THE IMPACT OF THE USE OF TENDERING AND COMPETITIVE BIDDING IN PUBLIC SECTOR PROCUREMENT

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.

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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.

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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.

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1.4 Research Questions

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

• Does tendering have a role to play in improving the efficiency and effectiveness of public sector procurement?
• What qualifies a bidder to be invited to bid?
• Has there been an instance where the lowest bidders are not offered the job?
• 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?
• Are the officers handling tendering in the public sector qualified?

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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.

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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

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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.

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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.

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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.