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THE EFFECT/INFLUENCE OF PROPOSAL DRAFTING PROCESS ON BIDDING SUCCESS. A CASE OF BRAC UGANDA
CHAPTER ONE
INTRODUCTION
The study investigated the effect/influence of proposal drafting process on bidding success. a case of BRAC Uganda. In this study, proposal drafting process is the independent variable and bidding success is the dependent variable. The key dimensions for proposal drafting process are; Solicited proposals, Unsolicited proposals., Preproposals, Continuation or non-competing proposals and Renewal or competing proposals, while bidding success will be measured by open or competitive bidding, and closed (“sealed”) or noncompetitive bidding.
This chapter presents the background of the study, the problem statement, purpose, objectives of the study, research questions, study scope, justification of the study, significance, hypotheses, conceptual framework, as well as operational definition of key terms and concepts.
The section presents, historical background, theoretical, contextual background, conceptual background.
1.1.1 Historical Background
The practice of bidding, or offering a price for goods or services, dates back to ancient civilizations. In ancient Rome, for example, government contracts were awarded through a bidding process. The concept of auction, a specific form of bidding, can be traced back to ancient civilizations as well, with evidence of auctions of goods and slaves in Greece and Rome. In the Middle Ages, auctions were used to sell seized goods, such as the property of criminals. During the 18th century, the auction system began to be used more widely for the sale of goods and property. The modern auction system as we know it today, in which an auctioneer calls out prices and bidders indicate their willingness to pay by raising their hand or bidding card, was developed in the 19th century (McGillivray, & Turner, 2017).
The history of bidding in England can be traced back to ancient times, with evidence of auctions being used to sell goods and property. However, the use of auctions in England as we know them today began to develop during the 18th century. Auction houses, such as Christie’s and Sotheby’s, were established in London during this time and became popular venues for the sale of art, antiques, and other high-value items. Auctions also played a significant role in the sale of land and properties, particularly during the 18th and 19th centuries, as the enclosure movement led to the consolidation of land ownership (O’Brien, & Miles, 2019). In the 20th century, the use of auctions expanded to include a wider range of goods and services, such as cars, machinery, and government contracts. Today, auctions are a common method for buying and selling a wide variety of items in England and around the world (Lynn, 2018).
Bidding in the United States has a long history, dating back to the colonial period. Auctions were used to sell a variety of goods and services, including land, livestock, and household items. During the 19th century, auctions continued to play a significant role in the economy, with the sale of land and properties being one of the most common uses of auctions (Helo, 2020). In the 20th century, the use of auctions expanded to include a wider range of goods and services, such as cars, machinery, and government contracts. Today, auctions are a common method for buying and selling a wide variety of items in the United States, including real estate, art, antiques, and collectibles. The Federal government also use auction to sell off seized assets, surplus goods, and even spectrum licenses. Electronic auctions and online bidding platforms have become increasingly popular in recent years, allowing for a wider range of buyers and sellers to participate in auctions (Baade, & Sanderson, 2022).
The proposal drafting process can have a significant impact on the success of a bidding process. A well-crafted proposal that clearly and effectively communicates the benefits of the proposed solution and demonstrates the qualifications of the organization can increase the chances of winning the bid. On the other hand, a poorly written or incomplete proposal can decrease the likelihood of success. Additionally, adhering to the requirements and guidelines provided by the organization issuing the bid can also be important for success (Politou et al., 2018).
The history of bidding in Africa is complex and varies by country and region. However, some key historical events and trends can be identified. In the colonial era, European powers established systems of procurement that were often exploitative and designed to extract resources from the continent. In many cases, these systems were used to extract resources from the continent without providing fair compensation to local communities or businesses (Lovett et al., 2020).
After independence, many African countries implemented procurement systems that were based on centralized planning and state control. These systems often focused on large-scale infrastructure projects, such as roads and dams, and were often characterized by a lack of transparency and competition. In recent years, many African countries have begun to reform their procurement systems to promote greater transparency and competition. Some countries have implemented laws and regulations to increase the participation of small and medium-sized businesses in procurement, and to ensure that procurement is conducted in a fair and transparent manner (Rasmussen et al., 2018).
