IMG-20200129-WA0047
KENNEDY KIPKOSGEI MAIYO
Associate, Advocate of the High Court of Kenya

GENERAL PROCUREMENT AND ASSET DISPOSAL PRINCIPLES: THE PUBLIC PROCUREMENT AND ASSETS DISPOSAL ACT NO. 33 OF 2015

Procurement/tendering, plays a very critical role in the delivery of goods and services to the people of Kenya.[1]Therefore, in a bid to safeguard this vital tool, the Constitution of Kenya, 2010 provides for the general principles of Public Finance.[2]Within it, the Control of Public Money which is central in the process, is recognised as integral in Public Finance and has been strategically provided for under Part 6.[3]In that regard, to ensure optimum utilisation of these scarce resources, procurement of public goods and services maximise benefit realisable from the available resources.[4] Thus, when a public entity contracts for goods or services, it is required to do so in accordance with a system that is fair, equitable, transparent, competitive and cost-effective.[5] These principles, in a nutshell, lay down the principles of public finance and procurement.

The Public Procurement and Asset Disposal Act[6](hereinafter “the Act”) was enacted to give effect to Article 227 of the Constitution and to provide for the procedures for efficient public procurement and for asset disposal by public entities.[7] The Act is therefore the working text on public procurement giving effect and meaning to the principles and aspirations enshrined in the Constitution.To achieve prudent use of public money and fair play the Act in its Part VI (Section 53-69) provides for the roadmap in general procurement and asset disposal by laying down its principles as follows:-

A. PROCUREMENT AND ASSET DISPOSAL PLANNING

Planning is a key ingredient in procurement and entails both strategic and tactical components.[8]Strategic planning usually denotes long term and structured planning for an organisation while tactical planning is limited to supply planning and ensuring optimal flow of goods at the organisation.[9]Under the Act, an accounting officer[10]is required to prepare an annual procurement plan in the format set out in the Regulations within the approved budget and before the commencement of the financial year.[11] He/she is also required to prepare an annual asset disposal plan in a format set out in the Regulations.[12]

“A good plan provides a framework for organizing company resources and it provides direction for employees on how they can help the company fulfil its strategic goals” – Robert Tanner MBA”[13]

In a measure to ensure compliance with this key facet of public procurement and finance planning, the Act requires the head of a procuring entity to prepare an annual procurement and asset disposal plan and their failure thereof constitutes and offence punishable under the Act.[14] Because public procurement is goal based, i.e. maximising use of scarce resources and getting the best value for money, it resonates with the main goal of planning being the systematic process of establishing a need and then working out the best way to meet the need.[15] Planning is also a key component of public participation and good governance as enshrined in the Constitution of Kenya, 2010.[16] Thus, to achieve and implement the aspirations embodied in the Constitution, each public procuring entity is under an obligation to plan and put in place measures for proper utilisation of resources.

B.  PROCUREMENT PRICING AND REQUIREMENT NOT TO SPLIT CONTRACTS

The market, on account of its vastness, offers a wide range of choice and affords a procuring entity[17] a base to go for the most cost-effective bid.[18]Therefore, in order to get value for money, a procuring entity is required to procure standard goods services and works at prevailing market prices.[19] This guiding principle and safeguard, averts instances where a procuring entity procures goods or services at an inflated prices thereby occasioning losses to the taxpayer.

Further, a procuring entity is restricted from structuring procurement as two or more for the purpose of avoiding the use of a procurement procedure except where prescribed.

C.  ELIGIBILITY TO BID

The eligibility of a person bidding for a contract of procurement or asset disposal is key in weeding out ineligible candidates. This is a requirement that is to be assessed on grounds of legal capacity, financial stability, professionalism, financial ethics, tax compliance and the non-existence of conflicts of interest.[20]A tender in all respects must comply with the specifications and conditions set out in the bid document.

D.  USE OF LIST OF ANOTHER STATE ORGAN OR PUBLIC ENTITY

A public entity may seek in writing to use another public entity’s list of registered suppliers provided that that list was developed through a competitive process and in accordance with the relevant provisions of the Act. This guideline serves to maximise the use of the available resources and save the tax payer the use of further resources in obtaining a list that is readily available from another state organ. This can more aptly be described as complementarity and cooperation.

E.  LIST OF REGISTERED SUPPLIERS.

The head of a procurement function of a procuring entity is under an obligation of maintaining and updating lists of registered suppliers, contractors and consultants according to its procurement needs.

Submission of names shall be continuous and the list shall be updated periodically and in accordance with Act.

F.  STANDARD PROCUREMENT AND ASSET DISPOSAL DOCUMENTS.

A procuring entity shall use standard procurement and asset disposal documents issued by the Authority and the tender document(s) shall contain sufficient information to allow fairness, equitability, transparency, cost-effectiveness and competition among bidders.[21]The above principles are the constitutional and statutory thresholds of procurement and asset disposal. Any process falling short of these principles is not only irregular but illegal.

G.  LIMITATION ON CONTRACTS WITH STATE AND PUBLIC OFFICERS.

Public officers are prohibited from entering into procurement contracts with public entities or state organs. They are further prohibited from influencing the award of contracts to themselves or persons (including legal entities) associated with them. This safeguard is also key in keeping the ogre of conflict of interest in check.

H.  SPECIFIC REQUIREMENTS

An accounting officer of a procuring entity is also required to prepare specific requirements relating to goods, works or services being procured that are clear, that give a correct and complete description of what is to be procured and that allow for fair and open competition among bidders.

I.  TENDER SECURITY

An accounting officer of a procuring entity may require that tender security be provided with tenders either as prescribed in the Regulations, as an absolute value or an amount not more than two percent of the tender as valued by the procuring entity.[22]

The tender security cushions the procuring entity against bidders withdrawing their bids prior to the end of the bid validity period or refusing to sign the contract. This would be to the detriment of the procuring entity and by extension the taxpayer.

J.  DECLARATION NOT TO ENGAGE IN CORRUPTION

A tender, proposal or quotation submitted by a person shall include a declaration that the person will not engage in any corrupt or fraudulent practice and a declaration of non-debarment from participating in procurement proceedings.

K.  TERMINATION OR CANCELLATION OF PROCUREMENT AND ASSET DISPOSAL PROCEEDINGS.

At any time prior to notification of tender award, an accounting officer of a procuring entity, may terminate or cancel procurement or asset disposal proceedings without entering into a contract where the subject of procurement has been overtaken by operation of law or technological change, inadequate budgetary provision, no tender was received, where the prices of the bids are above market prices, material governance issues, force majeure, non-responsiveness of all bids or upon receiving sufficient evidence of corrupt or fraudulent practices.[23]

This power is however not to be exercised whimsically but rationally. Like any other administrative decision, cancellation of procurement and asset disposal proceedings shall be subject to Judicial Review Proceedings on a test of legality, rationality and propriety.

L.  FORM OF COMMUNICATIONS, ELECTRONIC PROCUREMENT AND ASSET DISPOSAL.

All communications and enquiries between parties on procurement and asset disposal proceedings shall be in writing.

The Act further embraces Information and Communication Technologies (ICT) in procurement and asset disposal proceedings.

M.  INAPPROPRIATE INFLUENCE ON EVALUATIONS

After the deadline for submission of tenders, proposals or quotations a person who submitted a tender shall not make any unsolicited communications to the procuring entity or any person involved in the procurement proceedings in an attempt to influence that evaluation or comparison.

N.  CORRUPT, COERCIVE, OBSTRUCTIVE, COLLUSIVE OR FRAUDULENT PRACTICES, CONFLICT OF INTEREST.

A person to whom the Act applies shall not be involved in any corrupt, coercive, obstructive, collusive or fraudulent practice or conflicts of interest in any procurement or asset disposal proceeding.

This again is aimed at attaining the constitutional thresholds of fairness, equitability, transparency, cost-effectiveness and competition in procurement and asset disposal proceedings.[24]

O.  CONFIDENTIALITY

A procuring entity and all its employees and agents are prohibited from disclosing information relating to procurement whose disclosure would impede law enforcement; prejudice legitimate commercial interests, intellectual property rights or inhibit fair competition; or information relating to the evaluation, comparison or clarification of tenders, proposals or quotations or the contents thereof.

Volumes of information are shared during the procurement process. It’s only fair that parties coming across this information by virtue of their roles in the procurement process guard it in the interest of the bidders as well as the procuring entity. Unauthorised disclosures would prejudice legitimate commercial interests, violate intellectual property rights and create an uneven ground amongst bidders.

P.  PROCUREMENT RECORDS.

An accounting officer of a procuring entity shall keep records for each procurement for at least six years after the resulting contract has been completed or if no contract resulted, after the procurement proceedings were terminated.

Q.  PROCUREMENT APPROVALS.

All approvals relating to any procedures in procurement shall be in writing and properly dated documented and filed. No approval shall be made to operate retrospectively except in procurement responding to an urgent need. In procurements relating to an urgent need, the accounting officer shall be furnished with adequate evidence to verify the emergency.

CONCLUSION

The recent surge in proceedings against public entities and its officers for flouting procurement rules can only be attributed to ignorance or flagrant breach of the above principles among other laws regulating public procurement and asset disposal in Kenya.

For prudent use of public resources therefore, public entities and its officers must align themselves with the provisions of the Act including but not limited to the above principles and further to achieve the Constitutional thresholds of fairness, equitability, transparency, cost-effectiveness and competition in public procurement and asset disposal proceedings.

 

*LL.B (Moi University), PGD (KSL), Associate, Kipkenda& Company Advocates, Advocate of the High Court of Kenya.

[1] See, Republic v Public Procurement Administrative Review Board & others exparte SGS Kenya Limited Judicial Review Miscellaneous Application No. 496 of 2017.

[2] See, Constitution of Kenya, 2010, Chapter 12, Articles 201 – 231.

[3]Constitution of Kenya, 2010, Articles 225 – 227.

[4]See, Constitution of Kenya, 2010, Article 227.

[5] Ibid; Public Procurement and Asset Disposal Act, No. 33 of 2015, Section 3.

[6] No. 33 of 2015.

[7] See Preamble.

[8] Clifford P. McCue and Gerasimos A. Gianakis, ‘Public Purchasing: Who’s Minding the Store?’ (2001)1 Journal of Public Procurement72.

[9] Ibid, Pp. 76 – 77.

[10]See, Public Finance Management Act No. 18 of 2012, Section 3, 67 and 148 delimits on the meaning of an ‘accounting officer’ for purposes of procurement and public finance management.

[11]Public Finance Management Act.Section 53 (2).

[12]Public Finance Management Act. Section 53 (4).

[13]Robert Tanner, Seven Reasons Why Managers Fail to Plan available at <https://managementisajourney.com/seven-reasons-why-managers-fail-to-plan-2/> accessed on 23 July, 2020.

[14]Public Finance Management Act. Section 53 (11).

[15]Joseph Ansah1 & Stephen Normanyo, ‘Importance of Planning on Effective Procurement Delivery at the Decentralised Departments of Governance in Line with the Procurement Act 2003, (Act 663) of Ghana: The Case of Metropolitan, Municipal and District Assemblies (MMDAS) in the Western Region of Ghana’ (2017) 7 (8) Public Policy and Administration Research 39.

[16]Erick Okeyo -v- County Government of Kisumu & 2 Others, Petition No. 1 “A” of 2014; [2014] eKLR.

[17]See, Public Finance Management Act No. 18 of 2012, Section 2 on definition of procuring entity.

[18]Telcom Kenya Limited & another v Competition Authority of Kenya [2020] eKLR, Paragraph 161 on the market as a dynamic phenomenon.

[19]Public Finance Management Act, Section 54 (2).

[20]See Republic V PPARB; Accounting Officer KERRA Ex Parte Roben Aberdare (K) Ltd (2019)eKLR.

[21]See Nelson & Francis Associates v I.G Sacco Ltd (2017) eKLR

[22]See Jorge Lynch on “The Bid Security and its Purpose”

[23]See Republic v Public Procurement Administrative Review Board;Consortium of GBM Projects Limited and ERGInsaatTicaretVeSanayi A.S (interested party) ;National Irrigation Board Ex Parte [2020] eKLR

[24]See Nelson & Francis Associates v I.G. Sacco Ltd [2017]eKLR; In that case some bidders had been allowed to submit bids privately in a procurement process. It was held that the process was not done in accordance with the Constitutional and statutory provisions of law which required the respondent to observe the threshold of fairness, equity, transparency, cost-effectiveness and competitiveness. The award was clearly illegal and irregular.

IMG-20200129-WA0047

KENNEDY KIPKOSGEI MAIYO
Email: kenmaiyo@kipkenda.co.ke

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