Corruption in Procurement

UNIVERSITY OF DAR ES salute BUSINESS SCHOOL AN ASSESSMENT OF CORRUPTION IN THE PROCUREMENT concern IN GOVERNMENT CASE IN TANZANIA. BY BERNARD, HELLEN REG. NO. 2009-06-00929 explore PROPOSAL SUBMITTED FOR APPROVAL TO CARRY OUT RESEARCH FOR THE DEGREE OF master OR BUSINESS ADMINISTRATION. Table of Con cristalts 1. 0 INTRODUCTION 1. 1 background3 1. 2 STATEMENT OF THE PROBLEM4 2. o inquiry aim6 2. 1 RESEARCH OBJECTIVES6 3. 0 RESEARCH QUESTIONS6 3. 1 RESEARCH HYPOTHESIS. 7 4. 0 earthly concernations REVIEW 4. 1 CONCEPTUAL writings8 4. THEORETICAL textile. 10 4. 3 EMPIRICAL LITERATURE.. 12 5. 0 methodological analysis. 14 REFERENCES. 17 1. 0. INTRODUCTION 1. 1 Background The Tanzania governingal science has presbyopic realized the importance of unexclusive procurance to the economic victimisation of Tanzania and and thence to the fulfillment of key objectives inside the national Poverty Reduction St tellgy. To this effect, Tanzania was star of the first countries in S ub-Saharan Africa to enact a law simulate on the UNCITRAL model law.Since 1996, when the first sphere procural assessment swear out for (CPAR) was carried out, the Government has been working closely with the universe of discourse Bank and other(a)(a) provement sidetrackners to enhance the economy and efficiency of its procurement formation and to base it more(prenominal) transp arnt and accountable. The Government has long ac associationd that there is rampant depravity in Tanzania and has been fighting hard to reduce it. It is estimated that at the national direct about 20 percent of the giving medication expenditure on procurement is lost finished rottenness, mainly through kick-backs and bogus investments that gravel to be written off.Considering that humankind procurement accounts for about 70 percent of the completed politics expenditure bud lay d hold, this translates to a loss of TShs three hundred billion (USD 300 million) per year, enough to finance the combined annual re incumbent budgets of the ministries of health and education. clearly much(prenominal) a loss is economic some(prenominal)y unsustainable. Major losses find in construction and supply contracts, which ar the study avenues for decadence, particularly at the local government train. The consider for enhancing the transparency of the procurement system foundation non then be overemphasized.The Government of Tanzania is fully aware that its worldly concern procurement is silence weak and involve to be strengthened substantially to enable it to secure that the procurement laws and institutions become effective withalls in the efficient and transparent commission of unexclusive funds. Strategic reign overment in the public vault of heaven begins by looking up toward authorities -the current expectations and aspirations of citizens and their representatives and the older semi governmental agreements officially enshrined in the regulation that d efines public managers mandates for action. putrefaction had been inculcated in the political cultivation of most underdeveloped countries while, it still elicits the criticism and opposition of the public, it has n unmatchabletheless been legitimate as a fact in the political life. One of the original areas of putrefaction is in the procurement process. Grounded on the idea that, the bread and cover of politicians exists in this aspect, the procurement process has been the locus and target of most politicians aiming to get a slice of the stripe. In third world countries, this part of the cake proves to be the life of people.The foreign aid apt(p) by world-wide organizations like the World Bank and the International Monetary Fund and the government revenue from taxes is easily lost once the budget is distributed to departments and the purchase of equipments and materials has begun. . in the first place on we questioned the assumption or perception that depravation, especial ly petty rottenness is a function of low pay. In our review of theories of motivation we observe that there is consensus among theorists on motivation on pay being a necessary, but not sufficient condition for an employee to perform at a minimum level in an organization.Where an employee has a perception that the level of wages given by the employer supportnot and impart not join basic aliment/existence demands, and the employee is not in a position to exit from the organization, he/she allow for adopt deviant work behavior, which result include a number of income maintenance strategies, including rot to address the income shortfall. 1. 2 statement of the puzzle The procurement process has been the locus of government degeneracy- unless this can be address the citizens of Tanzania will continue to suffer.It is necessary that strategies and measures be introduced in the government procurement profession to reduce the corruptness in this process and in effect, decomposi tion in the government. procural corruption is deeply rooted in the political culture and traces its roots on the disposition of governments. As long as the nature of government and politics remains to be relatively immature, corruption in the procurement process will remain. Thus, the need for strategies to hamper this circumstance arises.A focus on newspaper reports, editorials and letters from readers in every of the last ten years would make one conclude that this unsophisticated has been eaten away by