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Chapter 2 - Introduction The documentation is descriptive and explanatory research endeavor.

It seeks to inform the reader about the benefits and advantages of having convenient and systematic material management procurement system. Having convenience in all our tasks performed in the local government is very helpful using high technology equipment and gadgets. And because of the highly technology, the material management procurement wants to keep pace with other users as well as technology. 2.1 Review Related Literatures 2.1.1 Foreign Literature United States The Foreign Military Sales is a Security Assistance Program which is administered by the U.S. Department of Defense and which allows eligible foreign governments and international agencies to purchase defense-related articles, defense services and military training from the U.S. Government. The U.S. Department of Defense serves as an intermediary, handling procurement, logistics and delivery and often providing product support and training. The Foreign Military Sales will be considered as a method of procurement when the goods or services required relate to military equipment of U.S. origin and when, on the basis of the information available at the time, those goods and services are available or can be made available from the U.S. DOD. When Public Works and Government Services Canada Headquarters determines that a requirement will be sole sourced to the U.S., the requisition must be reallocated to Public Works and Government Services Canada Headquarters Washington. Decisions by Public Works and Government Services Canada Headquarters to sole source requirements to the U.S. Foreign Military Sales program must be adequately

documented. The Foreign Military Sales is a mutually beneficial government-to-government method for selling U.S. defense equipment,

services, and training. Responsible arms sales further U.S. national security and foreign policy objectives by strengthening bilateral defense relations, supporting coalition building, and enhancing interoperability between U.S. forces and militaries of friends and allies.

China Early efforts to bring government procurement under

internationally agreed trade rules were undertaken in the OECD framework. This matter was brought into the ongoing Tokyo Round of Trade Negotiations in 1976. As a result, the first Agreement on Government Procurement was signed in 1979 and entered into force in 1981. It covered central government entities and procurement of goods only. It was amended in 1987, with this amended version entering into force in 1988.In parallel with the Uruguay Round, Parties to the Agreement held negotiations to broaden the coverage of the Agreement to purchases by sub-central government entities and other public enterprises and to the services and construction services sectors. Following these negotiations, the Agreement on Government Procurement (1994) (GPA) was signed in Marrakesh on 15 April 1994, at the same time as the Agreement Establishing the WTO. The GPA entered into force on 1 January 1996. It led to an estimated ten-fold increase in the value of procurement subject to international competition under its rules, as compared to the approximate annual value, between 1990 and 1994, of US$30 billion of covered procurement under the Tokyo Round Agreement. The value of coverage has expanded considerably since then, with economic growth, inflation and the expansion of the coverage and membership of the Agreement.

Indonesia An example of progress in creating a clearer and more coherent system of procurement has been the Indonesia. Up to 2003, more than 60 laws, executive orders, presidential decrees and administrative orders governed the procurement process, which resulted in confusion and conflicting interpretation increasing the likelihood of rigged bidding, delay and irregularities in the bid evaluation process (GP, WB and ADB, 2003, p. 89).Matters in part have been put to right by the enactment in 2003 of the Government Procurement Reform Act and its implementing regulations. This has imposed a uniform procurement system within the public sector, clearly specifying, amongst other things, the methods and stages of purchasing to be followed, the roles, responsibilities, accountability and manner of appointment of procurement officials and committees. Whats more, these measures have prescribed competitive bidding (within the limits indicated below), and greater transparency (IMF, 2004a; 2005a; GP, WB and ADB, 2003; WB, 2005a; Campos &Syquia, 2005).Further harmonization of procurement procedures and the use of uniform bidding documents was established in 2004 for local competitive bidding. But uniform and clearly defined procedures have yet to be adopted for tenders involving foreign contracts, and in bidding for consultancy services for donor funded public works projects. The ADB is currently engaged in a program with the Government of the Indonesia to overcome the remaining anomalies and ambiguities (ADB, 2005). Vietnam In Vietnam too, procurement rules have for years not only been limited in scope, but have also been highly fragmented. A variety of circulars (orders issued by Ministries), decrees (regulations passed by the Government) and ordinances (laws passed by the National Assembly) have covered procurement. Inconsistencies in these rules have given rise to confusion. However, steps have been taken to simplify and harmonize

