Public Procurement Process in Kenya
Procurement Process in Kenya: Public procurement in Kenya is governed by the Public Procurement and Asset Disposal Act 2015. The Act provides procedures for efficient public procurement and for assets disposal by public entities.
This legislation came into effect on 7 January 2016, repealing the previous Public Procurement and Disposal Act of 2005, and all state organs and public entities within Kenya are required to comply with this law in regard to planning and undertaking procurement, inventory management, asset disposal and contract management, except where the provisions of the Public Private Partnership Act, 2013 already apply to procurement and disposal of assets, or where procurement and disposal of assets takes place under bilateral or multilateral agreements between the Government of Kenya and any other foreign government or multilateral agency.
The law provides for the National Treasury to be responsible for public procurement and asset disposal policy formulation.
It is important to understand the process if you are to take advantage of the system. It is very easy to work within the set guidelines, so do not let them phase you.
First and foremost, we need to have a clear understanding of what Tendering is all about. Tender is defined as (see investopedia) the process whereby governments and financial institutions invite bids for large projects that must be submitted within a finite deadline.
Tendering is meant to encourage competition on the open market, promote innovative solutions, foster open and honest contract awards, and not to say the least reduce risk to the procuring entity.
The tendering process is inherently fair and encourages competition. The business owner who understands the process already has the winning advantage.
In simple terms, the procuring entity (usually the government, public body or large private company) will identify that it needs a certain service or product to be delivered in a predefined period. As such, within the business, the organisation will determine the requirement, identify the finding and prioritise against the business need.
The commercial or financial team will then declare to the public that they intend to contract out to a suitable supplier. This is called the Invitation To Tender (ITT). In Kenya, large scale contracts are Gazzetted and listed in the Public Procurement and Oversight Agency publications. Have a look at a recent Tender Notice
Companies and potential suppliers would then review the ITT. If they feel they can meet the requirement, then they purchase the Tender Documentation (usually KSh 2 – 5000) from the procuring entity. At this point, these suppliers then prepare their proposal also known as the Response to Tender. During this part of the process, the suppliers are likely to have many questions. These are usually covered during an open session held by the procuring entity where all potential suppliers are invited. The proposal should be split into 2 parts: the technical solution and financial.
Before the declared tender closing date, all suppliers must ensure that they submit their bids. Bids are not accepted after the closing date.
Submit your proposal on time. Otherwise you will not be considered!
The Procuring Entity usually has a committee ready to open the tenders. This is a crucial stage, and the first part to ensure that the process is fair and transparent. It is at this stage that the initial sift takes place. Proposals that do not meet the prequisite qualifications, information or expertise are eliminated.
The remaining proposals are then reviewed on their technical merit, and scored accordingly. When this process is completed, there is usually a supplier (or 2) that would have a lead. The next part is to review the financial submission. At this point, the committee look at the technical solution and financial submission to determine which proposal will deliver the greatest value for money!
Once the committee agree on the winner, usually termed as a recommendation, they pass this on the the commercial, legal and financial teams to deal with the negotiation.
When finalised between the supplier and procuring entity, the contract award is offered, and this is then recorded for public knowledge.
This process as defined is known as the One Stage Process.
In Kenya, we tend to follow a 2 Stage Process. This first stage tends to determine suppliers who are capable of meeting the customer’s need. The next stage determines which supplier with associated solution would meet the need of the customer by providing greatest value for money.
Procurement Process in Kenya – Public Procurement Oversight Authority (PPOA) Background
Procurement Process in Kenya: The Public Procurement System in Kenya has evolved from a crude system with no regulations to an orderly legally regulated procurement system. The Government’s Procurement system was originally contained in the Supplies Manual of 1978, which was supplemented by circulars that were issued from time to time by the Treasury. The Director of Government Supply Services was responsible for ensuring the proper observance of the provisions of the Manual. The Manual created various tender boards for adjudication of tenders and their awards.
A review of the country’s public procurement systems was undertaken in 1999 and established that:
- There was no uniform procurement system for the public sector as a whole.
- It did not have sanctions or penalties against persons who breached the regulations in the Supplies Manual, other than internal disciplinary action. Consequently application of the rules was not strict and many of the norms were not followed.
- The Supplies Manual did not cover procurement of works.
- The dispute settlement mechanisms relating to the award procedures as set out in the Manual were weak and unreliable for ensuring fairness and transparency.
- Records of procurement transactions in many cases were found to be inaccurate or incomplete or absent, which led to suspicions of dishonest dealings at the tender boards.
The systems had other institutional weaknesses that not only undermined its capacity for carrying out their mandates effectively but also led to a public perception that the public sector was not getting maximum value for money spent on procurement.
In view of the above shortcomings it was found necessary to have a law to govern the procurement system in the public sector and to establish the necessary institutions to ensure that all procurement entities observe the provisions of the law for the purpose of attaining the objectives of an open tender system in the sector. Consequently the establishment of the Exchequer and Audit (Public Procurement) Regulations 2001 which created the Public Procurement Directorate (PPD) and the Public Procurement Complaints, Review and Appeals Board (PPCRAB).
The PPD and PPCRAB, though largely independent in carrying out their activities, had been operating as departments in the Ministry of Finance on which they relied for staff, facilities and funding. Since these institutional arrangements have a potential for undermining the impartiality of these bodies in the long run it was found necessary to create an oversight body whose existence was based on a law. The Public Procurement and Disposal Act, 2005 was thus enacted and it become operational on 1st January, 2007 with the gazettement of the Public Procurement and Disposal Regulations, 2006.
The Public Procurement and Disposal Act, 2005 created the Public Procurement Oversight Authority (PPOA), the Public Procurement Advisory Board (PPAB) and the continuance of the Public Procurement Complaints, Review and Appeals Board as the Public Procurement Administrative Review Board (PPARB). The PPAB and PPARB are autonomous bodies.
The PPOA is mandated with the responsibility of:
- Ensuring that procurement procedures established under the Act are complied with;
- Monitoring the procurement system and reporting on its overall functioning
- Initiating public procurement policy
- Assisting in the implementation and operation of the public procurement system by:
- preparing and distributing manuals and standard tender documents,
- providing advice and assistance to procuring entities, and
- develop, promote and support training and professional development of staff involved in procurement.