Influence of Procurement Process on the Performance of Public Entities (A Case Study of Nairobi County Government)

Abstract

Globally public procurement plays a pivotal role in the provision of goods, works and services in every economy. Enhancement in the performance of the public procurement system is key ingredient for ensuring value for money is achieved in order to safeguard public funds particularly in the implementation of economic pillars such as the “Big Four Agenda” and Vision 2030. This is the case because 60% of Kenyan budget is spent through procurement contracts. This study sought to investigate the influence of user departments on the performance of procurement process in Kenya. Specific objectives of the study included: To examine the role of specification writing on the performance of public entities in Kenya, To investigate the influence of procurement plan on the performance of public entities in Kenya, To assess the effect of tender evaluation on the performance of public entities in Kenya and To determine the influence of receiving procedure on the performance the public entities in Kenya. The study will be guided by the following theories: resource based theory, systems theory, Expectancy theory and institutional Theory. Descriptive research design as well as quantitative research design were adopted using both qualitative and quantitative approaches. The target population was 1000 employees of Nairobi County government. The study adopted stratified random sampling to select the sample size of 100 respondents. Data was collected using questionnaires and oral interview . Descriptive statistics was employed aided by statistical package for social sciences version 21 to compute the percentages. Inferential statistics using regression and correlation analysis was applied to assist in examining the relationship between variables. Introduction Procurement process begins when the user department identifies the need and forwards a purchase requisition to procurement department for items to be purchased. However, there must be a procurement plan in place to provide procedural guidelines and ensure strict adherence to the procurement budget .The user plays a key role in the procurement process starting from initiation of the need to purchase, preparation of specifications, involvement in opening of quotations, evaluation International Journal of Academic Research in Business and Social Sciences Vol. 1 0 , No. 4, April, 2020, E-ISSN: 2222-6990 © 2020 HRMARS 42 of bids, inspection and acceptance of the goods, works or services (PPDA, 2015). The effectiveness of the procurement process heavily depends on active participation and coordination between the user and procurement department (Arjan & Van, 2010). The public procurement process may be viewed as proceeding through various stages of progression. It has been argued (Walker, 2013) that public procurement reform is most likely to succeed when it proceeds through a competitive procurement process. There has to be support from top management as well as the user departments for the whole process to be successful. This is seen as necessary to enable establishment of a robust link in the process by ensuring critical elements which include: procurement plan, preparation of specifications, evaluation and receiving of supplies are accomplished in a timely and responsive manner. In the global frontier, procurement is governed by the international procurement law as provided by the Rome convention of 2015. The model Law on International public procurement contains procedures and principles aimed at achieving value for money and avoiding abuses in the procurement process. The process is aimed at promoting objectivity, fairness, public participation, competition, transparency and integrity (UNCITRAL, 2011). In Africa, the African Development Bank standard forms are used for goods sponsored by the Bank. In Rwanda the public procurement process is managed on real-time basis by Rwanda Public Procurement Authority (RPPA) which operates under the Ministry of Finance and Economic Planning. Rwanda has a decentralized public procurement system where by procuring entities have the power to conduct directly their public procurement process. The Public procurement system in Rwanda is governed by six fundamental principles namely: Transparency, Competition, Economy, Efficiency, Fairness and Accountability (RPPA, 2012). In Kenya, all the standard forms are used depending on the sponsor of the project, with the Public Procurement Oversight Authority (PPOA) standards being used mainly for public goods funded by the Kenya Government (PPOA, 2009). In Kenya, the public procurement is governed by the Public Procurement and Asset Disposal Act of 2015. The PPADA, 2015 abolished the tender committee and the procurement committee and gave power to the Accounting officers to award tenders on recommendation by the Head of Procurement Unit. The Act also among other issues introduced new procurement methods which were not envisaged in the previous Act of, 2005 and the regulations, 2006. Statement of the Problem Public entities are grappling with reduced funding from exchequer, escalating cost of operations and rampant loss of funds through procurement of goods and services (Juma,2018).Enhanced team work among functional departments in an organization can facilitate information sharing which is a critical tool for effective and efficient management of procurement process (Alex, 2011). This will ensure the procuring entity gets value for money and enhance competitive buying which is anchored on the PPADA (2015). According to Farringtong (2015), Synergy between Procurement and user department plays a critical role in enabling an organization to achieve value for money in the acquisition of goods, works and services. Failure by the procurement department to play their role as outlined by the procurement International Journal of Academic Research in Business and Social Sciences Vol. 1 0 , No. 4, April, 2020, E-ISSN: 2222-6990 © 2020 HRMARS 43 law can result in delays in the delivery of services or loss of public funds. This will result to end user dissatisfaction which may bring about persistent complaints from other stakeholders. According to Jorge (2015), the most common causes of inefficiency in public procurement process are: delays in preparation of technical specification, failure to start procurement process on time, delay in opening bids, delay in evaluation of bids and failure to award tenders on time. A number of interventions have been undertaken to address the inefficiencies in the procurement process, they include: capacity building of stakeholders, improved public-private partnerships, development of procurement policies, increased, transparency, accountability and fairness in the procurement process (Nyambariga, 2016). However, these interventions have not been able to address the problem of the lack of coordination between the user and procurement department on the enhancement of the procurement process among the public entities. Therefore, this study seeks to address the need with the view of ensuring the departments work in harmony in order to achieve the overall goals of public sector organizations. In many instances users prepare and submit inaccurate specifications to procurement department which are returned back to user for review thus causing delays in the process. In view of the above, the two departments must work in harmony in order to achieve the overall goals of the organization (Shirima, 2010). The main problems facing many public procuring entities is the lack of proper co-ordination between procurement and other functional departments, leading to delays, quality discrepancies, stock outs, high cost in the procurement of goods and this consequently affects the smooth running of an organization and loss of tax payers money. The functional departments departments often fail to share information affecting the procurement process leading to delays in decision making. This further erodes the efforts that are geared towards achieving value for money in the public procurement. Every purchasing function must satisfy the five fundamental rights of procurement which include: right quality, right quantity, right price, right place and right time. This can be achieve when there is adherence to specification from the user department. The main challenge facing public procuring entities in Kenya today is how to synchronize the objectives of procurement department with the corporate mission of public entities in order to fast track the whole process right from need identification, evaluation of bids, selection of suppliers, award of tenders, contract management/expediting, inspection, receiving and payment of suppliers (Schapper et al, 2012). In the light of the above, this study seeks to address the knowledge gap by investigating the influence of procurement process on the performance of public entities. General Objective The general objective of the study was to determine the influence of procurement process on the performance of public procuring entities in Kenya Specific Objectives The study was guided by the following specific objectives: To investigate the influence of procurement plan on the performance of public entities in Kenya To examine the role of specification writing on the performance of public entities in Kenya. To assess the effect of tendering process on the performance of public entities in Kenya. International Journal of Academic Research in Business and Social Sciences Vol. 1 0 , No. 4, April, 2020, E-ISSN: 2222-6990 © 2020 HRMARS 44 To determine the influence of Inspection and receiving procedure on the performance the public entities in Kenya. Research Questions The study was guided by the following questions: What role does procurement plan play on the performance of public entities in Kenya? What is the role of specification writing on the performance of public entities in What is the influence of tendering process on the performance of public entities in Kenya? Is there a