The introduction of e-procurement in Uganda is good news to the business community. It is long overdue.
Over the years the world has witnessed the development of information, communication technology (ICT) and adopted it in work with great results. Uganda is steadily catching up and it is promising to ease work.
With e-procurement, the Ministries, Department and Agencies (MDAs) procurement process will be efficient and effective. It means tender bidders will be invited to submit both technical and financial bids online, which will increase transparency and reduce corruption.
When bids are submitted online, the chances of manipulating bid documents are minimized. But this will happen only when Public Procurement and Disposal Authority (PPDA) ensures the IT system supporting the e-procurement does not allow users to tamper with the documents after the bid submission deadline. In other words, the system should have enhanced security to deter intrusion otherwise it would be a good move that takes us nowhere.
Online Auction
Besides, e-procurement, the Government needs to consider online auctions too. This is where potential suppliers upload Prices of their goods and services online and then participate in the Auction process.
The question is how online auction is different from e-procurement and how it works.
When procuring goods and services through an online auction, the buyer invites suppliers to submit the expression of interest and technical bids through an e-procurement system. Then the technical bids are reviewed and the approved list is uploaded on the e-procurement portal. Once this activity is completed, a date and time is set to invite financial bids from all listed suppliers whose technical bids were approved.
Suppliers upload their financial bids live on the online auction platform. The system automatically ranks each bidder, based on their financial bids. The ranking is displayed for all bidders to see and compare prices with their competitors.
If a bidder wishes to reduce their bid price, they are allowed and also the system prompts them. All bidders other than that ranked number one know that if they do not reduce their price, they stand to lose the bid.
Bidders have to give a minimum pre-agreed discount for example 3% every time they submit a new bid price otherwise, the system will not accept their new reduced price if it is less than 3%. Another example is when a supplier ranked third reduces their price and beats the ranked one create an interesting case. The number one ranked supplier has the chance to reduce its price further and maintain the lead position.
Although the auctioning process is transparent with the prices of each bidder posted online, the supplier’s names are not disclosed.
The online auction gives 3 -5 minutes to every bidder to submit a discounted price. Every time a new valid bid price is submitted, all others get 3-5 minutes to submit a better price than that bid price.
The online auction of bidding continues until all bidders have given their last final prices. When no new bid price is submitted in the allocated 3-5 minutes then the bidding process closes automatically, while everybody knows their rank. This means the winner knows that he has won the bid and all other bidders ranked low are aware they lost.
If introduced,, MDAs will have no control of such a bidding process, they will just be informed about who won the bid. Even a supplier who loses a bid will accept the results with a smile, as they know that they lost because of their limitation of not being able to reduce the price further.
Financial Benefit for Government Treasury.
Apart from the elimination of corruption and bringing transparency, the online auction will bring a huge financial benefit to the Ministry of Finance as MDA’s buying goods and services will be able to source the same quantity and quality with a saving of at least 15% – 25%. This saving has been achieved by various multinational companies in Uganda. The saving comes from eliminating corruption and reducing the extra margin of the supplier.
The online auction is a tested procurement method adopted and practised all over the world. The Government of Uganda needs to adopt this method as Uganda needs more revenue for national development projects.
(The writer is the General Manager, Graphic systems (U) Ltd and Board member Private Sector Foundation of Uganda).