ASSIGNMENT- 2 PUBLIC PROCUREMENT

1. PART A

Public procurement can be defined as being the purchase of goods, services and works
by governments and other state-owned enterprises (OECD, 2021). The overarching
requirement involved in public procurement is that all public procurement activities must
be based on ‘value for money’ (Crown Commercial Service, 2021). This is because
most public procurement comes from taxpayer’s funds. To safeguard the interest of the
public, an effective and efficient management of public procurement while ensuring high
standards of conduct becomes a sine qua non.

As mentioned above, public procurement rests on the premise that all activities are
based on value for money. To achieve this goal, an effective and efficient management
of public procurement is of paramount significance. Getting good value out of public
procurement is not just a question of getting goods at the best price, but also involves
considerations of the costs incurred during the procurement process (Kumar, et al.,
2015). The concept of value for money in general involves considerations of ‘what a
government judges to be an optimal combination of quantity, quality, features and cost,
expected over the whole of the project’s lifetime’ (Burger & Hawkesworth, 2011). The
definition of value for money is now being broadened to include measures that reduce
the administrative overhead cost of procurement. Hence, an effective and efficient
management of public procurement can contribute to achieving value for money by
reducing administrative overhead costs and directing resources towards more complex
procurement processes (Kumar, et al., 2015). In Mauritius, the need for value for
money is clearly mentioned in the Public Procurement Act 2006, under article 11 for
instance, whereby the Central Procurement Board ‘shall strive to achieve the highest
standards of transparency and equity in the execution of its duties, taking into account
(among others) the need to obtain the best value for money in terms of price, quality
and delivery, having regard to set specifications’. Effective public procurement systems
can thus help governments see better value for money, reduce pressure on public
budgets and leave agencies better prepared to invite private investments. This idea is
encapsulated by the words of Catherine Masinde, Practice Manager of the
Macroeconomics, Trade & Investment Global Practice at the World Bank Group, who
states that: “Public funds are scarce and governments must invest with intention.
Improving public procurement systems contributes to a vibrant private sector, helps
governments get the most out of its investments, and supports growth” (World Bank,
2018).

Moreover, across the globe, public procurement is being used as a lever to drive
economic growth and achieve secondary/ complementary policy objectives such as
unlocking innovation, SME participation and delivering sustainable outcomes (OECD,
2019). From an economic perspective, public procurement is increasingly recognized
as a lever for improving the efficiency and effectiveness of public spending. As such, an
effective and efficient management of public procurement is vital.

2. PART B

Rothery (2003) reported that since the mid-1990s, the Government of China has been
developing the regulations, laws, and implementing procedures necessary to bring
public procurement under a comprehensive administrative and legal framework. It
retraced the history of its development and explains the motivations: improved quality of
public projects, increased transparency, development of national standards, and the
relationship with trade. It further described the unique aspects and challenges of China's
procurement system, notably the existence of two laws (the Tendering and Bidding Law
and the Government Procurement Law), the influences of social and economic policy,
and the use of procurement agents. The paper concluded with an assessment of future
needs to consolidate the various procurement-related laws, develop implementing
regulations, disseminate information, and strengthen the oversight function.

Kruger (2004) highlighted the significant differences between European Union (EU) law,
U.S. law and other regimes such as United Nations Model law, The World Trade
Organisation’s Government Procurement Agreement (WTO/GPA), The International
Bank for Reconstruction and Development (IBRD), and the NAFTA (North American
Free Trade Agreement) with respect to procurement laws. The author acknowledges
that the new directive on public contracting facilitates a smoother approach than in
current EU law with regard to high-tech complicated contract awards, but questions
whether the ’competitive dialogue’ really can afford tailor-made solutions to cope with
long-term public/private partnership arrangements of the kind now spreading all over
Europe

Kural & Alsac (2006) presented an analysis of the new public procurement procedures
to understand the path from the determination of the need to the signing of the contract
as well as several special provisions for consultancy services, complaint reviews and
statistics of the last two years. This study followrd the transformation of the public
procurement procedures in Turkey in 2002 by two laws; Public Procurement Law and
Public Procurement Contracts Law. This situation brought about challenges for the
stakeholders from both the public sector and private sector.

