An entity which was established by an Act of Parliament is 95% funded by its Internally Generated Funds (IGF). The Government of Ghana then finances 5% of its budget from the consolidated fund. The Chief Executive Officer (CEO) and the Chief Accountant have argued on the need to or not to be recognized as Procurement Entity as per section 14 of the Public Procurement Act, 2003 (Act 663) as amended by Act 914.
The CEO would like to set up an internal arrangement for procurement with the Chief Accountant as the chairman of the Procurement Committee but the Chief Accountant would like the organization to set up a Procurement Committee in accordance with the Act.
Required:
i) According to Section 14(1) (2) of the Public Procurement (Amendment) Act 2016, what is the scope and application of the act? (5 marks)
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Section 1:
- The procurement of goods, works and services, financed in whole or in part from public funds except where the Minister decides that it is in the national interest to use a different procedure;
- Functions that pertain to procurement of goods, works and services including the description of requirements and invitation of sources, preparation, selection and award of contract and the phases of contract administration;
- The disposal of public stores and equipment; and
- Procurement with funds or loans taken or guaranteed by the State and foreign aid funds except where the applicable loan agreement, guarantee contract or foreign agreement provides the procedure for the use of the funds except as exempted under section 96.
Without limiting subsection (1), this Act applies to:
a) Central management agencies;
b) government ministries, departments and agencies;
c) Subvented agencies;
d) Governance institutions; state owned enterprises to the extent that they utilise public funds;
e) Public universities, public schools, colleges and hospitals;
f) The Bank of Ghana and financial institutions such as public trusts, pension funds, insurance companies and building societies which are wholly owned by the State or in which the State has majority interest;
g) Institutions established by Government for the general welfare of the public or community.
h) Statutory funds, commissions and other bodies established by Government for specific purse; and
i) The phases of contract administration as specified in the contract administration manual.
ii) Advise the CEO and Chief Accountant on whether their entity falls under the Public Procurement (Amendment) Act 2016, Act 914. (2 marks)
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From the case the following facts were obtained:
- The entity is established by an Act of Parliament;
- The entity if financed from 95% IGF retention and 5% budget support, which are all are part of the public funds.
These suggest that the entity falls within the scope of the Public Procurement Act and therefore CEO must apply the provisions of the Act fully.
iii) Under what conditions would a procurement entity undertake procurement in accordance with established commercial practice? (3 marks)
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Subject to the approval of the Board, a procurement entity may undertake procurement in accordance with the established commercial practices if:
a) The procurement entity is legally and financially autonomous and operates within the commercial laws
b) It is beyond contention that the public procurement procedures are not suitable, considering the strategic nature of the procurement; and
c) The proposed procurement method will ensure value for money, provide competition and transparency is extent possible. (PPA- Section, 15)