Chapter one
INTRODUCTION
Background of the Study
In the present dynamic worldwide business rivalry situation, online innovation is never again an untimely idea; rather it is an unquestionable requirement. With development of web and data, correspondence innovation (ICT) applications, business substances are stressed to move their operations from customary path to the virtual e-business, e-acquisition and e-store network logic (Oketch, 2014).
The origins of e-procurement began in the 1980s, with the development of electronic data interchange (EDI). This development, while ancient by today’s standards, was groundbreaking for the time. EDI allowed customers and suppliers to send and receive orders (and invoices as well) using call-forward networks.
In the 1990s, technology, as it tends to do, improved and software companies began to develop electronic catalogues specifically for use by vendors. Since, e-procurement software has become an amalgam of the two: a platform for sending and receiving orders (as well as myriad other expenses such as travel) and various catalogues.
E-procurement trends in the world
Public procurement is at the core of how government conducts its business. As such, reforming procurement systems can prove transformational for development in any country. In Georgia, the introduction of e-procurement through the Georgian electronic Government Procurement (Ge-GP) system is a good example of how strong political will and commitment can be critical in the context of reforming public procurement. Within a year, the State Procurement Agency of Georgia (SPA) designed, developed, and tested the e-procurement system and eventually moved to the mandatory use of e-procurement, fully replacing paper-based tenders (Telgen J, 2001).
In Bangladesh, the National e-Government Procurement (e-GP) portal of the Government of the People’s Republic of Bangladesh is developed, owned and being operated by the Central Procurement Technical Unit (CPTU), IME Division of Ministry of Planning. The e-GP system provides an on-line platform to carry out the procurement activities by the Public Agencies – Procuring Agencies (PAs) and Procuring Entities (PEs). The e-GP system is a single web portal from where and through which PAs and PEs will be able to perform their procurement related activities using a dedicated secured web based dashboard. The e-GP system is hosted in e-GP Data Center at CPTU, and the e-GP web portal is accessible by the PAs and PEs through internet for their use. This complete e-GP solution introduced under the Public Procurement Reform (PPR) Program is being supported by the World Bank and gradually used by all government organizations. This online platform also helps them ensuring equal access to the Bidders/Tenderers and also ensuring efficiency, transparency and accountability in the public procurement process in Bangladesh (Knudsen D, 2003).
Public procurement is one of the most important roles performed by a government. It determines the supplies purchased by government organizations and the contracts for facilities and amenities to be constructed by the public sector.
Since its establishment in 2002, the Korean government's Public Procurement Service (PPS) has been managing an online public procurement system, the Korea Online E-procurement System (KONEPS), also known as “Nara Jangteo”, in order to deal with public sector procurements in a digitalized manner. The KONEPS is the national public e-procurement system that processes the entire procurement cycle online, from tender notice and bidding through to contracting and payment. All public entities publish tender notices through KONEPS, and suppliers may participate in all public sector biddings after a one-time registration with the KONEPS, except for procurement projects in the defense sector.
The world’s interest in the Korean government's e-procurement systems is spreading around the globe, including to African countries such as Ethiopia and Uganda, to countries in Central and South America and to Asia. The Ethiopian government asked for the PPS to conduct a feasibility test for the introduction of KONEPS there in March 2015. In the case of Tunisia, the Tunisian government hoped to expand cooperation on e-government services with Korea after the joint establishment of an e-procurement system with Korea. The two countries signed an MOU on e-government cooperation in May 2016. Korea has been actively sharing its experiences and knowhow with its partners around the world. In 2016 alone, as of November, a total of 286 officials from 79 countries, including Uganda, Mongolia, Botswana and Afghanistan, have come to Korea for e-procurement training programs (KenjaleK, A. Phatak, 2002).
E-procurement in Africa
Public procurement is a linchpin for good governance and effective public service delivery, both of which are critical to the sustainable development of Africa. In many countries throughout the region, strengthening procurement to address weaknesses in public sector governance has become a priority.
E-procurement has proven itself to be one of the more effective and efficient tools for bringing good governance to the procurement process. In order to improve public sector governance and move beyond traditional, paper-based procurement, numerous nations in Africa are receiving E-Procurement systems.
These systems will improve country government’s ability to generate data and analyse performance in capital budget spending in real time. That is the reason the World Bank is right now giving budgetary and specialized help to E-Procurement activities in a few African nations including Botswana, Rwanda, Mauritius, Ghana, Nigeria, Cameroon, Madagascar, Kenya, Uganda, Zambia and Zimbabwe.
