<< Programmes - Democratic Governance

Government purchases—more efficiency, fewer ‘sticky fingers’:

Building National Procurement Capacity to Implement the Public Procurement Act

Location:
Lilongwe, Malawi
Period:
2006 – 2007 and since 2008 incorporated into the Capacity Development for Public Sector Management project until 2011
Corporate Thematic Area:
Democratic Governance
2007 Budget:
US$ 719,000
Implementing Partners:
Office of the Director of Public Procurement
Development Partners:
USAID and World Bank
Contact:
Silke Hollander
Programme Analyst
P.O. Box 30135
Lilongwe 3, Malawi
Office: +265 (0) 1 773 500, Ext. 257
silke.hollander@undp.org

For many years the Government of Malawi used centralised procurement with a network of government stores—a common practice for many governments before the professionalisation of procurement. The 2003 Public Procurement Act, comprehensive legislation clarifying how procurement should be done and advocating a shift towards external procurement, changed this in a fundamental way. The Office of the Director of Public Procurement (ODPP) was established in 2004 as a regulatory body with the basic task of ensuring that the Procurement Act is implemented. ODPP regulates, reviews and advises on procurement throughout the government; facilitates training of procurement offices; monitors and evaluates progress and provides administration support.

There are two important benefits to a well-functioning procurement system. One is that it can increase efficiency in delivery of services, which is especially important for vulnerable populations where existing capacity to deliver services is not adequate.

Another benefit of a well-functioning procurement system is promotion of good governance, as transactions are more transparent and easier to track. Malawi is generally considered to have a serious corruption problem. In 2007 it ranked 2.7 (0 being highly corrupt and 10 very transparent) on Transparency International’s corruption perceptions index. Procurement is highly susceptible to corruption, as a great deal of money passes through often non-transparent procurement systems. The Malawi Growth and Development Strategy calls for improving governance and, in particular, a reduction in corruption.

Malawi receives relatively large inflows of development assistance. In 2005, Malawi received US$575 million, or 28 percent of GDP. The changes called for in the Paris Declaration on Aid Effectiveness would mean that a larger amount of these resources will be coordinated and managed by GoM. One area targeted to increase is the rate of development assistance that goes through the public procurement system—currently this stands at only 35 percent (OECD). This would result in a growing role of procurement entities in Ministries and Districts.

UNDP is providing support to the Office of the Director of Public Procurement (ODPP) as part of a larger effort to foster democratic governance, public administration reform and build government capacity to deliver services, particularly to the vulnerable. ODPP provides oversight, monitoring and technical backstopping to procurement entities across Malawi. Through ODPP, UNDP supports strengthening of procurement entities, transparency of public procurement and private sector ability to use the system.

UNDP also supports strengthening the ODPP office itself and works to create a better understanding of public procurement and the role of ODPP. The programme has assessed the procurement situation and provided strategies for addressing shortcomings. UNDP offers its support primarily in the form of technical expertise, funding of activities and funding of procurement staff positions.

This programme has facilitated access to the Government Wide Area Network for ODPP staff and made information available to the public via the Internet—especially on major procurement activities such as proposal requests and contract awards. The programme has supported ODPP in monitoring of record-keeping and management of public procurement data, making market price information available to procurement officers and auditors on common goods to minimize corruption and facilitate compliance with rules and regulations for submitting proposals.

The Price of Paper
One of the important outcomes of the project, mundane as it may seem, is a comprehensive list of prices for normal items. Joyce*, a procurement officer for a Ministry, needs to buy a huge range of products, from paper to car parts. If she receives an order for 30 boxes of paper she must do research on the normal price for this or see what the suppliers’ prices are. The first approach is time-intensive and the second includes a high likelihood of being overcharged.

The UNDP funded a Market Price Analyst at ODPP from 2006 to produce a Market Price Index on a quarterly basis. The analyst establishes methodologies and does research on the most purchased goods, while conducting market analyses on prices. ODPP provides this list to procurement entities to use as a benchmark for item prices. It adds transparency to procurement systems, which simplifies the work of the procurement officers. It is harder to be overcharged for items or to camouflage bribes if everyone knows approximately what things should cost.

Broadening private sector participation in Bids to supply Government
If the Ministry of Education wishes to procure primary school books, ideally it should advertise this need and receive a number of supply bids from a range of private sector companies, small or large. However, the requirements and technical standards of the bid documents are often too difficult for many otherwise qualified bidders to participate. Bids are often given to the firms that have the technical skills to complete the forms adequately rather than to firms providing the goods most cheaply. To help address this, UNDP has supported the development and production of 500 CDs with the relevant bidding documents and detailed guidelines on how to complete them, including tips and a checklist. These CDs were distributed at three regional private sector events to the 270 firms represented and are freely available upon request. The information is now also available on the ODPP website (http://www.odpp.gov.mw/home/).

Public Procurer Magazine
Procurement is relatively new as a designated profession, as the role has traditionally been provided by store clerks. Even within the Government, awareness is very low as to what procurement is and what its role is. Public Procurer Magazine is a quarterly journal that allows procurers to share their experiences and improve their understanding of best practices. It features holistic overviews on aspects of procurement as well as case studies. An institution writes a presentation on its procurement operations and the magazine provides feedback on content and how it fits in with best practice and then includes it in the next publication. The magazine is also advocating for procurers to use it to advertise supply bids so that more suppliers are aware of opportunities and the process becomes more competitive.

A major component of the programme has also been providing and facilitating training for staff at ODPP and the decentralised procurement entities. To this end it has also coordinated development of training manuals and trained 25 public procurement trainers.

The programme has been in place for two years (2006 -2007) and will be incorporated as an element in the Capacity Development Programme from 2008.