations, institutions, processes, plans and decisions are made accessible to the public at large or at least to public representatives so that processes and decisions can be monitored, reviewed, commented upon and influenced by the stakeholders, and decision makers can be held accountable for them. Accountability: Accountability means that governments, public and various other agencies acting on their behalf must be accountable for the correct and complete execution of their tasks and duties and for the decisions and actions being made in their area of responsibility. Fairness, Economy, and Efficiency: Contract award decisions should be fair and impartial. Public funds should not be used to provide favors to specific individuals or companies; standards and specifications must be non discriminatory; suppliers and contractors should be selected on the basis of their qualifications and the merit of their offers; there should be equal treatment of all in terms of deadlines, confidentiality, and so on.

Good Practices in Procurement

Policy Response: to and cover various procedures, laws and processes put in place Sound Legal and Institutional Framework: law applicable for procurement, regulations for contents of standard tender document, contacting authorities involved in evaluation, blacklisting and penal provisions Control Systems: adequate independent internal and external control and audit with a clear coordination of all control mechanisms such as internal audits, financial risk analysis, management control systems and performance audit and external financial audits. Complaints and Review Mechanisms: give companies the chance to protest in case of violations and grievance redressal methods and procedures Sanctions: Warning systems and effective sanctioning systems to effectively fight corruption Professionalism/Training: applicable rules, regulations, procedures, obligations, awareness raising on how to identify corruption risks, and means to enhance integrity and effectiveness e-Procurement : increases access to competition, transparency, efficiency and lowers costs

Procurement Monitoring
Integrity Pact and integrity clause: A set of obligations and rights that refrain governments and bidders from practicing any corrupt practices Public Hearing: procurement made are easily available for public scrutiny External Monitoring: Monitoring of procurement by civil society organisations that are external to the process, and Price Comparisons: Collection and publication of price information