Methods of Procurement

Mombasa tea auction 2012, Photo: VOA - H. Heuler,
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These are the relevent laws for the methods of public procurement: For cases of procurement it is Part XI section 92 of the Public Procurement and Disposal Act. For cases of tenders begun after Jan 7, 2016, see the Public Procurement and Asset Disposal Act, Sec. 215). These laws outline the various methods public entities can use to procure goods and services.

They include

(a) Open Tender 

This method is prioritized by law (Sec. 91 of the Act). All other methods need to be justified by special circumstances.
Where tenders are open to anybody who may wish to to apply. The accounting officer of a procuring entity is obligated by law take such steps as are reasonable to bring the invitation to tender to the attention of those who may wish to submit tenders. For the procurement of goods and servicese from 20 Mio. KES, open tenders are required. In open tenders, goods and works must be tendered nationally from 6 Mio KES, services from 3 Mio KES. Details about Open Tenders: (Sec. 96 of the Act)
(for the thresholds see Public_procurement_regulations_2006)

(b) Two-stage tendering

Two-stage tendering is a procedure typically used to achieve an early appointment of a contractor to a lump-sum contract. A procuring entity may engage in procurement by means of two-stage tendering when, due to complexity and inadequate knowledge on its part or advancements in technology, it is not feasible for the procuring entity to formulate detailed specifications for the goods or works or non-consultancy services in order to obtain the most satisfactory solution to its procurement needs. In the first stage competitors formulate proposals without a tender price. In the second stage selected competitors are invited to submit tenders with price tags. Details: (Sec. 99 b of the Act)

(c) Design competition

In this type of procurement, part of the services are already a part of the tender, because the overall shape and the details of the contract are offered by the contractual partner and not by the procuring entity. The Act says in Sec. 2 (Interpretations): “… such services may include architecture, landscaping, engineering, urban design projects, urban and regional planning, fine arts, interior design, marketing, advertising and graphic design.” For details see Sec. 100 and 101 of the Public Procurement and Asset Disposal Act.

(d) Restricted tendering

An accounting officer of a procuring entity may use restricted tendering only if any of the following conditions are satisfied

  • a complex or specialized nature of the goods
  • the time and cost required to examine and evaluate a large number of tenders would be disproportionate to the value of the goods
  • if there is evidence to the effect that there are only a few known suppliersAn advertisement is placed, where applicable, on the procuring entity website regarding the intention to procure through limited tender.
    Some details are to be found in Sec. 102 of the Public Procurement and Asset Disposal Act

    (e) Direct procurement

    A procuring entity may use direct procurement as allowed as long as the purpose is not to avoid competition. Because the procedure is especially  corruption-prone, there procurement is also strictly limited to

  • goods, works or services that are available only from a particular supplier or contractor, or a particular supplier or contractor has exclusive rights in respect of the goods, works or services, and no reasonable alternative or substitute exists
  • cases of disaster, war, catastrophic events and unforeseeable needs in these cases.
  • needs of standardization and compatibility if these needs are reasonable and economic
  • for the acquiring of goods, works or services provided by a public entity provided that the acquisition price is fair and reasonable and compares well with known prices of goods, works or services in the circumstances.
    The rules for direct procurement can be found in Sec 103 and 104 the Public Procurement and Assets Disposal Act, 2015 and – for cases before Jan 7, 2016 – in the PublicProcurementandDisposalAct_Cap412C_.

    (f) