CHALLENGES TO THE IMPLEMENTATION OF THE PUBLIC PROCUREMENT ACT, 2003 (ACT 663) AT STATE OWNED ENTERPRISES (A CASE STUDY OF GHANA PORTS AND HARBOURS AUTHORITY)

CHALLENGES TO THE IMPLEMENTATION OF THE PUBLIC PROCUREMENT ACT, 2003 (ACT 663) AT STATE OWNED ENTERPRISES (A CASE STUDY OF GHANA PORTS AND HARBOURS AUTHORITY)

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND

Governments of both developed and developing countries spend money on the acquisition of goods, works and services. To ensure judicious, economic and efficient use of state resources public procurement is necessary (Public Procurement Act, 2003).

Public procurement is the process by which organizations acquire goods, works and services using public funds. It includes planning, inviting offers, awarding contracts and managing contracts (Public Procurement Authority, PPA, 2007).

According to the PPA (2007) public procurement has a direct impact on the successful delivery of government projects and public services. It ensures sound public financial management by delivering value for money in government expenditure. It also encourages private sector growth and investment and reduces corruption.

The PPA (2007) further states that public procurement accounts for 50% to 70% of the national budget, 14% and 24% of gross domestic product and total imports respectively.

Thai (2001) noted that public procurement is an important function of government as the huge procurement outlays have great impact on the economy of any country. Arrowsmith (1998) also asserts that procurement is an important tool for the achievement of the economic, social and other objectives of governments.

The Government of Ghana, launched the Public Financial Management Reform Programme (PUFMARP) in 1996 with the aim to improve overall financial management in Ghana (PPA, 2007). PUFMARP identified weaknesses in the procurement system. Some of these weaknesses included: lack of comprehensive public policy, lack of central body with technical expertise , absence of clearly defined roles and responsibilities for procurement entities, absence of comprehensive legal, regime to safeguard public procurement, lack of rules and regulations to guide, direct, train and monitor public procurement. (Ameyaw et al, 2012).

Before the commencement of this reform programme, procurement was guided by many different rules. Government officials struggled to identify which rules to follow due to lack of policy framework for public procurement, (Suleima, 2010) as cited by Gnanih (2012).

In 1999, the Government of Ghana established the Public Procurement Oversight Group to steer the development of a comprehensive public procurement reform programme. (PPA, 2007)

As a result, the Public Procurement Bill was drafted in 2002 and this was passed into law on the 31^st of December 2003 as the Public Procurement Act of 2003, Act 663. (PPA, 2007)

The act established the Public Procurement Authority (Section 1 of Act 663) with the main object of harmonizing the processes of public procurement in the public service to secure a judicious economic and efficient use of state resources and ensure that public procurement is carried out in a fair, transparent and non-discriminatory manner.

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The Act also provides procedures and processes for the procurement of Goods, works and Consultancy services. It requires Procurement Entities to prepare procurement plan for each fiscal year and prepare quarterly updates for approval by the Entity Tender Committee. The Act, further, outlines procedures for the preparation of specifications, bid invitation, bid evaluation, award of contract and contract management. Since the implementation of the Act a number of challenges have been identified which have been affecting the effective implementation of the Act (Auditor Generals Report, 2011).

This study looks at the implementation challenges to the implementation of the Act at the Ghana Ports and Harbours Authority.

1.2 STATEMENT OF THE PROBLEM

The Public Procurement Act has been in enforcement since 2003 but since its formulation and implementation compliance to the law by various entities has been very challenging (Adjei, 2006).

Evidence in literature suggests that procurement challenges relating to Ghana are similar to the situations in many African and some Asia countries (Kumaraswamy, 1994, cited in Collins, Mensa and Osei Tutu 2012 ).

The National Public Procurement Authority of Sierra Leone in its 2005 report outlined several challenges affecting the work of the Authority. Some of these

The   country    Procurement    Assessment    Report    Ghana    (World Bank,     2003b)

revealed   that   most   staff    members   of   Ministries,   Departments   and   Agencies

(MDAs)  and  District   Assemblies   (DAs)  responsible   for  procurement   were   not

and suppliers are also crucial factors that challenge reform implementation (Azeem, 2007).

