THE PROCUREMENT CYCLE

AND LEGAL FRAMEWORK

FOR PUBLIC PROCUREMENT

KIPKEMBOI CHERONO

BA, MSc, MKISM

WHAT IS PUBLIC PROCUREMENT?

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WHAT IS PUBLIC PROCUREMENT?

Kes. 380 Bn ($3.8 Bn) for Nairobi –

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WHAT IS PROCUREMENT?

Procurement is the process of finding, agreeing

terms and acquiring goods, services or works

from an external source, often via a tendering or

competitive bidding process. The process is used

to ensure the buyer receives goods, services or

works at the best possible price, when aspects

such as quality, quantity, time, and location are

compared.

Weele, Arjan J. van (2010)

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WHAT IS PROCUREMENT?

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Means the acquisition by

purchase, rental, lease, hire

purchase, license, tenancy,

franchise, or by any other

contractual means of any type

of works, assets, services or

goods, including livestock or

any combination and includes

advisory, planning and

processing in the supply chain

system.

PROCUREMENT CYCLE

1. Identify

Needs/ Planning/ Procurement

methods

2. Technical Specs/Prepare Bid Docs

3. Invite Tenders

4. Evaluation and Supplier

Selection

5. Contract Award

6. Contract Management

7. Delivery of goods/

Completion of works

8. Payment / Close File/ Evaluation

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EVOLUTION OF PUBLIC PROCUREMENT

The Public Procurement system has grown from a

rudimentary stage during the colonial and post-

colonial period to a regulated system. This can be

seen in phases;

✓The colonial period – Crown Agents/CTB/SB

✓Post-colonial era i.e. 1963-1978 – Supplies

Manual/ Treasury Circulars

✓1978-2001 – Start of Reforms/ 1997 WB CPAR

✓Era of reform 2001-2007

✓The Era of the New Constitution i.e. 2010 to the

present7

EVOLUTION OF PUBLIC PROCUREMENT

IN KENYA

The public procurement system in Kenya has undergone

significant developments.

From a system with no regulations in the 1960s, and a system

regulated by Treasury Circulars in the 1970s, 1980s, 1990s, up to

2001.

Legal Notice No. 51; The Exchequer and Audit (Public

Procurement) Regulations, 2001 dated 30th March, and

amendments 2002.

The enactment of the Public Procurement and Disposal Act

(PPDA) of 2005 and the Regulations of 2006.

PPDA of 2005 was repealed and replaced with PPADA 2015

which became operational on 7th Jan. 2016. 8

IMPORTANCE OF PUBLIC PROCUREMENT

Procurement is a key component in the Public

Finance Management System

Article 201 of the Constitution of Kenya provides

that public money shall be used prudently and

responsibly

Article 227 of the constitution provides that:-

“when a state organ or any other public entity

contracts for goods or services, it shall do so in

accordance with a system that is fair, equitable,

transparent, competitive and cost effective.”

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PUBLIC PROCUREMENT LEGAL FRAMEWORK

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THE CONSTITUTION 2010

PUBLIC PROCUREMENT

& ASSET DISPOSAL ACT

2015

CIRCULARS/

DIRECTIVES

STD/

PROCUREMENT

MANUALS

PPAD

REGULATIONS*

GUIDING PRINCIPLES

the national values and principles provided for under Article 10;

the equality and freedom from discrimination provided for under Article 27;

affirmative action programmes provided for under Articles 55 and 56;

principles of integrity under the Leadership and Integrity Act 201;

the principles of public finance under Article 201;

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GUIDING PRINCIPLES

the values and principles of public

service as provided for under Article 232;

principles governing the procurement

profession, international norms;

maximization of value for money;

promotion of local industry, sustainable

development and protection of the

environment; and

promotion of citizen contractors.12

APPLICATION OF THE ACT

The PPADA, 2015 applies to all State

organs and public entities with respect to;

✓procurement planning,

✓procurement processing,

✓inventory and asset management,

✓disposal of assets and

✓contract management.

