KYAMBOGO UNIVERSITY

TO WHAT ATTENTION TO THE CASE BY NAMUYOMBA NORAH 07/U/3537/PLD/PD EXTENT DO ORGANISATIONS PAY ETHICAL ISSUES IN PROCUREMENT? STUDY: KAMPALA CITY COUNCIL

A RESEARCH PROPOSAL SUBMITTED IN PARTIAL FULFILMENT FOR AWARD OF A BACHELORS DEGREE OF PROCUREMENT AND LOGISTICS MANAGEMENT OF KYAMBOGO UNIVESITY. Supervisor: MR.KWIKIRIZA RONALD MARCH 2010

DECLARATION
I certify that, accept where references are quoted or made, this work is the outcome of my original effort and that the best of my knowledge it has not been offered for an award in any other university. Signature NAMUYOMBA NORAH Date.

APPROVAL
The research approval is now ready for an examination with my approval as the university supervisor. Signature Mr. Kwikiriza Ronald Date

ACKNOWLEDGEMENT

CHAPTER ONE
1.0 INTRODUCTION

This proposal is about the extent to which organizations pay attention to ethical issues in procurement and the case study is Kampala City Council (KCC). This chapter presents the preliminary sections of the proposal and in broader sense include the following; background of the study, problem statement, general objective, research questions, definition of terms, scope of the study and motivation.

1.1

BACKGROUND OF THE STUDY

Globally, ethical codes of conduct are not a new phenomenon. They originate from a Latin verb rumpere which means moral/ethical code or administrative law. The person who breaks the rumpere deprives from their recognized benefit for himself/ herself, family, tribe or some other group. (Kempe and Chikulo 1999:18) In Uganda, procurement is a new phenomenon and originally it was in the hands of the central tender boards which excluded districts until 1997. In May 1998, a task force of 12 members was set up by the government due to the influence of the donor community and global revolution. In 2001, a country procurement report was carried out with the support of the World Bank (WB). These reforms that started way back in 1998 culminated in to the birth of the Procurement and disposal of public assets act (1) 2003. Public officials in the procurement and disposing unit are required to possess a high degree of professional ethics in the execution of their duties. The PPDA emphasizes honesty, probity, accuracy of information, confidentiality, high level of competence, integrity and warns them of conflict of interest. (PPDA (1) 2003: 93) Abuse of office and lack of ethics have proliferated in Africa due to absence of transparency in management of public affairs coupled with lack of accountability. (Muganda 1997: 79) Lack of ethics breeds corruption in the public and private sector. Corruption is not a recent phenomenon in Uganda; it is as old as mankind.

According to transparency international corruption indices of 2004 and 2005, corruption was at high level globally. Out of 146 countries surveyed in 2004.106 countries scored less than 5/10 and 60 scored less than 3/10, this implied that there was high corruption. In 2005, 117 out of 146 countries scored less than 3/10. In Uganda, the increased complaints from the general public and the continuous appearance of the City Council authorities before the Public Accounts Committee (PAC), due to the misappropriation of funds and failure to follow the rules and procedures stipulated by the PPDA in tendering and sell of Local Government assets, and acquisition of property, has showed absence of attention being given to ethical issues in procurement. Looking at all the occurrences there have been this has placed Kampala City Council among the most corrupt institutions in Government. Because of the breakdown of systems of control, accountability and management in the 1960s and 1970s, the anti- corruption legal framework was thought about. This saw the subsequent enactment of the prevention of corruption act in 1970, the penal code act and the leadership act in 2002.

1.2

STATEMENT OF THE PROBLEM

Although a lot of literature has been published about ethical issues, in actual sense little has been done to ascertain how much attention organizations at both central and local government give to ethical issues. Even when training has been provided to procurement staff regarding the benefits of ethical issues, it appears not to have significant effect on their performance as there is continuous failure to improve their attitude towards work, increasing cases of corruption, lack of confidentiality with information, tendering irregularities, and a general misuse of office especially by top procurement officials. This has therefore prompted the researcher to examine the extent to which organizations pay attention to ethical issues in procurement.

1.3

RESEARCH OBJECTIVES

1.3.1 GENERAL OBJECTIVE

To determine the extent to which organizations pay attention to ethical issues in procurement especially in Kampala City Council (KCC).

1.3.2 SPECIFIC OBJECTIVES

This study will be aimed at realizing the following objectives; To find out whether organizations have policies regarding ethical codes of conduct in general: if yes, are they followed? To identify possibilities of cases of conflict of interest by public officers in the procurement department in organizations. To find out the relationship procurement officers in organizations have with their suppliers and the subsequent contract awarding.

1.4

RESEARCH QUESTIONS
Do organizations have policies regarding ethical codes of conduct in general: if yes, are they followed and if no, what is being done? Are there any incidences where public officers in the procurement department conflict in the course of executing their duties? What relationship do procurement officers in organizations have with their suppliers and the subsequent contract awarding?

