Procurement Structures in CARICOM Countries Research Analysis

Research Analysis: Procurement Structures in CARICOM Countries

Introduction

Public procurement management is the management of the processes surrounding the acquisition of services, goods, materials, and services required for efficient running of operations in the public sector (Khan, 2018). Among CARICOM member states, public procurement is governed by the public procurement protocols for the Caribbean community. The CARICOM protocols define public procurement as the acquisition of works, goods, or services by a procuring entity for public use or using public funds (CARICOM Protocols, 2017). In a nutshell, the protocols emphasize the principles of transparency, procedural fairness, value for money, and accountability in public procurement (CARICOM Protocols, 2017).

The proposed study sought to examine the current procurement processes in three CARICOM countries and identify the challenges faced in implementing the CARICOM procurement protocols. The overall aim is to identify ways to make the public procurement process in these countries more effective. The study makes use of primary data that was collected through a closed-ended questionnaire. The specific objectives are as follows:

· Objective 1: To examine the current procurement structures, in CARICOM member states.

· Objective 2: To identify the current trends and challenges facing public procurement and contracting in CARICOM member-states.

· Objective 3: To identify potential solutions to the current challenges and how to make public procurement in these countries more responsive and effective.

The corresponding null and alternative hypotheses are:

Objective 1

Ho: There is no difference in the procurement structures of CARICOM member states

Ha: There is a difference in the procurement structures of CARICOM member states

Objective 2

Ho: There is no difference in the challenges faced by public procurement and contracting officials between CARICOM states

Ha: There are significant differences in the challenges faced by public procurement and contracting between CARICOM states

Descriptive Statistics

a) What is the Academic Qualification of Respondents?

This segment tries to understand the academic qualification of the 15 respondents. Given differences in the naming and structure of departments across organizations and countries, it may not be possible to obtain descriptive statistics for respondents’current position and department. Thus, the study only summarizes the descriptive statistics for the variable ‘highest academic qualification’. To obtain descriptive statistics, the highest academic qualifications were assigned numerical values as follows: post graduate a value of 3, graduate a value of 2, and high school graduate a value of 1.

Table 1 shows the distribution of the respondents as post graduates, graduates and high school graduates of A & B, Jamaica and Trinidad and Tobago (T&T).

Table 1: Table showing academic qualification of the respondents

Your highest qualification

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

Total

Missing

System

Total

(Source: SPSS Output)

Frequency statistics indicate that nine of the respondents (60 percent) have a post-graduate qualification, 1 (6.7 percent) is a graduate, and 5 (33.3 percent) are high school graduates.

Table 2: Descriptive Statistics for Highest Academic Qualification

Statistics

Your highest qualification

N

Valid

Missing

Mode

Std. Deviation

Skewness

Std. Error of Skewness

Kurtosis

Std. Error of Kurtosis

(Source: SPSS Output)

The analysis in table 2 indicates a mode of 3, implying that post graduates make up the largest share in the sample. The negative skewness value of -.616 indicates that there are relatively fewer observations in the lower end of the distribution (high school and graduate levels), with more values concentrated in the higher end, which is the post-graduate qualifications. This supports the finding that post-graduates make up the biggest share of the sample.

The academic qualifications breakdown per country is as shown in Table 2

Table 2: Qualifications of Respondents by Country

Country

Post-Graduate

Graduate

High School Graduate

Total

Granada

A&B

T&T

Total

Four of the post-graduate respondents in the sample are from Granada, 3 from A&B, and 2 from T&T. Among the high school graduates, 2 each are drawn from A&B and T&T, while one is from Granada. Thus, Granada accounts for the highest percentage of post-graduate respondents, T&T accounts for the only graduate-level respondent in the sample, while A&B and T&T account for equal shares of high-school level respondents.

Empirical Analysis of Procurement Structures across CARICOM member states?

To determine whether there are significant differences in countries’ procurement structures, this study will use the chi-square test to check for associations. The chi-square test will indicate whether there is an association between country and the preferred procurement systems, contracting mechanisms, use of electronic procurement systems, and challenges faced in procurement.

a) What is the Nature of the National Government Procurement System?

Table 3: Cross-Tabulation of Responses on the Nature of the National Government’s Procurement System

What Is your national government’s procurement

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

Centralized (i.e. the majority of purchasing is the responsibility of a single unit or designated units purchase particular products or services)

Decentralized (i.e. responsibility for procurement is shared between departments)

Mixed

Outsourced (i.e. a private company carries out procurement on behalf of your National government)

Total

(Source: SPSS Output)

Table 3 indicates that 47 percent of respondents use a centralized procurement system in their countries, where purchasing is done by a single unit or department, or units are designated to purchase particular services or products. 13 percent reported that their countries use a decentralized system, where the procurement role is shared among departments, or departments do procurement for themselves. 33 percent of respondents reported using a mixed system that combines elements of both centralized and decentralized systems, while 7 percent use an outsourced system, where the procurement role is carried out by a private entity on behalf of the national government, leading to a cumulative percentage of 100. Thus, the centralized procurement system is the most popular in the three CARICOM states, followed by the mixed system, the decentralized system, while the outsourced is the least popular procurement system.

