Added value (F4)

The addition of value is one of the most difficult and complex one. This factor is significant in influencing public procurement attainment of VFM. The procurement officers have difficulties to show tangible value from procurement processes. Table 4.11 below presents the substantiating concepts and codes for this factor.

Table 4.11 Added value: substantiating concepts and codes Substantiating concepts

The benefits realised from strategic procurement, are cost-saving, risk reduction, compliance, public image, read reports.

Substantiating codes

“So when you follow the procurement process from point A to Z, you find out that the procurement function breeds VFM. It is good to follow them because you are protecting the institution”. (BCC 4.0)

‘’Following regulations, does not help in emergency purchases. Moreover, it does take long to complete the process, may be just follow the thresholds. For example, we want to do a purchase of MK15, million, we seek the approval of the ODPP but anything below that, we do not”. (LCC 4.0)

“And if you want to buy a vehicle within 6 weeks, you need to make plans when you present your evaluation for any procurement. So if you follow procurement plans, you will comply with the PPPs and get VFM”. (BCC 4.1)

“I should emphasise 'word shortcuts' if you want to make shortcuts, you may have problems. In such cases, these happen only during emergency procurements though we still seek consent of the ODPP. Mostly these come about when dealing with procurements involving items for the president and his vice”. (BCC 4.2).

Following regulations, does not help in emergency purchases. Moreover, it does take long to complete the process, may be just follow the thresholds. For example, we want to do a purchase of M15, million, we seek the approval of the ODPP but anything below that, we do not. (LCC4.0)

“And if you want to buy a vehicle within 6 weeks, you need to make plans when you present your evaluation for any procurement. So, if you follow procurement plans, you will comply with the PPPs and in the process, you get VFM”. (BCC4.1)

“But I understand that following procedures presented a big challenge because some entities do not have CPOs and POs to legitimise procurements.” (BCC4.3)

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“So, without complying with the PPPs, it means that procurement process is in a mess and there is no VFM.” (BCC 4.4)

“At this … because we spend taxpayers’ money, we follow the PPPs so that there is

accountability and transparency.’’ (BCC 4.5)

“Suppliers have to comply with the PPPs to be legible. Better prices do not mean the supplier will win the contract. Also, SMEs usually charge prohibitive prices unlike larger conglomerates. This puts them at a disadvantage. May be the ODPP should look into this so that they too are considered to promote them.’’ (BCC 4.6)

Properties

1. The failure of the procurement function to document success stories about VFM from

procurement processes is one of the criticisms against such processes. Other senior members of the councils have taken an alternative stance in order to frustrate the procurement function.

2. Some of the procurements concluded are able to show the tangible short-terms results.

However, most of the benefits of compliance are achieved in the long-term. In this regard, persisting that procurement should show short-term benefit can disturb the objectives of the function.

3. Due to the nature of the procurement function, it is not easy to show the “returns on

investment” as the activities are cross-functional. The efforts by the procurement function often result in widespread benefits to the organisation. This creates challenges for the procurement team to show tangible business benefits for each department.

4. Creating centralised procurement function at the LG secretariat can be detrimental in the

end. They can operate against the principles of decentralisation and this might lead to job losses during turbulent times.

Strategies

Much as it is not easy to realise short-term values from procurement initiatives, the inability to understand the long-term values may force the councils to engage in illegal procurements. However, the following strategies need to be employed:

1. The procurement function should clearly communicate its processes and values gained

from compliance. It is important for the top management to understand how value is achieved when the procurement function is respected.

2. The procurement function should also be able to project their plans in terms of long-run

benefits such as improved compliance levels, competitive advantage, improved public image, improved communication and customer satisfaction.

3. The planning department should also be able to show some short-term benefits wherever

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purchases based on RFQs; time savings realised from framework agreements and satisfied users.

4. The ODPP should likewise, deliberately avoid building empires and centralised

procurements at the LG. Instead, decentralised procurement units should be formed in conjunction with the LG Secretariat.

5. The strategy should define the risks of not having procurement units managed by

competent qualified specialists. Risks such as non-compliance, maverick buying, and lack of progression on the ladder of procurement thresholds ought to be book-marked. This strategy can act as a deterring factor on short-term values, which can be gained through adversarial purchases. Moreover, introduction of baseline surveys on satisfaction of main stakeholders may serve as useful indicator for showing added benefits. By and large, involvement of procurement specialists in the processes is one of common features of best procurement practices by all public entities.

Specific strategies for this factor

One of the most important focuses of public procurement regime is not limited to achieving high- quality services at the lowest possible price but also the following:

 Legal and regulatory compliance

 Public perceptions of ethical behaviour

 Public perception of fairness and justice

 Political and economic considerations about the use of public money

This means that it is not enough for procurement officers to claim that they have attained low prices, VFM and quality without demonstrating that the process for doing so was fair and just.