Siegfried Schnitzer (2010) provided an analysis of the fragmented sphere of

international agreements on public procurement law in the European Union. After a
comprehensive review of the most important European Communities agreements on
public procurement, this paper described how these agreements can be subdivided
within certain categories and certain types and how this categorisation and typification is
vital with regard to the legal effect of a particular agreement. In this regard, it is argued
that EC agreements on public procurement (including the World Trade Organization
Agreement on Government Procurement) are, in principle, capable of direct
applicability. Thus, disappointed bidders are - from an EU perspective -, in general, able
to invoke the provisions of such EC agreements before national courts and authorities,
based upon the non-discrimination principles incorporated in such agreements.

Thiankolu (2011) critically examined the policy objectives underlying Kenyaʼs public
procurement system, as set out in the countryʼs Public Procurement and Disposal Act,
2005 (“the Procurement Act” or “the Act”). The drafters of the Act made subtle but
significant deviations from the United Nations Commission on International Trade Law
Model Law on Procurement of Goods, Construction and Services (“the Model
Procurement Law”).2 Due to the deviations, there are many serious conflicts within the
Act, and between the Act and other Kenyan laws. Accordingly, there is need for a
comprehensive review of the Procurement Act.

Ntayi et al. (2012) examined the perceptions and effects of social value orientation,
expected utility, fairness in procurement procedures, the legitimacy of the procurement
law and the procurement law enforcement authority on compliance with the
procurement law, guidelines, procedures and regulations. Empirical research in this
area is relatively sparse. The findings show that social value orientation, expected
utility, legitimacy of the procurement law enforcement agency and perceptions of
procedural justice were significant predictors of the Public Procurement and Disposal of
Assets Authority (PPDA) regulatory agency.

Fisher & Corbalan (2013) examined principles of fair trade in public procurement in
Europe, focusing on legal dimensions related to the European Public Procurement
Directives. Key findings are that the introduction of fair trade products into European
public procurement has been marked by legal ambiguity, having developed outside
comprehensive policy or legal guidelines. Following a 2012 ruling by the Court of
Justice of the European Union, it is suggested that the legal position for fair trade in
procurement has become clearer, and that forthcoming change to the Public
Procurement Directives may facilitate the uptake of fair trade products by public
authorities.

Andrecka (2017) studied the legal loopholes and uncertainties that occur during public
procurement of framework agreements as a result of current EU rules and national
practices in Denmark and the United Kingdom - provision on framework agreements
were introduced into European Union (EU) Law in 2004. Since then framework
agreements have gained popularity and importance on the European Union (EU) public
tender market. The article highlights the need for clarification of the existing rules and
introduction of transparency to the subsequent call-off stage of framework agreements.

Ibrahim et al. (2017) investigated the efficacy of public procurement laws in ensuring
value for money (VfM) in a developing country context. A qualitative case study
approach involving three local government agencies in Ghana was employed. The
study found that the presence of a legal and regulatory framework does not ipso facto
guarantee compliance and VfM. Additionally, a possible reason why even reported
cases of compliance do not translate into VfM is that evidence of compliance, especially
in a developing country setting, is often a façade.

Halonen (2017) examined the disclosure of information within public contract awards
under EU law. EU Public Procurement rules have several objectives that may at some
times be conflicting with each other. A certain level of transparency of public
procurement procedure is necessary in order to fight corruption, enhance trade
opportunities and ensure effective legal remedies. On the other hand, too much
transparency may have certain anti-competitive effects. The national laws regarding
disclosure of information vary in different EU member states. In Finland the EU law
principle of effective remedies has been interpreted as requiring full transparency
among the bidders. The transparency rules under EU law and certain Member States'
national laws are analysed. As a conclusion, it is suggested that the rules on disclosure
should not be left solely to the discretion of member states as the over-transparent
approach taken by certain member states may negatively affect the markets both on a
national and EU level.