the corruption scourge. Contrast the foregoing situation with what obtained amid 1961, as we became independent and the late 1970s. The decade following Tanzanias independency (1960-1970) did not manifest intense corruption. Where it took place it tended to be restricted to subordinate officials who demanded and received negligible sums of gold.As the country expanded the public empyrean and public administration institutions more and more decayed, entailing the rise of bur eaucratic malfunctioning, opportunities for rent-seeking behavior and ask and offering takingss started creeping in. In the same period, the represent of living ruddiness dramatically while public service pay remained static or declined. Public officials became driven by a culture of survival and they progressively adopted deviant behavior patterns discussed earlier in the paper, including the utilize of corruption as an income maintenance strategy.To address and control the trend of increased corruption, the Nyerere Government enacted the leadership code as part of the Arusha Declaration which had been adopted in 1967 and dedicated Tanzania to the pursuit of Ujamaa and Self Reliance as its ideology. While moral suasion through a socialist code of conduct was qualification its contribution to the fight against corrupt tendencies, the country came to experience a major economic crisis following the oil crisis and the after effects of the war with Idd Amin in the late 1970s and early 1980s, with double digit inflation, major pecuniary deficits and negative economic growth.That situation saw the state lose its skill to pay public servants a living wage. Official salaries, even at managerial and executive levels, fell below subsistence needs, creating incentives to look for side incomes. As the state controlled economy declined, an in evening gown one arose to take its place. Smuggling became rampant. In the end, the harsh realities of scar urban center and poverty overwhelmed the dedication to socialist equality and corruption became embedded in Tanzania society. 2. 0 RESEARCH AIM This study aims to resolve measures and strategies that could resolve the issue of government corruption in the procurement process. . 1 research objectives This research paper aims to 1. Identify the different procurement corruptions in governments of three World countries 2. De marginine the confronts of the procurement process and discover where corruption happens 3. Evalu ate the nature of Third World Government and politics and the corruption in procurement 4. Propose measures that can resolve the issue of corruption in the procurement profession 3. 0 RESEARCH QUESTIONS This study seeks to answer the following questions 1. What are the indicators of procurement corruption and how extensive is it mong governments (Developed, developing and Third World) 2. What are the different corrupt practices in the process of procurement? 3. Outlining the procurement process, what stage(s) does corruption happen? 4. In relation to the nature of Third World Governments, what is their relation and to what degree that these two variables (corruption in procurements and government) affect each other? 5. What are the measures and strategies that governments absorb employed to address this issue? 3. 1 investigate hypothesis 1.The nature of government and politics in a country is significantly related to its corruption practices 2. The more accountable the government, the lesser the endeavor of corruption in the procurement process 3. Further, procurement corruption is now related to the lack of transparency in government purchases. 4. 0 LITERATURE REVIEW 4. 1 Conceptual literature CORRUPTION Corruption is a very widespread phenomenon with most governments having a least some. While corruption unremarkably meets with disapproval, it may have some redeeming features (Tullock, 1996).It may make possible smaller or no salary payments to officials who, if carefully supervised, will still carry out their functions on a fee-for-service basis (Tullock, 1996). hydrofoil International (TI) has chosen a clear and focused definition of the term Corruption is operationally defined as the misuse of entrusted power for privy gain. TI further forks between according to overtop corruption and against the rule corruption. Facilitation payments, where a bribe is paid to receive preferential treatment for something that the bribe pass receiver is required to do by law, constitute the former.The latter, on the other hand, is a bribe paid to obtain operate the bribe receiver is prohibited from providing. The cost of corruption The cost of corruption is four-fold political, economic, social, and environmental. On the political front, corruption constitutes a major obstacle to democracy and the rule of law. In a democratic system, offices and institutions lose their genuineness when they are misused for secret advantage. Though this is harmful in the established democracies, it is even more so in newly emerging ones.Accountable political leadership cannot develop in a corrupt climate. Economically, corruption leads to the depletion of national wealth. It is often accountable for the funneling of scarce public resources to uneconomic high-profile projects, such as dams, power plants, pipelines and refineries, at the expense of less spectacular but more necessary al-Qaida projects such as schools, hospitals and roads, or the supply