them. Decree 66 of 2003 represented a significant step forward in unifying procurement procedures across ministries, but major inconsistencies still existed with procurement-related provisions in other laws. However, an all-embracing Public Procurement Ordinance has been drawn up (having gone through several drafts) and should reach the statute book in the near future, so imposing greater uniformity, and providing, as well, the legal basis of an open and competitive purchasing process (SRV and WB, 2005). Limited efforts to upgrade and harmonize fragmented procurement laws and regulations have similarly been undertaken in 6 JONES. Cambodia In Cambodia, a fragmented system of procurement continues, governed by a plethora of disparate and uncoordinated sub-decrees in the absence of an overarching procurement law (WB, 2004a). In Indonesia too, public procurement rules remains highly fragmented. The World Bank reported in 2001, that in the procurement process, a multiplicity of laws and decrees and regulations constitutes a source of confusion with the risk of overlapping jurisdiction made worse by inconsistent provisions and a lack of clarity in important policy and procedural requirements (WB, 2001, pp. 1, 9). Presidential Decree 18 in 2000 concerning procurement outside construction provides a semblance of uniformity, but leaves in place, and does not supersede, many other laws, decrees and regulations affecting procurement (WB, 2003). However, in 2005, a start was made in drafting a comprehensive procurement law to create a uniform and more clearly defined set of procurement procedures (IMF, 2005b). The fragmentation of the procurement laws and regulations not surprisingly leads to a good deal of non-compliance. For example, in Cambodia, much of the procurement continues to be undertaken with little regard to the legal and administrative obligations that regulate the purchasing process.
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2.1.2 Local literature Innovation and Public Procurement: Review of Issues In modern capitalist system, most people would agree with the statement that innovation occurs in firms. Similarly, where several attempts to innovate occur simultaneously, the most efficient solution will be determined by market exposure and competition. The role of public agencies, voices stressing supply side policies would argue, should be to provide e.g. education and infrastructure, and leave innovation to be spurred mainly by the market. Public intervention in innovation should be limited strictly to instances of demonstrable market failure or problems, and even in these cases public intervention should be restricted to the supply side i.e. investments in research and development. ftp://europa.eu/pub/innovationpolicy/studies/chapter2_literature_review.p df

Systematic

Literature

Review

of

Flexible

E-Procurement

Marketplace During the Web era e-procurement has witnessed a steep rise in marketplace deployment; this has been followed by a substantial number of failures. A number of larger technology providers are now left to support both small and large businesses. Flexibility has been a key enabler in supporting network evolution across a varied number of domains. The aim of this study is to investigate flexibility around marketplace evolution, success and failure. In particular, explore the inter-relationships between architectural flexibility and the evolving Web and Internet. A systematic literature review (SLR) was carried out in order to uncover the changes that have taken place over the past fifteen years. A conceptual model is produced early in the research in order to provide contextual underpinning. We employed a manual search of 5 journals. Of the 22 relevant studies, one addressed research trends around e-procurement in pharmaceutical organizations. Three addressed e-procurement in financial

organizations. A number of flexibility categories are uncovered by the SLR and then used as a means to support flexible EPM design and adoption. Flexibility categories are uncovered and comprise technical, organizational, environmental and strategic (TOES) concerns. http://www.academia.edu/2606126/A_Systematic_Literature_Review_of_ Flexible_E-Procurement_Marketplace

Procurement and Development Effectiveness - A Literature Review Eurodad has identified public procurement policies and practices by developing country governments and aid agencies as a key area in which more progress is needed in order to improve the effectiveness of official development assistance. Public procurement accounts for up to 40 percent of GDP in some developing countries. Besides being an important share of these countries economies, procurement policies are an important instrument to achieve socioeconomic goals such as economic

development, poverty eradication and social equity. Procurement policies are also an important policy tool in the hands of governments to boost the national socio-economic fabric as part of their development strategies to gradually reduce aid dependence. In aid dependent countries in particular, a considerable share of public procurement is financed through Official Development Assistance (ODA) injected into national budgets as budget support. The use of developing countries own procurement systems was a donor commitment included under international agreements on aid effectiveness including the Paris Declaration and the Accra Agenda for Action. A second commitment was to untie aid to a maximum extent, aiming to increase the efficiency and development effectiveness of aid agencies own procurement.

http://betteraid.org/index.php?option=com_content&task=view&id=235& Itemid=26

Literature Review and Research Issues in e-Procurement Over the last couple of years, e-Procurement has received tremendous attention from researchers and practitioners alike. However research on e-Procurement is still scarce and scattered. This paper looks into prior research on interorganizational information systems (IOIS), electronic data interchange (EDI), channel management and procurement to develop a research framework and identify research issues in eProcurement defining important terms such as volume, width and depth of e-Procurement and classifying the ownership and governance structures of web-based IOIS. It is argued that supply market characteristics and product characteristics can explain emergence of various e-Procurement systems. Further these e-Procurement systems have different impact on interorganizational relationship and value generated from e-Procurement. However these impacts are moderated by adoption and implementation risks. This paper also summarizes the main benefits of an organization using e-Procurement and also their disadvantages and limitations. http://mls.sagepub.com/content/36/3/225.abstract

State of Philippine Public Procurement According to the World Banks Philippine Country Management Unit (2000), a survey conducted by the Social Weather Stations (SWS)1 in 1998 revealed that about 38% of those asked believed that there was a great deal of corruption in government, while 34% replied some. The majority of the respondents perceived that more than 50% of government funds were wasted in building roads alone. A SWS 2002/2003 survey reported that a conservative estimate of leakages lost to corruption would

be about 20% of the total budget of government for procurement (Social Weather Stations, 2003). According to Senator Edgardo J. Angara (2002), the Department of Budget and Management (DBM) estimated that an average of P22 billion annually was lost to graft and corruption in public procurement of locally funded projects alone. P22 billion is twice the budget of the Department of Health. This is equivalent to 520 million textbooks for Philippine public school children or 63,000 new classrooms. This amount also translates to 1,500 kilometers of concrete farm-to-market roads. Since procurement is the government activity where huge losses are perceived to occur, reforms in the said area therefore should have a substantial impact on the delivery and quality of social services. Prior to January 10, 2003, there were over one hundred administrative guidelines on public procurement affecting both local government units (LGUs) and national government agencies. Some of the issuances were conflicting, which allowed for differing interpretations by implementing agencies. The enactment of a procurement law that would streamline and standardize reforms at all government levels to achieve long-term reforms was imperative. Moreover, the reform efforts would also aid in maximizing scarce resources allotted for the provision of public services, intended to directly benefit the poor. Reducing corruption in public procurement, however, is a public good and essentially suffers from a free rider problem, which is that of collective action. Even if many want to see a reduction of corruption in public procurement, http://www.ippa.ws/IPPC1/BOOK/Chapter_3.pdf

2.2 Related Study 2.2.1 Foreign study The business challenge faced by the organization in question and why they perceived procurement outsourcing to be an appropriate response The scope and form of procurement outsourcing chosen The procurement process used and identification of procurement innovations and best practice The transition path adopted Quantification of changes in KPIs, including changes in cost and process performance achieved Key lessons learned. that can be applied to future procurement exercises. http://www.nelson-hall.com/service-line-programs/procurementoutsourcing/case-studies/#sthash.Pjd1nsNI.dpuf

Harvard University developed the well known case studies approach for MBA curriculum. For International Management,

Thunderbird University is the known leader. Cranfield University in United Kingdom, also published much work on case studies. Using these publications and the internet search, add much to the learning of global business and leadership. One of the hottest jobs today is being a project manager. After the project management course, MBA students are taking the Contract Procurement Management course. Contract manager works closely with project manager. The new survey indicated thatcontract management and procurement management are two of the growing disciplines globally, during the economic downturn in 2008. MBA

students completed real-life case studies as their final projects. This paper summarized their results. Harvard University, Thunderbird University

and Cranfield University UK have been publishing case studies for 20+ years. Massachusetts Institute of Technology, Polytechnic Institute of New York and Stevens Institute of Technology offered the Executive Master Degree program in Technical Management to differentiate themselves

from the traditional MBA degrees. Project Management is one of the core courses Since project management is cross-functional, the project skills learned can be applied to any industry Companies started to hire project managers in construction, engineering, environment, finance, human resource, marketing, software or any large/small project. In 2008, project manager became one of the hottest job titles, with 3,500 daily openings listed on Dice.com, Hsu (2007). The next hot job title is Contract and Procurement Management (CPM). http://www.gobookee.net/get_book.php?u=aHR0cDovL3d3dy5nLWNhc 2EuY29tL1BERi9tYWxheXNpYS9Ic3UucGRmCkNhc2UgU3R1ZGllc yBpbiBDb250cmFjdCBhbmQgUHJvY3VyZW1lbnQgTWFuYWdlbWV udCAtIENBU0EgLSBIb21l

