MODULE 3 PROCUREMENT PRINCIPLES AND ETHICS Prepared by

MODULE 3 PROCUREMENT PRINCIPLES AND ETHICS Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

MODULE OBJECTIVES q By the end of this module, participants will be able to: • Explain basic procurement principles and the underlying rules that support these principles – professionalism, transparency, value for money, accountability, fairness, competitiveness etc • Apply the codes of conduct in the performance of their procurement functions Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

BASIC OBJECTIVES OF GOOD PROCUREMENT q. The basic objectives of good procurement are: • To obtain the Right Quality of goods, works, or services • From the Right Source • In the Right Quantity • At the Right Price • Delivered to the Right Place • At the Right Time • Whilst achieving the lowest total cost. Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

PRINCIPLES/FACTORS AFFECTING ACHIEVEMENT OF PROCUREMENT OBJECTIVES q. The following principles/factors affect the achievement of good procurement objectives: • • Prepared by GIMPA Consultancy Professionalism Transparency Value for money (Efficiency and Economy) Competitiveness Accountability Fairness Sustainability Ethical approach MODULE 3 Public Procurement Authority (PPA), Ghana

PROCUREMENT PRINCIPLES Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

PROFESSIONALISM q Professionalism is the discipline whereby educated, experienced and responsible procurement officers make informed decisions regarding purchase operations. q The role of procurement professionals is critical to Ghana’s economic development. q It is in the recognition of this fact that the Public Procurement Authority’s object includes: ‘‘the professional development, promotion and support for individuals engaged in public procurement and ensure adherence by the trained persons to ethical standards”. (AB Adjei, Chief Executive, PPA July 2006). MODULE 3 Prepared by GIMPA Consultancy Public Procurement Authority (PPA), Ghana

TRANSPARENCY q. Transparency refers to the level of openness of a procurement process and the idea that procurement procedures should be characterized by clear rules and by means to verify that such rules were followed in the procurement process. q. Transparency means that the same rules apply to all suppliers, contractors, consultants/service providers for goods, works and services respectively and that these rules are publicized as the basis of procurement decisions prior to their use. q. Transparency enables the creation of open and fair procedures. q. It encourages inward investment and competitiveness as the public sector is. MODULE seen 3 as a responsible business partner. Prepared by GIMPA Consultancy Public Procurement Authority (PPA), Ghana

TRANSPARENCY (Cont’d) q. Transparency can be achieved in various phases of a public procurement process: • Publicity of contract opportunities • Publicity for the rules governing each procurement procedure • Rules relating to the clarification of tenders • Public opening of tenders • Debriefing • Publication of contract awards • Limits to control the discretion of procuring entities or officers in making public procurement decisions • The possibility for interested parties to verify the application of the public procurement rules as publicised Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

VALUE FOR MONEY (EFFICIENCY AND ECONOMY) q. Value for Money (VFM) is the optimum combination of whole life cost and quality to meet the customer’s requirements. It is reflected in the price of the item or service procured. q. The essence of the Public Procurement Authority’s object is to “secure a judicious, economic and efficient use of state resources in public procurement’’. q Value for Money (VFM) is a critical measure of the effectiveness of the procurement process, its outputs and outcomes. q. Achieving VFM requires a strategic and integrated approach to procurement. q. VFM may be compromised if the Public Procurement Act and Regulations are not followed. Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

VALUE FOR MONEY (Cont’d) q. The key aspects of VFM cover the following: • Ensuring the goods, works or services acquired are fit for the intended purpose. This means that: ü They can meet the requirements for the task in question, and ü They are not over-specified • Ensuring that the goods, works and services are acquired at the right price • Concluding an arrangement to secure what is needed on the best contractual terms • Ensuring the contracting parties fulfil their parts of their obligations under the terms and conditions of the contract Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

COMPETITIVENESS q. Competitiveness means actively encouraging greater suppliers, contractors, consultants and/ or service providers’ participation in the tendering process through advertising, sourcing reviews, prequalification and transparent procedures. q. The merits of competitiveness include: • Potential for cost savings and achievement of value for money • Increases the potential for supplier, contractor, consultant and/or service provider’s base • Greater awareness of new developments • Greater understanding of the Act and confidence in public sector procurement MODULE 3 Public Procurement Authority (PPA), Ghana Prepared by GIMPA Consultancy

