Malawi Government should have established flexible procurement laws and simplified the PPPs while holding all procurement stakeholders accountable for their mistakes. The study aimed at
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investigating the reasons behind lack of compliance in local councils and the role of ODPP and the PPA in improving compliance. It is in this regards that the theoretical and practical implications are derived.
5.2.4.1 Theoretical Contribution
The Principal Agency Theory (PAT) has its emphasis on how information about procurement flows. The PAT treats citizens as principals and public officials as agents. The principals have bounded rationality. They act based on incomplete information that comes their way. In order to have more perspective on procurement operations, they are faced with some obstacles in executing the processes. On the other hand, agents are better informed. This asymmetry of information allows the agents to indulge in opportunistic behaviour that goes unchecked due to high transactional costs faced by the principals (Obanda, 2010).
In fact, Schiele (2005) argued that while procurement officers may be capable of adding value to traditional procurements such as raw materials and repairs, huge procurements like consultancy services may constitute a category that can be outside the reach of such professionals.
This is a fundamental misunderstanding about what constitutes the function and what it can capably do or not do. This kind of thinking breaches the principles of PAT in the sense that at institutional level, the procurement department is an agent; hence delegated with all procurement’s responsibilities; outside the institution it is the principal evaluating suppliers. This means lack of meaningful involvement of the procurement department is a breach of this theory. However, in such situations, none seems to feel that the interests of the principals (taxpayers) need to be protected but mot that of the agents.
Eyaa and Oluka (2011) have presented a complementary view that is also related to agency problems, built on the assumption of a man as an honest individual yet not fully a competent actor. Both principals and agents are burdened by “honest incompetence”. The principal may not be fully competent to explain his goals to the agent, and the agent may not fully be able to understand these goals and know how to behave in order to maximise the principal’s welfare. Our study harmonised the two dimensions of the PAT. The resultant findings were that:
a) The procurement function needs to be graded to a level of the directorate. This would
enhance the level of involvement by the function. This would also increase the level of compliance procurement procedures in city councils, as the leadership would act with the principals at the same level of authority.
b) Training of procurement officers: in order to enhance compliance, procurement officers
and its stakeholders need tailor made procurement trainings to increase awareness, professionalism and competences.
According to Thai (2006), procurement professionals have dual responsibilities, as they make sure that operational agencies comply with procurement regulations while getting involved in procurements. Public procurement is a very complicated function that requires interdisciplinary skills. It is impossible to integrate these disciplines into one encompassing procurement
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knowledge. This way, the procurer should be able to communicate effectively with those professionals who are involved in the projects. Given the need for these skills, procurement officers must be flexible when making judgement.
Based on this study, procedures and regulations must act as beacons for enforcing compliance levels. The findings of this study have clearly shown that regulations are not followed due to the following main factors:
Poor alignment of procurement function
Poor and negative organisational structures
Lack of goodwill from top management
Political interference with procurement
Lack of professionalism by procurement officers
Lack of procurement planning
Lack of ICT infrastructure
Lack of capacity in procurement audits
Lack of institutions offering public procurement courses and
Interference by end users in procurement processes.
However, the PPA, 2003 established clear regulations complemented by clear penalties for the flouters. These are considered the most effective tools for enhancing compliance levels. Nevertheless, because the regulations are overregulated, those using them may frequently break or apply them to suit their tastes.
Based on the Public Procurement model already discussed for supplier’s selection, the three case studies were identified from the LG. According to De Boers et al. (2006), the potential for compliance problems in supplier selection is increased by different views stakeholders may have during the process. The policy makers seem to disregard the multitude of models available that lead to confusion about which model can actually be applied and to what extent should it be used in the submission of bids. In addition, the public policies seem to be based on the idea that once the buyer’s subjective values have been expressed in the model, for example criteria weights, the remainder of the process can be considered a value free administrative exercise. This may however not be the case hence the catalyst for tension between the original idea behind multiple criteria decision model (namely to gradually learn about ones value by the very building and rearranging a model); – and the strict roles of these models. The implications of this are that:
a) A number of important knowledge gaps seem apparent between important stakeholders
(policy makers, practitioners and researchers) as well within communities of stakeholders. It seems therefore important to create more mutual understanding of these different perspectives and improve the stakeholders’ knowledge about the many valuable aspects of
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formal models and their indisputable limitations. This should ultimately lead to more refined and realistic procurement procedures and regulations as well as more nuanced attitudes for both buyers and suppliers.
b) Procurement and supply chain management science researchers developing models must
gain a dipper understanding of the practical features and dynamics of the area where the models are being applied. When it comes to supplier selection, an important aspect for the future research seems to develop simple methods that can be applied by practitioners without much training and skills. The simplified procedures may not be highly sensitive to the stakeholders of public procurement. This will make life in the selection of suppliers simple, and normalisation procedures, removal of bids, extreme fake bids and so on will be reduced.
The foregoing discussion raises pertinent issues concerning the complexity of public procurement and selection of suppliers. That is in terms of designing efficient selection and management of suppliers, supplies systems, and diversity of stakeholder’s interests as well as measuring their performance. This calls for organisational realignment for stakeholders particularly for procurement professionals to equip them with relevant skills and knowledge.
In conclusion, a key challenge across city councils is to find solutions to ensure the protection of the procurement officials from any internal and external influences. The key to protecting them is through clear and ethical standards; an improved public procurement framework, budgetary autonomy; clear job structure; introduction of ICT in procurement processes, and career development and trainings. It is in this regards that we undertook this study.
5.2.4.2 Practical Contributions
One of the primary motivations of this study was “to develop a framework upon which implementation will enhance compliance and realise VFM”. The narratives told by the respondents in this study, like the literatures, pointed out to the chasm between the ethical practice of those involved in procurement and formal procurement theories. The analysed data also identified a comprehensive list of factors, which influenced the alignment of procurement function and compliance. These factors, alongside the principles of the Case Study, were properly described, and their characteristics were defined according to their properties (Corbin & Strauss, 2008). Beyond the description of these factors, a set of strategies and best practices were provided. The strategies were interpreted based on the researcher experience on public procurement and in line with (Strauss & Corbin, 1998) views. The aim of these strategies was to guide those people involved in procurement implementation. From these strategies, it was clear that there was lack of political will on the part of management on the procurement function. This may also be due to lack of familiarity with the PPPs; lack of professionalism by the procurers and the influence of institutional culture. The result was that there was completely no organisational structure. Even so, the function was being housed in the DoA’s baseline. For this reason, the study identified ineffectiveness of centralised procurement system in councils as one of the factors that brought about procurement problems. Depending on the best procurement practices, strategies and concepts were adopted. The organisational structure was also developed to provide
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a better understanding of the function. Because procurement was spread to the grassroots people, lead buying strategy was recommended for all procurements done at local levels. In the same vein, the properties and strategies provided for all other factors can assist in the theoretical understanding of public procurement in the councils. Because of better understanding, the proposed procurement framework maybe complied with without problems. It is therefore envisaged that the framework for compliance developed in here (see table 4.19) might be useful in the following ways:
5.2.4.3 Procurement function operation
The total responsibility has been given to the procurement function to follow the process used by the Malawi Government (Ref. Fig 2) since the roles of all stakeholders are properly separated. Any deviation from the stipulated norm has been assigned a reprimand and penalty. This may also help the procurement professionals become independent when discharging their duties while being accountable to taxpayers. It may also be used as a tool for enhancing PPPs in the city councils. The systematic way of doing PPPs has the objective of achieving regulatory goals by doing procurements in a transparent manner. Largely, all the interested stakeholders with the councils have been aligned to the roles they have on the procurement process. This will enable the function to be owned by all the people. At the same time, it will potentially enhance professionalism in the public procurement function.