Opinion
Piggyback contracts solution to inflated procurement deals
Publish Date: Jan 09, 2014
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By Charles Kalinzi

The year 2013 saw a lot of complaints over government losing billions of shillings in fraudulent procurements mainly being attributed to inefficient to lengthy process and similar products being procured at different prices from similar vendors thus denying attainment of value for money.

This illustrated innovation aims at leveraging the buying power of several buying entities to meet their existing needs through making use of existing contracts of organisations whose favourable terms and conditions are already negotiated and known to the new buying team(s).

Piggybacking
 

In piggybacking, an agency utilises the pricing and contracting of another agency that has already procured the same product or service, saving the agency the effort of developing its own invitation to bid and going through a separate solicitation process.

The agency that conducted the procurement must have followed their own requirements and met the procurement requirements of the agency attempting to piggyback of the contract. 

Some agencies require a signed agreement between the agencies before accepting the arrangement. It will avoid instances where the same items from probably the same supply region can be supplied to a government agency at rather varying rates which minimises inflated costs.
 

How does government buy using piggyback contracts?
 

A leading question would be whether Uganda’s public entities can use this innovation? The answer is absolutely yes, owing to the fact that majority have similar or make repetitive purchases ranging from stationery, to IT to vehicles etc which are similar across the board.

The fact is, if your organisation is making a straight or a modified re-buy which another public entity has bought before at competitive rates, you do not need to go through the same procurement process, but make use of the existing contract agreement of that entity at a negotiated/agreed terms and conditions to exactly get the same items from the same supplier.

This makes a number of government units become eligible to this innovation, and in the end will save taxpayers money (through saved time and process costs).

All public entity units ranging from municipalities, town councils, local governments and other public authorities like schools, colleges and higher institutions of learning; may obtain say information technology products and services for less time and money using the same contract used by a leading agency.

Such arrangements can, therefore, help by acquiring multiple offerings through a single order. Hence they stand to obtain a complex solution with a one-time negotiation, under which multiple contractor partners can work together to provide total solutions.

Instead of managing complex contractor and subcontractor relationships, they can arrange a “customised multi-vendor solution” simply and efficiently. 

Does piggybacking violate competitive bidding?
 

According to some experts like Mike Purdy’s contracting blog, he reasons that in an era of reduced government resources, piggybacking is an increasingly popular tool for many public agencies in the procurement of goods and services.
 

It does not, therefore, matter whether or not any government organisation has had experience using this technique in the past. I am sure they are interested in process reduction and efficient procurement capabilities. Once they agree on an enabling guide, they can easily get started with expert advice.

In developed economies, where this concept is being practiced, many public and private entities through their cooperative purchasing bodies are already benefiting from this arrangement and making reasonable documented savings ranging between 20-30% of their procurement spend.

I look forward to hearing other policy makers’ opinions about this initiative on new dimensions of obtaining value for money.

The writer is a Procurement Specialist and Lecturer

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