ACCOUNTABILITY q Accountability can be explained as the process of holding an individual or an organization fully responsible for all aspects of the procurement decision making process over which they exert authority. q. Relevant provisions under Act 663 as amended are sections 17(1) and 18(1) which place obligations on the head of entity and officers to whom authority is delegated to be accountable. q. The merits of accountability include: • Strengthens the perception of transparency and fairness • Reduces the incidence of corruption • Increases the need for actors within the procurement process to take ownership and responsibility for their actions and decisions Public Procurement Authority (PPA), Ghana Prepared by GIMPA Consultancy MODULE 3

FAIRNESS q Fairness in public procurement implies showing consideration and impartibility in all stages of the procurement process, such as demonstrating equality in tender evaluations. q. Fairness results in: • Development of mutual trust • Instils confidence in the procurement process which ultimately promotes increased participation by tenderers for contract opportunities • Increases the potential for supplier, contractor, consultant and/or service provider’s base Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

FAIRNESS q Fairness in public procurement implies showing consideration and impartibility in all stages of the procurement process, such as demonstrating equality in tender evaluations. q. Fairness results in: • Development of mutual trust • Instils confidence in the procurement process which ultimately promotes increased participation by tenderers for contract opportunities • Increases the potential for supplier, contractor, consultant and/or service provider’s base Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

EFFICIENCY q. Efficient public procurement means: • A system which operates in a timely manner, with a minimum bureaucracy, while being responsive to the needs of the ultimate users of the goods, works or services procured. • Efficiency covers the optimum utilization of scare resources to achieve desired results. Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

ETHICAL APPROACH q. Ethics is concerned with moral principles and values which govern our beliefs, decisions, actions and behaviours. q. Ethical approach implies exemplary approach to all procurement processes that cannot be questioned or criticized. Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

IMPORTANCE OF ETHICS q. Ethics is important in procurement for the following reasons: • Procurement staff are the representatives of their organization in its dealing with suppliers, contractors, consultants and/or service providers. • Sound ethical conduct in dealing with suppliers contractors, consultants and/or service providers is essential to the creation of good relationships and the establishment of supplier goodwill • It is impossible to claim professional status for procurement without reference to a consideration of its ethical aspects. • Procurement staff are probably more exposed to the temptation to act unethically MODULE 3 than most other employees. Prepared by GIMPA Consultancy Public Procurement Authority (PPA), Ghana

SUSTAINABILITY q. The introduction of sustainability into Ghana’s public procurement regime is to ensure that in making procurement decisions today, procurement entities should be mindful of the implications of their decisions on future generations. q “Sustainable procurement is all about taking environmental, social and economic factors into account in procurement decisions” q“It’s about looking at what your products are made of, where they come from and who has made them” (HEPS Sustainable Purchasing Guidance) q Sustainable procurement is about laws, policies and practices to integrate economic, social and environmental risks into public procurement processes and decisions. Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

CODE OF CONDUCT q. Section 86 of the Act 663 as amended requires the compilation and publication of a code of conduct by PPA. q. The codes of conduct shall apply to each official of a procurement entity, the members of evaluation panel, members of tender review committees, tenderers, suppliers, contractors, consultants and service providers. The codes of conduct shall address the following: • Confidential information • Conflict of Interest • Fraud and Corruption • Gifts and Entertainment • Training Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

Confidential information q. Officials must not disclose to any third party confidential or proprietary information. Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

Conflicts of interest in Procurement q. Conflict of Interest can be explained as “A situation where personal or business interests of a party could adversely affect the outcome of a procurement transaction. ” q. Public procurement officials must avoid conflicts between their personal financial interests and their official duties. q. Any instances of conflict of interest should immediately be disclosed/declared prior to the commencement of a procurement process. q. Tenderers have an obligation to disclose any situation of actual or potential conflict that impacts their capacity to serve the best interest of the procurement entity or that may reasonably be perceived as having this effect. q Failure to disclose said situations may lead to the disqualification of the Tenderer or the termination of the Contract. Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

