factors affecting effective management of the procurement function at nakuru north sub-county

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WORLD ACADEMIC JOURNAL OF BUSINESS & APPLIED SCIENCES-MARCH-SEPTEMBER 2013 EDITION

262

Factors Affecting Effective Management of the procurement

Function at Nakuru North Sub-County

Arbe Bashuna

Jomo Kenyatta University of Agriculture and Technology

Accepted 28 September 2013

Abstract

Procurement function plays a pivotal role in the performance of the public sectors in Kenya. However, it is worth

noting that for the function to realise its aims properly it has to be effectively managed. Past studies show that the

management of the procurement function is affected by a myriad of factors. The purpose of this study was to

assess selected factors affecting effective management of the procurement function at Nakuru North Sub County

Procurement Unit. This study carried out a census in the procurement units among departmental heads from all

the 30 Ministry departments. The specific objectives guiding the study involved finding out how project

financing, accountability, ICT adoption, internal processes and internal control system affect the procurement

function at Nakuru North Sub County Procurement Unit The design involved a process of collecting data in

order to answer questionnaires concerning the current status of the subjects which include behaviour, attitudes,values and characteristics in a study. Data was collected from the departmental heads of all Ministry departments

using questionnaires containing structured and unstructured questions administered personally by the researcher.

Data collected were analyzed for descriptive statistics mainly frequencies and percentages; and Pearson Product

Moment Correlation using the Statistical Package for Social Sciences. The findings were presented in the form of

tables. The study findings show that the management of the procurement function was found to be slightly

effective. This was greatly attributed to Project financing, Accountability, ICT adoption and the internal control

system as applied in departments. The study thus, recommends that the Government should consider reviewing

its policy in respect to project financing especially on funds adequacy and timeliness. Consideration should also

be made on improving on ICT adoption and strengthening the internal control system

Key Words: Effective Management of the procurement Function, Nakuru North Sub-County

1. Introduction

Procurement is a key function of any organisation, public or private and in an era of globalisation with the

advent of entrepreneurial organisations, management of purchasing and supply in private as well as in public

sectors has gained more prominence. All procurements regardless of their value or complexity follow a standard

sequence of actions, which need to be effectively managed to realise the objectives of the procurement function.

Effective management of the function prevents the possibility of poor performance and when attributed to

non-adherence to proper procurement processes and procedures; is an indicator of poor management of the

International Journal of Business & Management SEPTEMBER 2013 VOL.1, No,7




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procurement function (Knight, Harland, Telgen, Thai, Callender, and Mcken, 2007 cited in Kakwezi and Nyeko,

2010).

Andreasen (2012) in a study by on case companies in Denmark, concludes that the management of the

procurement function is quite involving since, procurement processes are complex, given the fact that they

involve the completion of a series of activities, such as qualifying new suppliers, procuring different types of

inputs, and monitoring supplier performance, that cut across both functional boundaries and organisational

boundaries. This is also the case across the world, more so, in developing countries, especially in Africa where

the management of the procurement function is dynamic. The dynamic explosion of technology, the shifting

demands of consumers, and the new structures of markets combine to convert the world of purchasing into one

of change and innovation. The purchasing agent of today is a specialist, a technologist, and above all, a skilled

and competent manager. He/she must understand the complexity and change which surround this task

(Andreasen, 2012).

Procurement encompasses the whole process of acquiring property and/or services. It begins when an

agency has identified a need and decided on its procurement requirement. Procurement continues through the

processes of risk assessment, seeking and evaluating alternative solutions, contract award, delivery of and

payment for the property and/or services and, where relevant, the ongoing management of a contract and

consideration of options related to the contract. Procurement also extends to the ultimate disposal of property at

the end of its useful life (Waters, 2004).

Public procurement systems are central to the effectiveness of development expenditure. Budgets get

translated into services largely through the governments’ purchases of goods, services and works. It is estimated

that 18.42% of the world’s Gross Domestic Product (GDP) is spent through public procurement (Mahmood,

2010). It is further estimated that public procurement accounts for 9%–13% of the GDP of the economies of

developing countries. In Angola, public procurement accounts for 58%, it accounts for 70% of public spending

(Thai, 2001), 40% in Malawi, , 58% in Angola, 70% of Uganda’s public spending (Basheka and Bisangabasaija,

2010), and 60% in Kenya (Akech, 2005). But the area of procurement is increasingly prone to internal factors

(Trionfetti, 2000). The study aims at evaluating the factors affecting effective management of the procurement

function in public sector with specific reference to Nakuru North sub County, Kenya.

In the past decades, the public procurement system in Kenya has undergone significant developments. From

being a system with no regulations in the 1960s, and a system regulated by Treasury Circulars in the 1970s,

1980s and 1990s, the introduction of the Public Procurement and Disposal Act (PPDA) of 2005 and the

Procurement Regulations of 2006 has introduced new standards for public procurement in Kenya. Like any other

system, the procurement system has inputs, a process referring the procurement cycle and outputs. The factors

investigated in this study are considered to affect various levels of the procurement function; the

operationalization of the procurement system.Procuring Entities are responsible for carrying out all the procedures pertaining to the complete

procurement cycle. It is important to be familiar with the complete procurement cycle and to ensure that there are

effective management procedures in place to properly manage each step (Public Procurement Oversight

Authority, (PPOA) 2009). The complete procurement cycle shall include: preparation of procurement plans;

preparation of procurement specifications and initiation of the procurement process; preparation of

pre-qualification/tender/bid documents; advertisement/initiation of bids; receiving and opening bids; evaluation

of bids; adjudication and contract award; notification of contract award; negotiations in areas where applicable;

preparation and signing of procurement contract; contract administration; receipt inspection and acceptance of

goods, works, services and consulting services; and Storage and Inventory Management (PPOA, 2009).




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According to the PPOA all steps of the procurement cycle must be properly documented with each step being

approved by the designated authority. PPOA also ensures that all procurement documentation is properly filed.

The management of public procurement function is vested in the hands of all stakeholders involved

throughout the implementation of the procurement cycle (PPOA, 2009). These stakeholders include: Supply

chain management officers, Authority to Incur Expenditure (AIE) holders, Suppliers, Finance, Audit,

Development Officers and Technical Support Staff. Effective management of the function would require joint /

collaborative efforts of all of these stakeholders. This study will be evaluating the factors facing these

stakeholders in the management of the procurement function. This study focuses on Nakuru North Sub County in

Nakuru County, curved out of Nakuru District in the year 2007. The area has been characterised by cases of

incomplete and stalled projects; unutilised funds returned to Treasury; and poorly done projects. These situations

are linked to various factors which need to be investigated.

Effective management of the procurement function is a precursor to the performance of the system in

achieving its intended objectives in both the public and the private sector. Different procurement functions and

responsibilities such as selection, quantification, product specification, pre-selection of suppliers and

adjudication of tenders should be properly managed for the function to realise its objectives (Mendoza, 2008).

Procurement should be planned properly and procurement performance should be monitored regularly;

monitoring should include an annual external audit. A reliable management information system (MIS) is one of

the most important elements in planning and managing procurement. Lack of a functioning MIS or the inability

to use it appropriately is a key cause of programme failure. There are reports of stalled and abandoned projects,

poorly implemented works, and returns of unutilised project funds in various parts of the country. This trend

shows that there are factors affecting the management of the procurement function. A Properly constituted and

managed procurement should be able to detect the possibility of such occurrences and prevent them. These

challenges have also been reported in Nakuru North Sub County, and thus raising a research dilemma to the

existence of management challenges faced by the procurement officers.

Research studies mention factors such as accountability ICT adoption, internal operating procedures and

internal control system as likely factors to impede or promote the management of the procurement function in the

public sector. On the same note, Ngugi and Mugo, (2010) established that that the performance of public

procurement function in Kenya is affected by these factor. However, their study did not bring out clearly the

issue of how these factors affected effective management of the procurement function. It should be noted that

these factors present themselves differently under different operational managerial environment. Given that the

management team responsible for manning the procurement function at Nakuru North Sub County operates

under a distinct operational environment and has distinct composition, it is important to understand how these

factors affect the effective management of the procurement function in this area.

The general objective of this study was to evaluate the factors affecting effective management of the procurement function at Nakuru North Sub-County.

To determine how project financing influences the effective management of the procurement function at Nakuru

North Sub-County.

1) To assess the effect of accountability on the effective management of the procurement function at Nakuru

North Sub-County.

2) To examine how Information Communication Technology adoption affects the effective management of the

procurement function at Nakuru North Sub-County.

3) To establish how internal control system influences the effective management of the procurement function at

Nakuru North Sub-County.




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How does project financing influence the effective management of the procurement function at Nakuru North

Sub-County?

What is the role of accountability on the effective management of the procurement function at Nakuru North

Sub-County?

How does Information Communication Technology adoption contribute to the effective management of the

procurement function at Nakuru North Sub-County?

How does internal control system influence the effective management of the procurement function at Nakuru

North Sub-County?

The procurement function has not been given the recognition it deserves in developing countries, in most

public entities, regardless of the effort by the partners like the World Bank, the International Trade Organisation,

the United Nations Conference on Trade and Development, the World Trade Organisation and, others (Basheka

and Bisangabasaija, 2010). This could be deliberate or sheer ignorance on the value the procurement function

could contribute to any Organization. In Kenya a lot of state resources are channeled towards procurement of

goods and services, with an aim of ensuring that the full cycle is completed efficiently (Akech, 2005). However,

there reports of dissatisfaction with the whole or part of the process of procurement, which are said to

subsequently impede successful implementation of government projects. Arguably this failure is widely blamed

on the inefficient management of the procurement function. This study established the factors affecting the

effective management of the procurement function. Information obtained from the study will be useful to the

Government, all procurement units at the Ministry offices and other interested stakeholders for guidance in

coming up with a comprehensive policy that is supportive to effective management of the procurement function.

The findings may also be useful as reference materials guiding future studies.

The study was carried out in the procurement unit at the Nakuru North Sub-County offices among the Heads of

Departments from the select user / Ministry departments. These key persons were used for the study given that

they were the Authority to Incur Expenditure (AIE) holders; and thus were in a strategic position to provide

information sought in the study. The study was expected to be completed within nine months covering the

period from January 2013 to September 2013.

Some of the respondents were reluctant to provide information sought due to its sensitivity; that is especially, on

policy and implementation issues. To overcome this limitation the respondents were assured of confidentiality of

information provided and informed of the purpose of the study, which in this case was purely for academic

purpose.

2. Literature review

The chapter presents a review of past research studies and publications conducted regarding the effect of

Government Finance Policy on the procurement cycle at the procurement units, in the advent of the devolved

government system. The chapter contains an overview of Procurement System; Procurement Process;Procurement Cycle

2.1Theoretical Review

This section presents the theoretical framework and conceptual framework guiding the study. This study is

supported by the principal agent theory and the general systems theory which are explained below.

2.1.1The Principal-Agent Theory

This study will be guided by “The Agency Theory” as initially put across by Jensen and Meckling, (1976)

and later expounded on by Sarens and Abdolmohammadi, (2010). The principal-agent theory is an agency model

developed by economists that deals with situations in which the principal is in position to induce the agent, to

perform some task in the principal’s interest, but not necessarily the agent’s (Health and Norman, 2004) Donahue,




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(1989) explains that procurement managers including all civil servants concerned with public procurement must

play the agent role for elected representatives. This theory will help us to investigate whether procurement

managers adhere to the procurement policy that guides the flow in the procurement cycle. The factors affecting

effective management of the procurement function present as obstacles to the principal agent relationship that

exists between the procurement managers and the stakeholders they represent: the clients and the appointing

authority.

2.1.2The General Systems Theory

The most widely employed conceptual framework in the policy sciences is the systems model (Easton, 1953;

1965; Dye 1966), which may be seen as an application of general system theory (von Bertalanffy, 1968) to public

policy. For many social science applications, this model is referred to as an “open systems” model, which reflects

the idea that all elements of the model are open to influences from the external environment. Thus, outputs and

feedback are functions not only of the conversion element, but of other environmental factors as well. In this

study, the procurement system is considered to be influenced by factors which include: project financing,

accountability, ICT adoption, operating procedures, and internal control system.

Thai (2000) adapts the systems model to capture “the whole scope of public procurement” (p. 17). He is

particularly concerned to portray the core elements of any procurement system and the relationships between and

among them. Thai places the policy-making function with management executives at the top level of a

procurement system. This has the effect of discounting the importance of policy roles that may be played in other

elements of his model, for example, his “regulations” element or his “operations” element.

2.1.3 Overview of Procurement System

In all countries, governments are significant buyers of goods and services. The value of the contestable

government procurement the world over was estimated at $2000 billion in 1998 (OECD Report 2001).

Odhiambo and Kamau (2003) points out that this is equivalent to 7% of the world GDP and 30% of the world

merchandise. In East Africa, the public procurement market of Kenya and Tanzania reflect a situation in line with

the international average. The stakes are therefore very high for the optimal utilisation of public funds in

Uganda and indeed the rest of the world. Global effort towards opening up public procurement markets is not a

new phenomenon. The GATT negotiations of 1947 rejected subjecting government procurement to GATT

guidelines. The arguments were mainly based on ‘nationalistic’ tendencies. The Tokyo Round of 1979 was not

successful either. Only a Code on Government Procurement was achieved with only few countries agreeing to be

bound. Despite this importance derived from the procurement function most countries in the developing world

seem to ignore this fact and fail to monitor the functioning of the procurement system.

After several years of discussion the Uruguay Round, which gave birth to the Agreement on Government

Procurement (GPA), is so far the most successful as far as efforts towards opening up government procurement

markets are concerned. Assented to by various parties in 1996, the GPA is a plurilateral agreement, requiring itsmember states to abide by the obligations set out in its framework. The obligations set out in GPA have two

dimensions; substantial and procedural. Under the substantial obligations, member countries are required to

impress upon the covered purchasing agencies not to give price and other preferences to domestic producers and

also not to discriminate against foreign suppliers. That is, transactions that are based on other criteria rather than

best value for money should be avoided. Under the procedural obligations member countries are required to put

in place a procurement system that is transparent and encourages open competition. The current membership of

GPA is 28 (Zanamwe, 2003) most of them developed countries and none from Africa.

Osei- Tutu, Mensah, and Ameyaw, (2011) argue that increasing the effectiveness, efficiency and

transparency of procurement systems is an on-going concern of governments and the international development




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community. Performance of the procurement function is measured through its efficiency and effectiveness in

meeting procurement aims. All countries have recognized that increasing the effectiveness of the use of public

funds, including funds provided through official development assistance (ODA) requires the existence of an

adequate national procurement system that meets international standards and that operates as intended.

Public procurement is the process whereby public sector organisations acquire goods, services and works from

third parties. It includes much that supports the work of government and ranges from routine items (e.g.

stationery, temporary office staff, furniture or printed forms), to complex spend areas (e.g. construction, Private

Finance Initiative projects, aircraft carriers or support to major change initiatives). It also includes a growing

spend where the private and third sectors provide key services directly to citizens in areas such as

welfare-to-work, further education, social care and health. Such services may also be provided by the public

sector directly, and in some cases even this public provision can be handled through procurement mechanisms. A

public body may bid for government work against private sector firms through a formal competitive process

(Office of Government Commerce, United Kingdom, 2012).

2.1.4 Procurement Process

Procurement encompasses the whole process of acquiring property and/or services. It begins when an

agency has identified a need and decided on its procurement requirement. Procurement continues through the

processes of risk assessment, seeking and evaluating alternative solutions, contract award, delivery of and

payment for the property and/or services and, where relevant, the ongoing management of a contract and

consideration of options related to the contract. Procurement also extends to the ultimate disposal of property at

the end of its useful life (Waters, 2004). An effective procurement process ensures the availability of the right

goods and services in the right quantities, available at the right time, for the right customers and at reasonable

prices, and at recognizable standards of quality (WHO, 2007).

Sound public procurement policies and practices are among the essential elements of good governance (KIPPRA,

2006). Otieno (2004) notes the irregular procurement activities in public institutions provide the biggest loophole

through which public resources are misappropriated. According to Thai (2001), the basic principles of good

procurement practice include accountability, where effective mechanisms must be in place in order to enable

procuring entities spend the limited resources carefully, knowing clearly that they are accountable to members of

the public; competitive supply, which requires the procurement be carried out by competition unless there are

convincing reasons for single sourcing; and consistency, which emphasizes the equal treatment of all bidders

irrespective of race, nationality or political affiliation.

2.1.5 Procurement Cycle

All procurements regardless of their value or complexity follow a standard sequence of actions. This is

known as the procurement cycle. The cycle involves a series of steps that must take place to supply a production

line or to replenish stock in a distribution center. Identifying the items that must be procured and determining thenecessary quantities is the first step. This information is used to generate a requisition which is sent to the

purchasing department. The assigned buyer requests bids and awards the purchase order to a vendor. When the

ordered items arrive, they are entered into the inventory system. The parameters for a procurement cycle may be

set by a known production schedule or vary based on consumer demand or other factors.

The procurement cycle occurs at the manufacturer/supplier interface and includes all processes necessary to

ensure that materials are available for manufacturing to occur according to schedule (Sunil and Meindl, 2004).

During the procurement cycle, the manufacturer order components from suppliers that replenish the component

inventories. The relationship is quite similar to that between a distributor and manufacturer with one significant

difference. Whereas retailer/distributor orders are triggered by uncertain customer demand, component orders




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can be determined precisely once the manufacturer has decided what the production schedule will be.