1.5

SCOPE OF THE STUDY

1.5.1 Subject scope

The study will focus on the extent to which organizations pay attention to ethical issues in procurement. The study will review the existing related literature focusing on the objectives of the study and research questions by carrying out face to face interviews with the employees in

the procurement and disposing unit (PDU) and the user departments and also supplying to them questionnaires.

1.5.2 Geographical scope

The geographical scope was determined bearing in mind that Kampala City Council has for the past years been ranked among the most corrupt government institution in Uganda. Therefore, this research will be confined in Kampala City Council procurement unit Kampala district on City house building.

1.5.3 Time scope

The study shall be limited to the period 2003 to date in order to ascertain the applicability of Ethical Issues in procurement in the organization. The study shall begin in February and end in June 2010.

1.6 MOTIVATION OF STUDY

In spite of the fact that a lot of research has been conducted on this very issue of ethics in Kampala City Council, a lot has been left to be desired. In reality the literature is not satisfactory and it is not clear to the procurement practitioners. The main driver for this study is to establish the extent to which organizations pay attention to Ethical Issues in procurement with greater emphasis on the public sector in Uganda to find more of this juicy issue.

1.7

SIGNIFICANCY OF THE STUDY

The findings of the study will assist the following; Government and non-governmental organizations to reconsider the contribution of ethics in relation to procurement in form of reduction in expenditure since procurement is strategic in any organization. Academicians, consultants and other researchers will use the findings of this study as a guideline in their research and in the execution of their duties. The study will help in strengthening procurement in both the private and public sectors as the findings will be used to evaluate the performance of procurement staff.

1.8

DEFINITION OF TERMS

The following terms have been used frequently in the research proposal and it was desired to define them. Ethics, procurement and corruption Corruption; this is the misuse of public power for private profit. (Encyclopedia of social sciences) Transparence International(TI) defines corruption as the misuse of entrusted power for private gains private gain must be interpreted widely, including gains accruing i.e. to an economic actors close family members, political party and in some cases to an independent organization or charitable institution in which the economic actor has a financial or social interest Ethics; this is the moral or professional conduct They are moral principles or values that guide officials in all aspects of their work Procurement; refers to the acquisition of works, goods or services by purchase, hire, lease, rent It also refers to the acquisition of consumption or investment good or service, from pencil, bed sheet, and aspirin for hospitals, gasoline for government cars, the acquisition of car and truck fleets, equipment for school and hospitals, machinery for force account used by government departments, other light and heavy equipment or real estate to construction, advisory and other services.(Hand book for curbing corruption in public procurement) It also refers to the acquisition of goods, services or works by procuring and disposing entity(PDE) from the supplier in accordance with the Law Authority; it means the public procurement and disposal of public assets authority established by section(5) of the PPDA Act

CHAPTER TWO; LITERATURE REVIEW

2.0 INTRODUCTION
In this chapter, the theoretical foundation for the study is presented. The researcher shall make a critical review of the existing literature that has been written and published by the various authors on the subject of attention to ethical issues in procurement.

The literature review shall be obtained from the internet, other researchers work, academicians work, journals, text books, magazines. In brief, this chapter covers the meaning of ethics and procurement, ethical issues in procurement and the extent to which organizations pay attention to ethical issues in procurement. Reviewing of literature involves systematic identification, location and analysis of documents containing information related to the research problem. It provides a good understanding of the research topic, reviews theories that inform the topic investigated and identifies research gaps in which to locate my study.

2.1

CONCEPTUAL FRAMEWORK SHOWING THE RELATIONSHIP

BETWEEN INDEPENDENT AND DEPENDENT VARIABLES.

Ethical issues (independent) Supplier relationship Contract awarding Disposing Code of conduct Conflict of interest Integrity Transparency Non-discrimination Fairness and honesty procurement function (dependent)

Affects

Extraneous variables Working environment Political atmosphere Remuneration Resources available Leadership style In the above framework, the selected relationship is one to many. For example, the relationship between ethics and contract awarding, the relationship between ethics and supplier relationship, the relationship between ethics and tendering in the procurement department in organizations. Ethical issues are the independent variable whereas procurement function is the dependent variable. There are also extraneous variables that start acting as the independent variable is affecting the dependent variable. They can on their own affect the dependent variable as well.

2.2 MEANING OF ETHICS AND PROCUREMENT FUNCTION.

According to the American heritage dictionary, ethics are the rules or standards governing the conduct of a person or a profession. And by extension, ethics are the rules and standards by which entrepreneurs and there employers ought to behave. (Rush worth kidder), founder of the institute for global ethics identified 3 kinds of behavior that does not live up to the standards set by society. He mentioned violation of the law, departure from the truth and deviation from moral rectitude. Using statistical terminology, ethics would be characterized as a latent construct for instance, something which is not directly measurable but can be represented or measured through other variables. Thus by observing a persons conduct, we can attempt to capture whether a person is ethical that is whether he or she has the conception of right and wrong. (Bodo schlegelmilch). He further explained that defining ethics as a concept of right and wrong raises the question from where such concepts originate. The answer is found in the persons up bringing, influences of family, school, religion, friends, role models, and the media thus ethics is learned, a belief system which guides moral judgments and actions. Corporate ethics and purchasing are statements issued by companies and other organizations describing their general value, systems and providing guidelines for decision making consistent with those principles. Lysons (2003) defines Procurement function as that function responsible for obtaining by purchase, lease or other legal means equipments, materials, supplies, and services required by an undertaking for use in production for instance creating utilities that satisfy wants. In section three of the PPDA Act no.1 of 2003, the term Procurement is defined as the acquisition by purchase, rental, lease, hire purchase, license, tenancy, franchise or any other contractual means of any type of work, service or supplies or any combination.