However, the bidding system in Africa is still facing challenges like corruption and lack of transparency, which affects the process of bidding. In addition, the procurement process is often slow and bureaucratic, which can deter private sector participation, the history of bidding in Africa reflects the broader history of the continent, characterized by exploitation during the colonial era, state-controlled systems during the post-colonial era, and ongoing efforts to promote transparency and competition in recent years (Shai, Molefinyana, & Quinot, 2019).
The history of bidding in Uganda is closely tied to the country’s political and economic development. During the colonial era, procurement in Uganda was conducted by the British government, which established systems that were designed to extract resources from the colony. After Uganda gained independence in 1962, the government implemented a system of centralized planning and state control, which was characterized by a lack of transparency and competition in procurement (Rogerson, & Rogerson, 2019). In the 1980s, the country was affected by a long civil war, political instability, and economic decline. This made it difficult to carry out procurement in a fair and transparent manner. In the 1990s, the Ugandan government began implementing economic reforms, including the liberalization of the economy, the privatization of state-owned enterprises and the introduction of market-oriented policies. These changes led to the establishment of a more open and competitive procurement system (Harland et al., 2019).
In 2002, the Ugandan government passed the Public Procurement and Disposal of Public Assets Act, which established a legal framework for procurement in the country. The act was intended to increase transparency, efficiency and fairness in the procurement process. However, the procurement system in Uganda is still facing challenges like corruption and lack of transparency. The government and other organizations have been implementing various initiatives to address these issues and ensure that procurement is conducted in a fair and transparent manner (Eyaa, & Oluka, 2011).
The history of bidding in Uganda reflects the broader history of the country, characterized by exploitation during the colonial era, state-controlled systems during the post-colonial era, economic decline and political instability during the civil war, economic reform and the liberalization of the economy, and ongoing efforts to promote transparency and competition in recent years.
1.1.2 Theoretical background
In 1971, three petroleum engineers working for Atlantic Richfield looked over the records of various oil companies after realizing that oil companies were suffering unexpectedly low returns on their investments yearly. Edward Capen, Robert Clapp, and William Campbell examined the low returns that occurred as a result of the Outer Continental Shelf oil lease auctions. In particular, they noticed that companies bidding on oil in the Gulf of Mexico an area that had a lot of oil and gas at this time were making peculiarly low returns. Since the area was dense with oil and gas, companies should have been able to buy oil at a relatively low price and sell it for a good profit.8
The petroleum engineers speculated that it was because of the competitive bidding environment that businesses were failing to make the return they expected. They believed that bidders did not have sufficient knowledge of the laws of probability to make rational informed decisions, and instead were being swayed by the bids of other oil companies.
The value of oil in the ground should have a similar value for all bidders, yet, when it is auctioned off, bidders must fight to outbid their competitors. This is partially because there was no method to estimate the potential value of an oil field, so bidders had to rely on intuition. However, in high-pressure situations, intuition can veer from rationality, like an auction.
The method in which an auction is set up ensures the winner has to be an individual who is willing to pay more than everyone else so, unfortunately, the winner is doomed to pay more than the oil’s inherent value. After investigating this common occurrence in oil bids, Capen, Clapp and Campbell coined the term “winner’s curse” to describe this phenomenon in their article “Competitive Bidding in High-Risk Situations.” They came up with three rules for people to avoid the winner’s curse:
- The less information one has compared with what his opponents have, the lower one ought to bid.
- The more uncertain one is about his value estimate, the lower one should bid.
- The more bidders (above three) that show up on a given parcel, the lower one should bid.8
These rules suggest that, unless bidders are well-informed and able to rationally calculate the inherent value of an oil field, they should be conservative with their bids.
Following the petroleum engineers’ investigation and discovery of the winner’s curse, professors of management Max H. Bazerman and William F. Samuelson, who specialized in negotiating and bidding, ran experiments to test its validity. They published a paper in 1983 titled “I Won the Auction but Don’t Want the Prize.” 9 Similarly to Capen, Clapp, and Campbell, Bazerman and Samuelson hypothesized that the reason the winner’s curse occurs is because a relevant piece of information is excluded from the decision-making processes of bidders — if an individual assumes that their bid will win, they should realize that they have overestimated the value of a commodity and revise their bid. However, it is hard to know whether or not your bid will be successful unless you know the other bids before you make yours.
Bazerman and Samuelson identified two factors that increase the likelihood of the winner’s curse: the degree of uncertainty and the size of the bidding population. The more uncertain people are about the inherent value of an item and the bigger the bidding pool, the more likely the winner’s curse is to occur. To test their theory, the researchers recruited MBA students to participate in four sealed-bid auctions. All commodities had a value of $8, and participants were told that they would receive a $2 prize if they had the bid closest to the inherent value of the item, so as to encourage reasonable bids.
Bazerman and Samuelson found that despite the incentive, the highest bids often exceeded the inherent value of an item. Subjects employed naive bidding strategies, even in a sealed bid situation. They also found that as predicted, increasing the degree of uncertainty (if the item was unfamiliar) and the bidding population size (the number of bidders) caused the winner’s curse to happen more frequently. Participants actually estimated the value of the items to be lower than their objective value, with the average bid being $5.13, but the mean winning bid was $10.01.10
In 2020, economists Paul R. Milgrom and Robert B. Wilson, won a Nobel Prize for their work on auction theory. They began researching the winner’s curse in 1982, but continued to research the phenomenon and more recently developed an explanation as to why rational bidders place maximum bids below the expected value of the commodity: because they are afraid of the winner’s curse. This theory will enable this study understand the challenges in winning bids despite the project proposal drafting by some organization.
1.1.3 Conceptual Background
Bidding refers to the process of offering a price for goods or services. It is most commonly associated with the auction process, in which potential buyers indicate their willingness to pay a certain price for an item by raising their hand, calling out a price, or placing a bid online. The highest bidder typically wins the auction and is obligated to purchase the item at the price they have bid. Bidding can also refer to the process of offering a price for a contract, such as a construction or government project. In these cases, bidders may submit sealed bids, with the contract being awarded to the bidder who has offered the best terms and the lowest price. Bidding is also used in financial markets, for example, in stock market, where traders bid for shares at a certain price. In general, bidding is a way for buyers and sellers to negotiate a price for goods or services through the process of competition (San Santoso, & Bourpanus, 2018).
A proposal is a document that presents a plan or suggestion for a particular project, product, or service. It is generally used in business and government settings to persuade a potential client or funding agency to accept a certain idea or to provide financial support for a project. Proposals can be formal or informal, and may be solicited or unsolicited (de Frutos-Belizón et al., 2019).
A solicited proposal is one that is requested by a potential client or funding agency, usually in response to a request for proposal (RFP) or request for quotation (RFQ). These types of proposals typically include detailed information about the proposed project or product, including technical specifications, timelines, and cost estimates (Tonetti, Greenwell, & Kornman, 2018).
An unsolicited proposal is one that is created and submitted by a company or individual without a specific request from a client or funding agency. These types of proposals are usually used to introduce a new idea or product to a potential client or funding agency, and may include information on the company’s qualifications, market research, and a detailed business plan (Ben-Chetrit et al., 2018).
In general, a proposal is a means of communicating an idea or plan and providing evidence to support its feasibility, and it is often used to persuade decision-makers to adopt it.
According to the Indian Contract Act 1872, proposal is defined in Section 2 (a) as “when one person will signify to another person his willingness to do or not do something (abstain) with a view to obtain the assent of such person to such an act or abstinence, he is said to make a proposal or an offer.”
1.1.4 Contextual Background
Bidding is a common process in global trade, as it allows buyers and sellers to negotiate prices and terms for goods and services. Bids can be submitted through a variety of channels, including online platforms, email, or fax.
In global trade, public procurement, also known as government procurement, is one of the most common types of bidding process. It’s a process by which government agencies purchase goods, services, and works from private sector companies. Governments around the world use public procurement as a way to buy goods and services, and the process is often open to bids from domestic and international suppliers (Basheka, 2017).
Another common type of bidding in global trade is through tenders. Tenders are used to invite suppliers to submit bids for the supply of goods and services. Tenders are often used by large organizations such as government agencies, international organizations and large companies to purchase goods and services.
Bidding in global trade also happens through online platforms, such as e-auctions. These platforms allow suppliers from around the world to participate in auctions for contracts and purchase orders. E-auctions are often used to purchase goods in large quantities, such as raw materials and components, bidding is a common process in global trade, it is used to negotiate prices and terms for goods and services, through procurement, tenders, and e-auctions.
The total value of public bids in the United States can vary depending on the specific time period and type of goods or services being procured. However, public procurement is a significant aspect of the economy and the value of public bids is likely to be in the billions of dollars. In the US, procurement at the federal level is governed by the Federal Acquisition Regulation (FAR) and state and local governments have their own procurement regulations. Federal procurement alone is estimated to be around $500 billion per year. In addition, State and local government procurement are estimated to be in the hundreds of billions of dollars per year. However, it’s worth noting that these figures are estimates and can fluctuate based on the economic conditions and government spending priorities. Additionally, the COVID-19 pandemic and the subsequent economic downturn may have impacted the total value of public bids in 2020 and 2021 (Jin, Tang, Chau, & Abbas, 2022).
The Ugandan government is the largest buyer of goods and services in the country, and spends a significant amount of money on procurement each year. The specific value of bids in Uganda can vary depending on the current economic conditions and the types of goods and services being procured. However, it’s worth noting that Uganda is still facing challenges like corruption and lack of transparency in the procurement process which may affect the total value of bids. The government and other organizations are implementing various initiatives to address these issues and ensure that public procurement is conducted in a fair and transparent manner. In addition, the COVID-19 pandemic and the subsequent economic downturn may have impacted the total value of public bids in 2020 and 2021 (Mawejje, & Odhiambo, 2022).
1.2 Statement of the problem
The complexity and volume of bidding has drastically increased globally in the recent years. Some of the causes that can be attributed to this include globalization, out sourcing, intense competition for existing markets as well as complicated and numerous partnership. Over the last fifty years, the world’s largest firms have advanced from being simple manufactures of hard goods, or providers of basic services, to being sophisticated vendors using advanced business models. This means that commitment of customers and suppliers to contractual obligations has increased, thus, the need for sustainable project proposal drafting. In the same respect BRAC Uganda has been failing to win bids despite the number of project proposals it has written it is therefore in this view that this study intends to investigate into the effect/influence of proposal drafting process on bidding success, with specific reference to BRAC Uganda.
1.3 Purpose of the study
The purpose of study if to investigate the influence of proposal drafting process on bidding success
1.4 Objectives of the study
- To establish the influence of unsolicited proposal on bidding success
- To investigate the influence of solicited bids on bidding success
- To analyze influence of non-competing proposals on bidding success
1.5 Research Questions
- What is the influence of unsolicited proposal on bidding success?
- What is the influence of solicited bids on bidding success?
- What is influence of non-competing proposals on bidding success?
1.6 Scope of the study
This section includes content scope, geographical scope and Time scope.
The content scope of the study will concentrate on; the influence of unsolicited proposal on bidding success, the influence of solicited bids on bidding success and influence of non-competing proposals on bidding success.
1.6.2 The geographical scope
The study will be carried out from BRAC Uganda located at; Plot 880 Heritage Drive, Kampala, Uganda.
1.6.3 Time scope
The period of data to be considered from BRAC Uganda will be from 2017 to 2022.
1.7 Significance of the study
The study will provide information to future researchers concerning the influence of unsolicited proposal on bidding success.
The future academicians will be able to have information regarding the influence of solicited bids on bidding success.
The study will also provide literature on the influence of non-competing proposals on bidding success
1.8 Conceptual frame work
Independent variables Dependent variables
Moderating variables
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