An Assessment oI Procurement ImpIantatIon CapacIty:

Tbe case oI Harar MunIcIpaIIty.

BY:
Zeidan Abubeker





Senior Essay Submitted to the Department of Public Financial Management in Partial
Fulfillment of the Requirement for Bachelor of Arts in Public Financial Management





ADVISOR:






Institute of Tax and Customs Administration
Ethiopian Civil Service University
Addis Ababa





December, 2011

Declaration
This report is the presentation oI my original research work. Wherever contributions oI other are
involved, every eIIort is made to indicate this clearly, with due reIerence to the literature, and
acknowledgment oI collaborative research and discussions. InIormation taken Irom published or
unpublished work oI others has been acknowledged in the text and a list oI reIerence is given.
I declare that this report has not been submitted in any Iorm Ior another degree or diploma at any
university or other institution oI tertiary education
The work was done under the guidance oI Ato kassay Tugi
Researcher`s Iull name---------------------------------------------------------------------
Signature----------------------
Date -----------------
























Approval
TIc undcr dcsigncd ccriify iIai iIcy Iavc rcad and Icrc ly
rccommcnd io iIc EiIioian Civil Scrvicc Univcrsiiy Accciancc of
Scnior Essay Sulmiiicd ly Zcidan Alulclcr and cniiilcd An
Asscssmcni of Procurcmcni Imlaniaiion Caaciiy. TIc casc of
Harar Municialiiy" in ariial fulfillmcni of rcquircmcnis for iIc
award of DacIclor Dcgrcc in Pullic Financial Managcmcni .
Advisor`s approval
Full Name ------------------------------------------------
Signature: -------------------------
Date--------------------------------
Examiner approval
Full Name----------------------------------------------
Signature: ------------------
Date-------------------------
Head oI department public Iinancial management
Full Name---------------------------------------------
Signature------------
Date-------------










Acknowledgements
First and Ior most, I would express my gratitude to Allah who helped me to start and Iinish this
study. next ,my deepest thank goes to Ato kassay Tugi my senior essay advisor ,who gave his
constructive advice ,suggestion ,completion oI this paper
I also would like to express my deepest and warmest gratitude to my bureau Harari Police
Commission and Harar municipality workers Ior their cooperation and give me suIIicient data
Ior my study
At last, but not least, I would like to thank all my Iriends Ior their advice and my Iamily who
gently helped me.























CHAPTER ONE
1. Introduction

J.J BooKground o] 1e S1udg
Pullic rocurcmcni oficn consiiiuics iIc largcsi domcsiic marlci
in dcvcloing counirics. Dccnding on Iow ii is managcd, iIc
ullic rocurcmcni sysicm can iIus coniriluic io iIc cconomic
dcvclomcni of iIcsc counirics. Indccd, ullic rocurcmcni is iIc
rincial mcans iIrougI wIicI govcrnmcnis mcci dcvclomcnial
nccds sucI as iIc rovision of Iysical infrasiruciurc and iIc
suly of csscniial mcdicincs. Again, many govcrnmcnis usc ullic
rocurcmcni io suori iIc dcvclomcni of domcsiic indusirics,
ovcrcomc rcgional cconomic imlalanccs, and suori minoriiy or
disadvaniagcd communiiics. Dccausc iIc dcloymcni of iIc ullic
rocurcmcni sysicm io ursuc iIcsc dcvclomcnial goals cniails
govcrnmcnial ccrcisc of cnormous discrciion, ullic rocurcmcni
is oficn an circmcly conirovcrsial suljcci maiicr. TIis is csccially
iIc casc in dcvcloing counirics wIcrc iIc aliliiy io ccrcisc
discrciion in iIc award of govcrnmcni coniracis Ias lccn a sourcc
of valucd oliiical aironagc" and rocurcmcni Ias lccn a mcans
for iIc illicii iransfcr of funds from govcrnmcnial io rivaic Iands.

Today govcrnmcnis all ovcr iIc world Iavc rcccivcd a grcai dcal of
aiicniion as rovidcrs of csscniial scrviccs, sucI as IcaliI,
cducaiion, dcfcnsc and infrasiruciurc. To lc allc io mcci iIc
dcmand for iIcsc scrviccs, govcrnmcnis urcIasc goods and
scrviccs from iIc marlcilacc. In oiIcr words, govcrnmcnis arc
urcIascrs of worls, sulics and scrviccs from iIc ocn marlci,
lacing iIcir dcmands alongsidc iIosc of iIc rivaic sccior. TIc
lusincss ocraiions of govcrnmcnis in iIc marlcilacc or ullic
rocurcmcni Ias iIus loiI cconomic and oliiical imlicaiions.
Yci, uniil noi ioo long ago, iIc suljcci of ullic rocurcmcni would
Iavc rcccivcd liiilc aiicniion ly acadcmic rcscarcIcrs and olicy
malcrs, lccausc ii was considcrcd an adminisiraiivc funciion ioo
mundanc io worry aloui (Wiiiig, 1998}.

PuIc ocucncnt s u Ic ccononc uctut o goucnncnts,
uccountng o u ugc ooton o Coss Doncstc Poduct
uodudc. Ecctuc uIc ocucncnt uuods nsnunugcncnt und
wasic of ullic funds.





TIc imoriancc of ullic rocurcmcni in icrms of sizc rclaiivc io
world CDP and world iradc is IigIligIicd ly an OECD rcori
(OECD, 2001}. In iIis rcori, iIc valuc of iIc conicsiallc
govcrnmcni rocurcmcni marlci was csiimaicd ai ovcr $2 000
lillion in 1998. TIis is cquivalcni io 7 cr ccni of world CDP and 30
cr ccni of world mcrcIandisc iradc. In a rclaicd siudy, Trionfciii
(2000} csiimaics iIai iIc sizc of ullic rocurcmcni varics lciwccn
5 and 8 cr ccni of CDP in mosi indusirializcd counirics.
For iIc Middlc Easi and Africa, iIc magniiudc of ccniral
govcrnmcni urcIascs rangcs lciwccn 9 and 13 cr ccni. TIcsc
figurcs indicaic iIai ullic rocurcmcni is imoriani in iIc
cconomics of loiI dcvclocd and dcvcloing counirics. TIc
cconomics of loiI dcvclocd and dcvcloing counirics.






J.2 BooKground o] 1e S1udg Areo

Harari rcgional siaic is onc of iIc Fcdcral Dcmocraiic Fcullic of EiIioia
rcgional siaics in iIc Easicrn ari of EiIioia. TIc siaic Ias no adminisiraiivc
zoncs or worcdas. TIc ioial numlcrs of lclclcs of iIc ciiy arc 19 wIilc iIc
rural ari of iIc siaic Ias 17 formcrs associaiion. TIc caiial ciiy of iIc siaic
is Harar. TIc siaic of Harari colc isolaicd in iIc Easicrn ari of EiIioia,
surroundcd ly iIc siaic of Oromia and iIc siaics sizc is csiimaicd ai 340
squarc lilomcicrs. According io 1994 ccnsus rcsuli iIc oulaiion is 131,139.
TIc urlan rcsidcnis of iIc siaic wcrc 76,378 wIilc iis rural inIaliianis wcrc
54,761. TIc major cconomic of iIc siaic is rcdominanily farming, civil scrvicc
and commcrcc i.c. McrcIandizing, indusiry and oiIcr scrviccs. Harari rcgion
is lics 51lm io iIc SouiI Easicrn of Dirc Dawa and 525 lilomcicrs io iIc Easi
(Fcdcral Siaiisiics, 2009}.





J.S S1o1emen1 o] 1e Prob1ems

Sound ullic rocurcmcni olicics and raciiccs arc onc of iIc
csscniial clcmcnis of good govcrnancc. Cood raciiccs rcducc cosis
and roducc iimcly rcsulis; oor raciiccs lcad io wasic and dclays
and arc oficn iIc causc of allcgaiions of corruiion and govcrnmcni
incfficicncy (WD 2003 65}. Morc imorianily, according io rcgional
rocurcmcni dircciivc (2003} rocurcmcni siaff and Icad of iIc
rocurcmcni unii of iIc Pullic lody Iavc iIc rcquircd cducaiional
qualificaiion and ccricncc in iIc ficlds rclcvani io ullic
rocurcmcni lui, iIcir alicaiion in raciicc may lc cniircly
diffcrcni. Poor disscminaiion of rulcs, inadcquaic iraining of
crsonncl, lacl of cnforccmcni, failurc io mainiain good rccords,
dclilcraic corruiion and a variciy of oiIcr faciors crcaic risls iIai
can undcrminc an oiIcrwisc sccmingly adcquaic sysicm (WD2003
68} .Documcni accounis osioncd from ycar io ycar wiiIoui
mcasuring lilc iIc asi ycar, rocurcmcni conirary io iIc cisiing
rulcs and rcgulaiions.
1


