Monday, October 24, 2011

THE ROLE OF THE CIVIL SOCIETY IN PUBLIC-PRIVATE SECTOR PROCUREMENT

1.0     Background

Civil Society and its Role in procurement should avail an understanding of what civil society (CS) is and the relevance of its organizations (CSOs) in terms of their roles and functions (generally and in relation to proper procurement efforts. Specific issues may relate to advocacy (in the context of lobbying, networking, litigation, creating public awareness (e.g. investigative journalism, workshops, etc) and monitoring procurement processes in service delivery (in context of decentralization (e.g. procurement, use of funds, etc.)

Public procurement is one of the sectors most affected by corruption in Uganda. In the assessment of the country's Auditor General, procurement accounts for 70% of public spending, of which an estimated 20% is lost via corruption. The PPDA, IGG and USAID survey identifies the lack of effective reporting systems, poor record management by state organs, the weakness of the judiciary, the poor investigation of corruption cases, and the lack of effective systems to punish corrupt officials, as major factors contributing to the high prevalence of corruption in public procurement.


 

The Public Financial Management (PFM) reforms that have been carried out that culminated into the enactment and establishment of PPDA in 2003 have improved public procurement to a certain extent but have not minimized corruption and hence loss of colossal sums of money which is lost through collusion between the public officials and the contractors. To break this chain there is an urgent need to involve civil society in monitoring the procurement processes to ensure value for money. The biggest challenge is incorporating and institutionalizing third party monitoring by the civil society which is currently not clearly catered for in the procurement regulations.


 

1.1 What is civil society?

Civil society (CS) is a now commonplace phrase. The phrase has been regarded as describing the sum total of those persons, entities and organisations and networks that lie outside the formal state apparatus. It therefore refers to the individuals or groups or communities that seek to address, through expertise and networks, issues of common concern, including corruption.

Civil society (CS) and Civil Society organizations (CSOs) mark the involvement and participation of citizen in the affairs of society, including combating corruption. Public participation and empowerment of citizens is in fact envisaged under the constitutional framework, in Objectives IV and X of the Objectives and Directive Principles of State Policy under the 1995 Constitution.

CSOs have become significant actors in society in making demands on the state to act and in holding public officials accountable for actions. They act as intermediaries between the public and the state. CSOs include different kinds of organisations working to serve CS at community, district and national levels. They may be characterised by their legal status, the quality of their work, the nature of their membership, the scope of their geographical coverage as well as the composition, size and type of their governing bodies. The most visible CSOs are–

  1. Community Based Organisations (CBOs)
  2. Faith Based Organisations (FBOs)
  3. Non-Governmental Organisations (NGOs)


 

1.2 Legal and Policy Framework in which CSOs operate

The legal framework within which CSOs in Uganda operate constitutes of the 1995 Constitution and the Non-Governmental Organisations (Registration) Act. Firstly, the fundamental rights under Chapter IV of the Constitution apply to CSOs, particularly the freedom of association (in initial formation of the CSOs), freedom of expression (useful in advocacy role of CSOs) and right to participate in civic affairs of the country – these are guaranteed under article 29 (1)(a) and (e) and article 38 of the Constitution.


 

2.0    Effects of corruption on public procurement

Corruption – which is defined by TI as the abuse of entrusted power for private gain – derails efforts to achieve the Millennium Development Goals and to put the Social services sector on a sustainable financial path.


 

Public procurement in Uganda provides the main interface between the public and private sectors and is recognized as a major source of corruption. In recent years, tendering institutions through formation of Contracts Committees have developed a raft of anti-corruption initiatives, including those aimed at deterring private companies from engaging in corruption. The public sector in Uganda is a very important customer to the private business – national as well as international.

There is a feeling that corruption and red tape are barriers to Uganda's investment and business climate. Andrew Mwenda observes that "The more procedures you impose on investors, the less attractive for investment you are. In his famous books The Other Path and, later, The Mystery of Capital, Hernando de Soto showed how too many procedural rules were making it difficult to do business in poor countries".

In his home country, Peru, to obtain authorisation to build on state-owned land, a person could spend on average six years and eleven months – requiring 207 administrative steps in 52 government offices. In Egypt, one would go through 77 bureaucratic procedures at 31 public and private agencies enduring four to fourteen years of bureaucratic wrangling and haggling. Such onerous obligations create incentives for shortcuts leading to bribery. The lesson: Never give the bureaucrat too much power". (Independent 01 April 2009)

In order to regulate the public procurement so as to secure optimal use of the public fund, the Government of Uganda enacted the 'Public Procurement and Disposal of Public Assets Act' that came into force on 21 February 2003.

Together with the Act, a set of Regulations of Sept 2003 and Guidelines of July 2003 from the Public Procurement and Disposal of Public Assets Authority (UPPDA) were made to give guidance to the understanding of the Act.

In Section three of the Act, the term Procurement is defined as:

The acquisition, through purchase, rental, lease, hire purchase, license, tenancy, franchise, or any legal means, of works or services or supplies or any combination. Our Honorable Parliament declare that an 'investment is not a procurement in the (in)famous 'Temangalo NSSF saga'.

Because of insufficient safeguards against corruption in procurement processes, enormous amounts of public money are misspent by governments worldwide every year. As a result, funding devoted to basic public services is deviated, affecting livelihoods. Government's credibility is harmed and private sector's possibilities to compete on the basis of a level playing field are deterred.


 

Impaired competition; Systematic corruption can induce inefficiencies that reduce competitiveness. It may limit the number of bidders, favour those with inside connections rather than the most efficient candidates, limit the information available to participants and introduce added transaction costs" (UNDP, 1997). These distortions of market forces obstruct the ordinary benefits induced by competition, like the achievement of best value for money, a rational allocation of resources, and the pressure experienced by individuals and companies for general improvement. Usually, a public tender affected by corruption represents an inefficient investment of public assets. One reason is inflated prices, another is that a corrupt official who discriminates in favour of some bidders frequently selects an inefficient contractor (Lien, 1990; Rose-Ackerman, 1978), resulting in shoddy work or poor quality services/goods which does not reflect value for money.


 

Corruption in public procurement makes the officials or the politicians in charge purchase goods or services from the best briber, instead of choosing the best price-quality combination. The result may be construction projects several times as costly as necessary, or the acquisition of goods not actually needed. For instance; Italian economists found that the cost of several major public construction projects fell dramatically after the anti-corruption investigations in the early nineties. The construction cost of the Milan subway fell from $227 million per kilometer in 1991 to $97 million in 1995. The cost of a rail link fell from $54 million per kilometer to $26 million, and a new airport terminal is estimated to cost $1.3 billion instead of $3.2 billion (Rose-Ackerman, 1999:29). Hence, when aggregated to a macro-economic level non-optimal choices of contractors can have noticeable effects on the economy


 

Corruption leads to state capture which evolves as a result of grand corruption. Key state institutions are "captured" by private interests to bias the policy-making process in favor of particular firms, leaving the operation of government non-transparent. The underlying threat to democracy is obvious when elected politicians and public officials make decisions on grounds deviating from the expected. Corruption in public procurement leads to loss of public confidence and trust in the procurement process and the government at large with negative implications


 

3.0    Role of civil society

Civil Society Organizations (CSOs) in Uganda are in a process of providing a consolidated and coherent framework for monitoring resource utilization in local governments. It is built on and recognizes other monitoring initiatives by Local Governments (LGs) and other government led monitoring initiatives. Its central theme is proactive budget and expenditure monitoring which is a departure from the existing ex-post expenditure tracking systems that have hitherto been employed in Uganda. It emphasizes demand driven monitoring of government expenditures at various levels.

The participation of civil society is premised on the provision of the 1995 Constitution. Objective X of the Constitution states that "The state shall take all necessary steps to involve the people in the formulation and implementation of development plans and programmes which affect them"


 

Objective XXVI of the Constitution which is entitled accountability stresses the fact that; public offices shall be held in trust for the people, all persons placed in the positions of leadership and responsibility shall in their work be answerable to the people and that; all lawful measures shall be taken to expose, combat and eradicate corruption and abuse or misuse of power by those holding political and other public offices.


 

Article 17d, and i charges citizens with the duty of protecting and preserving public property as well as combating corruption and misuse or wastage of public property.


 

Specific roles include

3.1 Lobbying and influencing Legal and Policy Measures

This entails mobilizing opinion against corruption in procurement and generating demand for action against those found to have abused procurement processes. As the main stakeholders in national governance and ultimate victims of poor procurements, civil society is a key sector in the fight against corruption in procurement. CS and CSOs in general and the media in particular as well as moral and religious leaders can help to create awareness, deepen appreciation of deleterious consequences, and generate demand for effective measures to reduce poor procurements and subsequent losses. This is important for getting political leaders and policy makers to initiate reforms against corruption. CS and CSOs are also crucial for fostering public support and ownership of reforms and thereby enhancing their legitimacy and sustainability.


 

Indeed, CSOs, NGOs, trade unions and anti-corruption advocacy groups can help to make corruption in procurement a major issue in national and local elections and transform the electoral system into a veritable facility for throwing out corrupt public officials and motivating elected officials to keep to a proper procurement process agenda.


 

This is related to policy formulation and changes within the procurement legal and institutional frameworks. Uganda's CSOs participated in this and input on the amendment bill 2009. Some of the proposed amendments included:


 

Amendment of section 45 of the principal Act;

The principal Act is amended in section 45 by:


Creating sub clause (1)
to contain the current wording under section 45.

Creating sub clause (2)
to read as follows:

'To enhance transparency of the procurement and disposal process, the Contracts and Disposal Committee, of a procuring and disposing entity, shall, invite, in addition to any technical persons from departments or outside the entity, at least two independent observers, from duly registered private sector agencies , civil society organizations or professional, in the relevant field, to attend its meetings in cases where the value of the procurement or disposal is estimated to be from five hundred million shillings and above;

Creating sub clause (3)
to read as follows:

Failure of an invited independent observer to attend a meeting shall not nullify the procurement or disposal proceedings

Creating sub clause (4) to read as follows:

During contract implementation, a procuring and disposing entity shall allow at least two independent monitors, from duly registered private sector agencies, civil society organizations or non-government organizations, in the relevant sector, to monitor the project under implementation, in cases where the value of the contract is estimated to be from one hundred million shillings and above.

3.2 Networking Efforts to Monitor and Combat Corruption

This involves civil society to civil society collaboration and support to combat corruption. Anti-corruption work is often a lonely project. Co-operation among CSOs, NGOs and other advocacy groups in their common efforts to promote transparency, accountability, and integrity in public administration as well as the private sector will increase their collective clout and produce positive results.


 

CS and CSO support can be crucial for transparency-promoting and anti-corruption crusaders and groups who suffer harassment and persecution at the hands of corrupt elements in government and private sector. Such elements will stop at nothing to protect the corrupt status quo and or to cover up their abuse of office. Mutual support among civil society organizations offers an effective antidote against backlash. For instance, Law Societies can provide pro bono defense for investigative journalists who are faced with judicial persecution. Moreover, since governments have no great incentive to unshackle the media, civil society agencies may be left with the responsibility to support the often, lonely efforts by journalists to expand their own freedoms.


 

Networking nationally, sub-regionally, and internationally is also essential for confidence and capacity building and for enhancing the profiles of the CSOs involved in anti-corruption efforts.

3.3 Support to PPDA Efforts and other Oversight Bodies

This involves CS and CSO support for the efforts of the public and official over-sight and agencies like PPDA. In this regard, CS and CSOs can help counteract the well-known tendency for public agencies and officials to connive with each other to undermine existing systems of checks and balances. CS and CSOs can provide oversight agencies and official anti-corruption institutions with the encouragement and support they need for the effective performance of official functions – support often not forthcoming from government. CS and CSOs, especially the media and society based-anti-corruption bodies, can liaise with and provide official Procurement agencies with evidence and relevant information and testify at hearings. It can also help to monitor compliance with regulations and sanctions imposed against corrupt procurement officials. This can help to bridge the gap between constitutional and statutory promise on the one hand, and on the other hand the realities of resource starvation and political marginalization that is often the fate of these public agencies.


 

3.4 Capacity building

Various efforts have been made to capacity build CSOs to engage. They are also part of the efforts that have yielded tremendous results on especially training of Contracts Committees and Technical Staff in Local Governments.


 

  1. Follow ups and information sharing

Through information sharing many entities have been put under pressure by CSOs as a result of follow up of reports by PPDA or other Government agencies. The case of CHOGM is a classic example of what CSOs can do to engage State actors to act.


 

Mainly reports from PPDA have no follow up mechanism. Compliance and audit reports are all gathering dust except some which were followed up by CSOs. PPDA should in principle copy all reports to CSOs to enable them act on demanding for implementation.