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APPLICATION

The Act applies to all public entities including;

✓state organs,

✓departments,

✓state corporations,

✓county governments,

✓companies owned by public entities and

✓bodies in which the national or county government has a controlling interest, among others.

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OBJECTIVES OF THE PUBLIC

PROCUREMENT SYSTEM

Efficiency and effectiveness

Value for money

Timeliness

Fair and open system

Competition

Open to outside participants

Provides for remedies

Transparency

Accountability 15

PUBLIC PROCUREMENT

Procurement is not only procuring goods and

services at the lowest price!

Public Procurement should also add value to

the outcomes to achieve value for money. In so

doing, it is necessary to:

▪ Promote innovation and sustainability;

▪ Discover the optimum solutions to the

issues;

▪ Be in tandem with the national objectives.

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IMPACT OF PROCUREMENT

Public procurement forms the largest domestic

market in many countries;

A good procurement system will have a positive

impact on economic development where it is

handled within a well functioning system e.g.

many organizations use 40-80% of their income

on procurement

the importance of procurement is clear, as a key

function in both the public and private sectors.

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IMPACT OF PUBLIC PROCUREMENT

Public procurement is subjected to laws and regulations to protect the public interest.

Unlike private procurement, public procurement is a business process within a political system and has therefore significant consideration in terms of integrity, accountability, national interest andeffectiveness

The process of public procurement requires improved visibility of expenditure,

More time afforded to planning and controlling activity in order to make it more effective and efficient. 18

THE PUBLIC PROCUREMENT & ASSET

DISPOSAL ACT 2015

This is an “Act of Parliament that give

effect to Article 227 of the Constitution; to

provide procedures for efficient public

procurement and for assets by public

entities; and for connected purposes”.

The Act is arranged as follows;

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ARRANGEMENTS OF THE ACT

Part Contents

Part I - Preliminary Definitions and application of the

Act

Part II – Bodies involved

in the Regulation of PPAD

Composition, roles and duties of

the various bodies charged with

regulation of public procurement

Part III – County

Government

Responsibilities with

respect to PPAD

Roles and responsibilities of

County Governments

Part IV – Powers to ensure

Compliance

Monitoring the Public

Procurement system

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Part Contents

Part V – Internal

Organization of

Procuring Entities

Responsibilities of Accounting

Officer, Evaluation Committee,

Procurement Function roles

Part VI – General

Procurement Principles

Guiding principles to enhance

transparency

Part VII – Basic

Procurement Rules

The procurement process rules –

Tender preparation, Evaluation of

Tenders and Contract Award

Part VIII – Classified

Procurement Methods

and Procedures

Security related procurement

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Part Contents

Part IX – Methods of

Procurement of Goods,

Works and Services

Open tender is the preferred

method but other methods

are provided e.g. restricted

tendering, framework, RFQ

etc

Part X - Procurement of

Consultancy Services

Procedures for Consultancy

Services e.g. QCBS, QBS,

Least Cost Selection etc.

Part XI – Procurement

Contracts

Creation and administration

of contracts

Part XII – Preferences and

Reservation in Procurement

Affirmative action provisions22

Part Contents

Part XIII – Inventory

Control, Asset & Stores

Management &

Distribution

Management of inventory, stores

and assets to prevent wastage

and loss

Part XIV – Disposal of

Assets

Disposal of obsolete or surplus

assets

Part V – Administrative

Review of Procurement and

Disposal Proceedings

Provides a mechanism of

handling complaints concerning

procurement proceedings

Part XVI – Offences and

Sanctions

Applies to anyone who breaches

the provisions of the Act. 23

TENDER PROCESS FLOW CHART

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Purchase

Requisition/

budget as per

Procurement Plan

Preparation of

Technical Specs/

Evaluation

Criteria

Preparation of

Tender

Documents

Contract Payment

and Closeout

Public Opening

of TendersInvite Tenders

Evaluation of

Tenders & Award

Recommendation

Contract

Preparation and

Negotiations

Contract

Management

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