Results of the cross-tabulation carried out on SPSS comparing country with the procurement system shows the following output:

Table 4: Cross Tabulation Results Country versus Procurement System

Country * Indicate the procurement and contracting mechanisms provided for, in the regulations of your country; assigning 1 to the most used and 4 to the least used. Degree used (please rank from level 1 to 4) [Public Bidding] * Indicate the procurement and contracting mechanisms provided for, in the regulations of your country; assigning 1 to the most used and 4 to the least used. Degree used (please rank from level 1 to 4) [Private Bidding] Crosstabulation

Indicate the procurement and contracting mechanisms provided for, in the regulations of your country; assigning 1 to the most used and 4 to the least used. Degree used (please rank from level 1 to 4) [Private Bidding]: Total

Indicate the procurement and contracting mechanisms provided for, in the regulations of your country; assigning 1 to the most used and 4 to the least used. Degree used (please rank from level 1 to 4) [Public Bidding]

Total

Least Used

Most Used

Second Least Used

Second Most Used

A&B

% within Country

% of Total

Grenada

Count

% within Country

% of Total

T&T

Count

% within Country

% of Total

Total

Count

% within Country

Public Bidding

% of Total

Results of cross tabulation indicate that generally, all three countries use a centralized procurement system, while the outsourced system is the least used in all countries. The chi square test results comparing the relationship between country and procurement system is presented in table 5 below.

Table 5: Chi Square Test Results Country versus National Government Procurement System

Value

Df

Asymp. Sig. (2-sided)

Pearson Chi-Square

59.794a

Likelihood Ratio

N of Valid Cases

a. 19 cells (95.0%) have expected count less than 5. The minimum expected count is .10.

(Source: SPSS Output)

Table 6: Symmetric Measures: Country versus Procurement System

Value

Approx. Sig.

Nominal by Nominal

Phi

Cramer's V

N of Valid Cases

a. Not assuming the null hypothesis.

b. Using the asymptotic standard error assuming the null hypothesis.

(Source: SPSS Output)

Implication: The test gives a chi-square value of ?(1) = 59.794; p = .00. The significance value is less than the confidence level of p = 0.05, implying that there is a significant relationship between country and the procurement system used. This implies that CARICOM countries do not equally prefer the centralized procurement system to the other three systems. Thus, we reject the null hypothesis and conclude that differences in procurement systems across CARICOM countries are significant. The symmetric measures table (Table 6), includes the Cramer’s V and Phi tests, both of which indicate the strength of the association between variables and range from -1 to 1, where -1 indicates a perfect negative relationship, 1 indicates a perfect positive relationship, and 0 indicates no relationship. The Cramer’s value of 0.644 and Phi value of 1 indicate a strong association between country and the preferred national government procurement system.

b) What is the Preferred Procurement and contracting Mechanisms in CARICOM?

The cross tabulation results will indicate generally CARICOM countries’ preference for four mechanisms: framework agreements, public bidding, private bidding, and direct purchasing.

i) Use of Framework Agreements among CARICOM Countries

Table 7: Results of Cross tabulation on the use of Framework Agreements

Crosstab

Indicate the procurement and contracting mechanisms provided for, in the regulations of your country; assigning 1 to the most used and 4 to the least used. Degree used (please rank from level 1 to 4) [Framework Agreements]

Total

Least Used

Most Used

Second Least Used

Second Most Used

A&B

Count

% within Country

Grenada

Count

% within Country

[Framework Agreements]

% of Total

T&T

Count

% within Country

[Framework Agreements]

% of Total

Total

Count

% within Country

[Framework Agreements]

% of Total

(Source: SPSS Output)

Table 8: Chi-Square Test Results – Framework Agreements

Value

df

Asymp. Sig. (2-sided)

Pearson Chi-Square

63.680a

Likelihood Ratio

N of Valid Cases

a. 19 cells (95.0%) have expected count less than 5. The minimum expected count is .31.

(Source: SPSS Output)

Table 9: Symmetric Measures: Use of Framework Agreements

Symmetric Measures

Value

Approx. Sig.

Nominal by Nominal

Phi

Cramer's V

N of Valid Cases

a. Not assuming the null hypothesis.

b. Using the asymptotic standard error assuming the null hypothesis.