During the past few years, several innovative IT based applications have emerged around the world that promise to bridge the proverbial digital divide by linking growers directly to domestic and international markets through the internet. Online commodity auctions are an example of such initiatives and have the potential to impact the livelihood of millions around the world. However, an important factor that affects the benefits obtained. by growers is the supply chain structure that results from the introduction of the online platform. In this paper, we provide a case study of an online coffee auction established in India for selling various grades of coffee beans. The focus of the case study is on the supply chain structure that is likely to evolve under various product and supplier characteristics. We argue that the online direct selling of commodities by growers is likely to evolve only under a certain set of conditions. We also argue that governments and platform providers can facilitate online direct selling by growers through initiatives that increase the bargaining power of the growers and increase

the confidence of the buyer to directly procure from lesser known growers. http://www.gobookee.net/get_book.php?u=aHR0cDovL2FzdHJvLnRlb XBsZS5lZHUvfmJhbmtlci9JbmZvcm1hdGlvbiUyMFN5c3RlbXMvZW NyYS1yZXYtZmluYWwucGRmClBST0NVUkVNRU5UIE1PREVMU yBJTiBUSEUgQUdSSUNVTFRVUkFMIFNVUFBMWSBDSEFJTjog QSBDQVNFIC4uLg==

This case study focuses on records management systems (RMS) technology acquisitions. It is one of 18 case studies prepared for the Technology Acquisition Project administered by the Institute for Law and Justice in partnership with Government Technology, Inc., and funded by the National Institute of Justice (NIJ), U. S. Department of Justice. The author of this case study is Steve Pendleton, President, Information Analytics, Inc. The report has been reviewed by the participating site but should be considered a draft pending final NIJ review. http://www.gobookee.net/get_book.php?u=aHR0cHM6Ly93d3cuaXQub2 pwLmdvdi9wcm9jdXJlbWVudC9maWxlcy9QaWVyY2UtUHJvY3VyZ W1lbnQucGRmClRlY2hub2xvZ3kgQWNxdWlzaXRpb24gUHJvamVjdC BDYXNlIFN0dWR5IFBpZXJjZSBDb3VudHkgLi4u

2.2.2. Local study Curbing Corruption in Public Procurement This session will introduce the audience to the general concept of public procurement, its importance in national economies, and its basic principles of economy, efficiency, transparency, and fairness. Key concerns of corrupt and fraudulent practices will be discussed along with their correlation to development. The main steps of a procurement process will be presented together with their methods and underlying requirements for meeting Good Governance principles. Figures on the global impact of corruption (with captioned source of information) will also be presented. The aim thereof is to draw the audiences attention to the gravity of the issue and to the amount of resources wasted due to fraudulent practices. The effect of corruption will be presented byregion (with country specifics in a given region) based on which comparisons and general conclusion swill be generated. This exercise will in the end allow estimating the effect of reducing, if not minimizing, corruption in public procurement. http://www.oecd.org/site/adboecdanticorruptioninitiative/regionalseminars/35165472.pdf

SCHOOL-BASED PROCUREMENT WATCH PROJECT(BANTAY ESKUWELA), PHILIPPINES The Philippines school-based Procurement Watch pilot project commenced implementation in April2009. The stated objective of the project is to stimulate and sustain client interest through the Parent Teacher Community Associations (PTCAs) and other grass-root NGOs in furthering procurement transparency and accountability reforms in selected public schools under the Basic Education Sector Reform Agenda. The project aims to achieve this through participatory

monitoring of the public procurement of school furniture, and in particular student armchairs, undertaken by community volunteers from local PTCAs across the Philippines. AusAID directly engages with an

indigenous civil society organisation (with international affiliation) as the delivery intermediary within a broader education program, in

collaboration with the Philippines Department of Education (DepED). DepED had an existing relationship with a social accountability organisation G-Watch, in monitoring their procurement activities with textbooks prior to the design of the school-based Procurement Watch project. AusAID is investing heavily in the education sector program and found it straightforward to present the case to the Government of Philippines for the school-based Procurement Watch project in terms of protecting its overall education investment. http://www.ode.ausaid.gov.au/current_work/Documents/school-basedphilippines.pdf Accountability in Public Procurement, transparency and the role of civil society Accountability constitutes a central pillar of any public procurement system. Withouttransparent and accountable systems enabling governments and citizens to engage in a mutually responsive way, the vast resources channelled through public procurement systems run the danger of increased corruption and misuse of funds. Even in a system with low levels of corruption, public and civic oversight can help identify inefficiencies, thereby increasing procurement efficiency and effectiveness for the benefit of improved service delivery and ultimately citizens. In UNDPs Capacity Development framework most often encountered in the work to strengthen capacities with national and local governments. Accountability exists when rights holders and duty bearers both deliver on their obligations. (UNDP 2008: 12). This conceptually links accountability to a rights based understanding of development

following three principles: inclusive rights for all people, the right to participation, and the obligations to protect and promote the realization of rights by states and other duty bearers (Gaventa 2002: 2). As such, the active engagement of a government on one side and its citizens on the other is necessary to achieve any measure of accountability. It is this relationship between state and citizens and the different forms it takes that constitutes the main subject of this case study. http://www.unpcdc.org/media/142496/story accountability.pdf TI-USAs Civil Society Procurement Monitoring Tool The Civil Society Procurement Monitoring (CSPM) tool is a webbased tool that is meant to support Civil Society Organizations (CSOs) or individuals who want to monitor public procurement for red flags for corruption in their respective countries. The tool was designed by Transparency International-USA (TI-USA) in cooperation with CSOs in Indonesia and the Philippines, support from procurement and IT consultants, and funding from the Governance Partnership Facility, of an institution -

administered by the World Bank. http://www.transparencyusa.org/documents/CivilSocietyProcurementMoni toringTool-1-Pager.pdf Scottish Borders council The procurement service in the Scottish Borders is managed as a centralized incorporate function. The team is relatively new, at four years old, and comprises ten staff. There is a mix of category managers and procurement specialists across Corporate Indirect, Learning and Care, and Construction, Transport and the Environment. This centralized method allows the team to embed a consistent approach across the Council, with a strong focus on: ensuring best value; early stakeholder engagement; and

compliance with national and EU legislation and local standing orders. The procurement service collaborates with professional, technical and specialist commissioners to ensure the appropriate internal stakeholders input and knowledge to each procurement activity. External providers are used to support a number of requirements, such as homecare services. There is no internal Building Services (STO) therefore local trade companies provide services to support the property and maintenance portfolio; this is one of the key reasons for their high proportion of local spend all of the Councils trade services and minor works contracts are provided through the private sector. The key objectives of the Scottish Borders current procurement strategy ensure the local dimension and the need to think locally is well recognized. =http://gps.cabinetoffice.gov.uk/sites/default/files/Capita frameworks help save time and money_0.pdf shows how

2.3 Synthesis & Relevance of the study Governments are significant purchasers of goods and services and these markets represent huge opportunities for international trade. Measuring government procurement for a large number of countries, in a consistent manner, is not a trivial task and careful attention must be paid to ensure that national data is gathered on the basis of harmonized procedures in all countries covered. Quantifying the size of government procurement markets becomes even more complicated when attempts are made at distinguishing procurement between government levels (central versus sub-central), or by types of expenditure (consumption versus investment), or at measuring the share of procurement that is potentially opened up to international trade (contestable). The latter indicator is meant to capture tradable purchases and excludes two categories of government purchases that are assumed to be non-tradable, the compensation of government employees and defense-related expenditure. The absence of detailed and

consistent measurements of government procurement markets for a large number of countries, broken down by government levels, by types of expenditure and contestable shares, represented an information gap. Informed knowledge about the size of government procurement markets and in particular the shares of national markets that are potentially opened up to international competition is relevant for the business community, governments and trade negotiators.