Compton and Jossep (1995) define procurement as the obtaining by various means (e.g. loan, transfer, hire purchase) of supplies and service with or without consideration Van Weele (1996) defines procurement as including activities required in order to obtain the product from the supplier and get it to the market where it is actually used. It encompasses the purchasing function, store, traffic and transportation, incoming inspection and quality control and assurance. Some firms also include salvage and management of environmental issues in procurement. Kintu (2004) defines public procurement as the acquisition by public bodies such as government departments, ministries, municipalities and local governments of various goods and services that they need for various activities.

2.3 ETHICAL ISSUES IN PROCUREMENT An Ethical issue can be seen as a problem, situation or opportunity which has several possible options and where each must be evaluated as right or wrong, ethical or unethical. Aguilar (1994:33) states that managers should be sensitive to ethical contents of business decisions and operational activities. Ethical issues in the field of procurement include the codes of conduct, integrity, transparency, accountability, economy and efficiency, value for money.

2.3.0 Codes of conduct

Government departments and government own corporations as well as private companies need Codes of Conduct which are prepared involving the entire staff , promoted and lived by top level staff , and explained to and accepted by staff at large; They are based on commitment to integrity and ethical behavior. There should be a clear prohibition of giving or accepting bribes and facilitation payments; In the PPDA (1) 2003, Specific Guidelines are in place addressing the giving and acceptance of gifts, entertainment and other favors. Company Codes need to address the issue of political donations, donations for charitable purposes and sponsoring of government functions. Conflict of

interest and favoring of relatives or friends in appointments or promotions are prohibited and regular sensitization, training, refresher training for all staff and students (capacity building) are encouraged. According to transparency international, clear rules and processes for sanctions should be in place in case of violations and prompt investigation upon suspicion and sanctioning is essential . Commitment to transparent and comprehensive book-keeping and a prohibition of off the books accounts, both domestically and internationally

2.3.1 Integrity
Integrity means that the procurement processes are honest and in compliance with the respective laws, that the best available, most suitable technical expertise is employed in a nondiscriminatory manner, that fair and open competition leads to a quality product at a fair price (value for money), and that the product takes into account the legitimate aspirations and concerns of all the stakeholders. Employees involved in procurement and acquisition process, play an important role in preserving the integrity of government contracting and assuring fair treatment of bidders, offerors and contractors. (Transparency International)

2.3.2 Transparency
Transparency means that laws, regulations, institutions, processes, plans and decisions are made accessible to the public at large or at least to representatives of the public so that processes and decisions can be monitored, reviewed, commented upon and influenced by the stakeholders, and decision makers can be held accountable for them. It is essential that transparency be created from the very beginning so that potentially every step in the long decision-making process can be viewed and influenced in a timely manner. Transparency needs to pervade all steps in the procurement cycle, from the earliest decision making by the respective authority about a new purchase or investment throughout the entire process of preparing the project economically and technically, the selection of the consultants, suppliers or contractors, the awarding and execution of the contracts and the final accounting and auditing phase. (Transparency international)

Transparency in this context is not achieved by grudgingly allowing access to some internal documents to selected people. Transparency requires that the government or project agency (the principal) voluntarily and proactively provide full public information through the print and electronic media about the potential options, plans, designs and programmes. Transparency also means that all the stakeholders of a major investment are fully informed and consulted about all aspects of the project. For example, on large dam projects it is essential that the affected population (those affected by potential resettlement as well as by upstream and downstream changes in the water flow regime) at large be allowed and indeed encouraged to participate in the process. It may be necessary to reach out directly to them through visiting teams. Experience of a few countries demonstrates that a series of well-publicized open public hearings (see below Section 3.3) is a particularly effective means to spread information and to obtain the stakeholders commitment, contributions and support for a large project, and to avoid misguided decisions. The transparent process may appear time-consuming and costly at the outset, but it is irreplaceable and will, in fact, save time as well as costs in the longer run. Projects which were prepared in secrecy, or with severely limited information for the stakeholders, often eventually run into public resistance or turn out to be tainted by corruption and are then sometimes held up for years.(Transparence International)

2.3.3 CONFINDETIALITY Procurement staffs have access to sensitive information on tender and contract prices product comparisons, product quality and supplier performance. This sensitive information must not be disclosed except on a need-to-know basis. Suppliers should feel comfortably assured that the same care is taken with their information as with the organizations own. Care should also be taken that information or ideas from one supplier are not passed on to the other, with out that suppliers written consent. Survey or enquiries from out side the organization for price checking or the so called budget quotes information should be referred to the Head of the Department or a member of the senior management who will need to consider their validity (PPDA (1) 2003 Section 47

