Project Materials

USE OF TENDERING AND COMPETITIVE BIDDING IN PUBLIC SECTOR PROCUREMENT

ABSTRACT

This study examines the use of tendering and competitive bidding in public sector procurement. A case study of the Ministry of Works, Imo Srate, Owerri. One of the objectives is stated in the first chapter of the research. In order to achieve the aims, a research question was developed to allow the researcher to collect relevant information about the topic area. The researcher reviewer discussed iterative and some information from the work in Chapter 2. Chapter three introduces the research methods, including the population and size. The fourth chapter contains the researcher’s presentation and data analysis. Finally, chapter five discusses conclusion, summary, and recommendations.

Chapter one

Introduction

1.1 Background of the Study

Tendering and competitive bidding are defined in the purchasing and supply management lexicon as offers from tenderness without callousness, typically in scaled envelopes provided by a time and date stated in the invitation to tender for the supply of products and services.

Uzor (2004:440) in (Lysons 1996:42) defined tendering as a purchasing procedure in which possible suppliers are encouraged to submit a firm and unequivocal offer of the price and terms, which, if accepted, will form the basis of the future contract.

Frank Harris and Ronald Mc Caffer described competitive bidding as an invitation by an organisation (i.e., the client) to a supplier to submit a quotation for a project or services requested by the client organisation, with the primary goal of determining the supplier’s performance abilities.

Tendering and competitive bidding are frequently required when an organisation or a corporation needs supply of particular commodities such as furniture, generating set, caterpillars, vehicles, pharmaceuticals, medical equipment, and computers, among others.

Tendering is commonly employed in the public sector to ensure compliance with public accountability norms. It may also be used by private sector organisations, particularly those involved in construction and services contracts, to get contract rates and terms.

According to Compton and Jessap (1989), such tenders are launched only at the time and data defined by the tender panel of qualified individuals who records the relevant details. The purpose of this study is to investigate the use of effective bidding in enhancing public sector procurement.

1.2 Statement of The Problem

The problems of tending and competitive bidding and their implications on public sector procurement have been identified by many as not only enormous but complex now that there is serious needs on the part of our various governments to provide more services with little funds and the issue of corruption in our “public life” some of the problems are

(i) A large number of problems have plagued sector tendering, which places a high value on the quality of contracts entered into by public sector organisations.

The entire contract system has gone sour as a result of mismanagement, corruption, and the misapplication of rules and regulations that must be followed when contracting for products and services.

(ii) The various authorities’ failure to guarantee a common code of practice and professional ethics of behaviour has resulted in a complete failure of public sector tendering.

(iii) The out-of-date nature of our financial regulations, which guide the operations of public procurement and public sector tendering, is the most serious issue with our public sector tendering, and thus has serious implications for the efficiency and effectiveness of public sector contract management and administration.

(iv) Competitive bidding in public sector procurement typically results in the lowest price bidder receiving the award, and the purchasing business obtains a population for negotiating with the highest bidder once bids are opened.

Future bidders will be less likely to offer their best price at first, assuming that they will do better in subsequent negotiations.

They will implement a strategy of submitting bids that are low enough to allow them to participate in any negotiations. However, their initial bid will not be as low as it is expected when the award is made to the lowest bidder without additional negotiation.

Competitive bidding puts a lot of pressure on suppliers to cut costs so that they can provide cheap but profitable rates. This cost pressure may cause sacrifices in product quality development and other critical services.

1.3 OBEJCTIVES OF THE STUDY

Most public institutions have a general misconception of tendering and competitive bidding as a strategy for public sector procurement.

(i) Investigate the role of tendering in increasing the efficiency and effectiveness of public sector procurement.

(ii) Determine the source of the misperception about competitive bidding.

(iii) Determine whether an autonomous unit of skilled and competent professionals is required to manage public sector procurement.

(iv) Examine tendering and contract award procedures and processes, as well as the abilities of officers involved in public tendering and contract administration.

1.4 RESEARCH QUESTIONS

Based on the study topic and research purpose, the researcher developed the following questions:

(i) Does tendering play a role in increasing the efficiency and effectiveness of public sector procurement?

(ii) What qualifications a bidder must meet in order to be asked to bid?

(iii) Have there been any occasions where the lowest bidder was not offered the job?

(iv) Can the present tendering process or procedures employed by public sector organisations eradicate corruption while increasing accountability and transparency in the sector?

(v) Do the public sector tendering officials have the necessary qualifications?

1.5 Statement of Hypothesis

Based on the research question, the following hypotheses are proposed.

Hypothesis one.

Ho: Tendering is an effective tool in public sector procurement.

H1: Tendering is an effective tool for public sector procurement.

Hypothesis two

Ho: The ministry has no viable way other than competitive bidding.