Fraud and Corruption q“A fraudulent practice is any act or omission, including a misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party to obtain a financial or other benefit or to avoid an obligation. ” q“A corrupt practice is the offering, giving, receiving or soliciting, directly or indirectly, anything of value to influence improperly the actions of another party. ” q. Procurement Entities and tenderers, suppliers, contractors, consultants, technical service providers and their agents and any personnel thereof, are required to observe the highest standard of ethics during the procurement and execution of public-financed contracts. q. Section 93 of Public Procurement Act, 2003 (Act 663) as amended on Corrupt Practices, states the following: 1. “Entities and participants in a procurement process shall, in undertaking procurement activities, abide by the provisions of article 284 of the Constitution”. 2. “An act amounts to a corrupt practice if so construed within the meaning of corruption as defined in the Criminal Offences Act, 1960 (Act 29)”. Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

Common Forms of Corrupt and Fraudulent Practices q “Coercive practice” means impairing or harming, or threatening to impair or harm, directly or indirectly, any party or the property of any party, to influence the actions of a party in connection with the implementation of any contract supported, in whole or in part, including such actions taken in connection with the execution of a contract. q “Collusive practice” means a tacit or explicit agreement between two or more parties to perform a coercive, corrupt, fraudulent, obstructive or prohibited practice, including any such agreement designed to establish prices at artificial, non-competitive levels or to otherwise deprive the Employer of the benefits of free and open competition. Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

Common Forms of Corrupt and Fraudulent Practices (Cont’d) q“Obstructive practice” means any act taken in connection with the implementation of any contract supported, in whole or in part: • That results in the destroying, falsifying, altering or concealing of evidence or making false statement(s) to investigators or any official in order to impede an investigation into allegations of a coercive, collusive, corrupt, fraudulent or prohibited practice, • That threatens, harasses or intimidates any party to prevent him or her from either disclosing his or her knowledge of matters relevant to an investigation or from pursuing the investigation and/or • Intended to impede the conduct of an inspection and/or the exercise of audit or investigation rights provided under Act 663 as amended and related regulations, manual, agreements and standard documents; Public Procurement Authority (PPA), Ghana MODULEtender 3 Prepared by GIMPA Consultancy

Common Forms of Corrupt and Fraudulent Practices (Cont’d) q“Prohibited practice” means any action that violates Compliance with Anti-Corruption, Anti. Money Laundering, Terrorist Financing, and Trafficking of Persons, Statutes and Other Restrictions of the United Nations. Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

Gifts and Entertainment q. Officials must not accept directly or indirectly, any gift (including any gratuity favour, entertainment, loan or other consideration) with a value in excess of a certain amount of money (which should be set at a low level, having regard to the overall situation in the country concerned from any person or entity which has or seeks to obtain a contract with their own agency. Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

Training q It is important to institute screening procedures and training requirements aimed at building the capacities of key actors in ethics of procurement. q. Such training programmes could cover: • • Prepared by GIMPA Consultancy Conflict of interest Bribery Fraud and corruption Child and forced labour Money laundering Terrorism financing Modern slavery MODULE 3 Public Procurement Authority (PPA), Ghana

RESULT OF UPHOLDING PROCUREMENT PRINCIPLES q. Procurement principles and ethics will result in the following: • • • Prepared by GIMPA Consultancy Increased efficiency in the procurement functions Procurement operations become more effective Enhanced profile of procurement Improved achievement of objectives Professionalism of procurement in Ghana Reduction in bribery and corruption and thereby achieving value for money in public procurement MODULE 3 Public Procurement Authority (PPA), Ghana