 

4.0 Benefits of civil society involvement:

  • Saves public money/Increases value for money and quality of services i.e. reduces fiduciary risks in procurement
  • Increased public ownership
  • Increased transparency and accountability
  • Help increase credibility and legitimacy of the process
  • Reduces unnecessary complaints/trials.
  • Clarifies rules of the game/levels the playing field
  • Reduces transaction costs (corruption is not free of charge or cheap. Winning and losing fairly is cheaper)
  • To improve aid effectiveness and contribute to deliver better services to the poor
  • Checks discretion of public servants hence minimizes collusion and wastage of public resources

The ways in which civil society can influence public procurement are many. In the Philippines civil society organizations are allowed to monitor all stages of the procurement process including the meetings of award committees (see Case 1). This includes the obligations to invite two observers to follow the procurement process. The two observers must have knowledge of procurement and no interest in the tender (ADB/OECD 2005: 19).


 

In a similar effort to gain access and directly monitor the public procurement processes civil society has in some cases supported the elaboration of a so-called integrity pact (IP) promoted by Transparency International. In the IP, a pact commits the public sector and all bidders for a specific public tender to a set of rights and obligations including desisting from offering or accepting bribes, collusion, etc. Further, the pact introduces civil society monitoring of the procurement process3. In Indonesia, for example, IP's have been implemented in 22 districts and municipalities (Malik 2007: 203-204).


 

5.0 Our Collective Role in the fight against Corruption in procurement

CSOs have for long time been saying that the fight against procurement corruption requires the collective efforts of all stakeholders: from government to the civil society, the private sector and even individuals. The central message here is that everyone has a role to play in order to eliminate corruption or at the very least to 'make [it] a "high risk" and "low return" undertaking'. The following are some of the ways in which stakeholders and all patriotic Ugandans can contribute to the fight against corruption in procurement and specifically CSOs:

  • Whistle blowing: sound the alarm on cases of procurement corruption ("The only thing necessary for evil to triumph is for good men to do nothing" – Sir Edmond Burke)
  • Demand that political leaders combat corruption and submit themselves for scrutiny
  • Condemn instead of hailing the corrupt in society
  • Develop a culture of integrity and transparency in procurement
  • Collective responsibility to monitor public procurement programmes and funds and reporting to relevant authority cases of mismanagement
  • Condemn the "get rich quick" culture
  • Condemn and desist from the politics of bribing voters because they influence tendering processes after winning.
  • Demand for comprehensive procurement legislation and enforcement of such legislation especially in procurements
  • Lobby for partnerships between government departments and civil society that promote accountability and good governance, and for mechanisms that enable civil society to be involved on a continuous process of government review.
  • Demand that government opens up and makes official information accessible to the public regarding all procurement processes.
  • Demand for open, competitive and transparent public procurement


 

6.0 Conclusion:

There is so much that can go wrong due to corruption in procurement and in the worst case scenario, a combination of several of the dangers identified above happen simultaneously. The ultimate danger is that corruption in procurement undermines democracy and good governance, and every patriotic Ugandan should fight it. With the collective efforts of we who are here and other stakeholders who are involved in the improving procurement professionalism, there is great hope that this fight can be won. I therefore say: let us fight the good fight with all our might, and let us purpose to be people of integrity. "Whoever walks in integrity walks securely, but he who makes his ways crooked will be found out" – King Solomon of Israel.


 

Since the economy of the Republic of Uganda just like any other L.D.C is procurement based, it is hoped that though enforcement various anti corruption legislation, there will be a creation of a sound business climate in Uganda. The PPDA, MOFEP, CSO, Business Community, Parliament and all taxpayers are a party to this process to ensure that businesses thrive.

7.0 Challenges

  • Lack of Capacity
  • Unprofessionalism
  • Corruption
  • Integrity in CSOs
  • Structural problems
  • Inaccessibility to information
  • Fear


     

     

  • "In great matters men show themselves as they wish to be seen; in small matters, as they are." —Gamaliel Bradford


     

  • "Integrity: A name is the blueprint of the thing we call character. You ask, What's in a name? I answer, Just about everything you do." —Morris Mandel


     

References

UPPDA Act March 2003

UPPA Regulations September 2003

UPPA Guidelines July 2003

UPPA Training notes several

Center for Procurement Training notes

Local Government Act 1997

Inspectorate Of Government Act 2003

Leadership code Act 2003


 


 


 

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