2.3.4 Accountability
Accountability means that governments, public (government owned or controlled) institutions or corporations and individual officials, on one hand, and companies, company executives and agents or other individuals acting on behalf of companies, on the other hand, must be accountable for the correct and complete execution of their tasks and duties and for the decisions and actions being made in their area of responsibility. Procedures enabling full accountability should be systematic and dependable. Records explaining and justifying all decisions and actions should be created and maintained. Wherever violations of legal or contractual obligations occur, the perpetrator must be taken to task - by disciplinary, contractual, civil and/or criminal sanctions, as appropriate. Negligence in enforcing accountability will quickly erode integrity. The parties called to action in this context include governments, public institutions and officials, national or international financial institutions, contractors in the widest sense (i.e. private companies or individuals, governments or public institutions acting as contractors offering the supply of goods, contracting, consultancy or other services), stakeholders and also Civil Society organizations.

2.3.5 Fairness, Economy, Non-discrimination and Efficiency

Contract award decisions should be fair and impartial. Public funds should not be used to provide favors to specific individuals or companies; standards and specifications must be nondiscriminatory; suppliers and contractors should be selected on the basis of their qualifications and the merit of their offers; there should be equal treatment of all in terms of deadlines, confidentiality, and so on. Procurement should be economical. It should result in the best quality of goods and services for the price paid, or the lowest price for the acceptable, stipulated quality of goods and services; not necessarily the lowest priced goods available; and not necessarily the absolutely best quality available, but the best combination to meet the particular needs, and the published specifications. The procurement process should be efficient. The procurement rules should reflect the value and complexity of the items to be procured: Procedures for small value purchases should be simple and fast - though not at the expense of integrity, fairness or transparency - but as contract values and complexity increase, more time and more complex rules will be required to ensure that principles are observed. Decision-making

for larger contracts may require complex committee and review processes. However, bureaucratic interventions should be kept to a minimum. According to PPDA Act section 44, it states a bidder shall not be excluded from participating in public procurement and disposal on the basis of nationality, race, tribe religion, gender or any other criteria not related to qualification, accept to the extent provided for in this Act. Section 48 of the PPDA Act states that All procurement and disposal shall be conducted in a manner which promotes economy, efficiency, and value for money. According to public procurement training manual 2007, the key elements of non- discrimination and fairness include; a) The procurement and disposal process shall not only be fair but be seen fair, and shall treat all parties even handedly. b) Disclosure of private or personal interest by staff involved in the process. c) Non acceptance of gifts and hospitality by staff in procurement d) Assurance of confidentiality and accuracy of information. e) Clear separation of responsibilities among the players. f) Clarifications, if any are given to all bidders and at the same time. g) All providers to be treated in a non-discriminatory manner including protection of commercial confidentiality where required. 2.3.6 PROBITY The purchasing policy requires Government agencies to conduct their procurement in activities with the at most probity. Each agency is to ensure that its procurement is carried out in accordance with the set obligations. Probity is the evidence of ethical behavior in a particular process. The term probity means integrity, uprightness and honesty. Employees and agencies in bid to maintain probity they should get involved Maintaining probity involves more than simply avoiding corrupt or dishonesty conduct, it involves applying public sector values such as impartiality, accountability and transparency. Ensuring probity in public sector activities is part of every public officials duty to adopt processes, practices and behavior that enhance and promote public sector values and interests.

A procurement process that conforms to the expected standards of probity is one in which clear procedures that are consistent with government policies and legislations are established, understood and followed from the onset. These procedures need to consider the legitimate interests of suppliers and ensure that all potential suppliers are treated equitably. Probity principles should be integrated into all procurement planning, and should not be a separate bolt-on consideration. Procurement must be conducted with probity in mind to enable purchasers and suppliers to deal with each other on the basis of mutual trust and respect and enable business to be conducted reasonably and with integrity. Achieving an ethical, transparent approach requires that the procurement rules be clear, open well understood and applied equally to all parties to the process.

2.4 POSSIBILITIES OF CASES OF CONFLICT OF INTEREST BY PUBLIC OFFICERS IN THE PROCUREMENT.

Fraedrich and Ferrell (2000) classified ethical issues relevant to most organizations into 4 key dimensions which include; conflict of interest, honesty and fairness, communication and finally relationship within the organization.

2.4.0 CONFLICT OF INTEREST

Ethics refer to the acceptable code of conduct expected of procurement professionals in the execution of their duties. Employees should understand that adherence to the code of ethical conduct (Act 4th schedule) in business is a measure of ethical behavior. They should comply with not using ones authority or office for personal gain-corruption, declaring conflict of interest that may influence ones decision, adherence to confidentiality and accuracy of information, and ensuring its true fair and not meant to mislead, upholding and using competition as the default procurement and disposal method, avoiding business gifts and hospitality and adherence to the restrictiveness phenomenon The guiding principles of ethical behaviour shall be impartiality, independence and integrity.

The conduct of staff and any official engaged in procurement and disposal shall not foster the suspicion or create the impression that there is any conflict between their official duties and their private interests. A procuring and disposing entity shall at all times be fair, honest and even-handed. A public officer who is involved in procurement or disposal, a bidder or a provider shall observe the relevant codes of ethics(a) in the Act and these Regulations; (b) issued by the Authority in the guidelines; and (c) issued by a professional body or association, of which the public officer, bidder or provider is a member. (PPDA Regulation 2003, 87:1-4) Financial Conflicts A criminal law prohibits you from working on a Government matter (such as a contract) that would affect your financial interests. This prohibition also covers the financial interests of certain other persons such as: your spouse; minor child; general partner; an organization in which you serve as an employee, officer, director, trustee, or A person with whom you are seeking or have an arrangement for future

general partner; and employment.

Examples of Financial Conflicts of Interest You would have a financial interest in a contract or other matter that affects the contractor in situations such as these: You own stock in a company that is bidding on a contract (or that is likely to be a subcontractor). You have a pension with, or deferred compensation from, your former employer, a contractor that is participating in a procurement with your agency. You moonlight for a company that gets a contract with your agency. Your spouse works for a contractor and her salary would be affected if her company is awarded (or loses) a contract with your agency. If you think you have a financial conflict, contact your agency ethics official right away. He will help you determine whether you will have to stop working on the Government matter, or whether another remedy would resolve the conflict. Impartiality Issues Even though you may not have a financial interest that can be affected by a procurement activity or contract, circumstances might arise that could call your impartiality into question. Some examples of when your impartiality could be questioned include the following: Your duties require you to work on a procurement involving your former employer or clients, your spouses employer or clients, close relatives, or others with whom you have some kind of business relationship. You are assigned to a contract involving a person you are dating. You are required to evaluate bids, one of which was submitted by a friend. If you encounter any situation where you think your impartiality would reasonably be questioned, you should stop working on that matter, and contact your supervisor and agency ethics official for further advice.

An individual has the opportunity to take a decision which advances his own interest rather than that of the organization. People will always make judgments about perceived rather than actual. In project procurement terms, accepting bribes, gifts, personal payment are considered as conflict of interest in most western countries unlike in Asian countries such as china. According to the PPDA (1) 2003 fifth schedule section 93(2) employees shall reveal any personal interest that may impinge or might reasonably be deemed by others to impinge on an employees business dealings with the industry. Managements should maintain a register of the financial interest of those members of staff with significant financial responsibilities, staff members who have business relations with out side organizations should carefully consider the position in which they place them selves and the organization. Ethics laws prohibit Government employees from financial conflict of interest. By keeping in mind a few basic concepts, you can help ensure that contracts are awarded and administered free from impropriety.

2.4.1 HONESTY AND FAIRNESS

These can be seen as principles that most people would acknowledge as typifying ethical behavior. As Ferrell et al (2002) suggests, these relate to a decision makers general characteristics or traits. Its expected that at least people follow all applicable laws and regulations and should not knowingly harm customers, employees, clients or even competitors through deception, misrepresentation or coercion. The PPDA (1) 20003 Section 45 suggests that all procurement and disposal shall be conducted in a manner that promotes accountability, transparency and fairness.

2.4.2 COMMUNICATION
Fraudulent behavior and corruption can be seen as a subset of conflict of interest; however it can also be systemic and involve many individuals and groups. Ferrell et al (2002:33) defines fraud as any purposeful communication that deceives, manipulates or conceals facts in order to create a false impression. This would include financial records, advertising messages, tender selection where an organizations message to customers or stakeholders must be truthful. All

communication made by the procuring and disposing entity to providers, or bidders shall be in writing and communication in any other form shall be referred to and confirmed in writing and English shall be the language of communication unless otherwise specified by the authority. (PPDA (1) 2003 section 57). 2.4.3 GIFTS AND HOSPITALITY Gifts from contractors As the Government employee, you must not solicit or accept gifts from contractors and there employees. A gift is any thing that has monetary value, such as food, travel, entertainment, discounts and loans. Even though you might work closely with contractor employees on a daily basis, remember that both agency contractors and their employees are considered prohibited source of gift to you. You also must not accept a gift given by an organization or individual who is seeking business with your agency Thus, the safest course of action is to remember this rule. Do not solicit anything, or accept a gift, from a contractor employee, unless clearly permitted by an exception in the ethics rules or you have received advice from your agency ethics official It is an offence to accept corruptly any gift or consideration as an inducement or reward for doing or refraining from doing anything in an official capacity, or showing favor or disfavor to any person in an official capacity Individuals and members of their family must not accept gifts or gratuities other than insignificant items of a nominal monetary value (as determined by the organization). If nonacceptance would cause misunderstanding or offence to the prospective donor, individuals should consult the Head of their Department or a member of senior management. The occasional offer of hospitality such as receptions, luncheons and trade dinner is acceptable provided that it complies with the institutions policies in this regard. Employees shall not accept any business gifts from current or potential Government suppliers unless such gifts are of very small intrinsic value such as a calendar or pen (PPDA (1) 2003 fifth schedule section 93(5)) Employees shall refrain from any business hospitality that might be viewed by others

as having an influence in making a government business decision as a result of accepting that hospitality. (PPDA (1) 2003 fifth schedule section 93(6) Gifts from Contractors As a Government employee, you must not solicit or accept gifts from contractors and their employees. A gift is anything that has monetary value, such as food, travel, entertainment, discounts, and loans. Even though you might work closely with contractor employees on a daily basis, remember that both agency contractors and their employees are considered prohibited sources of gifts to you.

You also must not accept a gift given by an organization or individual who is seeking business with your agency. Thus, the safest course of action is to remember this rule: Do not solicit anything, or accept a gift, from a contractor, prospective contractor, or contractor employee, unless clearly permitted by an exception in the ethics rules or you have received advice from your agency ethics official.

Examples of items that you generally may accept even from a contractor include: Modest food and refreshments, such as coffee and donuts that are not offered as part of a meal; Gifts valued at $20 or less per source per occasion, although the total value of such gifts must not exceed $50 in a calendar year from a single source (Note: a contractor and its employees are considered the same source. For example, you could not accept five $15 lunches from five employees who work for the same contractor.); Gifts based on a personal relationship (This means gifts from family members or friends with whom it is clear you have a true friendship not a friendly relationship with a contractor that was formed on the job.); Meals, lodging, transportation, or other benefits that are from your spouses employer, provided that the gift was not given or enhanced because of your Government job.

Gifts or discounts available to the general public, to all Government employees, or to all military personnel; Free attendance at a conference or similar widely attended gathering (as long as your agency determines that your attendance is in the agencys best interest and certain other conditions are met); and Anything paid for by the Government or secured by the Government under a contract. Your agency ethics official can help you determine whether you can accept a particular gift. Of course, you should not accept anything of value from a bidder or contractor if you think that the integrity of the procurement process could be questioned. Also, be careful not to accept gifts so frequently that a reasonable person would think you are using your public office for private gain. Finally, remember that you may never accept cash or solicit a gift from a contractor or contractor employee. 2.4.4 RECORD KEEPING Good procurement practices require that suitable and comprehensive written records of meetings and the decisions taken are recorded. The documentation required to be retained should be noted under appropriate headings in terms of the procurement policy. Records should be accurate and factual and they should not include unjustified or unfounded comment and be signed by individual making the record. A procuring and disposing entity shall maintain a record of its disposal proceedings and contract management for a period of seven years from the date of a decision to terminate a disposal activity or the date of completion of a disposal activity, which ever comes first (PPDA(1) 2003 Rule 293(1) ) Where the contract is on going or is challenged, the records shall be kept for one additional year after the completion of the contract or the settlement of the dispute, which ever comes earlier. (Rule 293(2)) Any person who attends or participates in a bid opening shall sign part 2 of PP form 35 in the Ninth Schedule to indicate his or her attendance. (Rule 164 (1))

2.5 RELATIONSHIPS WITH SUPPLIERS AND CONTRACT AWARDING Transparency in contract awarding is very crucial. In Uganda, the PPDA(1) 2003 emphasizes transparency in the contract awarding process which if maximized efficiently and effectively leads to realization of value for money and increase the countrys economy. Another powerful instrument for achieving transparency is the internet. Despite some unsubstantiated claims that openness of certain procurement process information could undermine and erode the quality of the process, could put confidential business information at risk and could endanger the entire project, several countries (Mexico and New Zealand among others) and major municipalities (e.g. Seoul) have recently placed their entire procurement system including procurement opportunities, bid documents, relevant laws and procedures, and results of the tenders - on the Internet and allow free access to everyone to that information. According to Clutter buck et al responsibilities to suppliers includes provision of practical advice and help which he says can be provided by helping suppliers to purchase more effectively and economically, assistance with finding non competitive customers to prevent too great a reliance on a single big company, providing feedback or unsuccessful bid (debriefing), providing advice and assistance with design, production and training of human resource. Monitoring supplier practice; socially responsible organizations should deal only with suppliers that have high ethical standards, ensure that supplier have an environment or green policy where this is appropriate and encourage suppliers to adopt a responsible attitude to various community groups such as the disabled personnel, youth programmes, and ex-offenders. Partnership sourcing which is a commitment to both customers and suppliers regardless of size, to a long relationship based on clear, mutually agreed objectives so as to strive for a world class capability. Organizations should identify items that a potentially suitable for partnership sourcing, sell the philosophy to top management, other departments involved, stress advantages, and also define standards that potential suppliers will be required to meet such as in-house design capabilities, willingness to innovate, and commitment to total quality management (TQM).

Organizations should formulate purchasing policies which include placing a proportion of orders with local suppliers thus assisting the prosperity of the communities in which the company is located, emphasizing Supplier development, measuring of supplier performance and provision of constructive feedback. Organizations should help suppliers with cash flow problems by paying invoices in time, ensuring that both finance and purchasing departments are aware of the policy and adhere to it and also deal with complaints as expeditious as possible so that payments are not needlessly deferred. Soliciting contributions or sponsorship, individuals who are involved in procurement may participate in the affair of the local community or charities, but if they are in position to influence procurement decisions, they should not solicit contributions or sponsorship from suppliers on behalf of third parties. Samples, Discounts and personal purchases, personal discounts for goods or services should not be solicited or accepted from a supplier or potential supplier if the offering is made as a result of the business relationship and is not generally an offer open to the general public. Samples should be returned to the supplier when ever possible. The organizations procurement function should devote all of its efforts in the benefit of the organization. The organizations name or procurement facilities must not be used for any personal purchase is of direct benefit to the organization in the discharge of its mission. Contests, lotteries or draws; procurement personnel should not take part in suppliers contests, lotteries or draws, if the opportunity to participate appears to depend on their job responsibility. For example, a free draw run by suppliers may offer prizes, and entrance to the draw would probably be based on ones status as a customer. The prize winners may also receive publicity in the suppliers house journal and possibly trade journals. This would represent an unfair advantage to the supplier concerned, and could compromise a staff member who agreed to participate. Staff members from the organization should aim to deal fairly and impartially with suppliers. Suppliers should be given a fair and equal opportunity to present their products and services.

When negotiating contracts or other agreements, the legitimate interests of the supplier and the organization should be recognized, and such contracts should subsequently be administered in good faith since the cost to a supplier of putting a bid package together can be high, staff members should avoid making casual enquiries for bids; any requests should be based on a serious intention to buy. The organization should have the reputation of being a good customer it should there of be as convenient as it is practical for supplier and potential supplier to deal with procurement staff. The service offered by supplier representatives can be of great value in the procurement process, since they can provide a source of intelligent information on the supply market. Those dealing with supplier representatives should interview them promptly and courteously. It is good practice to ensure that all commercial information is out of view when such interview takes place, perhaps by using a separate interview room where possible.

CHAPTER THREE; METHODOLOGY

3.1 INTRODUCTION
This chapter provides the description, research design and methodology employed to collect and analyze data. It will look at secondary and primary source of data for the study. It will cover the research design, source of information, data collection methods, data processing and presentation and the problems that are likely to be incurred, the budget and the schedule.

3.2 RESEARCH DESIGN

The research will follow a descriptive design, using both qualitative and quantitative data. This is because descriptive explains the situation the way it is. The quantitative analysis will be mainly used to express numbers and statistics to answer questions like how many/much, for example: how much costs/ revenue do you save from emphasizing ethics? The qualitative analysis will be concerned with data that need description. It will be used to address questions introduced by how many, why and what. It will be about attitude and opinions of the respondents.

3.3 SAMPLING STRATEGY

Sekaran (2003: 265) describes a sample as a subset of the population. Simple random sampling, this will be used in order to give individuals in the organization an equal chance of being chosen in the sample. This will help to eliminate any form of bias in the selection. A sample survey will be adopted to select a few respondents from the whole population of the organization. 3.4 AREA OF THE STUDY The study shall be carried out at Kampala City Council located on City house building Kampala districtin their purchasing department

3.5 THE STUDY POPULATION The study shall involve officials engaged in procurement i.e. The Accounting officer (AO) User department (UD), Procuring and disposing unity (PDU) and the Contract- Committee (CC) 3.6 SAMPLING SIZE/ POPULATION The survey population shall consist of cross section of management, heads of Department, the PDE and other staff in the related fields. The sample size shall consist of twenty (20) respondents selected basing on the familiarity with issues of procurement in Kampala City Council TABLE ONE SHOWING CATEGORISATIONOF RESPONDENT CATEGORY Management Heads of Department Other Staff Total Source: Researchers design EXPECTED RESPONDENTS 05 05 15 25

3.7 SOURCES OF DATA

Data gathered will mainly be from secondary and primary data sources. 3.7.1 SECONDARY SOURCES The data will be collected from both internal and external sources. Internal data source will include data from within the organization such as company reports, procurement reports, purchasing manuals, contract agreements. External data source will also mainly focus on published research reports, journals, articles, newspapers and text book from outside the organization.

3.7.2 PRIMARY SOURCES

This will be collected from the organization. This will involve gathering data directly to address the research objectives using interviews which are flexible and questionnaires which are convenient.

3.8 PROCEDURE FOR DATA COLLECTION

The researcher will present a copy of the introductory letter from the head of department to the human resource manager seeking permission to carry out the research from his organization. This will be accompanied with an application letter. Receipt of permission letter will be given, the researcher will design a program with the human resource manager to enable him/her select the samples to be tested. The researcher will issue questionnaires and conduct interviews with procurement officer. As for employees, the researcher will distribute the questionnaires to the selected employees under the guidance of the procurement officer.

3.9 DATA COLLECTION

There will be two methods that will be used collect data that is the secondary data collection and primary data collection. More so the data will be collected by reading, reviewing what other authors have written, interviewing, questionnaires and observation will be used to collect data about the extent to which organizations pay attention to ethical issues in procurement.