Examples of Unethical Conduct q. Revealing confidential or “inside information” either directly or indirectly to any tenderer or prospective tenderer; q. Discussing a procurement with any tenderer or prospective tenderer outside the official rules and procedures for conducting procurements; q. Favouring or discriminating against any tenderer or prospective tenderer in the drafting of technical specifications or standards or the evaluation of tenders; q. Destroying, damaging, hiding, removing, or improperly changing any official procurement document; q. Accepting or requesting money, travel, meals, entertainment, gifts, favours, discounts or anything of material value from tenderers or prospective tenderers; q. Discussing or accepting future employment with a tenderer or prospective tenderer; q. Requesting any other Public Servant or Government official representing the Procurement Entity in a procurement to violate the public procurement rules or procedures; q. Ignoring evidence that the Code of Ethics has been violated by a member of the Tender Committee, Public Servant or other employee or representative of the Procurement Entity; q. Ignoring illegal or unethical activity by tenderers or prospective tenderers, including Prepared by GIMPA Public Procurement Authority (PPA), Ghana any offer of personal inducements or rewards. MODULE 3 Consultancy

Obligations of Public Servants q. The guiding principles of ethical behaviour are: • Impartiality • Independence • Integrity q. Ethical behaviour must be promoted and supported by appropriate systems and procedures q. Systems and strict adherence to procedures alone cannot create an ethical and accountable procurement function q. Public Servants involved in procurement are obliged to follow the Civil Service Code and the regulations governing public procurement. q All procurement activities must be carried out in a manner above reproach, with complete impartiality and with no preferential treatment. q. The procurement process must allow suppliers, contractors and consultants to compete for business on a fair basis q. Public officials associated with the procurement function must be responsible by protecting the integrity of the procurement process and maintaining fairness Prepared by GIMPA Public Procurement Authority (PPA), Ghana Consultancy MODULE 3

Responsibilities of Officers q. Senior officers in a Procurement Entity have responsibility to: • Provide instructions and guidance to staff, especially where they may be exposed to opportunities for accusations of fraud or corruption; • Encourage staff to follow ethical principles and practices and create an environment where transparency and openness are the standard; • Ensure that all staff comply with instructions and guidelines, including the maintenance of documented records; • Set appropriate levels of financial delegation, and ensure a proper separation and rotation of duties. q. Junior officers in a Procurement Entity have responsibility to: • Follow management instructions and procedural guidelines; • Be alert to and report any indications of unethical behaviour; • Seek guidance from a manager or auditor on any concerns that may arise. Prepared by GIMPA Consultancy MODULE 3 Public Procurement Authority (PPA), Ghana

Responsibilities of the Private Sector q. The Private Sector is not exempt from responsibility to act ethically and transparently in procurement proceedings with the Government of Ghana. q. This message is to be reinforced by requiring tenderers to sign a formal declaration before participating in any procurement process: “I hereby certify that I and all officers of the Company which I represent will uphold the highest ethical standards in doing business with the Government of Ghana. We will not attempt to bribe government officials with money or other goods or services; we will not request favourable treatment and we will not seek information about competitors or other information regarding the procurement process. I understand that if I, or other officers of the Company which I represent are found to have breached this commitment, that sanctions will be made against the Company, including being debarred from doing business with the Public Procurement Authority (PPA), Ghana MODULE 3 Government of Ghana for a period of 5 years. ” Prepared by GIMPA Consultancy

Sanctions for Non-compliance with Ethical Standards q. Adherence to the provisions of Act 663 as amended and Regulations by Public Officials is obligatory and failure to do so will be considered an offence subject to sanctions. q. The level of sanctions will be published separately and will be graduated depending on the offence. q. Any official suspected of non-adherence to the rules and regulations will be suspended and his or her benefits, including salary, withheld pending investigation. Officials found misappropriating government funds, regardless of the value, will be summarily dismissed. q. Other offences involving non-adherence to the rules and regulations, including negligence and irresponsibility will result in sanctions as specified in the Act 663 as amended. q. Any tenderer, supplier, contractor or consultant who attempts to influence a procurement process, or the administration of a contract by any unfair method, will be subject to sanctions. q. This may include debarment of MODULE the company from Government contracts for a(PPA), Ghana Public Procurement Authority 3 Prepared by GIMPA Consultancy

q. QUESTIONS & DISCUSSIONS q. MODULE 3 – EXERCISE: