Public Procurement and Finance KNEC Notes

 LESSON ONE

INTRODUCTION TO PUBLIC PROCUREMENT

Chapter objectives:

By the end of this chapter, the learners should;

  1. Understand what is entailed in public procurement
  2. Learn about stages of public procurement since independence
  • Explain an ideal public procurement
  1. Describe values of to be observed in procurement

INTRODUCTION

Public procurement is the process which public entities contract for acquisition or supply of goods, services or works. Public procurement in Kenya has undergone major reforms to the current legal framework of Public Procurement and Disposal Act (PPDA) of 2005. In the various reforms, the major concerns were those of improving efficiency and effectiveness, promoting competition, trying to alleviate corruption levels in procurement activities, enhancing standardized procedures among others. This has further been supported especially the regulatory bodies of; Public procurement and Oversight Authority, Public Procurement Advisory board, and Public Procurement Administrative board.

However, since the inception of PPDA in 2007 together with the regulatory bodies, there have emerged challenges which have continued to limit the success of the above procurement umbrella. It is in this vein that we wish to highlight as our scope some of the challenges that public procurement encounters.

Government procurement

Government procurement also called public tendering or public procurement, is the procurement of goods and services on behalf of a public authority, such as a government agency.

To prevent fraud, waste, corruption or local protectionism, the law of most countries regulates government procurement more or less closely. It usually requires the procuring authority to issue public tenders if the value of the procurement exceeds a certain threshold.

Government procurement is also the subject of the Agreement on Government Procurement, a plurilateral international treaty under the auspices of the WTO.

Government procurement in the European Union

Government procurement in the European Union is the awarding of contracts for public works and for the purchase of goods and services the public authorities of the European Union (EU) and its member states. Government procurement represents 13.5% of EU GDP as of 2007, and has been the subject of increasing European regulation since the 1970s because of its importance in the European single market

IMPORTANCE OF PUBLIC PROCUREMENT

Public procurement often constitutes the largest domestic market in developing countries.

 

Economic development

  •  Depending on how it is managed, the public procurement system can thus contribute to the economic development of these countries.

 

Helps the Government meet development needs

  •  Indeed, public procurement is the principal means through which governments meet developmental needs such as the provision of physical infrastructure and the supply of essential medicines.

 

Helps the Government achieve development goals

  •  Again, many governments use public procurement to support the development of domestic industries, overcome regional economic imbalances, and support minority or disadvantaged communities. Because the deployment of the public procurement system to pursue these developmental goals entails governmental exercise of enormous discretion, public procurement is often an extremely controversial subject matter. This is especially the case in developing countries where “the ability to exercise discretion in the award of government contracts has been a source of valued political patronage” and procurement has been “a means for the illicit transfer of funds from governmental to private hands.”

 

Encourages international trade

  •  Another important attribute of public procurement in developing countries is that a considerable part of it is financed the so called development partners, as part of either bilateral or multilateral development assistance.It is estimated that the global pool of development assistance now averages $60 billion annually.

 

Organizational profitability

  • In the private sector, procurement is viewed as a strategic function working to improve the organisation’s profitability.  Procurement is seen as helping to streamline processes, reduce raw material prices and costs, and identifying better sources of supply.  In essence, helping to reduce the ‘bottom line’. Indeed, in many organisations the importance of procurement is recognised having their head of procurement placed at an Executive Board level.

Promotes openness and transparency in public entities

  • At higher levels of expenditure, this need for openness, transparency and non-discriminatory action is required legislation. The European Procurement legislation, implemented in the UK, means that all requirements for supplies/services (>£172,000 approximately) and works (> £4.3 million approximately) are advertised and tendered in accordance with published rules.

HISTORY OF PUBLIC PROCUREMENT IN KENYA Chapter objectives:

By the end of this chapter, the learners should;

  1. Understand what is entailed in public procurement history
  2. Learn about the challenges of the public procurement systems
  • The Prerequisites of a Sound Public Procurement System
  1. Values of Good Procurement Governance
  2. Values of Good Procurement Governance

PRE-INDEPENDENCE

At 1959 there was well defined procurement system.

The supplies and transport department existed for the for the entire government under the ministry of works.

Treasury provided a vote for each ministry and this vote was used to order goods and supplies the ministries.

1960

Financial regulations were issued the treasury for the purposes of providing common user services to the ministries.

To date the supplies branch of the ministry of roads still operate under these regulation.

Market research, inspection of materials and central tender board were established and were responsible for the procurement and award and they had three sections namely

  • The local
  • The overseas and
  • Country wide contracts.

The chief store keeper was appointed the chairman and members we drawn from various ministries.

 

POST INDEPENDENCE

 

The supplies services were centralized at the ministry of works. The services covered purchasing and storage. it was headed the chief procurement officer and the chief store keeper.

The chief store keeper had the responsibility of controlling all the common user items. in the in the government.

It served all the government ministries and departments with both the allocated and unallocated stores.

 

1974

Prio to the year 1974 public procurement was largely done the grown agents on behalf of the government .This is mainly because the local sources were still inadequate.

 

The treasury through another circular removed the secretariat from the ministry of works to the treasury as well as the chairmanship but the membership remained at the inter ministerial level.

1978

The east African community developed the guidelines under the east African supplies manuals.

This replaced the function of the crown agents and it was used fro all the procurements.

With the collapse of the east African community the Kenya government developed its own guidelines

Procurement supplies guide of 1978 was issued and was used alongside the east African manual.

1980

The central tender board was transferred from treasury to the office of the president and placed and was placed under the cabinet affairs and this saw the  central tender board and supplies branch were in the same ministry once again.

1989

There was restructuring in the government and that once again saw the separation of the  central tender board going back to treasury and the supplies branch going back to the ministry of works.

This was the beginning of the major changes that were to follow.

The membership level was elevated to the level of deputy secretary.

 

 

CHALLENGES OF THE ABOVE SYSTEM

 

  • There was no uniformity in the procurement system

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, , other than internal disciplinary action and consequently

  • No sanctions or penalties against persons who breached

No sanctions or penalties against persons who breached the regulations in the supplies manual, application of the rules was not strict and many of the norms were not followed were weak and unreliable for ensuring fairness and transparency.

The system was thus vulnerable to abuse.66 indeed; the Government Contracts Act provides that “public officers” cannot be sued personally upon any contracts which they make in that capacity.”67 The incentive for public officers to engage in corrupt procurement deals is thus quite strong.

 

  • Policies and procedures were scattered

Procurement policies and procedures were scattered in various government documents. Thus, for example, it was difficult to comprehend the Financial Regulations without the benefit of the Treasury circulars.

 

  • Vague procurement procedures policies

Again, vague procurement Ministry of Finance and Planning, procedures and policies meant that the system could easily be abused or manipulated unscrupulous public officers.

 

  • Political interference

Common corrupt practices in public procurement thus included public officers – often under the influence of powerful politicians and businessmen only inviting preferred firms, favoring certain firms at the short-listing stage, designing tender documents to favor particular firms and releasing confidential information. This state of affairs was worsened the fact that the procurement system was manned junior officers, who were therefore powerless to correct any anomalies and could easily be manipulated their seniors and powerful politicians.

 

  • Conflict of interest

Corruption in public procurement was also facilitated the lack of transparency in the system; the applicable procedures were invariably inaccessible to the public. To make matters worse, Kenyan law does not prohibit public officials from participating in private enterprise. Indeed, the civil service is far the most important launching pad for businessmen in Kenya as it gives senior government officials and politicians access to public resources, such as lucrative public procurement contracts. The participation of public officials in private enterprise has thus been a key source of corruption in public procurement, since the rules established to guard against conflicts of interest have invariably been breached.

 

 

  • Dispute settlement mechanisms relating to the award procedures as

Further, there was no provision for dissatisfied bidders or the general public to appeal against the procurement decisions of the various tender boards where, for instance, there were irregularities in the process. The system only allowed for appeals accounting officers (usually permanent secretaries) in the relevant government ministries, departments and agencies. And there was no role for the judicial system as the decisions of the administrative appeal bodies were deemed final.

 

  • Public sector was not getting maximum value for money spent on procurement

It was characterized overspending, which has been attributed to poor planning and packaging of procurement contracts accounting officers and their failure to check on existing inventory and lack of supervision and monitoring of project implementation. Cases where goods and works inferior to the specifications were accepted the government were thus quite common. Indeed, in some cases no goods or works were delivered at all. And in yet other instances, contracts were varied upwards from the originally quoted price, often with the connivance of senior government officers.

Thus a building constructed the National Health Insurance Fund cost more than twice the originally quoted price. Lead times were also exceedingly long. Thus the Minister for Trade has recently reported that it took his ministry nine months to buy a shredder.

 

  • 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

 

 

In the 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)

 

 

The Prerequisites of a Sound Public Procurement System(PILLARS)

 

A sound public procurement system should emphasize four principles, namely

  • Competition,
  • Publicity,
  • Use of commercial criteria
  • Transparency.

 

  • The principle of competition: means that contracts should be awarded holding a competition between a numbers of contractors to establish which can offer the most favorable terms for delivering government’s requirements. Competition not only ensures that government obtains value for money but is also important in maintaining the integrity of public procurement, “Since it is an effective means of achieving the transparency which prevents abuse of discretion. From an economy perspective, competition ensures that government obtains goods and services that are appropriate to its requirements from contractors with the requisite financial and technical capability on the best possible terms. There is a danger, however, that rules established to promote competition in public procurement may be counterproductive. Thus government agencies that purchase complex equipment do not often get what they need. Because of open competition rules, governments are for example forbidden from consulting potential suppliers informally before contracting in order to tell them what they really need. Were governments allowed to do so, it would be easier for the potential suppliers to work with corrupt government officials to rig specifications to produce a contract for a particular supplier. Thus public law values that emphasize transparency and accountability may result in governments not obtaining value for money.

 

  • The principle of publicity: complements that of competition ensuring that suppliers who might be able to win contracts are able to find out about those contracts and put themselves forward. In an ideal setting, public procurement systems should therefore “include obligations for specifications to be drawn up so as not to artificially exclude certain products; rules requiring authorities to reject non-responsive bids (those which do not conform to the specifications or fail to meet other fundamental requirements); and minimum time limits for potential bidders to respond to contracting opportunities.”

 

  • Use of commercial criteria: The requirement to use commercial criteria in making procurement Decisions: involves basing decisions on the ability of firms to undertake the contract and consideration of bids on commercial criteria such as price, product and quality. Thus it is often the case that the lowest bidder does not win the contract. Indeed, noncommercial criteria – such as industrial and social policies – are often controlling. Thus governments may limit contract awards to disadvantaged ethnic groups.

 

  • The principle of transparency is crucial. Transparency here means that procurement procedures should consist of clear rules and mechanisms for verifying that those rules are followed. An ideal public procurement system should therefore have sufficiently publicized rules of procedure which structure and circumscribe the discretion of procurement entities. Further, it should ensure that the procurement entities’ compliance with the applicable rules can be verified providing for the publication of the results of contract awards, the keeping of (Observing that “When purchasing computer equipment in particular, private firms (in the United States) view the vendor’s advice as crucial to the development of sensible specifications of their own requirements.”) detailed records of decisions and the furnishing of reasons to participating firms. It should also have mechanisms for scrutinizing the decisions of procurement entities to ensure that they comply with legal norms. Such mechanisms include subjecting procurement decisions to oversight a regulatory body and providing a quasi-judicial forum to which unsuccessful bidders can obtain the review of procurement decisions. From the foregoing account of the characteristics of a sound public procurement system, a question arises as to whether and the extent to which the reforms in Kenya have embraced the four principles.

 

Values of Good Procurement Governance

 

Accountability:

  • Clear lines of responsibility in decision making structure
  • Conducting procurement effectively, efficiently, legally and ethically.
  • Provide for internal audit check

Responsiveness:

  • To evaluate and respond to public interest.
  • Entails understanding “climate “and “culture “of the country

 

Professionalism:

  • To improve individual and systems performance
  • Buyers to use personal initiatives and sound business judgment.
  • Strong institutional support at top levels for supporting professionalism.

 

Transparency:

  • To ensure procedures and policies are understood and acceptable to suppliers and procuring entities.
  • Well defined regulations and procedures open to public scrutiny.
  • Clear standardized tender documents.
  • Bidding and tender document containing competitive information.
  • Equal opportunities for all the bidders

Competition:

  • To attract capable suppliers procuring entity must have:-
  • Fair, non-discriminatory and transparent procedures
  • Clear performance oriented    specifications.
  • Standard conditions of contract.
  • Adherence to Government’s contractual obligations.
  • Good working relationships with suppliers

Appeal Right:

  • To redress meritorious grievances of candidates and correct system failures.
  • An independent appeals system
  • Administrative Review Board may grand a  plea or make alternative  recommendation

Review questions

  1. What is public buying?
  2. How is it different from private buying?
  • Explain what is Good Procurement Governance?
  1. Write short notes on any three.
    1. Transparency in public procurement.
    2. Importance of specification in procurement.
    3. v) Distinguish Environmental Procurement and e procurement

References

  1. Khi V. Thai (2008), International Handbook Of Public Procurement, PVT publishers, New Delhi
  2. OECD (2007), Integrity In Public Procurement: Good Practice From A To Z Oecd Publishing
  • Sue Arrowsmith, and Martin Trybus (2003), Public Procurement, Routledge, London

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LESSON THREE

PUBLIC PROCUREMENT AND DISPOSAL ACT (PPDA) 2005

Chapter objectives:

By the end of this chapter, the learners should;

  1. Explain the meaning of public and disposal act
  2. Learn about how the act is applied to the public
  • Describe conflicts with other acts
  1. To know the procedure used to appoint the nominees in procurement arena

PUBLIC PROCUREMENT AND DISPOSAL ACT (PPDA) 2005

It came into operation on 1st Jan 2007, legal notice number 172 of 29th December 2006   while the public Procurement and regulation also become operational on 1st Jan 2007 legal notice no 174 of 29th December 2006. Kenya Gazette notice No 92 thus he Act and the regulations govern all public procurement actions that commenced after 1.1. 2007.

 

Procurement proceedings commences for the purposes of Act when the first advertisement relating to the procurement proceeding is first published or if there is no advertisement, when the  documents are first  given to persons who wish to participate in the procurement proceedings.

 

 

Purpose of the public procurement act

The Act is meant to establish procedures for efficient public procurement and for the Disposal of unserviceable, obsolete or surplus stores, assets and equipment public entities and to provide for other related matters.

 

The special objectives of PPDA

  • Maximize economy  and efficiency
  • To promote competition and ensure that competitors are fairly treated.
  • To promote integrity and fairness of procurement  Procedures
  • To enhance transparency and accountability
  • To restore public confidence in procurement process
  • To facilitate the promotion of local industries and economic development.

 

In a nutshell therefore the act aims at preventing the occurrences of corrupt practices in procurement processes as well as enhancement of accountability and transparency in the system.

 

For the purposes of the act the following terms are defined as.

 

Accounting OfficerAn accounting officer for a public entity other than a local authority  is the person the permanent secretary to the treasury as the accounting officer or if there is no such person, the C.E.O of the public entity, or for the local authority the town or country clerks of the local authority.

 

Corruption: Has the meaning assigned to it in the authority as offering, giving, receiving, or soliciting anything of value to influence the action of a public official in the procurement or disposal process or contract execution.

 

Procurement: Procurement means the acquisition purchase, rental, lease, hire purchase, license, tenancy, franchise, or any other contractual means of any type of works, assets, services or goods including livestock or any combination;

Procuring entity: “procuring entity” means a public entity making a procurement to which this Act applies;

“Public entity” means –

  • The Government or any department of the Government
  • The courts
  • The commissions established under the Constitution
  • A local authority under the Local Government Act
  • A state corporation within the meaning of the State Corporations Act
  • The Central Bank of Kenya established under the Central Bank of Kenya Act
  • A co-operative society established under the Co-operative Societies Act
  • A public school within the meaning of the Education Act
  • A public university within the meaning of the Universities Act
  • A college or other educational institution maintained or assisted out of public funds
  • An entity prescribed as a public entity for the purpose of this paragraph

 

To what organizations is the PPD Act applicable to?

The act is applicable to all the public organizations which include,

  • The government or any department of the government.
  • The judiciary
  • Commissions established under the constitution
  • Local authorities
  • state corporations
  • Co-operative societies established under the co-operative Act.
  • Public schools, colleges and universities or other educational institutions maintained or assisted public funds.
  • Any other organization approved as a public entity

 

 

The Act applies in respect to

  • To procurement a public entity
  • Contract management.
  • Supply chain management including inventory and distribution
  • Disposal a public entity of stores and equipment that is unserviceable, obsolete or surplus.
  • Renting of premises and acquiring of real property
  • Appointing of an individual’s to a committee, task force or anybody if the individual will be paid an amount other than for expenses.

 

Excluded in the Act is:-

Acquiring of services provided government

  • Acquiring of stores or equipment if they have been disposed off a public entity.
  • Retaining of services of an individual for a limited term if providing those services the individual works as through he is an employee.

 

Conflicts with Other Acts 

  • Where the provisions of PPDA and its regulation conflicts with any other act in matter relating ton procurement and disposal, the PPDA prevails.
  • Where there is a conflict of PPDA with international agreement except in instances of negotiated grants or loans PPDA prevails
  • Where there is a conflict between PPDA and regulations or any other direction of the authority with a condition imposed the donor of funds, the condition shall prevail with respect to a procurement that uses those funds and not other funds.

 

LESSON FOUR

 

REGULATION OF PUBLIC PROCUREMENT

Public procurement is regulated various bodies

  • Public Procurement Oversight Authority (PPOA)
  • Public Procurement Oversight Advisory Board
  • The Public Procurement Administrative Review Board

 

  • Public Procurement Oversight Authority (PPOA)

It was established under section 8 of the act as a body corporate.

  • It’s a legal entity with a perpetual succession, it has powers to sue and to be assured in is own name.
  • It has a common seal. (Without which the corporate is not responsible) it has power of holding and alienating movable and immovable property.

 

Function of the Authority

  • To monitor the public procurement system and report on the overall functioning and present to minister such reports and recommendations for improvement as the director general consider as advisable.
  • To assist in the implementation and operation of public procurement system by;
  • Preparing and distributing manuals and standard document to be used in connection with procurement public entities.
  • Providing advice and assistance to procuring entities.
  • Developing, promoting and support the training and professional development and support the training and professional development of persons involved in procurement.
  • Issuing written directions to procuring entities with respect to procurement including the conduct of procurement proceeding and the dissemination of information on procurement.
  • Ensuring that procuring entities engage procurement professional in their procurement units :
  • To ensure that the procurement procedures established under the act are complied with
  • To initiate public procurement policy and propose amendments to the act and regulations.

The Authority is headed a director general who is the Chief Executive  Officer responsible for its direction and management. He is appointed the advisory board with the approval of parliament normally his term is of 5 years and may be renewable for another five years.

 

To Be Appointed As the Director General,

  • A person must have a university degree in commerce, business administration, economics, engineering or a related field from a recognized university.
  • Have professional qualification in supply management from a reputable organization.
  • Have experience in management
  • Be of an outstanding character, honesty and of high integrity.

 

Reasons for the Termination of the Director General

  • Incompetence
  • Inability to perform reason of mental or physical infirmity
  • Convicted of an offence under the penal code, or this act or an offence involving dishonesty
  • If involved in a corrupt transaction or Acts
  • If you are adjudged bankrupt
  • If you hold another public office or deployed for any other work or business

(Especially due to conflict of interests)

 

Responsibility of the Director General

The Director General is responsible for the preparations and making all the estimates of revenue and expenditure to the advisory board for approval. These expenditures should provide for the

  • Payment of salaries, allowances and other charges in respect of the staff of the authority
  • The payment of pension’s gratuities and other charges in respect of former staff of the authority
  • The proper maintenance of building and ground of the authority and replacement of equipment of other property.
  • Payment of allowances and expenses of advisory board

 

The Funds of the Authority Consist Of:-

  • Money appropriated parliament for the purposes of running the authority
  • Loans or grants received the authority for its activities.
  • Revenue or fees collected for services tendered the authority.
  • Capacity building levy.

 

Public Procurement Oversight Advisory Board

This was established under section 21 of the act as an incorporated body and it consists of

  • Nine members appointed the minister and approved parliament.
  • The director general is also a member acting as the secretary.

 

Provisions Relating To Members of the Advisory Board

 

Appointment of nominated members

The nomination and appointment of the members of the Advisory Board under section 22(1) (a) shall be in accordance with the prescribed procedures and requirements.

Term of members

  • The term of office of each nominated member of the Advisory Board shall be three years.
  • A person may not serve more than two terms as a nominated member of the Advisory Board.

Termination of appointment and Resignation

  • A nominated member of the Advisory Board may resign a written resignation addressed to the Minister.
  • A resignation is effective upon being received the Minister or a person authorized the Minister to receive it.
  • The Minister, on the recommendation of the Advisory Board, may terminate a person’s appointment as a member of the Advisory Board only if the person –
  • is unable to perform the functions of his office reason of a mental or physical infirmity;
  • Is convicted of an offence under the Penal Code or this Act or an offence involving dishonesty; or
  • is absent from three consecutive meetings of the Advisory Board without reasonable excuse.

 

Disclosure of Personal Interest

 

  • A Member of the Advisory Board who has a direct or indirect personal interest in a matter being considered or to be considered the Advisory Board shall, as soon as reasonably practicable after the relevant facts concerning the matter have come to his knowledge, disclose the nature of his interest to the Advisory Board.
  • A disclosure of interest in a matter shall be recorded in the minutes of the meeting of the
  • Advisory Board and the member shall not be present while that matter is being dealt with the Advisory Board and shall not take part in any deliberations or vote relating to the matter.

 

The Authority shall pay the members of the Advisory Board such allowances and expenses as are determined the Minister for finance

 

The Organizations That Nominate Members Are

  • Institute of Certified Public Accountants (ICPAK)
  • Institute of Engineers of Kenya
  • Kenya National Chambers of Commerce & Industry
  • Federation of Master Builders
  • Kenya Institute of Management
  • Kenya Association of Management
  • Kenya Association of Manufacturers
  • Law Society of Kenya (LSK)
  • Marketing Society of Kenya
  • Architectural Association of Kenya
  • Institute of Surveyors of Kenya
  • Federation of Kenya Employers
  • The Central Organization of Trade Unions

NB: The minister in this case is minister of finance.

 

Functions of Advisory Board

  • To advice the authority, generally on the exercises of its powers and performance its functions
  • To approve the estimates of the revenue and expenditure of the authority.
  • To recommend the appointment and termination of the director general.

 

 

  • The Public Procurement Administrative Review Board

This is established under section 25.The public procurement complaints review and appeals board was established under the ex-changer and audit (public procurement regulations of 2001). The authority shall provide administration services to the review board.

Review questions

  1. Explain the concepts and values of good governance
  2. Describe the various bodies that regulate Public procurement
  • Explain the Public Procurement and Disposal Act PPDA
  1. Illustrate the termination of various members of the regulatory boards
  2. Explain which organization that PPDA is applied to
  3. What statutory bodies regulate the PPDA

 

 

References

  1. Khi V. Thai (2008), International Handbook Of Public Procurement, PVT publishers, New Delhi
  2. OECD (2007), Integrity In Public Procurement: Good Practice From A To Z Oecd Publishing
  • Sue Arrowsmith, and Martin Trybus (2003), Public Procurement, Routledge, London

 

 

LESSON  FIVE

 

INTERNAL ORGANISATION OF PUBLIC ENTITIES RELATING TO PROCUREMENT

Chapter objectives:

By the end of this chapter, the learners should;

  • Explain Responsibilities of a Procurement Entity
  • Describe The Roles of the Accounting Officer
  • Illustrate Function of a Procuring Unit
  • Explain Content of the Procurement Plan
  • Define Public funds

 

 

Introduction

 

Internal Organization of Public Entities Relating To Procurement

 

A public entity or organizations are required to establish procedures to provide for the making of decisions relating to procurement. All procurement shall be:

  • Within the approved budget of the procuring entity, therefore no entity should commence any procedures until it satisfied that sufficient funds have been set aside in its budget to meet the obligations of the resulting contract (this helps in curbing the common practice of stalled projects) and the pending bills owed to the government.
  • All procurement shall be planned the entity concerned through the annual procurement plan.
  • Procurement is undertaken procuring entity as per the threshold matrix.
  • Procurement should be handled different officers in respect of procurement initiation, processing & receipt of goods, works or services.

 

 

Responsibilities of a Procurement Entity

 

A procuring entity shall establish a procurement unit. Procuring entity  means a public entity making a procurement .Public entity  means –

  • The Government or any department of the Government
  • The courts
  • The commissions established under the Constitution
  • A local authority under the Local Government Act
  • A state corporation within the meaning of the State Corporations Act
  • The Central Bank of Kenya established under the Central Bank of Kenya Act
  • A co-operative society established under the Co-operative Societies Act
  • A public school within the meaning of the Education Act
  • A public university within the meaning of the Universities Act
  • A college or other educational institution maintained or assisted out of public funds or
  • An entity prescribed as a public entity for the purpose of this paragraph

 

 

Public funds

Public funds has the meaning assigned to it in the Exchequer and Audit Act and includes monetary resources appropriated to procuring entities through the budgetary process, as well as extra budgetary funds, including aid grants and credits, put at the disposal of procuring entities foreign donors, and revenues of procuring entities

 

The Roles of the Accounting Officer  

The accounting officer – for a public entity other than a local authority, an accounting officer is a person appointed the Permanent secretary to treasury as an accounting officer or if there is no such a person the chief executive officer of the public entity is responsible for ensuring that the entity complies with the act, regulations and any other direction of the authority with respect to each of its procurement.

  • He should ensure that the procurement entity establishes a procurement unit.
  • In addition he is also responsible and ensures that the procurement entity establishes a tender committee and a procurement committee.
  • He should also ensure that procurement  plans are prepared
  • He is also responsible for signing contracts for the procurement and disposal activities on behave of procuring entity and is responsible for contracts entered into.
  • Ensuring that procuring entity properly documents procurement proceedings and manages records.

Employees, board and committee member as well as contractor’s supplies and consultants   are also required to comply with the provisions of the acts.

 

Responsibilities of User Department

The user department shall be responsible for:-

  • Initiating procurement and disposal requirements and forwarding them to the procurement unit.
  • Participating in the evaluation of tenders, proposals and quotations.
  • Reporting any departure from the terms and conditions of the contract to the procuring unit/department.
  • Forwarding details of any required variation of contract to the procurement unit for consideration and actions.
  • Maintaining  and achieving records of contract management
  • Preparing any reports required for submission to the procurement unit, procurement committee, tender committee or accounting officer.
  • Undertaking conformity assessment  of supplied goods, works and services with the specification of the contract document
  • Preparation technical specification and submitting the same to the procurement unit.
  • Ensuring the issuance of goods, works & services received notes
  • Assisting in the preparation of procurement and disposal plans
  • Making clarification on tender requirements for quotations and any other as it is required

 

 

Function of a Procuring Unit

  • Maintain and update annually standing lists of registered tenders required the procuring entity and liaise with the authorities in respect with authority’s register of suppliers and procuring agents.
  • Prepare, publish and distribute procurement and disposal opportunities including, invitations to tender, pre-qualifications documents and invitations for expressions   of interests.
  • Co-ordinate the receiving and opening of tender documents.
  • Maintain and safeguard procurement and disposal documents and records
  • Submit shortlisted and lists of pre-qualified tenders to the procurement committee or tendering committee for approval.
  • Issue procurement and disposal  documents to candidates,
  • Propose the membership of the evaluation committee to accounting officer for approval.
  • Coordinate the evaluation of tenders, quotations and proposals.
  • Prepare and publish notices of award and notices of tender acceptance.
  • Prepare contract documents in line with award decision
  • Prepare  and issue rejection and debriefing letters
  • Prepare contract variations and modifications to documents.
  • To maintain, recommend a negotiating team for appointment accounting offices where negotiations are allowed and participate in such negotiations.
  • Maintain, achieve document and records of the procurement and disposal activities for the required period of time (the usually 6 years).
  • Provide information as required for any petition or investigation under the review procedures.
  • Implement the decision of the procurement, tenders and disposal committee including co-coordinating all activities of these committees.
  • To act as a secretariat to the tender, procurement and disposal committee.
  • Liaise with authority and other bodies on matters relation to procurement and disposal
  • Monitor contract management the user departments to ensure implementation of contracts in accordance to terms and conditions of the contract.
  • Report any significant departures from the terms and conditions of the contract to the head of the procurement entity.
  • Prepare consolidated procurement and plans
  • Advice procuring entity on aggregation of procurement to promote economies of scale.
  • Coordinate internal monitoring and evaluation of the supply chain function
  • Carry out periodic market surveys to inform the placing of orders or adjudication the relevant a ward committee.
  • To conduct periodic and annual stock taking
  • To certify the invoices and payment vouchers to suppliers
  • Approve the extension of the tenders validity period
  • Verify that the available stock levels warrant initiating a procurement process.

 

 

 

Procurement Entities

Procurement entity should prepare a procurement plan for each financial year as part of their annual budget preparation process. The annual procurement plan shall be integrated with the applicable budget process and based on an indicative or approved budget. Heads of department shall submit the plan to the accounting officer at least 30 days before closing of the financial year.

 

Content of the Procurement Plan

The consolidated annual procurement plan shall be prepared the procurement unit and approved the head of the procuring entity and where applicable the Board of Directors.

The annual procurement plan of each procurement entity must include:-

  • A detailed / breakdown of goods, work or services required.
  • A schedule of the planned delivery, implementation or completion dates for all goods, woks or services required
  • An indication and justification for whether it shall be procured within a single year period to under a multi-year management.
  • An indication of which items can be aggregated for procurement as a single package   or for procurement through any applicable arrangement for common user items.
  • An indication of which item can be packaged into lots.
  • An estimate of the value of each package of goods, works or services required and a indication of the budget available and sources of funding.
  • An indication of the appropriate procurement methods for each procurement requirement. Employee’s board and committee members as well as the contracts suppliers and consultants are also required to comply with the provisions of the PPDA and its regulations.

 

 

Review questions

  • Define Public funds
  • Explain Responsibilities of a Procurement Entity in Kenya
  • Describe the Roles of the Accounting Officer in the procurement act
  • What are the functions of a Procuring Unit
  • Illustrate what is entailed in Content of the Procurement Plan

References

  • Khi V. Thai (2008), International Handbook Of Public Procurement, PVT publishers, New Delhi
  • OECD (2007), Integrity In Public Procurement: Good Practice From A To Z Oecd Publishing
  • Sue Arrowsmith, and Martin Trybus (2003), Public Procurement, Routledge, London

 

 

LESSON SIX

 

TENDER COMMITEE

Chapter objectives:

By the end of this chapter, the learners should;

Functions of tender committee

  1. Describe the role Procurement committee
  2. What is Evaluation committee
  • How the Transfer of procurement authority operates
  1. Explain the function Inspection and acceptance committee.

 

 

 

Tender Committee

 

For purposes of decision making the procuring entities shall establish tender committee

This tender committee shall have a secretary who is a procurement professional in-charge of the procurement unit.

Functions of tender committee.

  • Review ,verify and ascertain that all procurement and disposal has been undertaken in accordance with the Act  and  regulation and the terms set out in the in the tender documents
  • Approve the selection of the successful tender or the proposals
  • Award procurement contracts in accordance with the threshold
  • To ensure that funds are available for the procurement under consideration
  • To ensure that procuring entity does not pay in excess of prevailing market rates prices.
  • Review and prove the use of lots, where packaging into lots has been proposed.
  • Review the selection of the procurement method and where a procurement method other than open tender has been proposed to ensure that the adoption of the other procurement method is in accordance with the Act, regulations and any other guidelines stipulated the authority.
  • Approve the list of persons qualified to submit proposed
  • Approve the  of person to be given request for quotations
  • Approve the list of tenders  in cases of restricted tendering
  • Approve negotiations
  • Approve the amendment of contracts previously awarded the tender committee
  • To understand any other duty of function.

 

Employees, members of the board or committee members of a public entity as well as the contract suppliers and consultants are required to comply with the provisions of the PPDA and its regulations.

 

The accounting officer may use the procurement unit or tender committee of other procuring entity to provided that the said entities carry out their procurement in accordance with the PPDA and the regulations.

 

The authorities have power to transfer procuring responsibilities of a procuring entity to another procuring entity or procuring agent in the event of delay or in such other instances as my be prescribed.

A procurement agent may be appointed a procuring entity on competitive basis to carry out such procurement proceedings on it are behaved. These agents must be pre-qualified agreed with the authority and are also required to comply with the act and with the regulation.

 

Procurement Committee

A procuring entity shall establish a procurement committee

The procurement committee shall be responsible for procurement below the threshold of the tender committee set out in the first schedule

The procuring committee shall be composed of

  • An officer delegated  the head of the procuring entity or the accounting  officer  who shall serve as the chair man of the committee
  • The finance officer or an officer carrying out related functions.
  • Three other members appointed the head of the procuring entity or the accounting officer.

 

The secretary of the procurement committee is person appointed the head of the procuring unit. This person should be a member/staff of the procuring unit.

 

Evaluation Committee

For each procurement within the threshold of the tender committee, the procuring entity shall establish an evaluation committee for the purposes of carrying out the technical and financial evaluation of the tenders or proposals

An evaluation committee shall

  • A separate financial evaluation committee and a separate technical evaluation committee.
  • A combined financial and technical evaluation committee.

An evaluation committee shall consist of a chairman and at least two other members all appointed the accounting officer or the head of the procuring entity upon recommendation the procurement unit.

 

The technical committee shall be responsible for

  • Technical evaluation of the tenders and proposals received. They should strictly adhere to the to the compliance and evaluation criteria set out in the tender documents.
  • They should performance the technical evaluation with all due diligent and within a period of thirty days after the opening of the tender documents.

 

Each member of the evaluation committee shall evaluate independently from the other members of the committee before sharing his/her analysis, questions and evaluation including his/her rating of (how he has rated the tenders /proposals) with the other members of the technical committee.

The financial evaluation committee shall be responsible for

  • The financial evaluation of the tenders or proposals received .this should be in strict adherence to the compliance and evaluation criteria set out in the tender documents or request for proposals.
  • They should perform the evaluation with all due diligent and within five days from the time of completion of the technical evaluation.

 

Note that the members of the evaluation committee should not get into direct communication with the any of the tenders participating in the tender and proposals that such evaluation committee is considering.

 

An evaluation committee shall prepare a report on the analysis of the tenders and the final ratings assigned to each tender and submit the report to the tender committee.

 

Inspection and Acceptance Committee.

 

  • A procuring entity shall establish an inspection and acceptance committee.
  • They are responsible for
  • Inspecting and where necessary test the goods received.
  • Inspect and review the goods works or services in order to ensure compliance with the terms and specification of the contract.
  • Accept or reject ob behalf of the procuring entity the delivered good works and services.
  • Ensure that correct quantities are received
  • Ensure that the good, works and services have been delivered or completed on time or that any delay has been noted.
  • Ensure that all the required manuals or documented have been received
  • Issue interim or completion certificates or good received notes as appropriate and in accordance with the contract.

 

Disposal Committee

 

A public entity shall establish a disposal committee in accordance with the regulations for the purpose of recommending the best method of disposing of unserviceable, obsolete or surplus stores or equipment.

 

The disposal committee shall meet within the prescribed period to report on the items and subject to a technical report, recommend the best method of disposal..this will be reviewed later in Disposal of stores and equipment

 

 

TRANSFER OF PROCURING AUTHORITY

A procuring entity may transfer the procuring authority to another procuring entity or agent only in the following circumstances.

 

  • Where the authority is of the view that the procuring entity lacks the capability to comply with the Act, regulations or directions given the authority due to its size or capability.
  • Where the accounting officer or the head of the procuring entity decides that it would be more economical or efficient to transfer the function and request the authority to do so.

The accounting officer of the procuring entity that has transferred the procurement function shall remains accountable for all the decisions taken the procuring entity to which the function has been transferred.

 

 

The accounting officer of the two entities shall agree on

  • any function that may be excluded from the transfer arrangement
  • the mechanism for implementation of the  procurement  and disposal requirements
  • reporting and monitoring procedures and responsibilities
  • any limitation or exceptions to the transfer
  • Any costs to be paid.

Note: that the transfer agreement shall be made in writing the heads /accounting officers of the two entities.

 

Procuring Agents

For an agent to be recognized she shall pay a fee of 20,000 to the authority. The fee is payable once.

The procurement entity shall

  • Meet the cost of the services offered the procuring agent
  • Prepare the terms of reference for the procuring agent assignment in accordance with the provision of the act and regulations.
  • Be responsible for the actions and performance of the procuring agent.

 

A procuring entity shall not contract out contract out both the procurement function and the contract management function to the same agent

The functions of the accounting officer, procurement committee or tender committee shall not be contracted out.

 

 

Review questions

  1. Define the tender committee
  2. Describe the role Procurement committee
  • What role does Evaluation committee play in public procurement
  1. How the Transfer of procurement authority operates
  2. Explain the function Inspection and acceptance committee.

References

  1. Khi V. Thai (2008), International Handbook Of Public Procurement, PVT publishers, New Delhi
  2. OECD (2007), Integrity In Public Procurement: Good Practice From A To Z Oecd Publishing
  • Sue Arrowsmith, and Martin Trybus (2003), Public Procurement, Routledge, London

 

 

 

GENERAL PROCUREMENT RULES

Chapter objectives:

By the end of this chapter, the learners should;

  1. Understand the General Procurement Rules
  2. Explain when the Contract Termination
  • Be able to Identify qualified persons in procurement
  1. Describe Fraudulent activities that would lead to disqualification

 

Introduction

 

 

General Procurement Rules

  • For each procurement, the procuring entity shall use open tendering or an alternative procurement procedures.
  • A procuring entity may use an alternative procurement procedure only if that procedure is allowed.
  • A procurement entity my use restricted tendering or direct procurement as alternative procurement procedure only if before using that procedure the procuring entity shall,
  1. Obtained a written approved of its tender committee
  2. Records in writing the reasons for using the alternative procurements procedure.

 

Procurement not to be split or inflated

  • No procuring entity may structure procurement as two or more procurements for purpose or use of avoiding the use of a procurement procedure.
  • Any person who contravenes this is spoilt f procurement one shall be guilty of an offence.
  • Standard goods services and works with as market prices shall be procured at the prevailing real market price.
  • Public officials involved in transactions (where you buy goods at inflated prices) in which standard goods, services a works are procured at unreasonably inflated prices shall in addition to any other sanctions prescribed in the PPDA be required to pay the procuring entity for the loss resulting in the transactions.

 

Qualifications to be awarded contract

 

A person is qualified to be awarded a contract for procurement if;

  • The person has necessity qualifications, capability, experience, resources, equipments and facilities to provide what is being procured.
  • Has the legal capacity to enter into a contract for the procurement.
  • The person is not insolvent, in receivership, bankrupt or in the process of being wound up and is not subject of the legal proceedings relating to the above.
  • If you have not been debarred from participating in procurement proceedings.
  • The procuring entity is not precluded from entering into the contract with the person.

 

Identification of qualified persons

  • To identify qualified persons a procuring entity may require that a person to provide evidence or information that all the above (qualification to be awarded the contract) have been fulfilled.
  • The entire requirement (for qualification) shall be set out in the tender documents or request for proposals or quotations or if a procedure is used to pre-qualify persons, in the documents used in that procedure.

 

The procuring entity may disqualify a person for submitting false, inaccurate or incomplete information about his qualification.

 

A procuring entity shall not enter into a procurement contract with;

  • An employee, member of the board, or committee the procuring entity.
  • A minister, public servant or member of the board or committee of the government or any department of the government.

 

Prequalification procedures

 

Where the procuring entity conducts pre-qualification procedures, it shall publish an invitation to candidates to submit applications to be pre-qualified and shall include: – the name, address contact details of the procuring entity

  • An outline of the procurement requirement including the nature and quality of goods works or services and the location and timetable for delivery for the performance contract.
  • Statements of the key requirements and the criteria to qualify.
  • Instructions on obtaining the pre-qualification documents, including any price payable and language of the document.
  • Instructions on the location and deadline for submission of the tender documents.

 

 

SPECIFIC REQUIREMENTS

  • The procuring entity should prepare specific requirement relating to the goods, work or services being procured that are clear.
  • It should give a correct and complete description of what is to be procured and that it should allow for fair and open competition among those who may wish to participate in the procurement proceedings.
  • The specific requirements shall include all the procuring entity technical requirements with respect to the goods works or services being procured

 

Technical requirements shall where appropriate related to the performance rather than to design on descriptive characteristics and

Secondly be based on national or international standard.

 

The technical requirements shall not refer to a particular trade mark, name, patent, design, type, producer, or service provider or to specific origin.

 

The technical requirement shall not refer to a particular trade mark, name, patent, design, type, producer, or service provider or to specific origin unless;

  • There is no other sufficiently precise or intelligent way of describing the requirement.
  • The requirements allow equivalents to what is referred to.

 

Declaration

A tender, proposal or quotation submitted a person shall include a statement verifying that the person is not debarred from participating in procurement proceeding and a declaration that the person shall not engage in any corrupt practices.

 

Contract Termination

 

A procuring entity may at any time terminate procurement proceedings without entering into a contract however;

  • The procuring entity shall give prompt notice of termination to each person who submitted a tender, proposal or quotation or if direct procurement was being used to each person with whom the procuring entity was negotiating.
  • On request any of the above the procuring entity shall give its reasons for its termination within 14 days of the request
  • In matters where tenders had been submitted, the procuring entity shall return the tenders un-opened i.e. if termination occurs before the contract.
  • The   procuring entity is not liable to any person for the termination and the decisions shall not be reviewed the review board or a court of law
  • The entity shall give the authority a written report of the termination.

 

 

Form of Communication

  • If a procurement procedure used is open or restricted tendering or a request for proposals, communications between the procuring entity and the person seeking the contract shall be in writing.
  • If where direct procurement or a request for quotation is used communication shall either be in writing or referred to and confirmed in writing.
  • Electronic communication is also allowed.

 

Inappropriate influence on evaluation

 

After the deadline of submission of tenders, proposals or quotations

  • No person who submitted a tender, proposal or quotation shall make any unsolicited communication to the procuring entity that might reasonably be constructed as to attempt to influence the evaluation and comparisons of the tenders, proposals, or quotations.
  • No person who is not officially involved in the evaluation and comparison of tenders, proposals or quotations shall attempts in any way to influence that evaluation or comparison.

 

 

 Note: a person who contravenes the above (1 and 2) is guilty of an offence and liable for conviction.

  • If the person  is an individual a fine not exceeding 4 million or imprisonment for a term  not exceeding 3 years or to both.
  • If  a corporation, a fine not exceeding 10 million

Candidates shall participate in procurement proceedings without discrimination except where participation is limited.

 

The minister shall in consideration of economic and social  development factors prescribe  preferences or restrictions in public procurement and disposal. The preferences and reservations shall be

  • Non discriminatory in respect of the targeted groups.
  • Allow competition among the eligible candidates
  • Be monitored and evaluated.

The preferences reservations shall apply to

  • Candidates such as disadvantaged groups, micro, small and medium enterprises.
  • works, services and good or any combination
  • identified regions

To qualify for a specific preferences or reservation a candidate shall provide evidence of egibility

 

Fraudulent activities

No person, agent or employee shall be involved in any corrupt practice in any procurement proceedings.

  • The person shall be disqualified from entering into a procurement contract.
  • If a contract has already been entered in to with a person, the contracted shall be avoidable at the option of the procuring entity.
  • The procuring entity may take any other legal remedy

Review questions

  1. Define Declaration and Form of Communication
  2. Describe the General Procurement Rules
  3. Explain when the Contract Termination
  • Describe the procedure of identified qualified persons in procurement
  1. Describe Fraudulent activities that would lead to disqualification

References

  1. Khi V. Thai (2008), International Handbook Of Public Procurement, PVT publishers, New Delhi
  2. OECD (2007), Integrity In Public Procurement: Good Practice From A To Z Oecd Publishing
  • Sue Arrowsmith, and Martin Trybus (2003), Public Procurement, Routledge, London

 

CHAPTER 5

METHODS OF PROCUREMENT

Definition

Procurement methods refer to the procedures used the procuring entity to acquire goods, services and works. These methods can be competitive and non-competitive. There’s a preference for using competitive methods of procurement given that they tend to promote transparency, economy and efficiency, and limit favouritism.

Types of procurement methods

  1. Open Tendering method
  2. Alternative procurement methods
    • Restricted Tendering,
    • Direct procurement
    • Request for Proposals,
    • Request for Quotations,
    • Low-value procurement
    • Specially permitted procurement procedures
      • Concession / public private partnership
      • Design competition

 

Of the above-mentioned procurement methods, open tendering and request for proposals, are considered competitive procurement methods because the solicitation documents are advertised and open to any qualified firm interested in competing for the assignment. In contrast, request for quotations and direct procurement are considered non-competitive procurement methods because the invitation to submit offers is not advertised, and it is sent only to firms or individuals specifically invited the procuring entity.

With respect to restricted tendering, there’s debate as to whether it is a competitive or non-competitive procurement method. I consider it a non-competitive procurement method because the solicitation documents are sent to a limited number of suppliers, contractors, or service providers.

Deciding which procurement method to use
a decision to use a particular procurement method must be based primarily on the stipulations of the procurement guidelines, manuals and procedures; which necessarily stem from the procurement legal framework. It’s also important to consider (among others):

  • the value and complexity of the requirement
  • the degree to which the procuring entity is able to clearly define the requirement
  • if there is a need for prospective bidders to participate in finalizing the specifications of the requirement
  • the urgency of need
  • market availability

Procurement methods

Open tendering (competitive bidding, open competition or open solicitation)

This is defined as the process which a procuring entity, based on previously defined criteria,  effects  public  procurements,  by  offering  to  every  interested  bidder  equal  simultaneous  information  and  opportunity  to  offer  the  goods and works needed. The procurement notices used to call for bids is called invitation for bid or invitation to tender.

The General Rule:

As a general rule, all  procurement  of  goods, services and works  by  all  procuring  entities  shall  be conducted open competitive bidding. The  winning  bid shall  be  the  lowest  evaluated  responsive  bid  with regards to work specification and standard

The fundamental requirements of open tendering are that they should:

  • Be open to all qualified and interested bidders,
  • Be advertised locally (and internationally, when required)
  • Have objective qualifications criteria,
  • Have neutral and clear technical specifications,
  • Have clear and objective evaluation criteria, and
  • Be awarded to the least-cost provider, without contract negotiations.

When to use this method

It is presumed that this procurement method fosters effective competition and adds value for money; however, there are arguments to the contrary given that the open tendering method is strictly procedures-based and was primarily designed for the procurement of simple goods. As a result, it is not suitable for complex procurements where the focus is more on the output and outcome of the contracting process rather than on strict adherence to standards.

Stages in Open tender process

  1. Procurement plan
  2. Prepare specifications
  3. Prepare tender documents
  4. Advertise and sell tender documents
  5. Preparations and submission tenderers
  6. Opening tenders
  7. Tender evaluation
  8. Contract award
  9. Contract preparation
  10. Signing of contract
  11. Performance of contract

Preparing a procurement plan

  • Preparing specifications follows preparation and approval of a Procurement Plan or Materials Requirements Plan (MRP)
  • A procurement Plan shows the items that will be required a particular User and therefore the items that will be procured the Procurement Entity. The Plan shows what will be procured and when and to meet which needs
  • To prepare a Procurement Plan a Procurement Entity is required to engage Users in identifying their needs for the next one year during the Government budget planning cycle. The procurement entity then takes into account the needs and prepares a plan showing what will be bought during the year for the entity.
  • Procurement Planning is compulsory for all those institutions that utilize Public funds such as LATF
  • A Procurement Plan showing the materials required is derived from the Bill of Quantity (BQ) or Bill of Material (BM) that must be prepared showing exactly what will be required
  • When preparing the procurement plans all the procurement items covered the budget will be grouped and prepared into procurement packages.
  • The procurement will be grouped into goods, works, services and consultancy services. As a general rule the groups should not be mixed in procurement except in special cases where they are considered inseparable.
  • The procurement plan will indicate the procurement method to be used for each procurement package and also the estimated total cost of the resultant contract.

Preparation of specifications

A Specification is simply a definite description of what is needed or wanted for use the User. The User must approve specifications

  • Specifications take the forms of:-
  • Brand name (Builds bias in the procurement process)
  • Trade Description
  • Description of purpose or use an expert
  • Blue print, Engineering drawing or Dimension sheet
  • Chemical analysis
  • Statement of physical characteristics
  • Standard statement drawn the purchaser or User
  • Public standard drawn or defined a central purchasing agency of the government
  • Specifications must be updated on the basis of market realities, must be part of the bid documents, must come before the preparation of bidding documents and must be prepared those who know what is required or a procurement agent or a consultant in case of complex specifications

Preparation of Tender documents

  • There are standard tender documents for each type of procurement
  • All procurement entities are supposed to use standard tender documents as provided the PPOA
  • The documents are available from the Government printer. Due to lack of capacity in some LAs, assistance of the competent departments of the Government should be sought especially in the preparation of tender documents for civil works, water projects and other technically sophisticated projects.

 

 

Critical and first line documents include:-

  • Advertisement to invite tenders for the project or Request For Quotation (RFQ)
  • Blank Bill of Quantities (BQ) or Schedule of Materials
  • Supplier Questionnaire or Confidential Business Questionnaire (CBQ)
  • Work plan showing details of the work/s
  • Order Amendment form

Advertise and Sell Tender documents

  • Financial limits or ceilings must be observed
  • The advertisement must be placed in a newspaper (not a periodical) of general nationwide circulation at least twice during the 21 days the advertisement will run and the newspaper should have been under continuous publication for at least two (2) years
  • The period during which potential suppliers are given time to respond to advertisements is 21 days
  • The tender advertisements should specify project/item description, required qualifications, closing and submission dates etc.
  • Open tender may sometimes be costly. It is therefore sometimes deemed necessary to identify potential bidders on the basis of compliance criteria after which a short-list of prequalified suppliers is prepared and each invited to bid
  • Technical complexity is what should determine whether there should be pre-qualification or open tender without prequalification
  • Tender documents should not be sold for more than Kshs. 5,000.

Preparation, submission and opening of tender documents

Tenders shall be received and opened in the manner stated in the tender documents. Improperly filled documents will be rejected.

  • For the purpose of receiving tender bids, each LA shall maintain a tender box and a tender register
  • Tenders shall be opened a tender committee of at least three members
  • Bidders shall be allowed to attend the tender opening to witness the process of opening
  • Evaluation shall be done an Evaluation Committee. The committee shall have at least three
  • The evaluation committee members must be technically qualified to carry out evaluation
  • Evaluation shall be conducted in the manner indicated in the tender documents.
  • The Evaluation Committee shall prepare an evaluation report which shall indicate the tenderer or vendor who is recommended for contract award.
  • The evaluation report will also contain details of all the other vendors and reasons for rejection of their proposals
  • The contract shall be awarded the tender committee
  • Where samples are requested for a Register of samples shall be maintained

Evaluation of Tender

  • Preliminary evaluation should lead to the decision of who to evaluate technically
  • Application form for Adjudication of tender/quotation shall be filled
  • Technical evaluation will be conducted the technical evaluation committee on resources, equipment, legality and other related matters. The members must be technically qualified to undertake evaluation
  • Financial evaluation will be conducted secretariat but only on the bidders who have been technically qualified.
  • Evaluation must be done within 30 days after opening of tenders.
  • Tender security may be requested for – Not to exceed 2% of the estimated value of contract. If tender security is demanded the financial institution (or Insurance Company) proposed the vendor it must be one approved the PPOA.
  • Members must append their signatures on the various documents as directed the secretary of the tender committee

Contract award

  • The secretary to the tender committee should prepare all the required documentation
  • The agenda for each procurement item should be prepared after proper analysis of the bids
  • The secretary should prepare a price comparison schedule for analysis
  • The analysis of bids/price schedule should be tabled before the tender committee for adjudication and award
  • Awards should be made to the lowest evaluated bidder for standard off-the-shelf items, and to the best evaluated bidder for specialized items
  • Decisions should be collective and consensus. All members must commit themselves to the decisions in writing (signatures must agree with their specimen signatures already on record)
  • The minutes of the tender committee should be taken and recorded the secretary
  • The Clerk can veto the decision of the Procurement Committee under given situations

Contract preparation

  • The first thing here is for the tender committee to make its decision on who to award the contract on the basis of all the available information
  • Awards tender committee shall be final and binding unless successfully appealed against or vetoed the Chairman of the committee
  • The award should be mailed to or collected the successful bidder
  • Once the successful bidder has responded accepting the award, then a formal contract should be entered into in case of contract of high value
  • The contract document should contain all the necessary terms and conditions. Samples are obtainable from the PPOA
  • The terms of a contract and manner of performance may be altered an agreement of the parties
  • The terms of contract are basically worked out on the basis of the 5 RIGHTS – e.g. time and place of performance, quality and quantity, how delays will be handled, monitoring for compliance, claims, disputes and appeals, obligations of the parties and the basis for payment/s etc.

 

Signing of contract

  • After the contract award the tender committee the Chairman of the Tender Committee shall ensure that the contract is prepared which shall then be signed the two parties to the contract.
  • The contract shall be based on the format provided in the tender documents i.e. the tender documents submitted the successful tenderers/bidders and any clarification provided
  • The contract shall not be signed until after 14 days after the notification of contract award. This is to allow time for any possible appeals
  • The contract shall be deemed to be formed when it is signed both parties.
  • A formal contract may not be necessary for contracts belo Ksh. 500,000. Signed orders which are also signed the supplier shall be sufficient in this case.

Performance of contract

  • After the contract is signed the supplier/ contractor shall be responsible for performing the contract in accordance with the terms and conditions of the contract and the relevant committee shall be responsible for the management of the contract.
  • The contract must be well managed otherwise weak administration or management of procurement contracts is an invitation to corrupt practices. There is need to ensure that the supplier/ contractor delivers the specifications or quantities specified in the contract and that members of the committee have the skill and knowledge in confirming compliance with specifications.
  • In managing the contracts the Chairman of the Committee shall use the Procurement File which shall have been well kept. This file shall be maintained in such a way as to contain all information on the procurement process up to contract award.

Receipt, Inspection and Acceptance of Goods

The Inspection and Acceptance committee shall immediately after delivery of goods, works or services:-

  • Inspect and where necessary test the items involved
  • Inspect and review the goods, works or services in order to ensure compliance with the terms and specifications of the contract
  • Accept or reject on behalf of the LA (Procuring Entity), the delivered goods, works or services.
  • Ensure that the correct quantity has been received.
  • Ensure that the goods , works or services meet the technical standards defined in the contract
  • Ensure that the goods , works or services have been delivered or completed on time or that any delay has been noted and acted on
  • Ensure that all required manual or documentation have been received and
  • Issue interim or completion certificates or goods recorded notes as appropriate and in accordance with the contract.
  • Sign all the relevant documentation

Distribution of key documents

The receipt, inspection and acceptance of goods must be done through filling or confirming details on the documents already signed.

For accountability and safety of documents, the established rules for the distribution of documents must be followed.

  • Distribution of LPO (S20):4 (four) copies

Original: given to the supplier to retain

Duplicate: given to the supplier and to accompany the goods.

Triplicate: For payments then attached to payment voucher.

Quadruplicate:  retained in the pad.

  • Distribution of S11: 3 (three) copies

Original: kept the store man issuing out the goods in a safe file.

Duplicate: Kept the user receiving the goods in a safe file too.

Triplicate: Retained in the pad

  • Distribution of S10: 2(two) copies

Original: submitted as a bid to the quotation box.

Duplicate: kept the bidder

Disposal of stores

  • This is charged to the procuring entity’s Disposal Committee that must be established (section 128) of the ACT and Regulation 92.
  • The committee is meant to dispose unserviceable, obsolescent, obsolete or surplus stores or equipment.
  • The committee shall recommend a method of disposing the items which may include any of the following:-
  • Sale public tender
  • Sale public auction
  • Transfer to another public entity or parts of a public entity without financial adjustments.
  • Destruction, dumping or burying.
  • Trade- in.

The relevant documents must be filled. The key documents used for disposal record include the following:-

  • Board of survey form (F.O.58)
  • Disposal certificate
  • Destruction certificate
  • Standard tender document for disposal

Some disadvantages of the open tendering process are:

  • Lengthy timeframe for completion of the procurement action,
  • Requires strict adherence to procedures,
  • Assumes existing internal capacity for the completion of clear and precise specifications,
  • Restricts suppliers’ participation in determining the technical specifications,
  • Limits the possibility of building long-term relationship with suppliers,
  • Focuses only on a least-cost solution,
  • Suppresses innovation, and
  • Excessive formalism may limit supplier participation in the tendering process.

 

 

 

Alternative procurement methods

  1. Restricted tendering

Restricted tendering is a procurement method that limits the request for tenders to a select number of suppliers, contractors or service providers. This method of procurement is also called: Limited Bidding and Selective Tendering. Although considered a competitive procurement method, competition is limited to only firms shortlisted or invited the procuring entity. A process should be in place for arriving at the number and specific firms that will be invited; that number however is dependent on the stipulations of the public procurement legal framework.

When to use this method

  • Due to complexity or specialized nature of the goods,  works  or services is limited to prequalified contractors:
  • the time  and  cost  required  to  examine  and  evaluate  a  large  number  of  tenders  would  be  disproportionate  to  the  value  of  the  goods, works or services to be procured; and
  • there is  only  a  few  known  suppliers  of  the goods, works or services as may be prescribed  in the regulations.
  1. Direct procurement

This is where goods, services and construction works are acquired from only one source. It is also called sole-source procurement, single-source procurement, or sole-source selection. This is clearly a non-competitive procurement method.

When to use this method

  • for emergency situations;
  • when only one firm or individual is qualified to fulfil the requirement;
  • for the continuation of previous work, or additional work, that cannot be acquired from another firm or individual due to patent, compatibility issues, or exclusive rights;
  • the use of this method represents a clear advantage over the use of a competitive method;
  • the total cost is within the threshold set for this method of procurement;
  • for the procurement of related items that are available only from one source;
  • for other situations contemplated in the procurement legal and regulatory framework.

Procedure

  • the procuring entity may negotiate with a person for  the  supply  of  the  goods,  works  or  services  being procured;
  • the procuring  entity  shall  not  use  direct procurement in a discriminatory manner; and
  • The resulting contract  must  be  in  writing  and  signed both parties.
  1. Request for proposal

The Request for Proposal (RFP) is a two envelope procurement method that can be used for goods, services or works. It is used when suppliers, contractors or services providers are expected to propose a specific solution (methodology and work plan) to fulfilling a specific requirement.

Firms are required to submit technical and financial proposals in two separate envelopes. The technical proposal is evaluated first and ranked according to pre-established evaluation criteria, and only the financial proposals of those firms that achieved the minimum qualifying mark (score), indicated in the RFP, are opened and evaluated.

The RFP method differs from open tendering in six fundamental aspects:

  • Proposals are submitted in two sealed envelopes,
  • At the opening event, the financial proposals are left unopened and are safeguarded,
  • Financial proposals are opened only after completion of the evaluation of technical proposals,
  • Only the financial proposals of the firms achieving the minimum qualifying mark or more are opened,
  • Selection is based on a proposed solution and not on price,
  • The sum of the combined weighted score of the technical and financial proposals determines the winning firm with which the contract is negotiated.

There are some differences in addition to the above, on the application of the request for proposals that introduces a bit of confusion with respect to this method. As with other methods, the use of this one must strictly adhere to the stipulations of the governing procurement legal framework.

The following are examples of the selection procedures for consulting services that use the RFP procurement method:

  • Quality and cost-based selection (QCBS),
  • Quality based selection (QBS),
  • Fixed budget selection (FBS), and
  • Least-cost selection (LCS).

Types of request for proposals

  • request for proposals without negotiations
  • request for proposals with dialogue (Article 48), and
  • Request for proposals with consecutive negotiations (Article 50).

In spite of all of the above, the essential characteristic of the RFP is that:

  • sealed proposals (technical and financial) are received in response to the RFP,
  • the technical proposals are opened and evaluated before the financial proposals are opened,
  • Only the financial proposals of the firms achieving at least the stipulated minimum qualifying mark on their technical proposals, are publicly opened,
  • the final score is usually the sum of the weighted score of the technical and financial proposals, and
  • The final contract is awarded based on the highest combined score rather than lowest price, except in the case of least-cost selection (the subject of a future post).

Procedures

  • Notice inviting expression of interest. This will set out the following
  • the name and address of the procuring entity;
  • a brief  description  of  the  services  being  procured  and,  if  applicable,  the  goods  being  procured;
  • the qualifications  necessary  to  be  invited  to submit a proposal; and
  • An explanation of where and when expressions of interest must be submitted.
  • The procuring  entity  shall  advertise  the  notice inviting  expressions  of  interest  in  at  least  two  daily  newspapers of nation-wide circulation.
  • Terms of reference. This will set out
  • the specific  requirements the  services or the  goods  being  procured  and  the  time limit for delivery or completion; and
  • Anything else required under the regulations to be set out in the terms of reference.
  • Determination of qualified persons: After the deadline for submitting expressions of interest the  procuring  entity  shall  examine  each  expression  of  interest  to  determine  if  the  person submitting  it  is  qualified  to  be  invited  to  submit  a  proposal  in  accordance  with  the  notice  inviting  expressions of interest.
  • Request for proposal is sent to qualified persons. This will set out;
  • the name and address of the procuring entity;
  • the general  and  specific  conditions  to  which  the contract will be subject,
  • instructions for  the  preparation  and  submission  of  proposals  which  shall  require  that  a  proposal  include  a  technical  proposal  and a financial proposal;
  • an explanation  of  where  and  when  proposals  must be submitted;
  • the procedures  and  criteria  to  be  used  to  evaluate  and  compare  the  proposals  including —
  • the procedures and criteria for evaluating the  technical  proposals  which  shall  include  a  determination  of  whether  the  proposal is responsive;
  • the procedures and criteria for evaluating the financial proposals; and
  • any other  additional  method  of  evaluation,  which  may  include  interviews  or  presentations,  and  the  procedures  and  criteria  for  that  additional method;
  • a statement giving notice of the restriction on entering  into  other  contracts;  and
  • anything else  required,  under  this  Act  or  the  regulations  to  be  set  out  in  the  request  for
  • Evaluation of proposals
  • Notification of successful proposal
  • Negotiations with submitter of successful proposal
  • Contract requirement. The resulting contract shall be in writing and sets out the following;
  • the maximum amount of money that can be paid under the contract; or
  • the maximum  amount  of  time  that  can  be  paid  for under the contract.

 

  1. Request for Quotation

The request for quotations is a procurement method that is used for small value procurements of readily available off-the-shelf goods, small value construction works, or small value services procurements.  It is also called as invitation to quote and shopping, and it does not require the preparation of tender documents to the same extent as open tendering, request for proposals or two-stage tendering. The invitations are not complex, and this method is considered non-competitive because the procuring entity determines which contractors, suppliers or service providers to request quotations from as long as a minimum of three are invited.

 

When to use this method

  • the procurement  is  for  goods  that  are  readily  available  and  for  which  there  is  an  established  market; and
  • the estimated value of the goods being procured is less than or equal to the prescribed maximum value for using requests for quotations.

Procedure

  • Procuring entity prepares a request for quotation setting out the following;
  • the name and address of the procuring entity;
  • the specific requirements relating to the goods being procured;
  • an explanation  of  where  and  when  quotations  must be submitted; and
  • anything else  required  under  this  Act  or  the  regulations  to  be  set  out  in  the  request  for
  • The procuring entity will then;
  • give the  request  to  such persons as the procuring entity determines;
  • the request must be given to as many persons as necessary to  ensure  effective  competition  and  must  be  given  to  at  least  three  persons,  unless  that is not possible; and
  • give the request to each person  early  enough  so  that  the  person  has  adequate time to prepare a quotation.
  • The successful quotation shall be the quotation with the lowest price that meets the requirements set out in the request for quotations.
  • The following shall apply to the resulting contract;
  • the procuring entity shall place a purchase order  with  the  person  submitting  the  successful  quotation; and
  • the person submitting the  successful  quotation  shall confirm the purchase order in writing.

Advantages of request for quotations

  • Procurement lead-time is significantly reduced given that there’s no need to prepare solicitation documents, or to advertise requirements. And the period for quotations submission is also equally reduced.
  • The number of quotations received is limited to the number of bidders quotations were requested from, so the selection process time is also reduced.
  • The procuring and/or requesting entities would usually have a pretty good idea of where and from whom the goods, services or works can be procured, so there’s a higher probability of response to the request for quotations.

Disadvantages of request for quotation

  • Lends itself to irregularities because the procuring entity decides which suppliers, contractors or service providers to send request for quotations to, and competition is very limited.
  • Could be abused as a result of the breaking of requirements into smaller sizes in order to apply this method of procurement.
  • Could easily lead to requesting quotes from a limited number of firms even if the goods, services or works are available from a greater number.

 

  1. Low-value procurement

This is a procurement method used where;

  • the estimated  value  of  the  goods,  works  or  services being procured are less than or equal to  the prescribed maximum value for that low-value  procurement procedure; and
  • Any other prescribed conditions for the use of the low-value procurement procedure are satisfied.
  1. Specially Permitted procurement procedures ( concession/public private partnership and design competition)

Concessioning:  means  a  procurement  that encourages  the  mobilization  of  private  sector resources  for  the  purpose  of  public  financing,  construction,  operation  and  maintenance  of  development  projects  and  may  include  builddown  and  operate,  build-own-operate  and  transfer,  build-operate  and  transfer  or  similar  types of procurement procedures;

Public-private partnership: means an agreement between a procuring entity and a private party under which;

  • the private party undertakes to perform a public function or provide a service on behalf of the procuring entity;
  • the private party receives a benefit for performing the function, either way of;
  • compensation from a public fund
  • charges or fees collected the private party from the users of a service provided to them; or
  • a combination  of  such  compensation  and  such   charges  or  fees;

(c)  the  private  party  is  generally  liable  for  the  risks  arising  from  the  performance  of  the  function  depending  on  the  terms  of  the  agreement;

Design  competition: means  a  procurement procedure  for  obtaining  competitive  bids  for  services which are creative in nature and which  require  that  part  of  the  services  be  carried  as  part  of  the  bid  to  facilitate  evaluation  of  the  bids  and  such  services  include  architecture,  landscaping,  engineering,  urban  design  projects, urban and regional planning and fine  arts.

 

CHAPTER 6

APPLICATIONS OF ICT IN PROCUREMENT

E-PROCUREMENT

E-Procurement means procurement of goods and services online using the internet. Ideally, it covers the full ‘life cycle of procurement. The intention is to automate, possibly, the entire procurement process, along with tender bid submission and payments suppliers, in an online web-based real-time environment. E-Procurement could resolve many of the constraints/ delays of traditional procurement

  • Tender notices are up-loaded and available on web-site
  • Firms to get registered at portal free of cost
  • Bidders/Indenters to obtain Digital Signature Certificates (DSC) from any certified agency
  • The tender offers are submitted on-line
  • Tenders are opened on-line.
  • All accompanying documents are scanned and submitted on-line after certification digital signature.

Differences between procurement and e-procurement

Manual Tendering System              

•         Longer Procurement Cycle

•         Expensive

•         Paper Based Procurement

•         Restricted Mobility

•         No work on Holidays

•         Prone to Human errors

•         Physical Security

•         Wastage of space to store bids

•         Not easily retrievable

Electronic tendering (e-procurement)        

•         Shorter Procurement Cycle

•         Economical – Fixed Cost

•         economical friendly

•         anytime , anywhere

•         any time

•         very less chance of error

•         Fool proof Security

•         Lifelong storage on CD

•         Easily Retrievable, one click access

 

Objectives of e-procurement

  • Transparency: Introduce the maximum extent of transparency in public procurement making the required information available in the internet.
  • Cost Savings through higher competition: A result of wider publicity to Government procurement opportunities.
  • Cost savings  through  demand  aggregation:  the  ability  to aggregate  Government  departments’  demand  to  leverage buying power with then supply market.
  • Reduced inventory costs: Improved planning and management of inventory leading to lower levels of inventory.
  • Internal arbitrage: Ensuring consistency in goods and services costs at the best price across all departments at item level.
  • Consistent and sustainable contractor development: Enabling pre-qualified vendors the opportunity to access other government departments.
  • Transactional effectiveness: Eliminating or automating nonvalue adding steps within the procurement to enable efficient and effective processes.

Benefits of e-procurement

Benefits to the tendering authority

  • Completely Automated Process
  • Shortens Procurement Cycle
  • Economical and Environment Friendly
  • Greater Transparency
  • Improvement in work culture in the departments
  • System aided Evaluation process
  • Minimize Human errors
  • Minimal Storage Space
  • Lesser hassle of communication and administration

Benefits to suppliers

  • Anytime & Anywhere Bidding
  • Fair, Free and Fearless participation for vendors
  • No dependence on Newspaper, Courier
  • Zero Administrative hassles
  • Can carry out all activities from any compute
  • Economical – saving on Traveling cost
  • Reduces efforts & cost of bidding
  • No tenders can be missed because of distance
  • Can submit bid on last minute

E-procurement module

e-Procurement module   is   the complete  e-tendering   process starting   from  online  publishing   of  Tender,  Enquiries, Online  bid  submission  the bidders, online bid opening, Online bid evaluation and publication of   award of contract on Portal.  Digital Signature Certificate    is   mandatory for e-Procurement module.

Complete Cycle Of e-Procurement Module

  1. Creating a tender
  2. Publishing tender
  3. Bid submission
  4. Technical bid opening
  5. Technical bid evaluation
  6. Financial bid opening
  7. Financial bid evaluation
  8. Award of contract

Modes of e-Procurement

Electronic procurement activities being done using modes given below,    combination of these could also be used as per need: –

  • e-publishing of tender (publication of tender)
  • e-procurement (procuring Process online)

Challenges of e-procurement

  • Knowledge : important for beneficiary to know the procedure prepare their  DSC
  • Authentication: How do you verify the identity of the users?
  • Confidentiality: How do you ensure that the information sent is read only intended users and nobody else?
  • Integrity: How do you prevent tampering information?
  • Non Repudiation: How do you prove the origin of the information?

 

 

How can we secure e-Procurement

The security features incorporated in an e-Procurement application ensures that all activities are logged, no unauthorized person has access to data, all sensitive data is encrypted and system can be restored in a minimal possible time in case of a disaster or system crash, with the help of:

  • Audit Trail
  • Data Encryption
  • Secure User and Administrator access
  • Process Validation

E-procurement application – main features

Functional Features

  • Workflows based & Access Control (financial & procurement category)
  • Indigenous & Global Procurement (Multi Currency)
  • Multi Part Bidding
  • Notifications & Alerts
  • Clarifications
  • Good authentication – Role based access
  • Security, Secrecy (of bids) – Signing, Encryption
  • Ease of Use
  • Good Archival & Retrieval features/ policy – Safe and secure

E-Procurement solution Functionalities

  • Online Supplier Registration (Portal Registration)
  • Creation of Tender
  • Approval of Tender
  • Publishing of Tender
  • Online Bid submission suppliers/contractors
  • Online payment of Tender Fees & EMD
  • Online Bid opening
  • Evaluation of bids (Technical and Financial)
  • Generation of Comparative Statement (Technical & Financial)

Implementation of e-procurement – success factor

Major factors which could be crucial to transformation from simple traditional procurement to e-Procurement are: –

  • Strong will and focused thrust from the top management
  • Building in-house champions/ enthusiasts for adoption of e-Procurement
  • Buyer’s dedicated project team to drive the Mission
  • Aiming for realistic implementable goals/ objectives and time lines
  • Well defined/ standardized procurement processes and forms
  • Extreme care to aspects like Tender-security, Supplier-enablement/ Training & Ease of use
  • Well integrated back end systems, standards, policies & practices to link and leverage upon
  • Strong will & above all determination

Conditions for Successful Implementation

  • Strong government leadership (e.g. Korea, Mexico at presidential level)
  • Appropriate implementation framework (e.g. procurement policy, legislation, capacity building, standards
  • Infrastructure development (connectivity)
  • Complaints mechanism & resolution
  • Oversight over collusion & bid rigging
  • Managing political economy of reform

 

 

 

CHAPTER TWO:

SECURITY RISKS ASSOCIATED WITH E-PROCUREMENT

 

 

By the end of this chapter, the learners should;

 

  1. Explain the risks associated with e-procurement
  2. The share-holders in e-procurement
  • The effects of organization infrastructure in e-procurement

 

 

Security risks associated with e-procurement

 

  1. Erroneous deletion of document s for e-procurement .

This can be prevented constantly backing up the documents

  1. Access of unwarranted personnel to the documents hacking.

This can be overcome using uptodate security measures.

  1. Plagiarism

This is someone else using the information of someone else without permission.

This can be avoided using copy right.

  1. Cyber crimes

e-procurement is prone to this as it is difficult to know genuine responses from not genuine ones.

This can be avoided using pre vetted suppliers. And carring out back checks.

  1. It is impersonal

This means that the parties do not interact physically and hence they do not know each other physically making it prone to criminal issues.

 

Stakeholders in e-procurement

  1. Accounts payable

Maintain catalogues, process POs, process invoices

  1. Audit

Ensure laws, rules, procedures and guidelines are being followed.

  1. Buyers

Initiate requisitions, access catalogues, approves POs, receipt purchases, process invoices, approve payments.

  1. Executive

Sponsor champions program,  develops policy secures funds and resources, supports policy and procedural changes across functional areas.

  1. Finance

Manage, analyze and access data, develop and implement policy and procurement processes.

  1. HR

Manage personnel data, develop and implement policy.

  1. IT

Implement, integrate and manage online systems and tools, develop business and IT strategy, develop and implement policy.

  1. Legal

Write and negotiate contracts.

  1. Procurement.

Manage, analyse and access data, source suppliers, manage categories and contracts, manage suppliers, develop and implement policy, receipt purchases, approve payments.

  1. Security

Develops and maintain security controls and requirments, develop and implement policy .

  1. Suppliers

Respond to tenders, participate in contract management, maintain catalogues, process POs, submit invoices, receive payment.

 

How electronic market works

  1. Electronic markets are markets connected through modern communication networks and high speed computers
  2. In an electronic market place , buyers and sellers do not have to be in the same physical location in order to interact.
  3. The world wide web has become the universal interface for electronic markets.

People can use the web to access various electronic market virtually from anywhere at anytime.

  1. Ordinary investors can use the internet to conduct online trading through online brokerage firms, and customers can bid for various products at online auction houses such as eBay.
  2. They can be built around vertical (industry specific) or/and horizontal (cross industry) markets.

 

The effects of organization infrastructure in e-procurement

  1. Goals and results

These are the template for infrastructure development in e- procurement

The organization value goal defines how the organization creates value that its customers are willing to pay for.

The results the organization measures and rewards establish priorities across the organization.

When the value goal is aligned with the results it creates the blue print for building organization infrastructure.

  1. People

This is what people do and how they do it. Defines the role people play and assures people have the ability and willingness to achieve high performance in these roles.

In e-procurement infrastructure institutionalize high performance getting the right people doing the right things.

  1. Process

This establishes how thing get done inside organization.

Process increases performance taking discreet tasks and organize them into a predecessor and successor relationship. Driving out deviation in processes through methods like statistical process control maximizes e-procurement efficiency.

  1. Structure

Structure creates focus and control. It create focused action breaking the organization into distinct areas of responsibility.

Structure create control distributing authority throughout the organization.

Structure increases performance setting priorities and minimizing redundancy of action.

 

  IFMIS

 

It is an automated system that enhances efficiency in planning, budgeting, procurement, expenditure management and reporting in the National and County Governments in Kenya.

 

Sound systems, strong legal and regulatory frameworks as well as a competent and productive civil service are the cornerstones of an efficient Public Finance Management(PFM) regime. Public Financial Management reforms have been identified as the key drivers to efficient public service delivery and creation of wealth and employment, ensuring that the Government and its Departments raise, manage, and spend public resources in an efficient and transparent way with the aim of improving service delivery.

Over the last decade the Government of Kenya has undertaken a number of PFM reforms aimed at enhancing accountability and transparency. These reforms have targeted the core PFM systems of budget formulation and execution, public procurement, revenue collection, internal and external audit, parliamentary oversight, Payroll and Pensions, Public debt and guarantees, Accounting and Reporting and the Macro-fiscal framework.

These initiatives have drawn support from Development Partners, including the World Bank, the European Commission, GIZ, DFID, SIDA, DANIDA, CIDA, USAID, JICA, and Norway that have worked closely with the Kenya Government in implementing the reforms. The broad objective of these reforms is to strengthen PFM systems enhancing transparency, accountability and responsiveness to public expenditure policy priorities.

The PFM reform is also instrumental in the fight against wasteful spending and corruption. Various studies show positive results and an improved performance the public financial systems, although challenges still remain in key areas of the economy.

This calls for sustained implementation of the Government’s reform programs. One of the major reforms embarked on, is the automation of Public Financial Management processes. The introduction of the Integrated Financial Management system, Electronic Funds Transfer, the Pension system and the Public debt management systems among others, have been premised on the realization that GoK can effectively leverage existing and emerging technology to enhance the pace of reforms.

  1. LESSON ELEVEN

 

DISPOSAL OF STORES AND EQUIPMENT

 

Chapter objectives:

By the end of this chapter, the learners should;

  1. Describe what it means Application of part
  2. What is Disposal committee
  • How Restriction on disposal to employees
  1. Explain the Disposal procedure

 

 

Disposal of Stores and Equipment

 

Application of part

This Part applies with respect to the disposal of stores and equipment of a public entity that are unserviceable, obsolete or surplus.

 

Responsibility for complying with Act

 

Disposal committee

A public entity shall establish a disposal committee in accordance with the regulations for the purpose of recommending the best method of disposing of unserviceable, obsolete or surplus stores or equipment.

 

The disposal committee shall meet within the prescribed period to report on the items and subject to a technical report; recommend the best method of disposal.

 

Disposal procedure

The employee in charge of unserviceable, obsolete or surplus stores or equipment shall bring the matter to the attention of the disposal committee.

An employee shall comply with subsection (1) within a reasonable time after the stores or equipment become unserviceable, obsolete or surplus.

The disposal committee shall recommend to the accounting officer a method of disposing of the stores and equipment which may include any of the following:

  • Transfer to another public entity or part of a public entity, with or without financial adjustment.
  • Sale public tender.
  • Sale public auction.
  • Destruction, dumping or burying.
  • Trade-in.

Within the prescribed time period after receiving the recommendations of the disposal committee the accounting officer shall give the committee a written notice as to whether the accounting officer accepts or rejects the recommendations of the committee.

If the accounting officer accepts the recommendations of the disposal committee, the stores and equipment shall be disposed of in accordance with those recommendations.

 

If the accounting officer rejects the recommendations of the disposal committee he shall, within the time period referred to in subsection.

  • Include, with the notice given to the committee under subsection (4), written reasons for rejecting the recommendations of the committee
  • Give the Authority a copy of the notice under subsection (4).
  • Refer the matter back to the committee for further consideration.

 

 Directions

The Authority may issue written directions to public entities with respect to the disposal of unserviceable, obsolete or surplus stores and equipment.

 

Restriction on disposal to employees

A public entity shall not dispose of unserviceable, obsolete or surplus stores and equipment to an employee of the public entity or a member of a board or committee of the public entity except as expressly allowed under the regulations.

 

Application of Part V111 to disposals

 

Part VIII applies, with necessary modifications, with respect to disposals of unserviceable, obsolete or surplus stores and equipment in the same manner as that Part applies with respect to procurements.

 

 

Review questions

  1. What is the role played Disposal committee
  2. Describe the Disposal procedure in public procurement
  • Explain the Restriction on disposal to employees

References

  1. Khi V. Thai (2008), International Handbook Of Public Procurement, PVT publishers, New Delhi
  2. OECD (2007), Integrity In Public Procurement: Good Practice From A To Z Oecd Publishing
  • Sue Arrowsmith, and Martin Trybus (2003), Public Procurement, Routledge, London

 

 

                                

                                                                    

SPM412: PUBLIC PROCUREMENT    

MAIN EXAMINATION

 

DATE: DECEMBER                                                                                   TIME: 2 HOURS

INSTRUCTIONS:

Answer QUESTION ONE and any other TWO QUESTIONS.

 QUESTION ONE (30 MARKS)

  1. a) Discuss critically the purpose, applicability and the specific objectives of the legal frame work that regulates public procurement in Kenya today. [10 mks]

 

  1. b) Critically outline and discuss the historical background of Public procurement and disposal Act 2005 since pre-independence up-to-date. [10 mks]

 

  1. c) Discuss the three fundamental bodies that regulate public procurement in Kenya, Cleary showing the functions, responsibilities and qualifications of its various constitutes. . [10 mks]

 

 QUESTION TWO (20 MARKS)

 

  1. a) Identify and vividly discuss the various procurement and disposal procedures/method that public entities are required to use When procuring goods, services and works as provided for under the public procurement and disposal act 2005(PPDA) stating when each is appropriate used. [14mks]

 

  1. b) What is public procurement and what does the same entail? [6 mks]

 

 QUESTION THREE (20 MARKS)

 

  1. a) What procurement are specific excluded under the present legal

Frame work                                                                          [4mks]

 

  1. b) Who is an accounting officer and what are his duties and responsibilities

Under the PPDA                                                               [6mks]

  1. c) What are the functions of a procuring unit? [10 mks]

 

QUESTION FOUR (20 MARKS)

  1. a) Companies today are paying a great deal of attention to the ‘organizations ethical procurement’ along the supply chain. Select and discuss any five ethical issues that would be likely to have a bearing upon a company’s commercial relationship with its suppliers for the provision of its materials. [10 mks]
  2. b) What are the main Inbound and outbound related transportation costs in the logistics/movement of organizations materials after being procured from the supply source? [6 mks]
  3. c) Identify and discuss any two challenges in public procurement and their recommendations. [4mks]

QUESTION FIVE (20 MARKS)

  1. a) Discuss the role of ICT in procurement Cleary showing the Main types and the advantages of e-procurement. [10 mks]
  2. b) What are the essential characteristics of a contract of sale of goods as clearly described in the law of sale of goods? [4 mks}
  3. c) What are major distinct between a ‘sale’ and ‘an agreement to sell’. [6 mks]

 

 

 

MT KENYA UNIVERSITY

 

                                                                    

SPM412: PUBLIC PROCUREMENT    

SPECIAL/SUPPLIMENTARY EXAMINATION

 

DATE: DECEMBER                                                                                   TIME: 2 HOURS

INSTRUCTIONS:

Answer QUESTION ONE and any other TWO QUESTIONS.

 QUESTION ONE (30 MARKS)

  1. a) Critically outline and discuss the historical background of Public procurement and disposal Act 2005 since pre-independence up-to-date. [10 mks]

 

  1. b) Discuss the three fundamental bodies that regulate public procurement in Kenya, Cleary showing the functions, responsibilities and qualifications of its various constitutes. . [10 mks]
  2. c) Identify and vividly discuss the various procurement and disposal procedures/method that public entities are required to use When procuring goods, services and works as provided for under the public procurement and disposal act 2005(PPDA) stating when each is appropriate used. [10mks]

 

QUESTION TWO (20 MARKS)

  1. a) Discuss the functions of the tender committee [10 mks]
  2. b) Discuss any five roles of an accounting officer [10 mks]

 

QUESTION THREE (20 MARKS)

Discuss the major offences that are outlined in the Public Procurement and Disposal Act 2005 [10 mks]

Outline the general objectives of public procurement.   [10 mks]

QUESTION FOUR (20 MARKS)

 

  1. a) Discuss six conditions and four warranties under the sale of goods. [10 mks]

 

  1. b) The delivery of goods may be actual, symbolic or constructive in the event of sale of goods. Outline any ten golden rules of delivery [10 mks]

 

QUESTION FIVE (20 MARKS)

Discuss the major developments that can be observed in the evolution of procurement and supply management in Kenya. [10 mks]

Discuss the major committees that are functional within the procurement of goods, works or service. [10 mks]

 

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