3.9.1 TOOLS OF DATA COLLECTION

The researcher will use the following tools to collect data: Interview, the researcher will use unstructured interview which has no definite format and therefore it will not be standardized. It will be more flexible and the interviewer will have the freedom to arrange the format of the questions by rephrasing or modifying the questions. The unstructured interview is described as the informal way of collecting data in face to face situation. The extent and warding of the questions will be tailored towards the respondent that is the questions will follow the interviewees direction. The researcher will ask various questions relating to the problem under investigation. The interview will be conducted with the procuring and disposing unit plus Employees in the user departments. This tool of data collection will be very reliable and accurate. Its for extensive investigation and gives satisfactory results. Questionnaires, a standard list of questionnaire items relating to the problem under investigation will be prepared. The researcher will construct and formulate questions for both Human

Resource Manager and Employees. This is because its less expensive and helpful to collect information from a wide area; less time is required to collect the questionnaires. Observation is the process of examining peoples actions or events occurring in a particular place. In observation method, the researcher will observe and records only what she / he will see. The researcher will make an observation check list to be used during the process of observation. The check list will be designed according to the objectives of the study- that is the researcher will have clear targets to observe. Many activities will be observed to gain meaning from them. Observation technique will be one of the data collections which will be used to supplement other instruments of data collection like questionnaires and interviews.

3.9.2 RELIABILITY AND VALIDITY OF THE INSTRUMENT

The questionnaire and interviews guides that will be constructed and formulated will first be taken to the research supervisor for approval. The above tools will be tested and pre-tested on a group of colleagues to examine their effectiveness before proceeding to the field of study (piloting method)

3.10 MEASUREMENT OF VARIABLES

Dependent variable is a variable which changes, appear or disappear as the researcher changes, introduces or removes other variables, an independent variable is a variable that the researcher manipulates, controls to ascertain their relation to the dependent- they are the cause and the extraneous variables are those apart from the independent variable that affect the dependent variable. The independent variable in the study is ethical issues while procurement function is the dependent variable.

3.11 DATA PROCESS, ANALYSIS AND PRESENTATION

After gathering data from both primary and secondary sources, the data shall be first assembled together, after which it shall be organized by the use of tabulation and percentages there by creating a plat form for summarization of data. Appropriate analytical methods shall then be applied so as to manipulate the data, its relationship and quantitative meanings are derived. Simple tabulation is one of the statistical tools that shall be used to summarize data. The researcher will also use inductive reasoning to draw inferences to the general situation about the topic.

3.12 CONTROL OF EXTRENEOUS VARIABLES

These are factors that are likely to influence the dependent variable apart from the independent variable and they include; working environment, political atmosphere, Remuneration, Resources available, Leadership styles. However these shall be controlled by holding them constant since they are difficult to eliminate.

3.13 ETHICAL ISSUES

All the data that shall be gathered by the researcher from the respondents shall be kept confidential to the researcher and shall only be used for academic purposes.

3.14 LIMITATIONS TO THE STUDY

The employees may fear the researcher because they may consider him/ her as a spy, as a person who may easily expose their dirty linen. It may not be easy for the researcher to balance collecting research data and attending lectures. There is in adequate funding of the research, this is because of the devastating global economic crisis which has ravaged Ugandas economy. This is because research will involve transportation costs, stationary, printing, feeding and fear of some officials who may ask for money before they part with any type of information. These require financial resources which are limited. There might be threats of time limits and deadlines that the researcher might need to work against considering the fact that the study shall be conducted alongside other activities like lectures, course work and tests.

APPENDIX I
REFERENCES
Nicholas Siropolis; Small Business Management 6th edition: Houghton Mifflin Company, 222 Berkeley street Boston USA. Bodo Schlegelmilch; Marketing ethics. An international perspective, 1st edition: Thomas Learning Berkshire house, 168-173 high Holborn London UK. Bertha z Osei Hwedie and Kwaku Osei-Hwedie (2000) The political, economic, and cultural bases of corruption in Africa, in corruption and development in Africa, Macmillan press limited. CIET International (1998) National integrity survey, Baseline Uganda: Report to the inspectorate of government, Kampala, august 1998. Government of Uganda (1995), Constitution of the republic of Uganda: Kampala law reports. Government of Uganda, Laws of Uganda volume xxii (the police act cap 303). K2 consults Ltd, National integrity survey results. Report to the inspectorate of government, Kampala 2003. Muganda. A; Mobilizing quietly for impact. An alternative approach of Tanzania. A paper presented at the regional ministerial seminar on GOOD GOVERNANCE FOR PRIVATE SECTOR DEVELOPMENTIN AFRICA, Lake Victoria hotel, Entebbe, Uganda, 16 th-19th march 1997. Derek Walker, Procurement systems page 104-106 published by Routledge.

Public Procurement and disposal of Public Assets act and regulations (PPDA) (1) 2003. Wai D.M, (1995) The essence of capacity building in Africa . James Smart Coleman Memorial papers, JSC African studies Centre, University of California, Los Angeles. Saturday Monitor, November 22nd 2008. Sekaran Uma (2003): Research methodology for business. A skill building approach 4th edition: Hermitage publishing services. Kenneth Lysons and Michael Gillingham (2003), Purchasing and Supply chain management 6th edition: Pearson education limited.