1. THE UNIVERSITY OF LUSAKA
BPS460 – PUBLIC SECTOR PROCUREMENT SYSTEMS

2. INTRODUCTION Why Purchasing is Important
Institutional spend on purchasing, e.g
Manufacturers – 55c/ dollar
Governments – 10 to 15% of GDP
Impact on product and service quality
Reduction in costs
Outsourcing
Early supplier involvement

3. PART 1 – INTRODUCTION TO PUBLIC PROCUREMENT
Public procurement is the acquisition by purchase, rental, lease, hire purchase, licence, franchise or any combination thereof. (Public Procurement Act, 2008)
It includes much that supports the work of government and ranges from routine items (e.g. stationery, furniture), to complex spend areas (e.g. construction of hospital, hydro power station)

4. Definition Public Sector Government ministries and departments
Local authorities
Parastatal companies
Institutions in which Government has majority or controlling interests

5. Public Vs. Private Sector Procurement Practices
PUBLIC PRIVATE • Delivers services to the • Supply the business entity population with inputs • Social & Political • Strives for efficiency & objectives besides quality – relates to the firm’s economy profits

6. Public Vs Private Sector Procurement Practices (cont’d)
PUBLIC PRIVATE • Avoids locked-in • Seeks stable, long term relationships; seeks relationships between buyer competition and seller • Often as agent, buying • Buying for one’s own firm for others

7. Public Vs Private Sector Procurement Practices (cont’d)
PUBLIC PRIVATE
• Considers full compliance • Looks mainly at price
with rules, exact terms of and quality, and
contract and accountability flexible on rules

8. Public Vs Private Sector Procurement Practices (cont’d)
PUBLIC PRIVATE
•Financial Accountability: • Financial Accountability:
Keeps strict control of Observes basic business and
budget obligations and auditing standards
expenditures of public
funds

9. Public Vs Private Sector Procurement Practices (cont’d)
PUBLIC PRIVATE
•Transparency: •Transparency:
Buying in full public view Buying within the “closed”
under scrutiny of elected situation of the firm; answering
officials and the press. to inside corporate officers

10. Procurement Principles
Economy
Competition
Efficiency
Equity
Integrity
Transparency
Accountability
Value for Money
Reliability
Fairness
Development of local industry

11. PURCHASING POLICY AND PROCEDURES
OBJECTIVE
To discuss why purchasing policies and procedures are important;
To identify and understand the different types of policies; and
To identify and understand the various procurement procedures.

12. PURCHASING POLICY POLICY
A body of principles, expressed or implied, laid down to direct an institution towards its objectives and guide executives in decision making
Policy refers to a set of directives, purposes, and rules of action that guide an institution;
Rules of action are standard operating procedures together with any rules and regulations.

13. PURCHASING POLICY Advantages
provide guidelines when formulating strategies.
Provide authority and /or precedent for a given course of action.
Provides a framework for consistent decision making and action.
Defines the rules and procedures that apply to all employees.
Provides a basis for management control, allow coordination across organisational units and reduce the time managers spend making decisions.

14. PURCHASING POLICY Disadvantages
It is difficult to communicate throughout large organisations.
Personnel start viewing policies as a substitute for effective management.
Policy development can restrict innovation and flexibility.
Too many policies accompanied by cumbersome procedures can be a nightmare to an organisations.

15. PURCHASING POLICIES Effective Policies Action oriented Relevant
Concise
Unambiguous/well understood
Timely and current
Guides problem solving and behaviour
Action oriented – provide enough detail to direct behavior toward a specific goal or objective.
Relevant – avoiding trivial issues;
Concise – stating a position with a minimum number of words;
Unambiguous – clear to staff as to how to interpret the policy’s intent and direction;
Timely and current – policies should be periodically reviewed for clarity and conformance.
Policy formulation and review should be a dynamic activity undertaken at least once every year. A policy may be timely and correct but not enforced by management. Under such circumstances, it is management’s responsibility to re-educate the workforce about the objective of the policy.

16. PURCHASING POLICIES Basic Principles
Procurement policies should aim to select and procure, in an economically rational manner, the best possible goods and services available;
Suppliers worldwide should be eligible to participate in procurement transactions on open, fair and transparent principles and easy-to-understand, simple procedures;
Purchasing transactions have an important contribution to make to society, therefore, purchasing practices should consider the effective preservation of natural resources and protection of the environment.
Purchasing policies as we have seen meant to provide guidance and support to the professional purchasing and support staff.The policies must conform to three basic principles.

17. PURCHASING POLICIES Categories of Policies The role of purchasing;
The conduct of purchasing personnel;
Social and minority business objectives;
Buyer-supplier relationship; and
Operational issues.
The five categories define;

18. PURCHASING POLICIES Policies Defining the Role of Purchasing
Origin and Scope of Purchasing Authority;
Objectives of the Purchasing Function;
To select suppliers who meet requirements;
To purchase materials and services that comply with standards;
To treat all suppliers fairly and ethically
Corporate Purchasing Office Responsibilities

19. PURCHASING POLICIES
Policies Defining the Conduct of Purchasing Personnel
Ethics Policy
Reciprocity Policy
Contacts and Visits to Suppliers
Former Employees Representing Suppliers
Reporting of Irregular Business Dealings with Suppliers

20. PURCHASING POLICIES
Policies Defining Social and Minority Business Objectives
Supporting Minority Business Suppliers
Environmental Issues

21. PURCHASING POLICIES Policies defining Buyer-Supplier Relationships
Qualification and Supplier Selection
Principles and Guidelines for Awarding Purchasing Contracts
Labour or other Difficulties at Suppliers
Treating suppliers fairly and with integrity.
Providing prompt payments to suppliers.
Inform suppliers as to why they did not receive a purchase contract.
Conditions prompting a re-tender.
Conditions outlining the use of competitive bidding.
Operating guidelines with regard to negotiations.

22. PURCHASING POLICIES Policies Defining Operational Issues
Hazardous Materials
Supplier responsibility for Defective Material
Purchased Items Comparison
Compliance with state laws and regulations
Supplier-requested changes in contract terms and conditions
The proper disposal of material assets
Purchasing’s legal right to terminate a contract or order
All policies clarify management’s position on a topic while providing guidance to the personnel responsible for carrying out the policy.
Procurement personnel must take an active part role in controlling hazardous waste.
In many countries, governments require companies to develop Environmental Management Systems to deal with environmental issues. Discuss case of NCZ and ZAMANITA.
NCZ hazards, gaseous, solid and liquid types, identify.