H1: The ministry uses another effective strategy outside competitive bidding.

1.6 Significance of the Study

The purpose of this research is to help researchers or showers understand the relevance of this. Investigate whether the ministry will need effective and efficient tendering and competitive bidding. At the conclusion of this effort, the ministry will be able and capable of doing so.

Tendering and competitive bidding are used effectively and efficiently inside the ministry.

(i) This research will benefit the Ministry of Works, the researcher, and the public and private organisations being studied.

(ii) It provides an opportunity for an unknown contactor or supplier to become known, particularly if it is successful.

(iii) It enables public accountability.

(iv) The research study encourages competitiveness, which may result in a lower tender figure. (v) It provides an opportunity to attract real tenderers who are truly interested in the project.

1.7 SCOPE OF THE STUDY

This study was limited to public-sector organisations. Tendering and competitive bidding have played many roles in the management and administration of public sector contracts; this study would have covered all the ministries, departments, agencies, boards, and even the local government areas in this country;

however, the researcher decided to concentrate on the study of the implications of effectiveness and efficient tendering in the administration and management of contracts in In doing so, the researcher focused on the majority of the departments and units that had something to do with the subject of this study.

These departments or units include administration, engineering, planning, and finance. These areas provide valuable insight into what happens in other ministries, departments, boards, and agencies.

1.8 Limitations of the Study

The researcher had several challenges while completing this study, including: (i) It was difficult for the researcher to balance attending lectures and other school activities with the various visits to the ministry during this research job. This significantly limits the scope of the study and research to be conducted. (ii) Financial limits were another barrier that the researcher confronted.

This prevented the researcher from making all of the necessary trips to acquire the appropriate quality and quantity of information for this type of research. (iii) Finally, many personnel involved in the management and administration of tendering, competitive bidding, and public sector contracts were reluctant to provide much-needed information in the form of documents and forms labelled as “strictly confidential” by the government.

1.9 Definition of Terms

(1) BID: A quotation for a price or other contract terms, whether payment or acceptance.

(2) LEAD TIME: The time gap between when a need is perceived and when it is met or satisfied.

(3) TENDER: The procedure in which potential suppliers are solicited by newspaper and other selected media advertising to make a solid and unequivocal offer of price and terms, which, if accepted, will serve as the basis of the following contract in competition with others.

(4) COMPETITIVE BIDDING: Competitive bidding is one approach for obtaining the best pricing.

(5) QUOTATION: A formal statement issued by a contactor/supplier for his customer that includes cost estimates, specifications, and other important information about an agreement between the two parties.

(6) GOVERNMENT: An institution with the authority to govern and direct the affairs of a state.

(7) EVALUATION: The process of ascertaining and determining the quantity and value of something.

(8) NEGOTIATION: Seeking agreement between the purchaser and the contractor/supplier on mutually acceptable terms and conditions before concluding a contract.

(9) ANALYSIS: The process of disassembling components into individual pieces or units in order to study and evaluate each item critically.

(10) CERTIFICATE: The act of licensing by a document that formally tests the fulfilment of conditions.

(11) PROCEDURE: A method, system, or pattern for carrying out a task, service, or dealing with suppliers, etc.

(12) PERFORMANCE BONDS: This is a commitment or security to complete a contract as requested, and if the customer fails to do so, the supplier or contractor will compensate him.

(13) SPECIFICATION: This is a detailed description of any objective materials or processes required for a task, supplier, or contract that the contractor or supplier must comply with. It is what the provider must provide to the buyer, as described by the buyer.

(14) SOURCING: This is a process and technique used by buyers to survey, analyse, and select the supplier who can best satisfy their organization’s requirements.

(15) SOURCING POLICY: These are policies that are designed to direct purchasing functions in terms of who the organization’s primary suppliers are.

(16) QUALITY: Quality is the fatality of futures and a characteristic of a product or service that relates to its capacity to meet stated or implied needs.

(17) PRICE: This is the amount of money for which an item is offered, sold, or brought.

(18) pricing ANALYSIS: This is the evaluation of the seller’s pricing without considering the cost and profit components that comprise the price.

(19) FAIR pricing: A fair pricing is the lowest price that allows the supplier to provide continuous supply of high-quality materials where and when they are needed.

(20) SELECTIVE TENDER: This is a procedure in which the buying firm invites only competent suppliers from the approved supply list to tender.

(21) FORWARD BUYING: This is a buying method that involves purchasing materials in quantities more than what is now required.

(22) STANDARDISATION: It is an agreement on certain sizes, designs, quality, and the like.

(23) CONTRACT: A contract is an agreement between two or more parties that is intended to have legal effects.

(24) PRICING: This is the process that determines the pricing.

(25) ORDER: This is a request to a manufacturer or trader to provide something.