From iIc rcscarcIcr crsonal ccricncc, many rollcms Iavc lccn
dirccicd iowards ullic rocurcmcni caaciiy asscssmcni for iIcir
incffcciivcncss and incfficicncy. Dcsiic IigI rcgional govcrnmcni
ccndiiurc on rocurcmcni iraining and dcvclomcni cvcry ycar io
imrovc iIc crformancc of iis cmloycc, lui Effcciivc ullic

1
Audit report presented by the Federal Auditor General to the House Peoples Representatives during June 09, 2011
rocurcmcni sysicms of iIc ullic lodics Ias noi yci incrcascd.
TIc rcscarcIcr susccis iIai cvaluaiion of asscssmcni of ullic's
caaciiy asscssmcni io imlcmcni rocurcmcni was givcn liiilc
aiicniion. Hcncc, iIis siudy is dcdicaicd io caminc an asscssmcni
of Harar Municialiiy Procurcmcni Caaciiy. TIcrcforc, iIc
rcscarcIcr lclicvcs iIai ii is iIc rigIi iimc io malc rcscarcI on an
asscssmcni of Harar Municialiiy's caaciiy io imlcmcni
rocurcmcni. Hcncc, iIc rcscarcI uliimaicly irics io answcr iIc
following lasic qucsiions.-

1. WIai arc iIc caaliliiics of iIc imlcmcniing and iIc
adcquacy of rocurcmcni and rclaicd sysicms in Harar
municialiiy io adminisicr rocurcmcni?

2. WIai arc iIc risls (insiiiuiional, oliiical, organizaiional,
roccdural, cic.} iIai may ncgaiivcly affcci iIc aliliiy of iIc
Harar municialiiy io carryoui iIc rocurcmcni roccss?


. WIai arc iIc ossillc suggcsiions and rccommcndaiions
iIai addrcss iIc various cIallcngcs and rollcms rclaicd
io rocurcmcni cffcciivcncss of Harar Municialiiy?

.4 ObjectIve oI tbe Study

TIc main oljcciivc of iIis siudy is io asscss Harar
Municialiiy's Caaciiy io Imlcmcni Procurcmcni and io
comc u wiiI somc rccommcndaiions on iIc lascs of iIc
rcscarcI findings.

Tbe specIIIc objectIves are:-

To cvaluaic iIc caaliliiy of iIc imlcmcniing and iIc
adcquacy of rocurcmcni and rclaicd sysicms in Harar
municialiiy io adminisicr rocurcmcni;

To asscss iIc risls (insiiiuiional, oliiical, organizaiional,
roccdural, cic.} iIai may ncgaiivcly affcci iIc aliliiy of iIc
Harar municialiiy io carry oui iIc rocurcmcni roccss;

To asscss sufficicni and qualificd siaff io carry oui iIc
normal rocurcmcni iasls assigncd; and
To asscss sIould lool inio iIc qualiiy and adcquacy of
suoriing and conirol sysicms io iIc Harar Municialiiy




J.S. S1gn1]1oonoe o] 1e S1udg

According io iIc rcscarcIcr's oini of vicw, iIc finding of iIis siudy
will lring a significani coniriluiion io iIc lurcau in undcrsianding
iIc rollcm criaining io ullic rocurcmcni and io oini oui
ossillc suggcsiions. Ii will rovidc oiions Iow io conirol scarcc
ullic rcsourccs and io ialc an aciion iowards minimizing and
safcguarding iIcsc rcsourccs. Ai iIc samc iimc ii insigIis Iow io
dccrcasc iIc risl and ly imroving fairncss and iransarcncy. Ii
will also coniriluic cmloyccs io undcrsiand Iow io acIicvc lcsi
valuc for moncy. TIc ovcrall significancc of iIc siudy is.-

O Ii incrcascs rocurcmcni managcmcni caaciiy and moniior
iIc roccss cffcciivcly;
O Ii imrovcs accounialiliiy, inicgriiy and iransarcncy of iIc
roccss and rcducc corruiion; and
O Ii diagnoscs iIc IcaliI of iIc cisiing rocurcmcni sysicm in
Harar Municialiiy.


J.t. Me1odo1ogg
.6.. Researcb DesIgn
TIc siudy will cmloy dcscriiivc iyc of rcscarcI dcsign. Ii givcs
iIc ooriuniiy io sIow iIc dciail iciurc of asscssmcni of
rocurcmcni caaciiy ly answcring all qucsiions raiscd in iIc
oljcciivcs of siudy.
.6.2. Data Sources
TIc rcscarcIcr Ias uscd loiI rimary and sccondary daia sourccs
for iIc siudy. TIc rimary daia Iavc lccn collccicd from iIc
conccrncd lodics and individuals iIrougI olscrvaiion, inicrvicw
and qucsiionnairc. Sccondary daia Iavc lccn gaiIcrcd from
diffcrcni documcnis availallc in iIc officc, inicrnci and lools.

.6.3. Data GatberIng TooIs

Dccnding on iIc siudy undcr considcraiion, iIc rcscarcIcr Ias
uscd all aroriaic mciIods iIai cnallc io gaiIcr iIc ncccssary
daia. Accordingly closc and ocn- cndcd qucsiionnaircs arc iIc
main daia gaiIcring iools of iIis rcscarcI. Unsiruciurcd sclf-
adminisicrcd inicrvicw and siruciurcd inicrvicw for rcsonsillc
officials.
1.6.4. Samlc and Samling TccIniqucs

TIc iargci of iIc siudy is io idcniify an asscssmcni of rocurcmcni
caaciiy. To do iIis, iIc rcscarcIcr conducicd non rolaliliiy
samling. Hc iricd io includc all iIc siuff of rocurcmcni
dcarimcni and rocurcmcni commiiicc ccci iIc sccrciary
lccausc iIc numlcr of rocurcmcni dcarimcni and rocurcmcni
commiiicc is noi morc iIan icn, so I ialc 100% of oulaiion.

.6.S. Data AnaIysIs and InterpretatIon

According io iIc rcscarcIcr iIc aroriaic mciIod of analysis for
iIc siudy is dcscriiivc mciIod. Hc uscd maiIcmaiical
comuiaiion (crccniagc}, simlc iool (iallcs}, for daia analysis and
rcscniaiion.
J.9. Orgon1zo11on o] 1e S1udg

TIis acr is dividcd inio four cIaicrs. Having oljcciivcs and
rcscarcI rollcms, iIc acr organizcd in a logical manncr iIai iIc
firsi cIaicr focuscs on iIc laclground, significancc, Scoc,
mciIodology, and limiiaiion of iIc siudy. TIc sccond cIaicr is iIc
liicraiurc rcvicw. TIc iIird cIaicr is aloui daia analysis and
finding. TIc lasi cIaicr is conclusion and rccommcndaiion lascd
on iIc findings oliaincd ly iIc rcscarcIcr.




































CHAPTER TWO
2. Review of Related Literature
2.1 Basic concept of definition of Procurement



. Overview of Public Procurement in Ethiopia.
2..1. Public Procurement in Ethiopia is regulated by (a) the Financial
Proclamation No. 57/1996 which constitutes the Procurement Law (b)
the Financial Regulation No. 17/1997 issued by the Council oI
inisters (c) the inistry oI Finance Procurement Directives and
contracts issued in 1997, 1999 and revised in 2005 at the Federal level.
In 2005 the Government has established Public Procurement Agency
which is responsible to oversight policy and monitoring oI Public
procurement. Procurement law enacted in 2005 (as per Proclamation oI
No. 40/2005) is required among other things, establishment oI
regulatory body, development oI Procurement Directives, preparation
oI standard bidding documents, guidelines and implementation oI
capacity building strategy at all levels.
The Directive is intended to serve procurement oI goods, works and
service contracts. It speciIies activities and procedural requirements oI
a procurement cycle. Procurement needs assessment, planning,
selection oI methods, bid receipt and opening, evaluation, contract
award and Iollow-up oI contract perIormance. The Directive also
provides SBDS and Iormats used Ior such activities and content
embodied Ior some SBDS and Iormats. Technical speciIication is Ior
Goods contracts as TOR (Terms oI ReIerence) is meant Ior procurement
oI consultancy service that shall be prepared under the support oI
technical personnel.



























