of power and water to agrestic areas. Furthermore, it hinders the development of fair market structures and distorts competition, thereby deterring investment.The effect of corruption on the social fabric of society is the most damaging of all. It undermines peoples trust in the political system, in its institutions and its leadership. Frustration and planetary apathy among a let down public result in a weak civil society. That in turn clears the way for despots as well as democratically pick out even unscrupulous leaders to turn national as personates into personalized wealth. Demanding and compensable bribes become the norm. Those unwilling to comply often emigrate, leaving the country numb(p) of its most able and most honest citizens.Environmental degradation is yet another consequence of corrupt systems. The lack of, or non-enforcement of, environmental regulations and legislation has historically allowed the North to export its polluting industry to the South. At the same time, regardless exploitation of natural resources, from timber and minerals to elephants, by both(prenominal) domestic and external agents has led to ravaged natural environments. Environmentally devastating projects are given preference in funding, because they are easy targets for siphoning off public money into cliquish pockets.PROCUREMENT Procurement is the full process involved in acquiring required goods, services or works. Procurement involves identifying the requirement of the buy authority, building a list of minimum requirements, and then scoring both pleaseed parties who meet the minimum requirements, usually offering the highest score establish on the most economically advantageous bid, generally known as best value. Part of the Procurement process is in any case to manage the contract once awarded, to ensure that the successful suppliers, or suppliers, are providing a quality service. cooperative contracts are becoming more commonplace where quadruplicate publ ic bodies will combine their requirements and run a single Procurement process to meet their merged requirements. Due to the higher volume of handicraft promised by collaborative contracts, suppliers will usually offer great(p)r discounts. Collaborative contracts are usually led by one public body, acting on behalf of the others. In addition to this, some Procurement Centers of Expertise set up and manage contracts on behalf of public bodies, allowing all public bodies to use these collaborative contracts.Some examples of these Centers of Expertise are OGC, Buying Solutions and Procurement Scotland. The stage of the Procurement cycle when suppliers are invited to submit bids is known as the Tendering process. Usually, in addition to submitting their pecuniary bid, suppliers are required to respond to a questionnaire which the public body has put together with the intention of identifying and eliminating suppliers who are unable to meet their basic requirements, thereby preventing their tender from being successful regardless of whether they have the most economically advantageous bid. . 2 Theoretical framework The authoritative study of political corruption encompasses matters of definition, typology, cause, and consequence, linked by a common theoretical framework. A substantial body of literature explores these issues, but numerous problems exist. The countless definitions inadequately set out the fundamental normative and behavioral dimensions of corruption and fail to incorporate the phenomenon into a broader theoretical framework or to deal accurately with the question of mystical interests.Typologies of corruption, though equally rife, in like manner seem to lack clear theoretical relevance. Existing explanations of corruption can be attacked for projecting confusing and contradictory hypotheses, for being fragmentary, and for failing to differentiate various types of corrupt behavior those centering on the functions of corruption also seem inco mplete. Some, for instance, underscore the positive effects of corruption in integration ruling elite but fail to question whether corruption influences feelings of legitimacy toward government or inspires destabilizing protests and mobilizations.As a form of deviant political behavior, corruption is political conduct contrary to political norms. This definition underscores both its normative and behavioral components. The normative aspect of corruption centers on the evaluative standards or rules that determine political propriety the criteria used to judge the legitimacy or illegitimacy (i. e. , the corruptness) of a political act the behavioral aspect corresponds to observable actions (Morris, 1991). The norm provides the standard by which all acts of government are to be interpreted and judged.Accordingly, any private usurpation of that pertaining to the public domain, which negates this principle, invites condemnation. An important issue that warrants attention concerns the r ole of personal gain or interest. Including personal gain or what is tantamount to private interest in a definition of corruption presents two major problems. First, it is generally held that all acts are a function of personal gain in formal theory, this is referred to as rationality. Consequently, all acts by government officials, whether corrupt or otherwise, are thought to be motivated by a rational procession of private interest.In other words, a non corrupt act is promoted by personal interest just as is a corrupt act. Since personal interest is an assumption of human behavior and a constant, it need not be included in a definition Strategic heed in the public sector begins by looking up toward politics -the current expectations and aspirations of citizens and their representatives and the older political agreements formally enshrined in the legislation that defines public managers mandates for action.Politics, and the laws that politics produce, deserve this pride of place for three key reasons. First, it is this kingdom that managers must search to discover what purposes are deemed publicly valuable and can, therefore, be practically and normatively sustained as the focus of their managerial efforts. It is in and through politics that they can discover and help shapes their mandates for action.Second, political institutions grant public managers the resources they need to accomplish their operational purposesincluding money and authority over their own organizations and over those beyond their organizations who can contribute to the managers purposes. Third, it is to politics and law that public managers are both theoretically and practically accountable their performance is ranked and their reputations made within this realm.Procurement contracting often entails large monetary sums and involves widely known or powerful people inside and immaterial government. Thus, this kind of corruption can be especially damaging to a country in terms of distor ted incentives, undermined public trust, and inequitable dispersal of national budgets. This is particularly prevalent in Third World countries where the political socialization of people seems to accept corruption as a part of the political culture.Among the principal types of procurement corruption includes collusion in play (leading to higher costs/prices for the urban center, payments for which may or may not be shared with corrupt officials) kickbacks by firms to fix procurement competition and bribes to officials who put the winning contractors behavior (which may permit lowball bids with subsequent cost overruns and unnecessary changes in contract specifications) (Klitgaard, MacLean, and Parris, 2000). 4. 3 Empirical literature Corruption is about economics, gaining power, maintaining power and unfortunately to some, survival (Green, 2000).Generally, its been my experience that corruption usually involves bribery, kickbacks, gratuities and gifts to government employees fro m individuals doing business or attempting to do business with the government. A large percentage of corruption taking place within governments and businesses worldwide rests within the procurement of goods and services. The movement toward de centralization, accountability, and democratic forms of government at the local level is gathering momentum (Klitgaard, MacLean, and Parris, 2000).In this context, the enormous costs of corruption are being explicitly recognized, as is the urgent need to correct governmental malfeasance (Klitgaard, MacLean, and Parris, 2000). Corruption is an entrenched symptom of misgovernance often reflected in patronage, red tape, inefficacious revenue-generating agencies, large scale bribery in procurement, and failure to deliver services to city dwellers When the government needs a good or service, the city government has the two broad alternatives of making it or buying it that is, the city can provide the good or service itself, or rocure it from the p rivate sector (Klitgaard, MacLean, and Parris, 2000). Corruption is one of the dimensions of this choice. Because contracting is where the money is, most government officials are tempted by the lure of procurement services often at the expense of the public. Recent developments and current trends are highlighting the role of accountants in governance.Foremost among these are the increasing concern with rising levels of corruption, the renewal of interest in accountability and transparency as inoculations against corruption the new government focus on results, benchmarking and value-for-money (the new public management) and the corresponding gormandise in the private sector through business process reengineering, knowledge management and intranets &8212 where accounting systems play a major role decentralization and participation by citizens and NGOs in public management are multiplying the needs for credible accounting instruction the privatization of utilities in several countrie s is increasing the need for regulation, in which accountants have a major role in reduction information asymmetry the globalization of corporate finance has enhanced the need for global standards of accounting and auditing the Asian crisis has highlighted the weaknesses in transparency, in financial sector regulation and in corporate governance generally in a number of countries (Bennett, 2000). There are several measures that could be done in order to reduce the incidence of corruption. First, reducing the scope and role of nature politics.An increase in public policy debates and other activities of government, opening the unkindly doors, and permitting greater public scrutiny of official processes would clearly have such an impact. Generally, the more public government affairs become, the less corrupt they can be (Bennett,2000). Enhancing the impropriety of the states subsystems would also reduce the likelihood of corruption. This could be pursued, for instance, by creating a n effective civil service system or merit system or opening up grass-roots political involvement. Such reforms would cripple the centralization of recruitment and thereby temper the loyalty patterns that currently prevail.Strengthening the autonomy and role of Congress or democratizing corporate organizations would be steps in this direction (Bennett,2000). Strengthening social organizations would also impinge on corruption. This could be done by reducing the tutelary role of the state and decrease the dependency of social organizations on the state or by enhancing commonplace input into the organizations themselves. Not only must businesses or unions articulate demands on the government, but such organizations must be structurally responsive to the demands of their constituents. Tying the fate of leaders of social organizations to criteria internal to the congregation rather than those determined by the state would greatly inhibit current patterns of corruption (Bennett,2000). 5. 0 METHODOLOGYThis chapter will discuss the method of research to be used, the respondents of the study, the sampling technique, the pecker to be used, the validation of the instrument, the administration of the of the instrument and the statistical treatment of the data that will be gathered. Research methodological analysis and Techniques for data collection This study will use the descriptive approach. This descriptive type of research will utilize interview, observation and questionnaires in the study. To deck the descriptive type of research, the researcher will be guided by Calmorin when he stated Descriptive method of research is to gather information about the present existing condition. The purpose of employing this method is to describe the nature of a situation as exists at the time of the study and to explore the cause/s of particular phenomena.Proposed subject Population/Sample The general population for this study will be composed of government officials and militar y group in the procurement process, randomly selected private companies who have been involved in the bidding process and randomly selected citizens. I will use a combination of cluster and random sampling. First, I will cluster the respondents from the government, the private sector and the public sector. To make the sampling easier for every specific cluster, I will seek the aid of any anti-corruption non-government organization to facilitate the name calling and addresses of the respondents or have them together in one place (i. e. in an organizational meeting) so that the sketchs can be given in one session. I will pick one hundred (100) respondents per cluster for a total of three hundred (300) respondents. Validation of the Instrument For validation purposes, I will initially submit a mass questionnaire and after approval, the watch over will be given to five respondents from the government, private corporations and the public sector. by and by the survey questionnaire wil l be answered, I will ask the respondents for any suggestions or any necessary corrections to ensure further utility and validity of the instrument. I will again examine the content of the survey questionnaire to find out the reliability of the instrument.I will exclude irrelevant questions and will change words that would be deemed difficult by the respondents, too much simpler terms. Administration of the Instrument The revised instrument will then be administered to the respondents of the study which will be chosen through a combination of cluster and random sampling. I will exclude the ten respondents who will be initially used for the validation of the instrument. I will also tally, score and tabulate all the relevant data in the survey questionnaire. Statistical Treatment of Data When the entire survey questionnaire will have been collected, the researcher will use statistics to analyze all the data.The statistical formulae to be used in the second and third part of the surv ey questionnaire will be the following 1. Percentage to determine the magnitude of the responses to the questionnaire. 2. burthen Mean 3. I will use chi-square to relate the participation rate of the government employees, companies and the public sector. I will be assisted by the SPSS in coming up with the statistical analysis for this study. Resource, Confidentiality and other esteem The survey respondents and interviewees identities will be held confidential. Only I will have the knowledge on their identities and utmost secrecy will be provided. Further, personalities who do not want to be quoted in interviews will not be disclosed. REFERENCES. 1.Klitgaard, Robert, MacLean, Ronald and Parris, Lindsey, Corrupt Cities A Practical Guide to Cure and Prevention, Ics Press, 2000 2. Bennett, Anthony, The Role of score in Good Governance, In Carter, Williiam, Davies, Mark, El, Yassin and Ford, Kevin, Government Ethics and rightfulness Enforcement Toward Global Guidelines, Praeger Pub lishers, 2000 3. Green, Vincent, An Approach to Investigating Corruption in Government, In Carter, Williiam, Davies, Mark, El, Yassin and Ford, Kevin, Government Ethics and Law Enforcement Toward Global Guidelines, Praeger Publishers, 2000 4. Morris, Stephen, A State-Society Approach to the count of Corruption , Corruption & Politics in Contemporary Mexico, University of aluminium Press, 1991