Low level and absence of capacity building for service provides inhibit successful public procurement in Malawi (ODPP Annual Report, 2007).

A lot of studies have been conducted into the challenges to the implementation of the Act in the Metropolitan, Municipal and District Assemblies in Ghana. However, not much study has been conducted into the challenges to the implementation of the Act in State Owned Enterprises. The object of this research is to identify the specific challenges that militate against the implementation of the Act in a typical state owned enterprise and provide solutions to address these challenges.

1.3 AIM:

The aim of the study is to identify the challenges facing the implementation of the Public Procurement Act 2003, Act (663) at the Ghana Ports and Harbours Authority

1.4 OBJECTIVES

The specific objectives of the study are:

• To identify the challenges to smooth implementation of the Procurement Act at the Authority.

• To identify remedies to resolve the challenges.

1.5 RESEARCH QUESTIONS

The following key research questions will be  used to facilitate the study:

• What are the challenges to the implementation of Procurement Act at the Authority?

• What are the remedies to resolve the challenges?

1.6 SIGNIFICANCE OF STUDY

There have been difficulties in the application of the Act in state owned enterprises some of which seek freedom from the Act because their activities are not funded from the Consolidated fund. This has occurred with particular reference to commercially oriented state owned enterprises that have to compete in a private sector environment.

This study is, therefore, relevant for three (3) major reasons

1)   It would help the Ghana Ports and Harbours Authority adopt practices that would conform to the provisions of the Act.

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• It would also provide an analytical perspective for understanding the challenges to the implementation of the Act in similar state owned enterprises.

• The recommendations would complement the Public Procurement Authority (PPA) efforts at removing challenges to the implementation of the procurement Act especially in State Owned Enterprises.

1.7 SCOPE OF STUDY

This survey covers only the Ghana Ports and Harbours Authority. The study is also limited to the implementation challenges confronting the Authority in its procurement activities using the Public Procurement Act 663 of Ghana.

1.8 METHODOLOGY

1.8.1 Study Population

Ghana Ports and Harbours Authority employs about three thousand (300) staff made up of about 300 senior staff and about 2700 junior staff (Bortey, 2011). They constitute the study population. The focus however would be on those who were directly involved in procurement activities.

1.8.2 Research Approach

A quantitative  research approach was adopted.

1.8.3 Analysis of Data

The data collected was analysed using weighted mean and standard deviations. Descriptive statistics in the form of tables and charts were also used where necessary..

1.9 LIMITATION OF STUDY

The following were some of the constraints encountered during the study.

1. The unwillingness of some of the respondents to release information that could enrich the study. The participants are public sector workers

and  would  not  want  their  identities  to  be  revealed  and thought  the

answers they provided might be used against them. This was mitigated by assuring them that the study was for academic purposes only and that they should not indicate their names on the questionnaire.

2. The researcher had to combine academic work with his regular office work and family life.

3. The results of this research, however, are a good foundation for more detailed study which may lead to amendments to some sections of the Act 663.

1.10 STRUCTURE  OF   THE    REPORT

The   dissertation   is   organized   into   five (5)   chapters.    viz

Chapter    One

This covers the introduction, background, problem statement, objectives of the study, research questions, significance , and organization of the study.

Chapter    Two

This chapter reviews literature on public procurement in general and then focuses specifically on public procurement in Ghana including: how procurement functions were undertaken before the public procurement reforms in Ghana; the legal framework of public procurement Reforms in Ghana, the procurement cycle, the Public Procurement Act, 663 procurement challenges, remedies to the challenges and state owned enterprises .

Chapter    Three

This describes the methodology including study population, sampling procedure, data collection procedure and mode of analysis.

Chapter    Four

This chapter     summarises, analyses, and discusses the findings of the research

Chapter Five

This chapter comprises summary of the findings, conclusions and recommendations.