Aboelazm & Afandy (2019) presented and analyzed the different concepts of centralized
and decentralized procurement methods; identified the advantages and disadvantages
of each method and the two methods of public procurement applied in the Arab
Republic of Egypt in an attempt to overcome the disadvantages of the Egyptian system;
and introduced a new framework for government procurement in Egypt. The research
attempted to find the ideal method of public procurement in general and what is the
method to be followed in the Egyptian case through the data presented and analysis of
the Egyptian public procurement system.

Sarawa & Mas’ud (2020) proposed and validated the strategic public procurement
regulatory compliance model with mediation effect of ethical behavior. It expanded the
socio-economic theory of regulatory compliance to explore the mediating effect of
ethical behavior on the influence of professionalism, familiarity, enforcement, resistance
to political pressure and compliance with public procurement regulation. A quantitative
research design was deployed using 125 procurement officers as a sample group. The
data from the sample was analyzed using Partial Least Squares Structural Equation
Modeling (PLS-SEM). The results validated the hypotheses for the strategic public
procurement regulatory compliance model with mediation effect of ethical behavior. The
study not only confirmed the earlier findings on the direct effects of professionalism,
familiarity, enforcement, resistance to political pressure and ethical behavior on
compliance, but also established the mediating effect of ethical behavior on compliance
on all the predictors except resistance to political pressure. The study implied that
ethical behavior of public procurement officers should be a strategic point of concern by
both policymakers and professional bodies.

The purpose of Cantera (2021) was, on the one hand, to analyze the management
models that Law 7/1985, of April 2, 1985, regulating the Local Regime Bases, offers to
the Provincial Capital Cities of the Autonomous Community of Castilla y León in Spain,
a Member State of the European Union, for the provision of public urban transport
services, and on the other hand, in line with and in relation to the previous premise, to
study how it influences and determines, depending on the form of management of the
public service of urban transport chosen by each town council, which articles of Law
9/2017, of November 8, on Public Sector Contracts, should be applied. From the study
of these issues, it was concluded that the level of application of the contractual
legislation is the same, it is disruptive and unequal, which requires a necessary
legislative modification that equates the application of the contractual regulations,
regardless of the model of management of the urban transport public service that the
Municipalities decide to adopt.

Although not directly related to public procurement law, Asai et al. (2021) studied how
hiring public officials affects firms’ ability to win government contracts in Japan.
Personnel transitions of public officials were linked to contractors and government
contracts awarded to those contractors over time. Using within-firm variation, evidence
consistent with exchange of post-public employment for increases in government
contract awards was observed. The results suggest that quid-pro-quo arrangements are
not made as simple bilateral agreements between an individual public official and a firm,
but rather made with substantial organizational involvement.
3. PART C

3.1. ANALYSIS OF PROCUREMENT PROCEEDINGS AT THE MINISTRY OF

HEALTH AND WELLNESS. (MOHW)

3.1.1 STEPS INVOLVED IN PROCUREMENT PROCEEDINGS.

The key objectives of the public procurement system are to achieve efficiency and
effectiveness in the procurement process to deliver value for money following ethical
principles in line with the PPA Act 2006 and Public Procurement (Regulations 2008).
Accordingly, at the Ministry of Health of Wellness, the following steps are involved in
procurement proceedings:

1. Request are received from end users which may be an individual, department or
divisions that requires the goods, services or works in order for it to undertake its
operational functions.

2. Upon receipt of the request, funds are earmarked.

3. Subject to availability of funds, approval are sought from the Accounting Officer for
invitations of bids.

4. File is submitted to the Procurement Unit for Procurement proceedings.

5. At the procurement unit, the request is channeled to the respective unit for invitation
of bids.

6. Depending on the request, i.e. goods, services or works and the cost estimate, the
appropriate method of procurement is selected, that is informal Quotation, Restricted
bidding (RB, RFSQ) or Open National Bidding which may national or international.

7. After tendering exercise, bids are evaluated by a selection of officers recommended

by the Procurement Committee (Departmental Bid Committee or DBC) and
approved by the accounting officer.
8. After evaluation, the Bid Evaluation Committee (BEC) submits its report for
recommendation of award to the DBC for vetting and approval by the Accounting
Officer.

3.1.2 SELECTION OF DEPARTMENTAL BID COMMITTEE

The Accounting Officer is responsible and accountable for ensuring that all the
procurement proceedings of the procuring entity is conducted in accordance with the
PPA, its regulations and other established procedures. In so doing, he has to select
officers to from part of the Procurement Committee (DBC).

A Procurement Committee must consist of:

(a) A Senior Officer as chairperson and not less than two other members, appointed by
the Accounting Officer or the Board where applicable,

(b) The Head of the Procurement Unit,

(c) The Head or representative of the Finance Section,

(d) Any other officer(s) designated by the Accounting Officer, and

(e) A Secretary.

3.1.3 SELECTION OF EVALUATORS

1. Evaluators are selected from a pool of evaluators registered by the Secretariat

Tendering Unit of the Ministry of Health and Wellness knowledgeable in the subject
matter except of Works project whereby the evaluators are selected from a pool of
Engineers registered and available on the Ministry of National Infrastructure and
Community Development. The final selection of evaluators and the secretary are
approved by the Accounting Officer prior to start of evaluation.

2. An Evaluation Committee may be set up by the Accounting Officer in consultation

with the Chairperson of the Procurement Committee and comprise of not less than
 three members, which may include a member who is not an officer of the Procuring
Entity where such expertise is not available in-house, and one Secretary.

3. The Evaluation Committee may include one or more members of the End Users, as
appropriate, and any person involved in the preparation of the bidding document if
considered advantageous due to the type and complexity of the procurement.

4. The role of the Secretary is to liaise with the members of Evaluation Committee
meeting as directed by the Chairperson of the Evaluation Committee, maintain
attendance and take minutes of all deliberations during evaluation, ensure that all
bids are kept in a secured place, and organize the necessary logistics such as
meeting place and other office requisites.

The members of an Evaluation Committee should possess skills, knowledge and

experience relevant to the procurement subject matter, which may include – (a)
technical skills; (b) procurement and contracting skills; (c) financial management or
analytical skills, and (d) legal expertise. (6) The number of members and level of
expertise of an ad hoc Evaluation Committee shall depend on the value and complexity
of a subject matter of procurement.

3.1.4 TENDER OPENING PROCESS

Bids are opened by the secretariat-tendering unit of the Ministry under the supervision
of the core members of the DBC.

3.2 MAIN WEAKNESSES IDENTIFIED

 The selection of the evaluators is done at the discretion of the accounting officer.
There is, however, no ‘scientific’ method in place to select the optimal mix of
evaluators for any particular project. Evaluators are selected on the basis of their
technical abilities and level of expertise but there is currently no way of
ascertaining whether the BECs that are selected for projects are actually the
optimal ones.
  Top level management in Public Institutions, like MOHW, interfere too much in
procurement process since such behaviours do not give value for money. It is
recommended that this should be stopped.
 Too little advertisements to bidding. To this end, advertisements should be
intensified to allow more contractors or suppliers to bid for contracts, not only
registered contractors, as this would enable the various public Institutions to
maximize a higher benefit from competition.
 There is no proper method in place to estimate the number of hours required for
the evaluation of bids. This may lead to an over-estimation of the number of
hours required and overpayments to the evaluators, thereby leading to excessive
public spending. The Ministry can try to come up with ways to forecast the
required number of hours (e.g. by making use of past data) to circumvent this
issue.

3.3 FIVE POSSIBLE MEASURES TO IMPROVE THE PROCUREMENT SYSTEM IN

MAURITIUS

3.3.1 SUSTAINABLE PROCUREMENT

Sustainable procurement, also known as green procurement, is a process a process

whereby organizations meet their needs for goods, services, works and utilities in a way
that achieves value for money on a whole life basis in terms of generating benefits not
only to the organization, but also to society and the economy, whilst minimizing damage
to the environment (Islam, et al., 2017). It is said to bring about a number of important
benefits, such as protection of natural resources and cost saving. It would be a
welcome innovation in the public procurement landscape in Mauritius. For instance, the
Government can procure hybrid vehicles that would be fuel-efficient and eco-friendly. It
can also buy those electrical appliances that would consume less electricity.

3.3.2 PUBLIC-PRIVATE PARTNERSHIP (PPP)

Public-private partnerships (PPP) involve collaboration between the Government and a

private-sector company that can be used to finance, build, and operate projects, such
as public transportation networks, parks, and convention centers. Financing a project
through a public-private partnership can allow a project to be completed sooner or make
it a possibility in the first place. Public-private partnerships often involve concessions of
tax or other operating revenue, protection from liability, or partial ownership rights over
nominally public services and property to private sector, for-profit entities (Investopedia,
2021). Many countries are already making use of PPP to deliver public assets and
services. New Zealand is one conspicuous example. One study (Liu & Wilkinson,
2011) found that PPP adoption leads to accelerated infrastructure provision, better risk
allocation, whole of life cost savings, improved service quality, access to additional
income sources, benefits for local socio-economic development and enhanced project
scrutiny. Engaging more actively in PPPs would therefore stand the Mauritian
procurement system in good stead in the future and ensure better value for money in
public spending.

3.3.3 PURCHASER-SUPPLIER RELATIONSHIP

It is well documented that closer relationships between buyer and suppliers can create
significant value and help supply chains become more resilient. To improve the
procurement system in Mauritius, the Government can therefore consider engaging in
supplier relationship management (SRM), which is the systematic approach to
evaluating vendors that supply goods, materials and services to an organization,
determining each supplier's contribution to success and developing strategies to
improve their performance. Such an initiative would allow the Government, among
others, to save on certain costs and to benefit from reduced price volatility (e.g. for the
procurement of oil) (Davies, 2021).

3.3.4 BEST VALUE PROCUREMENT

Best Value Procurement (BVP) is an innovative procurement methodology based on

purchasing and realizing the highest value for the lowest price (best value) (Supply
Value, 2021). It is a procurement system that looks at factors other than price, such as
quality and expertise, when selecting vendors or contractors. The vendors or
contractors are researched first before a detailed project plan is made. Adopting BVP
would offer the Government greater predictability in terms of the final goal, expressed in
costs, time and quality with a minimum of effort and control for them. BVP would also
increase project value by mitigating risks and increasing the transparency by
underscoring the pre-award phase (Storteboom, et al., 2017).

3.3.5 CENTRALISED PROCUREMENT AND OTHER POSSIBLE AMENDMENTS

For some ministries, a form of centralized procurement can be pursued to make the
procurement process less costly and more efficient. For instance, currently hospitals in
Mauritius make their own purchases. This form of split procurement leads to different
hospitals incurring different prices for the same items. Such procurement exercises can
be done centrally, at the head office of the Ministry of Health and Wellness. This would
minimize fluctuations in costs and aid in better budgeting and cost control.

The Public Procurement Act (2006) should be amended to include provisions for
electronic procurement and sustainable procurement issues. This will improve
transparency, accountability, and compliance respectively as well as ensure sustainable
best practice in our public procurement system.

In addition, as mentioned in the previous sub-section, there is currently no way of

objectively estimating the amount of time required to evaluate bids. This can potentially
lead to abuse as some evaluators may prefer to drag the evaluation exercise longer so
that they can get paid for longer hours. Amendments can be brought to the PPA to cap
the number of hours that an evaluation exercise can take. This cap would be
dependent on a number of factors, e.g. number of bids received, complexity of the
project (which can be determined through its estimated cost) and so on. The use of
past data would be of great help in ascertaining how many hours to allocate to an
evaluation exercise.