Perspective of E-procurement in Kenya
E-procurement system contributes essentially to national profitability development through the removal of non-value added activities in procurement process. However, the reception has been moderate in Kenya. Experiences that will be acquired from orderly assessments with respect to the obstructions of e-procurement system will build up an instrument to quantify achievement; distinguish hindrances to making progress and set up a structure to advance accomplishment of e-procurement in general society segment in Kenya.
In Kenya, there are a few organizations that have effectively grasped the utilization of e-procurement technology. For instance Nation Media group through their digital platform commonly known as N-Soko empowers their customers to buy items on the web (Gitahi, 2011). Awino (2011) conducted an investigation of selected strategy variables on firms's performance. The study focused on supply chain management in large manufacturing firms in Kenya. It was set up that the greater part of the SCM systems of extensive assembling firms in Kenya are not possessed by singular firms but rather additionally different organizations within the SCM that give the required linkages towards the general corporate performance of the manufacturing industry. However, the adoption rate of e-procurement systems has been much lower than the initial prediction (Forrester Research 2000; Da Vila et al. 2003).
The Kenyan, government has perceived the reception of ICT in in service delivery to the public and citizen in general.This has gained momentum with the current Government administration. Existing writing uncovers that various organizations in Kenya have successfully adopted the use of e-procurement technology. Gitahi (2011) referred to the case of Nation Media Group which through their digital platform commonly known as N-Soko has empowered their customers to buy items on the web. There is however developing proof of the moderate take-up of the innovation regardless of the advantages that e-procurement offers (Segal and Taylor, 2001).In the public sector, several models have been tried by different public entities to implement e-procurement. The Public Financial Reform Management (PFMR) Strategy Paper 2001-2006 recommended automation as well as integration of key government functions such as the human resources payroll, accounting, procurement and budgeting citing transparency, better financial management and easier reporting as some of the benefits (GoK, 2001). According to the E-government Strategy Paper 2004 e-procurement was one of the medium term objectives which were supposed to be implemented by June 2007, but the implementation process was observed to be very slow (GoK, 2004). Within every county in Kenya, there is a department called the Integrated Financial Management Information System (IFMIS) Department which has the mandate of designing, spearheading and managing the Integrated Financial Management Information System re-engineering process in all central government ministries, county governments and all government agencies.
Statement of the Problem
The basic principle of procurement is to purchase the right quantity, at the right quality, the right price, at the right time and from the right price. Public sector buying in Kenya however puts a premium on purchasing at the right price. Section 6, (227) (1) of the Kenyan Constitution, 2010, states that 'When a State organ or some other open substance contracts for goods or services, it shall do as such as per a system that is reasonable, equitable, transparent, competitive and cost-effective. ‘corruption in public procurement processes leads to problems such as lack of accountability and transparency, absence of political control and appropriate review trails, weak professionalization of the organization and some more (GoK, 2012). With the need to incorporate key functions ,such as, procurement and bookkeeping and to streamline and improve straightforwardness in administration of public funds as well as to provide a framework for standardized reporting, the government has adopted the approach requiring all administration acquiring entities to use the Integrated Financial Management Information System (IFMIS). As indicated by CRA (2013), in the 2013/2014 monetary year a sum of 210 billion Kenya shillings was dispensed to the counties government to encourage their operations. This brought remarkable achievement when the government ministries revealed a 42.7% drop in their procurement working cost adding up to Ksh629 million down from KSh1.64 billion in the earlier year (GoK, 2014). As indicated by Malela (2012) over half of procurement processes in Kenyans public procuring entities are carried out manually. The manual procedures are costly, moderate, inefficient and data storage and retrieval is poor (Malela, 2010).
According to the e-government strategy paper (2004) e-procurement was one of the medium term objectives which was to be implemented by June 2007, yet the process has been very slow and findings show that most of the procurement processes in public institutions are still manual with the internet only being used for e-mails and web browsing (PPOA, 2013). This moderate execution of e-procurement in the public sector raises worry as to what factors influence the implementation of e-procurement in the Kenyan public sector particularly in government ministries. Osore (2013) pointed that introduction of e-procurement is aimed at introducing a procurement and payment System (P2P) which fully automates the procurement and payment process. The process may reduce the workload involved in the process of tendering, costs and time involved as suppliers will not have to travel long distances to place tenders in different counties and/or ministries head offices.
According to Bwoga (2011) effective e-procurement processes will provide a smoke screen between the supplier and the panels dealing with the respective bids making it hard for one to try and compromise the involved procurement officials. In spite of the Government's maintained and incremental endeavors in setting down ICT procedures in the zone of Public Financial Management Reforms keeping in mind the end goal to help straightforwardness, productivity and adequacy; it is as yet evident that the implementation of e-procurement is still very slow. In addition, no study has yet focused on factors influencing implementation of e-procurement in central government ministries in Kenya. The basic principle of procurement is to purchase the right quantity, at the right quality, the right price, at the right time and from the right price. Public sector buying in Kenya however places a premium on buying at the right price. Chapter 6, (227) (1) of the Kenyan Constitution, 2010, states that ‘When a State organ or any other public entity contracts for goods or services, it shall do so in accordance with a system that is fair, equitable, transparent, competitive and cost-effective.’ However, corruption in public procurement processes leads to problems such as lack of accountability and transparency, lack of political control and proper audit trails, weak professionalization of the bureaucracy and many more (GoK, 2012). With the need to integrate key functions such as procurement and accounting and to streamline and enhance transparency in management of public funds as well as to provide a framework for standardized reporting, the government has adopted the policy requiring all government procuring entities to use the Integrated Financial Management Information System (IFMIS). According to CRA (2013), in the 2013/2014 financial year a total of 210 billion Kenya shillings was disbursed to the counties government to facilitate their operations. This resulted in a remarkable achievement when the government ministries reported a 42.7% drop in their procurement operating cost amounting to Ksh629 million down from KSh1.64 billion in the previous year (GoK, 2014). According to Malela (2012) more than 50% of procurement processes in Kenyas public procuring entities are carried out manually. The manual processes are costly, slow, inefficient and data storage and retrieval is poor (Malela, 2010). According to the e-government strategy paper (2004), e-procurement was one of the medium term objectives which was to be implemented by June 2007, but the process has been very slow and findings show that most of the procurement processes in public institutions are still manual with the internet only being used for e-mails and web browsing (PPOA, 2013). This slow implementation of e-procurement in the public sector raises concern as to what factors influence the implementation of e-procurement in the Kenyan public sector particularly in government ministries. Osore (2013) pointed that introduction of e-procurement is aimed at introducing a procurement and payment System (P2P) which fully automates the procurement and payment process. The process may reduce the workload involved in the process of tendering, costs and time involved as suppliers will not have to travel long distances to place tenders in different counties and/or ministries head offices. According to Bwoga (2011) effective e-procurement processes will provide a smoke screen between the supplier and the panels dealing with the respective bids making it hard for one to try and compromise the involved procurement officials.
Despite the Government’s sustained and incremental efforts in laying down ICT strategies in the area of Public Financial Management Reforms in order to boost transparency, efficiency and effectiveness, it is still apparent that the implementation of e-procurement is still very slow. In addition, no study has yet focused on factors influencing implementation of e-procurement in central government ministries in Kenya. This study therefore seeks to investigate factors influencing implementation of e-procurement at the Directorate of Criminal Investigations (DCI), Nairobi County.
1.3 Research Objectives
1.3.1 General Objectives of the study
The general objective of this study is to investigate the factors influencing the implementation of e-procurement in the Directorate of Criminal Investigations (DCI) in Nairobi County.
1.3.2 Specific study Objectives
i) To determine the influence of top management commitment on the implementation of e-procurement at the Directorate of Criminal Investigations (DCI), Nairobi County.
ii) To establish the influence of information technology infrastructure on implementation of e-procurement at the Directorate of Criminal Investigations (DCI), Nairobi County.
iii) To examine how staff training influences implementation of e-procurement at the Directorate of Criminal Investigations (DCI), Nairobi County.
1.3.3 Research Questions
i) How does top management commitment influence implementation of e-procurement at the Directorate of Criminal Investigations (DCI), Nairobi County?
ii) How does information technology infrastructure influence implementation of e-procurement at the Directorate of Criminal Investigations (DCI), Nairobi County?
iii) What is the influence of staff training on the implementation of e-procurement at the Directorate of Criminal Investigations (DCI), Nairobi County?
1.4 Scope of the Study
The scope of this study is on the factors influencing the implementation of e-procurement at the Directorate of Criminal Investigations (DCI), in Nairobi County. The study will help further knowledge with regard to e-procurement systems in Kenya and also help in the identification of areas for recommendation and further studies.