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CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
This chapter explores existing literature on the impact of procurement methods on the performance of public projects and programmes. It begins with a theoretical framework, followed by an in-depth discussion of various procurement methods and their effects on project performance.
2.1 Theoretical Framework
2.1.1 General Systems Theory
General Systems Theory, proposed by Ludwig von Bertalanffy in 1950, compares organizational operations to biological systems. From a biological perspective, it conceptualizes an organism as a complex, integrated system composed of interdependent structures and functions—just as cells are made up of molecules that must coordinate and communicate effectively to ensure survival. Similarly, organizations must maintain internal harmony and adapt to external environmental complexities to remain effective (Githinji & Moronge, 2009).
Von Bertalanffy challenged reductionist approaches by emphasizing that systems acquire new qualities through interaction with their environments—a phenomenon known as emergence. He proposed that understanding a system requires examining the relationships and arrangements of its components rather than isolating individual parts. This perspective is applicable across diverse organizational departments, such as finance, HR, and R&D, thus providing a unifying foundation for organizational analysis (Keraro, 2014).
Hanson and Holt (2014) noted that systems theory equips leaders with a framework for understanding organizational dynamics, even though it does not prescribe specific management strategies. The theory promotes a holistic view of organizations by recognizing the interdependence of internal and external subsystems. Traditionally, managers might focus narrowly on isolated components, leading to misalignment across departments. In contrast, systems theory encourages integrated management and interdepartmental coordination (Young, Nagpal & Adams, 2016).
2.1.2 Contingency Theory
Developed by Joan Woodward in the 1950s, contingency theory posits that there is no universally optimal approach to managing or organizing an enterprise. Instead, effective management depends on situational factors—both internal and external. Emerging in response to the limitations of classical theories like Weber’s bureaucracy and Taylor’s scientific management, contingency theory argues that management practices must be tailored to specific contexts and environmental conditions.
2.1.3 Overview of Procurement Methods
Domestic Competitive Bidding (DCB)
Domestic Competitive Bidding, or National Competitive Tendering (NCT), is commonly applied in public procurement where participation is limited to domestic suppliers. Arrowsmith and Quinot (2013) describe it as a process where only local firms are invited to bid, particularly in projects with small contract values or regionally scattered works. The method is suitable when goods and services are available locally at competitive prices or when the complexity and costs of international bidding are unjustifiable (Gbogr, 2017).
NCT is deemed acceptable for World Bank-financed procurement only if it aligns with the principles of efficiency, economy, and transparency. Typically, tenders are advertised nationally and are conducted in the local language and currency (Kinyua, 2015). The eligibility criteria often require national ownership and registration (Akuffo, 2014).
Despite its widespread use, research on the effects of procurement methods on performance is limited. Most existing studies explore a narrow set of procurement variables—such as the impact of bid evaluations on cost and time (Assaf & Al-Hejji, 2006; Wardani et al., 2006)—or the influence of partnering tools (Eriksson, 2008). A holistic view of procurement’s role in project performance remains underexplored (Cox & Thompson, 1997).
International Competitive Bidding (ICB)
ICB is preferred in circumstances requiring broad competition, particularly when domestic capacity is insufficient. This method enables agencies to select the most competitive international bids, often for large-scale or technically complex projects (Ferwerda, Deleanu, & Unger, 2017).
Hensher and Stanley (2008) regard ICB as a transparent and value-oriented approach. It fosters global participation and is typically reserved for projects exceeding a set financial threshold (Tetteh, 2014). To maintain accountability, public institutions using ICB must adhere to rigorous auditing and documentation standards (CIPS, 2012). Effective procurement planning, including needs assessment and sustainable procurement strategies, further enhances ICB outcomes (Aputo, 2017; Song, Landrum & Chernew, 2013).
Direct Procurement (Sole Sourcing)
Direct procurement is applied when competitive bidding is impractical—usually in emergencies or when only one vendor can meet the specifications. According to Kenya’s Public Procurement Regulations (Section 74), this method is only valid when justified by urgency, exclusivity, or technical uniqueness (Mbae, 2014; Kiruja, 2014).
While efficient in time-sensitive scenarios, direct procurement poses risks of abuse and lacks the transparency associated with competitive methods. Hence, robust oversight and professional procurement practices are crucial (Public Procurement Oversight Authority, 2016; Adjei, 2006).
2.1.4 Influence of Procurement Methods on Project Performance
Kraljic’s (1983) strategic procurement model marked a paradigm shift in viewing procurement as a strategic—not merely operational—function. With the growing global demand for infrastructure (Visse, 2012), procurement methods play a central role in delivering projects effectively (Orr & Kennedy, 2008).
While Public-Private Partnerships (PPPs) offer an innovative delivery model, their success is often constrained by misaligned stakeholder expectations and weak governmental oversight (Memon, Rahman & Azis, 2012). In Uganda, procurement planning remains a critical yet underdeveloped function (Oluka, 2013). Studies by Muhwezi (2013) and Sabiti et al. (2011) emphasise the need for capacity-building and accountability mechanisms within procurement entities.
Restricted tendering, while limiting competition, can be effective if executed transparently and with proper prequalification protocols (Oluka, 2013). Contractor monitoring also influences procurement outcomes, as it ensures compliance with delivery schedules and quality standards (Mbalangu, 2013; Kansiime, 2014).
Contract management further supports procurement performance by aligning vendor obligations with organisational goals (Schmitz & Platts, 2004; Agere, 2009). However, procurement inefficiencies persist due to corruption, weak enforcement of laws, and lack of stakeholder engagement (Beukers et al., 2006; Joshi, 2010).
2.2 Physical Distribution and Logistics in Procurement
Efficiency in physical distribution—including transportation, warehousing, and order processing—is vital to achieving customer satisfaction and reducing operational costs (Sandberg, 2007; Forster, 2004). Innovations in ICT, such as EDI and ERP systems, further facilitate seamless integration of procurement and logistics processes (Parasuraman et al., 2002; McLaren et al., 2002).
Proper warehousing not only preserves product integrity but also supports long-term distribution planning (Zeithaml et al., 2003). Conversely, high storage costs may offset procurement gains if not managed efficiently (Farrington et al., 2006).
Order processing technologies can improve procurement cycle times and data accuracy, although they may require significant upfront investment (Zhenx et al., 2001). Ultimately, effective logistics and stakeholder collaboration enhance procurement outcomes and promote organisational competitiveness (Lysons, 2006; Mason et al., 2007