(Source: SPSS Output)

Interpretation: The frequency cross-tabulation table (table 7) indicates that CARICOM countries use framework agreements as the second most used procurement and contracting mechanism. Both A&B and T&T rank framework agreements as the second most used, while Grenada ranks it as the second least-used mechanism. The test gives a chi-square value of ?(1) = 63.68; p = .00. The significance value is less than the confidence level of p = 0.05, implying that there is a significant relationship between country and the procurement system used. This implies that the countries do not equally use framework agreements as the second most used mechanisms. Thus, we reject the null hypothesis and conclude that there are differences in the frequency in which countries use framework agreements. The Cramer’s value of 0.665 and Phi value of 1 in table 9 indicate a strong association between country and the use of framework agreements.

ii) The Use of Public Bidding

Table 10: The Frequency of Public Bidding among CARICOM States

Indicate the procurement and contracting mechanisms provided for, in the regulations of your country; assigning 1 to the most used and 4 to the least used. Degree used (please rank from level 1 to 4) [Public Bidding]

Total

Least Used

Most Used

Second Least Used

Second Most Used

A&B

Count

% within Country

% of Total

Grenada

Count

% within Country

% of Total

T&T

Count

% within Country

% of Total

Total

Count

% within Country

Public Bidding

% of Total

(Source: SPSS Output)

Table 11: Chi Square Test Results for the Frequency of Public Bidding

Value

df

Asymp. Sig. (2-sided)

Pearson Chi-Square

65.280a

Likelihood Ratio

N of Valid Cases

a. 19 cells (95.0%) have expected count less than 5. The minimum expected count is .21.

(Source: SPSS Output)

The frequency cross-tabulation table (table 10) indicates that CARICOM countries prefer public bidding as the most used procurement and contracting mechanism. The test gives a chi-square value of ?(1) = 65.28; p = .00. The significance value is less than the confidence level of p = 0.05, implying that there is a significant relationship between country and the frequency of public bidding. This implies that the three countries do not equally use framework agreements as their most preferred technique. Thus, we reject the null hypothesis and conclude that there are differences in the frequency in which countries use public bidding.

iii) Use of Private Bidding

Table 12: Cross Tabulation for the Use of Private Bidding

Indicate the procurement and contracting mechanisms provided for, in the regulations of your country; assigning 1 to the most used and 4 to the least used. Degree used (please rank from level 1 to 4) [Private Bidding]

Total

Least Used

Most Used

Second Least Used

Second Most Used

A&B

Count

% within Country

% of Total

Grenada

Count

% within Country

% of Total

T&T

Count

% within Country

% of Total

Total

Count

% within Country

% of Total

Table 13: Chi Square Test Results for Country versus Frequency of Private Bidding

Chi-Square Tests

Value

df

Asymp. Sig. (2-sided)

Pearson Chi-Square

88.000a

Likelihood Ratio

N of Valid Cases

a. 19 cells (95.0%) have expected count less than 5. The minimum expected count is .31.

(Source: SPSS Ouput)

The frequency cross-tabulation table (table 12) indicates that generally, it is not clear how private bidding ranks as the preferred mechanism among CARICOM countries. The test gives a chi-square value of ?(1) = 88; p = .00. The significance value is less than the confidence level of p = 0.05, implying that there is a significant relationship between country and the frequency of private bidding. This implies that the three countries do not apply private bidding in equal measure. Thus, we reject the null hypothesis and conclude that there are differences in countries’ use of private bidding for procurement.

c) Use of Electronic Procurement Systems in CARICOM Countries

7 of the 15 respondents reported that their countries had an electronic procurement system in place, while 8 reported that such a system did not exist. Of the countries that use an electronic system, the respondents indicate that e-procurement is mostly used for public bidding and direct purchasing and least used for framework agreements. 40 percent of the respondents believe that the procurement departments in their countries are able to implement sustainable procurement mechanisms, while 60 percent believe that the procurement departments lack such capability.

Figure 1: Procurement Divisions and Sustainable Procurement

(Source: Excel Output)

d) Challenges Faced in Implementing sustainable procurement mechanisms in CARICOM countries

Table 14: Obstacles to Sustainable Procurement by Country

Price is the main selection criterion

Sustainable products are costly

Insufficient supply of goods and services

Supply only available in international market

Lack of information about SPP

Lack of Legislation

Difficulty getting approvals and lack of interest

Grenada

A&B

T&T

Total

A good number of respondents believe that one of the greatest challenge in the implementation of sustainable practices in CARICOM countries is that sustainable products are more expensive. Another fundamental obstacle is that price is often the main selection criterion, such that public officials focus on purchasing the cheapest products as opposed to sustainable products. Other fundamental reasons identified by respondents include that most public officials lack information about sustainable procurement practices, there are minimal regulations governing sustainable procurement, and some of the sustainable goods and services are only available in the international market.