Component orders depend on the production schedule. Thus it is important that suppliers be linked to the

manufacturer‘s production schedule. Of course, if a supplier’s lead times are long, the supplier has to produce

to forecast because the manufacturer’s production schedule may not be fixed that far in advance.

2.1.6 Procurement Function

Most major companies and even some government organizations have a purchasing or procurement

department as part of everyday operations. These departments provide a service that is the backbone of many

manufacturing, retail, military and other industrial organizations (Alexis, 2013). Not long ago, purchase function

was seen to be a desk job, monotonous paper work, dull and passive and more of an administrative function. The

purchase managements were the most affected group whose only aim was to keep feeding shop floor and

avoiding stock out situation. Today the situation has changed totally. Procurement function is considered to be a

strategic initiative and seen to be adding value to entire business process. Profile of the procurement managers

has changed and expectations from these managers are different.

Modern day procurement managers manage procurement and sourcing function both at strategic and

operational levels. They are proactively engaged in building supplier networks, estimating, controlling and

reducing costs besides performing other functions and ensuring service levels. Their job functions are

increasingly becoming cross functional together with supply chain and manufacturing functions. According to

KPMG, (2012), the main functions are: to ensure the consistent and optimised management of the purchasing

processes; to analyze and provide the necessary business information for decision-making; to implement

e-procurement procedures and systems integration with suppliers; to manage the vendor selection and evaluation

systems; and to promote innovation in the procurement function.

Procurement function as explained above is one part of the sourcing function. In the Public Sector enabled

environment, procurement function consists of detailed indenting process, procurement budget management,

purchase order release, shipment schedule planning with seller coupled with ensuring compliance with

documentation and system updating processes. Procurement function deals not only with procurement of raw

materials and components, but also with capital equipments, project procurement, spare parts procurement for

after market, managing rejections, defective returns, warranty replacement process with suppliers too. Vendor

development is a key function in procurement. Sourcing and vendor development are some of the skill sets

required to be developed by Procurement team. Procurement function works closely with procurement logistics

or inbound supply chain. A procurement professional needs to have operational knowledge of logistical activities

in supply chain network, the various agencies, knowledge of policies, customs rules, Taxation, commercial,

logistical and customs documentation besides knowledge of commercial trade rules and terms (KPMG, 2012).

2.2 Conceptual Framework

The study conceptualises that effective management of the procurement function, the dependent variable,which is measured in terms of project financing, accountability, ICT adoption, internal processes, and internal

control system; the independent variables, have an effect on the procurement function. Project financing is

measured though adequacy and reliability, while project funds disbursement is measured through aspects like

timeliness. Arguably when funds are disbursed late they make the procurement cycle lengthy. The researcher also

conceptualises that the soundness of the internal control system has an effect on the effectiveness and reliability

of the project cycles. Figure 2.1 presents the conceptual framework.




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Figure 2. 1: Conceptual Framework showing the factors affecting effective management of the

procurement function

2.2.1 Project financing and the Procurement Function

Government officials and elected leaders have increasingly come to realize that public agencies must utilize

ICT in order to enhance the procurement processes in the public sector. Faced with tight budgets and a retiring

workforce, today’s government agencies are operating in an environment defined by the need to ‘do more with

less’. Public authorities are expected to provide excellent service to their constituents in an effective and

transparent manner, all the while working under constant resource constraints by adopting ICT (Hagén, and Zeed,

2005). This requirement means that if this aspect is underfunded the support it is expected to offer to the

procurement cycle will not be realised.

Country Procurement Assessment Report (CPAR), prepared by a team of Government officials, World Bank

and donor staff, and national consultants, reveals substantial inefficiency in public procurement and concludesthat the principle of “value for money” is not achieved. This is true for both governments financed and donor

financed procurement. The main findings of the 2002 Country Portfolio Performance Review of World Bank

projects also reviewed slow project implementation and disbursement among other factors due to, a large extent

of inadequate procurement planning, non-transparent procurement procedures and poor contract management.

Inadequate procurement planning leads to challenges such as insufficient funding and subsequently poor

performance of the procurement function.

A review in 2002 of 132 works contracts which constitute an important part of public expenditure indicated

that about 84% incurred cost-overruns of up to 30% of the initial amount (World Bank, 2003). Similar findings

of public procurement weaknesses attributed to poor financing were recorded in the 1996 Country Procurement

ICT Adoption

Effective management

of the Procurement

function

Project Financing

Accountability

Public Procurement and

Disposal Act

Internal processes

Internal Control System

Dependent VariableIndependent

VariablesIntervening Variable




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Assessment Report (World Bank, 1996). In Kenya, there have been cases of stalled and incomplete projects due

to delayed financing from the Government or insufficient funding linked to lack of foresight. However, there

seems to little research on this aspect in the case of public procurement.

There is still a knowledge gap on how the procurement process can contribute to improved performance of the

procurement function in developing countries. Purchasing efficiency and purchasing effectiveness represent

different competencies and capabilities for the purchasing function. CIPS Australia (2005) presents the

differences between efficiency and effectiveness. Efficiency reflects that the organisation is “doing things right”

whereas effectiveness relates to the organisation “doing the right thing”. This means an Organisation can be

effective and fail to be efficient, the challenge being to balance between the two.

Issues to do with timeliness in the disbursement of funds to the government units help in improving the

process of procurement. The procurement unit needs to be assured of funds availability before preparing

procurement plans and entering into negotiations with the suppliers. This literature fails to recognise delays in

financing project as a possible aspect of this factor. A funding mechanism is necessary to maintain a system that,

due to the volume and complexities of public procurement, will invariably consume time and resources. Yet,

funding from the same source that funds the awards committees will render the distinction between the two

irrelevant.

2.2.2 Accountability and the Procurement Function

Public procurement means purchasing of goods, services or public works contracts by the contracting

authorities that have been defined in the procurement law. Public procurement must follow the procedures that

are stated in the law. Accountability is government's obligation to demonstrate effectiveness in carrying out goals

and producing the types of services that the public wants and needs (Segal and Summers, 2002). Public

procurement functions’ efficacy thrives on accountability.

Lack of accountability creates opportunities for corruption. Brinkerhoff (2004) identifies three key

components of accountability, including the measurement of goals and results, the justification or explanation of

those results to internal or external monitors, and punishment or sanctions for non-performance or corrupt

behavior. Strategies to help increase accountability include information systems which measure how inputs are

used to produce outputs; watchdog organizations, health boards or other civic organizations to demand

explanation of results; performance incentives to reward good performance; and sanctions for poor performance.

For In South Africa, a district health planning and reporting system was used to improve management control

and hold government agents accountable for their decisions. By combining financial and service data, the

reporting system drew attention to clinics and programmes that had unusual indicators, and helped officials to

explore root causes for performance differences, including possible corruption (Vian and Collins, 2006).

Accountability shows how the public interest has been protected in the expenditure of public funds.

Maintaining integrity in public procurement is one of the most important pillars of modern national procurementsystems (Barrett, 2000). Ensuring the accountability of procurement officials is perhaps the most essential aspect

of this goal. The accountability of procurement officials is not only important from a public or administrative law

perspective, but also has economic implications.

Transparency in public procurement is about information. The access to key procurement information by civil

society, the media and other stakeholders, and the ways in which these actors can use the information, directly

affects accountability. Furthermore, transparency is considered a highly cost-effective way of achieving greater

accountability (Schapper, 2008).

Accountability constitutes a central pillar of any public procurement system. Without transparent and

accountable systems enabling governments and citizens to engage in a mutually responsive way, the vast




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resources channelled through public procurement systems run the danger of increased corruption and misuse of

funds. Even in a system with low levels of corruption, public and civic oversight can help identify inefficiencies,

thereby increasing procurement efficiency and effectiveness for the benefit of improved service delivery and

ultimately citizens.

According to Grierson and Needham, (2006) argue that demonstrated accountability and transparency reduces

the likelihood of unethical behaviour, reassures the community and instils confidence in all stakeholders

concerning the integrity of decisions. According to Wee (2002) ethics are the moral principles or values that

guide officials in all aspects of their work. Ethical behaviour encompasses the concepts of honesty, integrity,

probity, diligence, fairness, trust, respect and consistency. Ethical behavior includes avoiding conflicts of interest,

and not making improper use of an individual's position. Ethical behavior is important in public procurement as

it involves the expenditure of public money, and is subject to public scrutiny. Public officials should always

behave ethically and fairly, including in their business undertakings.

Ethical behavior supports openness and accountability in a procurement process and gives suppliers

confidence to participate in the Government marketplace. Ethical behavior can also reduce the cost of managing

risks associated with fraud, theft, corruption, and other improper behavior; and enhance confidence in public

administration (Wee, 2002). An important and effective way to maintain ethics awareness in agencies is to

provide training for employees (Amos and Weathington, 2008). Ethics training and seminars can be provided,

along with training in more specific areas, such as procurement procedures, record keeping, records management,

and accountability and administrative law. Regular reviews or audits of procurement processes can be done to

ensure probity is being considered and achieved (Amos and Weathington, 2008).

Ethics is all about what is morally right and morally wrong, so procurement ethics is concerned with what is

morally right in procurement as profession, (Wood, 1995). This is very important in procurement management

because procurement staffs deal with suppliers represents the whole organization and that will determine the face

of the organization towards the suppliers which may create goodwill or destroy it.

2.2.3 Information and Communication Technology (ICT) Adoption

Government officials and elected leaders have increasingly come to realize that public agencies must utilize

ICT in order to enhance the procurement processes in the public sector. Faced with tight budgets and a retiring

workforce, today’s government agencies are operating in an environment defined by the need to ‘do more with

less’. Public authorities are expected to provide excellent service to their constituents in an effective and

transparent manner, all the while working under constant resource constraints by adopting ICT (Hagén, and Zeed,

2005). In order to meet today’s operating challenges, regional and local governments are turning to ICT to

enhance the services for residents, businesses and visitors, and improve internal efficiencies by lowering costs

and increasing productivity. Public authorities are implementing scalable communication infrastructures to

promote economic development, attract new businesses and residents, and above all, provide excellent service toconstituents (Abouzeedan and Busler, 2002).

According Kirungu, (2011) in Kenya, manual systems are a source of major inefficiencies in regulation and

operations of the function. ICT needs to be adopted to ensure proper functioning of the procurement system. This

does not only involve computerization of the system but scaling communication technology. E-procurement

system is a product of the new world order where everybody is going digital. With globalization and internet

connectivity, there is need to upscale the function in Kenya.

The old way of doing business consists of buyers managing forecasts and communicating requirements to

suppliers via phone, fax and e-mail. Spreadsheets and manual reports are passed between the trading partners.

These manual processes are slow and cumbersome. They cannot support today’s demand-driven enterprises.




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Supply chain procurement professionals spend too much time “putting out fires” and reacting to daily problems

(Thomson and Jackson, 2007). They cannot seem to find the time to develop strategic relationships with

suppliers and deploy improved business processes that eliminate shortages. Factors that hinders ICT growth in

developing nations are Infrastructure, business environment (financial, legal), social factors (such as poverty,

illiteracy, urbanization level), educational factors and cultural environment.

Procurement of goods, works, and services through Internet - based information technologies

(e-procurement) is emerging worldwide with the potential to reform processes, improve market access, and

promote integrity in public procurement”. However, rather than a technical solution, e-procurement should be

considered part of procurement reform in general (Schapper, 2008).

Studies in other countries show that ICT is a precursor to quality performance of the procurement system. For

instance, Kramer, Jenkins, and Katz , (2007) report that the Government of Chile is using ICTs to facilitate the

procurement from small businesses using a new business model and this has positively effected on the

functioning of the procurement system especially, since the integration of online services in the system.

Information access has been improved tremendously due to this. The system in Kenya if properly strengthened

through integration of ICT can also yield these benefits.

E-procurement can take many forms, from uploading select information such as tender notices to a website

to very comprehensive systems including the entire procurement process. Whatever complexity an

e-procurement system might display, using the Internet creates an immediate potential for making information

public and widely available and thereby enhance transparency. Still, introducing e-procurement is not without

risks. The integrity and security of an Internet - based system can be compromised and there is a risk that

erroneous information be uploaded. Further, implementing e-procurement is often seen as the main solution to

systemic procurement challenges, but a public procurement system will still require a solid legal and regulatory

framework, qualified procurement officers, and an oversight mechanism among others to be well-functioning.

2.2.4 Internal Control System (ICS) and the Procurement Function

Internal controls refer to the measures instituted by an organization so as to ensure attainment of the entity’s

objectives, goals and missions. They are a set of policies and procedures adopted by an entity in ensuring that an

organization’s transactions are processed in the appropriate manner to avoid waste, theft and misuse of

organization resources. Internal Controls are processes designed and effected by those charged with governance,

management, and other personnel to provide reasonable assurance about the achievement of an entity’s

objectives with regard to reliability of the a system such as the procurement system, effectiveness and efficiency

of operations and compliance with applicable laws and regulations (Mwindi, 2008).

According to Hayes et al., 2005 internal control comprises five components; the control environment, the

entity’s risk assessment process, the information and communication systems, control activities and the

monitoring of controls. The likelihood of achievement of the procurement system aims is affected by limitationsinherent in all systems of internal control” (Hayes et al., 2005). It therefore important the procurement function

is subjected to an effective internal control system. This can be strengthened by organizing seminars to enhance

the capacity of procurement staff on compliance to the Procurement standards.

Internal audit provides for purchasing audit. Purchasing audit is a management tool used in assessing how

goals and objectives are being met while utilizing organisational limited resources (Van Weele, 2006). The

resources are inputs (personnel, budgets, time, and equipment) that need to be used effectively and efficiently in

fulfilling different goals and objectives. Effective performance of the procurement function is facilitated by

proper planning and budgeting by proper controls, though, this cannot be proved by the research results. The

public sector the major “push” is on reducing costs, this focus has consequences on performance. Effective




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procurement function is one that is cost effective and this can be achieved when there are effective internal

controls in place. Experience shows that when organisations focus on reducing costs, the quality of goods and

services procured suffers, and when organisations focus on quality, costs come down.

Seminega (2012) reports that in most developing countries, the Procurement Officers are provided with

procurement guidelines, manuals or a handbook which he argues must be complied. A good system will provide

room for an effective internal control system subjected to periodic checks. Such a system should include issues

related to: organizational structure; record keeping; division and segregation of duties; authorizations and

approvals; internal checks; and competency of the staff. He asserts that in order to prevent bad practices in

public procurement and contract management and take corrective measures if they happen, the Chief Budget

Manager should ensure that the internal control system is in place and communicated to all concerned with

public procurement operations. The value of the ICS is emphasised since, the survival and efficacy of the

procurement unit and function depends on it. In his survey on the role of ICS on the performance of Rwanda

public procurement units, he further, postulates that the internal control system in a procurement unit should

ensure the balance between quick decision making and risk control. It should also provide updated information

on the respect of standards in order to take appropriate measures. As it emerges in this section it is therefore,

important to note that internal control system strengthen the functioning of the procurement system and its

omission in the system would compromise the performance of the entire function at the unit. There is however, a

gap in literature in respect to the role of ICS in the performance of the Public Procurement function in Kenya

(Seminega, 2012).

Tan, Chong and Uchenna, (2009) argue that public procurement has, for long, been overshadowed with

inefficiency, corruption and disregard of fundamental "value for money" considerations. This has adversely

impacted the rate and quality of progress in realizing the objectives of national development, especially in

developing and transition countries (Tan et al., 2009).

Employees may neither engage in, nor give the appearance of engaging in, dishonest or unethical actions.

Both are injurious to the public’s perception of honest government. As a government employee, you might have

access to procurement and other nonpublic information that could affect a contract bid or the award process

(Wymer and Regan, 2005). Improper disclosure of such protected information could violate numerous laws, as

well as ethics rules. It also could subject you to administrative actions, as well as civil or criminal penalties.

Management in contracting authorities should ensure that there is an appropriate focus on good practice in

purchasing and, where there is a significant procurement function that procedures are in place to ensure

compliance with all relevant guidelines.

Procurement staff, departmental heads and all related stakeholders will need training, particularly in how to

resolve dilemmas and competing priorities. Useful monitoring and due diligence tools include Supplier

Engagement Forums and supplier questionnaires during tendering and at other stages of the relationship such ascontract renewal. Public officials should not accept benefits of any kind from a third party which might

reasonably be seen to compromise their personal judgment or integrity. Thomson and Jackson (2007) established

that the actions of public officials must be above suspicion and not give rise to any actual or potential conflict of

interest and their dealings with commercial and other interests should bear the closest possible scrutiny.

Officials involved in procurement must not make improper use of their position (Tan et al., 2009). Officials

may have access to very confidential and/or market sensitive information. It is unethical to use inside

information provided to the agency as part of a tender process, either for the material benefit of the official or for

another person. Criminal sanctions apply to such behaviour.

The public procurement system is also influenced by culture and technology. In a culture where giving gifts is a




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common public relation practice, it is difficult to distinguish between gifts and bribes. Moreover, rapidly

advanced technology has forced public procurement to (a) adopt new procurement methods, such as the use of

e-signature and purchase cards; and (b) be knowledgeable in many aspects and considerations of how to procure

information technology.

Internal processes need to be properly streamlined and coordinated to function well to generate required

objectives. Choosing the supplier, product or subcontractor has an essential role in the potential growth of

turnover. How the organisation’s brand is perceived in the market affects the sales numbers. Sometimes the buyer

can feel that they are receiving a better product because of a good brand image. This means that the supplier can

actually have a positive impact on the decision made by the buyer. It’s important not to forget the power of word

of mouth marketing. It’s a factor that can determine whether your product gets chosen over the competitor’s one

(Iloranta 2008).

Procurement has direct and indirect costs that clearly affect the effectiveness. The organisational structure,

division of work and operation efficiency; are components that modify the effectiveness of procurement function.

The procurement processes and procedures have a close relation to other functions on the organisation and on

their efficiency as well.

2.2.5 Public Procurement and Disposal Act of Kenya

The public procurement system in Kenya has evolved to an orderly and legally regulated system governed

by the PPDA, 2005. Prior to this, in Central Government it was governed by Treasury Circulars from 1969, then

the Supplies Manual of 1978, before the promulgation of the Exchequer and Audit (Public Procurement)

Regulations, 2001.The PPDA, effective as of 1st

January 2007, applies to all procurement of goods, works and

services, as well as the disposal of assets by public entities. The Public procurement processes is a complex issue

because of the multiple interests and objectives it strives to achieve simultaneously coupled by the multiple

regulatory policies and bodes it has to adhere to (Kagendo, 2012).

The public procurement system in Kenya has therefore evolved from a crude system to an orderly regulated,

legal and constitutional regime. Kenya’s public procurement system can be traced back to 1955 during the

colonial days (Public Procurement Oversight Authority, 2009). As a country therefore, Kenya has largely failed

to effectively harness the spirit and letter of Public Procurement and Disposal Act of 2005 and other related

enabling legislations in delivering transparency, accountability, and good governance in public procurement

sector. The law as it exists today has not been able to eradicate corruption and related challenges in this sector as

anticipated. This therefore, makes it difficult for procurement managers to effectively play their role.

Public Procurement and Disposal Act of Kenya is an ACT of Parliament to establish procedures for efficient

public procurement and for the disposal of unserviceable, obsolete or surplus stores, assets and equipment by

public entities and to provide for other related matters. This Act applies with respect to: (a) procurement by a

public entity; (b) contract management; (c) supply chain management, including inventory and distribution;and (d) disposal by a public entity of stores and equipment that are unserviceable, obsolete or surplus. In an

environment whereby the stakeholders are not aware of the provisions and implications of the Act, they are likely

to work against it, thus affecting effective implementation of the procurement function.

2.3 Critique of the Existing Literature

CIPS Australia (2005) presents the differences between efficiency and effectiveness and mentions the

importance of timeliness of disbursement of funds to a project’s procurement function. However, the study fails

to link this aspect to effective management of the procurement function. The Literature above indicates that

purchasing efficiency and purchasing effectiveness represent different competencies and capabilities for the

purchasing function, but does not clearly demonstrate the link between this management function and project




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financing.

Grierson and Needham (2006) argue that that demonstrated accountability and transparency reduces the

likelihood of unethical behaviour, reassures the community and instils confidence in all stakeholders concerning

the integrity of decisions. This is not the case in Kenya, where demonstrated accountability does not always

match the reduction of unethical behaviour. For instance, recent scandals such as the Anglo-Leasing security

contracts, maize importation, Free Primary Education (FPE) funds, sale of Grand Regency Hotel to Libyan

investors without following the due process of law, Triton Oil importation scam, sale of Kenya’s Embassy in

Japan and many other scandals which relate to corruption in public procurement is worrying (Mars Group, 2011).

The Mars Group estimates that recent major grand corruption scandals have cost Kenya over KSh700bn (£5bn).

It has reached a point where the citizenry are frustrated by the corruption and impunity exhibited by state

officials in collaboration with other actors who misuse public resources despite the tightening legal regime. With

these happenings in the public sector, there is need to establish whether accountability contributes to effective

management of the procurement function.

Literature on ICT adoption shows that the public procurement systems that have adopted ICT have

effective management systems that support the procurement function (Kramer, Jenkins, and Katz, 2007).

However, this cannot be generalised to all cases, for instance in Kenya, where public procurement is not fully

ICT compliant, thus it remains unclear how this omission is affecting effective management of the procurement

function.

Literature review shows the important role of the ICS in the management of the procurement function. An

efficiently upheld ICS would mean adherence to the PPDA in Kenya and compliance to set internal policy

guidelines. The literature however, falls short of the ICS effectiveness and its effect on the management of the

public procurement in Kenya. This is because past studies have in most cases been centred in the developed

world, since public procurement is a new concept in developing countries such as Kenya.

2.4 Summary

Procurement reform is a protracted process and there are many obstacles along the way and therefore needs

to be effectively managed. This chapter has presented literature on selected factors that influence the

procurement function. These factors are: project financing, accountability, Information and Communication

Technology adoption and internal control system. The overriding objective of a state’s public procurement

system is to deliver efficiency and “value for money” in the use of public funds. The literature review in the

above sections shows that this objective can be achieved effectively, if factors such as project financing,

accountability throughout the procurement system; efficiencies in the internal processes and a functioning and

effective internal control system are paid attention.

2.5 Research Gaps

Developing countries have need for a well-functioning public procurement system. This is particularly truefor developing countries, where procurement usually accounts for a high proportion of total expenditure. Kenya

is committed to improving efficiency in the public procurement system at every opportunity for the purpose of

enhancing: accountability in decision-making structures; responsiveness to citizens of the country;

professionalism to improve performance; transparency in the procedures and policies; and appeal rights to

redress meritorious grievances of suppliers. However, this can only be achieved with a full understanding of

the factors influencing the management of the procurement function at the basic level. There is lack of sufficient

information on these variables, locally to enable the government fulfill its commitment. Existing literature in

Kenya fails to capture the influence of these factors on the effective management of the Procurement function at

Sub-County level. This study will evaluate the factors affecting effective management of the procurement




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function at Nakuru North Sub County.

3. Research Methodology

3.1 Introduction

This chapter discusses the methodological procedures that will be used in data collection and analysis.

Discussed in details are the research design; the location of the study; population of the study; sampling

procedure and sample size; instrumentation; data collection, data analysis and the method used by the study in

analyzing data collected.

3.2 Research Design

The study adopted descriptive survey research design in examining the factors affecting the effective

management of Procurement function in Nakuru North Sub-County’s procurement unit. The descriptive survey

design method was appropriate and useful in exploring how internal factors affect the performance of the

procurement function in the study area. This research design was used because it is an efficient approach of

collecting descriptive data regarding characteristics of a sample of a population, current practices, conditions or

needs.

3.3 Population

The target population of the study was the procurement units the procurement units at the Nakuru North

Sub-County offices form which heads of departments of all Ministry departments were interviewed. There are

30 heads of department in Nakuru North County each representing a Ministry. These were used for the study

given that they are the Authority to Incur Expenditure (AIE) holders; and thus are in a strategic position to

provide information sought in this study.

3.4 Census

The study employed a census technique in determination of the size of the population to be used for the

study. In this study the technique is considered ideal, since individual Government Ministries have distinct

characteristics; and the study was keen in collecting information from all the Ministries for comparison of arising

attributes of variables of the phenomenon under study (Currivan, 2013). A census was, thus, conducted on all the

Authority to Incur Expenditure (AIE) holders; one in each of the 30 Government Ministries at the Nakuru North

Sub-County.

3.5 Research Instruments

Data was collected from heads of department of all user / Ministry departments using questionnaires

containing structured and unstructured questionnaires. The questionnaires were prepared thematically on the

basis of the research questions. The questionnaire is divided into five sections. The first section; Section A,

captures personal information of the respondents, while Section B to E captures information in addressing

research questions (i) to (iv). Prior to use the research instruments were validated and subjected to reliability

analysis as presented in the sections below.3.6 Validity and Reliability of Instruments

According to Mutai (2000), an instrument can be validated by proving that its items or Content and

construct validity was established to determine if the items are a representative sample of the skills and traits that

comprise the area to be measured. A pilot study was carried out in the procurement units within Nakuru town.

The supervisors provided guidance on the content of the instruments; that is ensuring that all the research

objectives are addressed by the questions or information sought in the instruments. The manner of construction

of the questionnaires was also checked to ensure that the questions were not misinterpreted and only relevant

information is obtained. According to Cohen, Manion and Keith (2007), Validity is ensured by; choosing an

appropriate scale, ensuring that there are adequate resources for the required research to be undertaken, selecting




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an appropriate methodology for ensuring the research questions, avoiding having too long or too short an interval

between pretest and post-test, ensuring standardized procedures for gathering data or for information

administering tests, and tailoring the instruments to the concentration span of the respondents.

Mugenda and Mugenda (2003) defined reliability as a measure of the degree to which a research instrument

yields consistent results or data after repeated trials. Piloting was done at Rongai Sub County using 3 AIE

holders; representing 10% of the population to test the reliability of the instrument. The respondents were given

the measuring instruments. The procurement units for piloting were outside the study area. A reliability

coefficient of 0.7 or over was assumed to reflect the internal reliability of the instruments (Mugenda and

Mugenda, 2003). Cronbach’s alpha is an index of reliability associated with the variation accounted for by the

true scores of the underlying construct. Construct is the hypothetical variable that is being measured.