REFERENCES

World Bank`s (200, January) Bank-Financcd Procurcmcni Manual, Washington, DC:
WORLD BANK (2000), "Standard Bidding Documents: Procurement of Works, World Bank, Washington,
D.C.
















































tbIopIan CIvII ServIce UnIversIty
InstItute oI Tax and Custom AdmInIstratIon
Department oI PubIIc FInancIaI Management


"uestIoners to be IIIIed by Harar MunIcIpaIIty procurement OIIIcIaIsJ
ndorsIng commIttee

Dcar rcsondcnis
TIis qucsiionnairc is rcarcd for gaiIcring daia on asscssmcni of Harar
Municialiiy's caaciiy io imlcmcni rocurcmcni. Ii is conducicd only for iIc
ariial fulfillmcni of D.A dcgrcc. TIcrcforc, I lindly rcqucsi you io rcsond for
cacI qucsiion Ioncsily and gcnuincly. All of our rcsonsc will lc lci
confidcniial I would lilc io iIanl you in advancc for ialing your valuallc iimc
io filling oui iIis qucsiioncrs. Insiruciion. iIicl (} in iIc lo givcn for iIc
qucsiions fill iIc llacl saccs in wriiing, No nccd of wriiing your namc.

Scciion - A- Ccncral Informaiion of rcsondcnis
1. Dcarimcni---------------------------------------------------------------------------
------------------
2. Educaiional lcvcl

Ccriificaic and lclow Diloma Dcgrcc Masicrs and
alovc

3. Ccndcr M F
4.
5. Ycar of ccricncc - lclow 3 3-10
>10


SectIon -B- PubIIc procurement Issues oI Harar MunIcIpaIIty.

TRANSPARNCY
1. Arc iIcrc mandaiory rcquircmcnis for mainiaining wriiicn rccords of
rocurcmcni?
Ycs No I don'i lnow

2. Arc iIcy availallc io iIc gcncral ullic?
Ycs No I don'i lnow
3. Arc rcquircmcnis for advcriiscmcni of coniraciing ooriuniiics adcquaic?
Ycs No I don'i lnow
3. Docs agcncy Iold rcgular mcciings wiiI iIc lusincss communiiy io discuss
rocurcmcni issucs?
Ycs No I don'i lnow
4. Is ii availallc io iIc gcncral ullic?
Ycs No I don'i lnow
BIDDING DOCUMNTS
6. Docs iIc Harar Municialiiy Iavc caallc siaff for rcaraiion of lidding
documcnis?
Ycs No I don'i lnow
7. Arc iIcrc scaraic documcnis for inicrnaiional and naiional comciiiivc
lidding?
Ycs No I don'i lnow
8. Arc qualificaiion criicria aroriaic and clcarly dcscrilcd?
Ycs No I don'i lnow
PR-"UALIFICATION
9. Docs Harar Municialiiy mainiain udaicd lisis of qualificd sulicrs,
coniraciors and consulianis, and udaicd marlci informaiion on commonly
rocurcd goods, including sarcs and consumallcs?
Ycs No I don'i lnow
10. Do rc-qualificaiion documcnis clcarly and comlcicly dcscrilc all
rcquisiics for sulmiiiing rcsonsivc alicaiions and iIc qualificaiion
rcquircmcnis?
Ycs No I don'i lnow

ADVRTISMNT
11. Arc coniracis io lc awardcd ly comciiiivc lidding ullicly advcriiscd?
Ycs No I don'i lnow

COMMUNICATIONS BTWN BIDDRS AND TH PROCURING AGNCY
11. Arc rcqucsis for clarificaiions answcrcd romily and comlcicly in a
wriiicn form?
Ycs No I don'i lnow

13. Do rocuring cniiiics mainiain accuraic rccords of all communicaiions wiiI
iIc liddcrs (lcforc and aficr iIc dcadlinc for sulmission}?
Ycs No I don'i lnow

BID AMINATION AND VALUATION
14. Arc cvaluaiions conducicd ly qualificd cvaluaiing commiiiccs?
Ycs No I don'i lnow (WIy}______



15. Arc lid cvaluaiions carricd oui iIorougIly and on iIc lasis of iIc criicria
sccificd in iIc documcnis?
Ycs No
If noi, wIai oiIcr criicria arc considcrcd?