3.7 Data Processing and Analysis

The data collected from the field was coded and entered into the computer for analysis using the Statistical

Package for Social Sciences (SPSS) version 20 for windows. Both qualitative and quantitative data were

analyzed. Qualitative data was analyzed by reading the questionnaire. Descriptive statistics (frequencies and

percentages) were computed for all the five objectives. Quantitative data was computed for inferential statistics

(Pearson Moment Correlations) with a 0.05 test significance level. According to Kabiru and Njenga (2009)

Pearson correlation method is used to compare the variables, where two sets of variables were compared to see

the extent to which they were related and if they were used to predict each other. The correlation between two

sets of variables was indicated by means of correlation coefficients which were positive. A positive coefficient

ranges from 0 to 1.0 while a negative coefficient ranges from -0 to- 1.0. 1 was a perfect correlation and 0

indicates that there was no correlation between two sets of variables.

4. Research findings and discussion

4.1 Introduction

This chapter presents the findings of the study analyzed using the research methodology discussed in

Chapter 3. The findings are presented thematically under the subheadings namely: general characteristics of the

respondents; Effect of Project financing on the effective management of the procurement function; the role of

accountability on the effective management of the procurement function; Contribution of adoption of

Information Communication Technology to the effective management of the procurement function and Influence

of internal control system on the effective management of the procurement function.

4.1.1Response Rate

The research study was a census of 30 heads of departments at Nakuru North Sub County. Out of the 30

questionnaires distributed, 25 were re-collected which translated to a response rate of 83.33%.

4.2 General Information of the Respondents

This section describes the general characteristics of the respondents such as gender, age, educational level,years of service and their designation.

4.2.1Gender of the respondents

The respondents were asked to indicate their gender. The result was then cross tabulated against their

designation and the result was as given in Table 4.1




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Table 4. 2: Gender of the respondents

Designation

Head of department / unit/ division Assistant Head S.P.H.O Medicalsuperintendent

Gender Male F 8 4 2 1

% 47.1% 80.0% 100.0% 100.0%

Female F 9 1 0 0

% 52.9% 20.0% .0% .0%

Total F 17 5 2 1

% 100.0% 100.0% 100.0% 100.0%

The findings show that 47.1% of the male respondents were heads of Departments, 80% of the Assistant

heads of Department were male, all the S.P.H.O and the medical superintendent was a male while the rest in each

category of designation were female. It emerges thus that a sizeable percentage of 52.9% were female working as

heads of Department. This was bound to influence their perception of the phenomenon under investigation as

well as enable the public sector to deliver better quality public services effectively. According to the Gender Equality Duty, (2012) Guidance for Great Britain, incorporating gender equality into procurement will enable the

public sector to deliver better quality public services. The gender equality duty will mean that public bodies

will have to ensure that the works, goods or services they buy are responsive to and genuinely meet the needs of

both men and women – thereby increasing the quality of the service they are providing. This therefore means

that management of procurement function in Nakuru North Sub County was poised to yield good results due to

the gender mix in departmental headship.

4.2.2 Age of the respondents

Age of the respondents was considered in this study to influence the respondents’ perception of effective

management of the procurement function. The result was cross tabulated against years of service in their

departments and was as shown in Table 4.2

Table 4. 3: Age of the respondents

Years of service/ working period

1-5 years 6-10 years Over 10 years

Age 25 - 30 Years F 2 0 0

% 50.0% .0% .0%

35 – 40 years F 1 0 0




279

% 25.0% .0% .0%

41 – 44 years F 1 2 4

% 25.0% 66.7% 22.2%

45 – 50 years F 0 1 9

% .0% 33.3% 50.0%

Over 51 years F 0 0 5

% .0% .0% 27.8%

Total F 4 3 18

% 100.0% 100.0% 100.0%

The findings show that 50% of the employed in the departments for a period of 1 to 5 years were aged 25 to

30 years, 25% of those who had for the same period (1 to 5years) were aged between 35 to 40 years and 25% of

those in service for that period were of 41-44 years. It is also established that 66.7% of those who had served for

a period of 6 to 10 years were in age of 41-44 years, 33.3% of those who had served for a period of 6 to 10 years

belong to 45-50 years of age. The findings further show that 22.2% of those who served for a period of over 10

years were aged between 41 and 44 years, 50.0% of the respondents who had served for a period of over 10 yearswere of 45-50 years of age and 27.8% of those who had served for a period of over 10 years were aged over 51

years. This implied that most persons involved in the procurement function had an experience of over 10 years

and were above 45 years of age. This also shows that there was less involvement of the youth in public

procurement.

4.2.3 Level of Education

Level of education, in this case was in reference to the academic level of education attained. That is

K.C.P.E at primary school level, KCSE at secondary school level, professional certificate and Diplomas at

college level and the Bachelors or Masters Degree level at the University .The responses to the level of

Education attained were as provided in Table 4.3.

Table 4. 4: Level of Education

Response Frequency Percentage

K.C.S.E 1 4.0

College 13 52.0

Bachelors' degree 10 40.0

Masters 1 4.0

Total 25 100.0




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The findings show that 52% of the respondents indicated that their highest attained level was college level,

40% indicated Bachelors Degree, 4% indicated masters level, while 4% indicated KSCE level was their highest

attained level. This implied that most persons had attained a level sufficient to influence favorably their

comprehension of antecedents to effective management of the procurement function.

4.3 Effect of Project financing on the procurement function

This section contains the findings in respect to objective 1 which sought to examine the effect of Project

financing on the effective management of the procurement function at Nakuru North Sub-County.

4.3.1 Extent of effect of project financing on the procurement process

The respondents were asked to indicate the extent to which project financing affected the procurement

process of supplies in the public and the result was as given in Table 4.4.

Table 4. 5: Extent of effect of project financing on the procurement process


Not at all

Small extent

0

1

.0

4.0

Moderate extent 3 12.0

Great extent 12 48.0

Very great extent 9 36.0

Total 25 100.0

The findings show that 48% of the respondents indicated that project finance affected procurement process

to a great extent, 36% indicated to a very great extent, 12% to a moderate extent and 4% to a small extent. This

implied that according to most of the respondents’ project financing affected the procurement process of supplies

in the public sector. There was therefore possibility that some projects were underfunded and experienced

inadequacies when funds were required. This was likely to affect project performance. This is in agreement with

Hagén, and Zeed, (2005) who argues that when the project is underfunded the support it is expected to offer to

the procurement cycle will not be realized.

4.3.2 Effect of project finance aspects on the procurement function

The respondents were asked to indicate the extent to which select aspect of project financing affected the

management of procurement function and the response was as provided in this section, they were asked toindicate the level of extent to which the following project financing aspects affect the effectiveness of the

procurement management on a scale of 1-5, where 1 represented Very Great Extent while 5 represented „Not at

All‟. As shown in Table 4.5

Table 4. 6: Effect of Project Finance Aspects on the Procurement Process

N Minimum Maximum Mean Std.

Deviation

Inadequate project financing 25 1.00 4.00 1.6000 .95743




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Timely disbursement of funds 25 1.00 5.00 1.8800 1.20139

Flexibility of procurement

budgets

25 1.00 4.00 1.9200 .99666

Bureaucratic bottlenecks in time

of payments

25 1.00 5.00 2.2000 1.32288

Public Procurement and

Disposal Act ( contract

management and procurement

procedures

25 1.00 5.00 2.5800 1.24231

Valid N (listwise) 25

The findings indicated that inadequate project financing influence the procurement function to a very great

extent, great extent or moderate extent, all the outlined aspects of project financing affected the effective

management of the procurement function as indicated by mean scores of less than 2.5 with the exception of

Public Procurement and Disposal Act which had a mean score of 2.58. This is not healthy, since an effective

procurement process ensures the availability of the right goods and services in the right quantities, available at

the right time, for the right customers and at reasonable prices, and at recognizable standards of quality. This

view is also supported by a report by WHO, (2007). Table 4.6 below presents the Effects of Project Financing on

procurement of SuppliesTable 4. 7: Descriptive Statistics on Effects of Project financing on procurement of Supplies

Statement N Minimum Maximum Mean Std.

Deviation

Project funds are always released on time, thus

making management of the project easy

25 1.00 5.00 3.3200 1.24900

Most stalled projects are due to inadequate

funding

25 1.00 5.00 2.5600 1.75784

It is difficult to relocate unutilized votes for

other poorly financed areas

25 1.00 4.00 1.6400 1.03602

It takes time to get approvals / authorizations

for procurement of required items

25 1.00 5.00 2.0400 1.46856


Table 4.6 shows that according to most of the respondents, it is difficult to relocate unutilized votes for other




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poorly financed areas recording a mean score of 1.64. It is also established that it takes time to get approvals /

authorizations for procurement of required items with a mean score of 2.04. This is below the mid mean score

mark of 2.5, implying that these aspects were affecting the procurement of Supplies negatively. It is important to

note that findings also show that most stalled projects are due to inadequate funding with dispersion higher than

the moderate extent (2.56), Implying also that there was a high possibility that most of the stalled projects could

be linked to inadequate funding. Project funds are not always released on time, thus making management of the

project difficult as shown by mean score of 3.32 for a reverse assertion.

4.4 The effect of accountability on the procurement function

This section contains the findings in respect to objective 2 which sought to assess the role of accountability

on the effective management of the procurement function at Nakuru North Sub-County. Accountability

constitutes a central pillar of any public procurement system. Without transparent and accountable systems

enabling governments and citizens to engage in a mutually responsive way, the vast resources channelled through

public procurement systems run the danger of increased corruption and misuse of funds. Even in a system with

low levels of corruption, public and civic oversight can help identify inefficiencies, thereby increasing

procurement efficiency and effectiveness for the benefit of improved service delivery and ultimately citizens.

4.4.1 Extent to which accountability affects procurement process of supplies

The respondents were asked to indicate the extent to which key components of accountability affected

management of their procurement function and the response was as provided in Table 4.7

Table 4. 8: Extent of effect accountability on the procurement process of supplies




Small extent 1 4.0

Not at all 9 36.0

Total 25 100.0

The findings show 20% of the respondents indicated that accountability affected procurement process of supplies

in the public sector to a very great extent, 40% indicated that it was a moderate extent, 4% indicated that the

effect was to a small extent, while 4% indicated not at all. This implied that accountability did affect

procurement process of supplies in the public sector greatly as indicated by most of the respondents.

4.4.2 Effect of Key components of accountability on the procurement function

The respondents were asked to indicate the extent to which key components of accountability affected

management of their procurement function and the response was as provided in Table 4.8

Table 4. 9: Effect of accountability on the procurement function

Statement N Minimum Maximum Mean

The measurement of goals and results 25 1.00 5.00 2.3600

The justification or explanation of those results to internal or

external monitors

25 1.00 5.00 2.7200




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Punishment or sanctions for non-performance or corrupt

behavior

25 1.00 5.00 2.8800


The mean scores for the effects of key components of accountability on the management of the procurement

function were as follows: the measurement of goals and results (2.36); the justification or explanation of those

results to internal or external monitors (2.72); and punishment or sanctions for non-performance or corrupt

behavior (2.88). Though the scores are above the mid mean mark of 2.5, the scores are below 3.0 which represent

the moderate extent as per the likert scale used in this study. This implied that all the three aspects were above

moderate extent and thus affected the procurement of supplies in most Ministry departments. This finding is is in

agreement with a study by Vian and Collins (2006) who posits that lack of accountability can lead to project

failure since, it precipitates corruption.

4.4.3 The Influence of Accountability on the Procurement FunctionThe influence of accountability on the management of procurement function was also assessed through select

statements to which they agreed with their assertion. The response was as presented in Table 4.9

Table 4. 10: The Influence of Accountability on the Procurement Function


Accountability is government's obligation to demonstrate

effectiveness in carrying out goals and producing the types of

services that the public wants and needs

25 1.00 5.00 1.8000

Lack of accountability creates opportunities for corruption. 25 1.00 5.00 1.3200

Government officials use discretion to license and accredit

facilities, providers, services and products, opening risk of abuse

of power and use of resources.

25 1.00 5.00 2.4000

High amounts of discretion without adequate controls can create

opportunities for corruption.

25 1.00 5.00 1.7600


Accountability is government's obligation to demonstrate effectiveness in carrying out goals and producing the

types of services that the public wants and needs (1.8); Lack of accountability creates opportunities for

corruption (1.32); Government officials use discretion to license and accredit facilities, providers, services and

products, opening risk of abuse of power and use of resources (2.4); High amounts of discretion without

adequate controls can create opportunities for corruption (1.76). All these scores are above the mid mark of 2.5,

implying that they were aspects that could not be ignored since; they affected the effectiveness of the

procurement function.

4.5 Contribution of ICT Adoption to the Procurement Function

This section contains the findings in respect to objective 3 which sought to assess the contribution of Information

Communication Technology adoption to the effective management of the procurement function at Nakuru North

Sub-County.

4.5.1 Effect of ICT Adoption on procurement of suppliers in the Public sector

The respondents were asked to what extent ICT adoption affected procurement of suppliers in the public sector

and the response was as provided in Table 4.10




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Table 4. 11: Effect of ICT Adoption on procurement of suppliers in the Public sector



Great extent 3 12.0


Small extent 6 24.0

Not at all 5 20.0

Total 25 100.0

The findings show that 28% of the respondents indicated that ICT adoption affected procurement of

suppliers in the public sector to a very great extent, 24% indicated that it did affect to a great extent, 20%indicated that there was no effect at all, 16% indicated that the effect was to a moderate extent, while 24%

indicated that the effect was to a small extent, The implication here is that ICT adoption was an important factor

affecting the procurement function according to most of the respondents.

4.5.2 Effect of Key components of ICT adoption on the procurement function

The respondents were asked to indicate their level of agreement with the following statements that relate to

the effect of ICT adoption on management of your procurement function. To this they responded as provided in

Table 4.11

Table 4. 12: Effect of Key components of ICT adoption on the procurement function


Government officials and elected leaders have increasingly

come to realize that public agencies must utilize ICT in order to

enhance the procurement processes in the public sector.

25 1.00 5.00 1.9200

Public authorities are expected to provide excellent service to

their constituents in an effective and transparent manner

25 1.00 4.00 1.7200

In order to meet today’s operating challenges, regional and local

governments are turning to ICT to enhance the services by

lowering costs and increasing productivity

25 1.00 4.00 1.6400

Public authorities are implementing scalable communication

infrastructures to promote economic development

25 1.00 4.00 2.0400

African nations are lagging severely in ICT adoptions despite

the benefits from ICT experienced by others

25 1.00 5.00 3.0400


According to findings, Government officials and elected leaders have increasingly come to realize that

public agencies must utilize ICT in order to enhance the procurement processes in the public sector. This is true

as it is evidenced by the mean score of 1.92. Most of the respondents upheld the view that public authorities are

expected to provide excellent service to their constituents in an effective and transparent manner and this

assertion scored a mean of 1.72. With a mean score of 1.64, it is suffices that according to most departmental




285

representatives, it was evident that in order to meet today’s operating challenges, regional and local governments

are turning to ICT to enhance the services by lowering costs and increasing productivity. The statement that

purports that public authorities are implementing scalable communication infrastructures to promote economic

development recorded an mean score of 2.04, while he view that African nations are lagging severely in ICT

adoptions despite the benefits from ICT experienced by others score a mean of 3.04. it can be argued that these

respondents had realized the value attached to ICT and believed that Africa was averagely on the right path.

This implied that most respondents appreciated the importance of ICT as a factor positively influencing

procurement function. These findings are in agreement with Hagén, and Zeed, (2005) who postulates that in

order to meet today’s operating challenges, regional and local governments are turning to ICT to enhance the

services for residents, businesses and visitors, and improve internal efficiencies by lowering costs and increasing

productivity. This is also in support to the view held by Kirungu, (2011) in Kenyan study, who argues that

manual systems are a source of major inefficiencies in regulation and operations of the function. ICT needs to be

adopted to ensure proper functioning of the procurement system.

4.6 Influence of Internal Control System on the Procurement Function

This section contains the findings in respect to objective 4 which sought to assess the influence of internal

control system on the effective management of the procurement function at Nakuru North Sub-County.

4.6.1 Effect of Internal Processes on Procurement of Supplies

The respondents were asked to indicate the extent to which internal processes affects procurement of supplies in

the public sector and the response was as provided in Table 4.12

Table 4. 13: Effect of Internal Processes on Procurement of Supplies.



Great extent 5 20.0


Small extent 6 24.0

Not at all 3 12.0

Total 25 100.0

The findings 44% of the respondents indicated that internal processes affected procurement of suppliers in

the public sector to a great extent, 20% indicated that the effect was to a moderate extent, 24% indicated a smallextent, and 12% not at all .This implied that according to most of the respondents internal processes had an

influence on the procurement of supplies and thus this could not be ignored.

4.6.2 Effect of Internal Processes on the procurement function

The respondents were asked to indicate their level of agreement with the following statements that relate to

the effect of internal processes on management of your procurement function. To this they responded as provided

in Table 4.13




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Table 4. 14: Effect of Internal Processes on the procurement function


Professional and job-related responsibilities are placed before

personal gain and individual interest

25 1.00 5.00 2.1200

Employees may neither engage in, nor give the appearance of

engaging in, dishonest or unethical actions

25 1.00 5.00 2.1200

Value for money is the core principle underpinning public

procurement, incorporating ethical behavior and the ethical use

of resources.

25 1.00 5.00 2.2000

Officials involved in procurement must not make improper use

of their position

25 1.00 5.00 1.6000


Table 4.13 presents the results showing the mean scores for the effect of Key components of internal

processes on the management of their procurement function as follows: professional and job-related

responsibilities are placed before personal gain and individual interest (2.12); employees may neither engage in,

nor give the appearance of engaging in, dishonest or unethical actions (2.12); value for money is the core

principle underpinning public procurement, incorporating ethical behavior and the ethical use of resources (2.20);

and officials involved in procurement must not make improper use of their position (1.60). This implied that all

the components of internal processes in the table above were affecting the procurement function in most of the

departments.

4.6.3 Effect of Internal Control System on the Procurement Function

The respondents were asked to indicate their level of agreement with the following key components of

Internal Control System affected management of their procurement function. To this they responded as provided

in Table 4.14

Table 4. 15: Effect of Internal Control System on the Procurement Function


Organizational structure; 25 1.00 5.00 1.8400

Record keeping; 25 1.00 5.00 1.8000

Division and segregation of duties; 25 1.00 5.00 1.8400




287

Authorizations and approvals; 25 1.00 5.00 1.9600

Internal checks; 25 1.00 5.00 2.0000

Competency of the staff 25 1.00 5.00 2.0000


The mean scores for the effect of key components of Internal Control System on management of your

procurement function are as follows: organizational structure (1.84); record keeping (1.80); division and

segregation of duties (1.84); authorizations and approvals (1.96); internal checks (2.0); and competency of the

staff (2.0). The findings show most of the departmental heads were in agreement with the fact that components of

Internal Control System positively affected the procurement function. This is agreement with Seminega (2012)

who reported that internal controls play a pivotal role towards ensuring effective management of the procurement

function. It means thus, that with proper application of these controls enhance the effectiveness of the

management process.

4.7 Relationship between Effective management of procurement and independent variables

A Pearson Correlation was computed between the independent variables (Project financing, Accountability,

ICT adoption and internal processes) and (Dependent Variable) Effective management of procurement with the

aim of establishing whether there was a causal relationship between these study variables. The results were as

presented in Table 4.15

Table 4. 16: Relationship between Effective management of procurement and independent variables

VARIABLES EMOPF PF A ICT IP

EMOPF R 1 .324 .306 .416(*) .336

Sig. (2-tailed) . .114 .136 .039 .101

N 25 25 25 25 25PF R .324 1 .263 .242 -.083

Sig. (2-tailed) .114 . .204 .244 .694

N 25 25 25 25 25

A R .306 .263 1 .693(**) .157

Sig. (2-tailed) .136 .204 . .000 .454

N 25 25 25 25 25

ICT R .416(*) .242 .693(**) 1 .387Sig. (2-tailed) .039 .244 .000 . .056

N 25 25 25 25 25

IP R .336 -.083 .157 .387 1

Sig. (2-tailed) .101 .694 .454 .056 .

N 25 25 25 25 25

* Correlation is significant at the 0.05 level (2-tailed).

** Correlation is significant at the 0.01 level (2-tailed).

EMOPF: Effective Management of Procurement Function




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PF: Project Financing

A: Accountability

ICT: Adoption of Information Communication Technology

IP: Internal Processes

R = Correlation value

The findings show that that there is a positive correlation between the dependent variable (effective

management of procurement function) and independent variables (Project financing, Accountability, ICT

adoption and internal processes). This implies that the independent variables are responsible for the current

level of the effectiveness in managing the procurement function. Project financing is positively correlated with

effective management of procurement function at 0.324 at 0.114 significance level; Accountability at 0.306 at

0.136 significance level, ICT adoption at 0.416 at 0.039 significance level; and Internal processes at 0.336 at

0.101. All these values were above the test significance level at 0.05, this implying that the independent variables

negatively affected the effective management of procurement function.

5. Summary of findings, conclusions and recommendations

5.1 Introduction

This chapter presents a summary of research findings, conclusions, and recommendations drawn from

conclusions. The purpose of this study was to evaluate the factors affecting effective management of the

procurement function at Nakuru North Sub-County. In this study, data was collected using questionnaires heads

of departments of all user / Ministry departments. Analysis of data was conducted with the aid of the Statistical

Package for Social Sciences (SPSS) version 21.0 for windows. The analysis entailed computation of descriptive

statistics (frequencies and percentages).

5.2 Summary of Findings

The study findings show that project financing had an influence on effective management of the

procurement function at Nakuru North Sub-County. This was evidenced by 84% of the respondents, who

indicated project financing affected the procurement process of supplies in the public sector. However, it is

worth noting that timely disbursement of funds, flexibility of procurement budgets, and bureaucratic bottlenecks

in time of payments did not affect the procurement function in this sub county. The respondents appear to almost

unanimously agree that Public Procurement and Disposal Act (contract management and procurement procedures)

affected the management of the procurement function.

Accountability had an influence on the effective management of the procurement function at Nakuru North

Sub-County. It is noted that as embraced at the sub county, it did not affect the procurement function.

Measurement of goals and results, justification or explanation of those results to internal or external monitors and

punishment or sanctions for non-performance or corrupt behavior appear to be meticulously done in such a way

that it favoured the procurement function.Information Communication Technology adoption contributed to the effective management of the

procurement function at Nakuru North Sub-County. However, it emerges that the level of adoption was still low

as according to most respondents, the Government officials and elected leaders still had not lived to the

realization that public agencies must utilize ICT in order to enhance the procurement processes in the public

sector.

Internal control system influenced the effective management of the procurement function at Nakuru North

Sub-County. According to most of the respondents internal processes had an influence on the procurement of

supplies. According to most respondents professionalism was not fully embraced and this was bound to affect the

procurement function and most of the respondents engaged in dishonesty or unethical actions. However, most




289

respondents showed that organizational structure, record keeping, division and segregation of duties,

authorizations and approvals, internal checks and competency of the staff as adopted and / or implemented was

sufficient to steer effective management of the procurement function.

5.3 Conclusions and recommendations

Based on the summary of findings, the following conclusions were made: Project financing had an

influence on effective management of the procurement function. Procurement process can contribute to improved

performance of the procurement function if the process is timely financed. Delayed disbursement and project

funding inadequacies appear to be one of the main reasons behind stalled projects. Hagén, and Zeed, (2005)

posits that the procurement unit needs to be assured of availability funds before preparing procurement plans and

entering into negotiations with the suppliers.

Accountability had an influence on the effective management of the procurement function at Nakuru North

Sub-County. Accountability shows how the public interest has been protected in the expenditure of public funds.

Maintaining integrity in public procurement is one of the most important pillars of modern national procurement

systems (Barrett, 2000). Ensuring the accountability of procurement officials is perhaps the most essential

aspect of this goal. The accountability of procurement officials is not only important from a public or

administrative law perspective, but also has economic implications.

Information Communication Technology adoption contributed to the effective management of the procurement

function at Nakuru North Sub-County. The old way of doing business consists of buyers managing forecasts and

communicating requirements to suppliers via phone, fax and email. Spreadsheets and manual reports are

passed between the trading partners. These manual processes are slow and cumbersome. They cannot support

today’s demand-driven enterprises. Supply chain procurement professionals spend too much time “putting

out fires” and reacting to daily problems (Thomson and Jackson, 2007).The study thus concludes that

ICT adoption affected procurement process at Kenya government ministries to a great extent. ICT adoption

enhanced the process of effective tendering through advertising,sourcing reviews, prequalification, potential

for cost savings and greater awareness of new development. Adopting ICT enabled Kenya government

ministries to provide excellent service to their suppliers in an effective and transparent manner.

Internal control system influenced the effective management of the procurement function at Nakuru North

Sub-County. According to Thomson and Jackson, (2007), the actions of public officials must

be above suspicion and not give rise to any actual or potential conflict of interest and their dealings with

commercial and other interests should bear the closest possible scrutiny. It is not possible to give guidelines for

every conceivable situation that may arise but if a doubt arises about a particular situation line

management should be consulted. This study concludes that the study concludes that operating procedures

affected procurement process at Kenya government ministries to a very great extent.

Based on the findings and conclusions of the study, the following recommendations were made: TheGovernment of Kenya should consider examination and evaluation of offers is made effective. Accountability

and measurement of goals and results need to be considered since they affect procurement process at

Kenya government ministries.Also,Procurement results need to be reported to internal or external monitors

since this affects procurement process at Kenya government ministries.The government officials need to be

encouraged to use discretion to license and accreditfacilities,providers,services and products to reduce

opening risk of abuse of power and use of resources.

Thirdly, adequate controls should be put in place reducing opportunities for corruption. Performance incentives

need to be offered to employees to reward good performance. This will help to increase accountability. Kenya

government ministries should adopt ICT. This will enhance the process of effective tendering




290

through advertising, sourcing reviews, prequalification, potential for cost savings and greater

awareness of new development. It will also enable Kenya government ministries to provide excellent service to

their suppliers in an effective and transparent manner. As regards internal processes, they should be enhanced in

order to avoid conflict of interest in the work processes. Separation of key functions will contribute to

professionalism, accountability and an efficient procurement system.

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