CONTRACT AdmInIstratIon

16. Arc sulicrs and coniraciors gcncrally aid on iimc?

Ycs No I don'i lnow (WIy}______



17. Arc iIcrc aroriaic roccdurcs io moniior dclivcry of goods and
scrviccs io vcrify quaniiiy, qualiiy and iimclincss?

Ycs No I don'i lnow (WIy}______

18. Arc coniracis gcncrally adminisicrcd in a fair and cquiiallc manncr?

Ycs No I don'i lnow _

Support and ControI Systems
19. Arc inicrnal iccInical and adminisiraiivc conirols clcar for rcvicws,
clcaranccs and dccision-maling?
Ycs No I don'i lnow _

20. Is iIc audii indccndcni?
Ycs No I don'i lnow _
StaIIIng
Do siaff slills gcncrally maicI rcquircmcnis and numlcrs?
Ycs No I don'i lnow _

21. Do rocurcmcni siaffs Iavc adcquaic rojcci/coniraci managcmcni
caaliliiics?
Ycs No I don'i lnow

22. Do adcquaic formal and on-iIc-jol iraining rograms cisi for cniry- and
IigIcr-lcvcl rocurcmcni siaffs iIai coniriluic io rocr rofcssional carccr
dcvclomcni?

Ycs No I don'i lnow _

GeneraI RIsk Assessment
23. Docs iIc rocurcmcni rofcssion acar io lc gcncrally siaffcd wiiI Ioncsi
and caallc individuals?
Ycs No I don'i lnow

24. Docs iIc IigIcsi lcvcl of iIc agcncy cncouragc/suori/cnforcc
comliancc wiiI cisiing rocurcmcni rcgulaiions?

Ycs No I don'i lnow (WIy}








25. Do you Iavc any clcar olicy uscd io conirol or minimizc iIc risl?

Ycs No If ycs wIai lind of olicy uscd?


______________________________________________________________________________




26. Arc rocurcmcni lans rcarcd aIcad of iimc as a norm?

Ycs No I don'i lnow



27. Arc iIcsc lans dciailcd cnougI and rcalisiic comarcd wiiI asi Iisiory?

Ycs No I don'i lnow





28. Do lans rocrly considcr iccInical, financial, managcrial and
imlcmcniaiion consirainis?

Ycs No I don'i lnow




29. Is ovcrall lanning for comlc goods, worls and oiIcr coniracis donc in
sufficicni dciail io roducc rcalisiic rojcci dcfiniiion, acIicvallc comlciion
scIcdulcs and accuraic cosi csiimaics?

Ycs No I don'i lnow (WIy}______




30. Arc roccdurcs and mciIodologics for lanning rocurcmcni of rccurrcni
iicms (i.c. invcniory conirol, forccasiing of fuiurc rcquircmcnis, classificaiion,
coding, accouniing/financial managcmcni, sarc aris managcmcni, and
dclivcry sysicms} adcquaic?

Ycs No I don'i lnow (WIy}______

If No wIai is iIc rcason ______________________________________________________



______________________________________________________________________________

______________________________________________________________________________








INTRVIW "USTIONS
WHICH IS GOING TO B ANSWRD BY
Procurement OIIIcIaIs


1. Do rocurcmcni uniis rcgularly conduci marlci survcys io udaic iIcir
lnowlcdgc of rcvailing riccs for goods, worls and scrviccs? ____________





______________________________________________________________________________



2. Do rulcs on ncgoiiaicd rocurcmcni, if any, rovidc iIc lasis for a
fair and iransarcni roccss? Dciail.




_____________________________________________________________________

3. WIai Arc qualificaiion criicria aroriaic and clcarly dcscrilcd?




_____________________________________________________________________

4. Is rc-qualificaiion carricd oui wIcn aroriaic? WIai iycs of
coniracis is ii uscd for? Worls? Coods? Consulianis? OiIcr?




_____________________________________________________________________




5. WIai is iIc iracl rccord of iIc agcncy on ullisIing/udaiing
Ccncral Procurcmcni and Sccific Procurcmcni Noiiccs?




______________________________________________________________________________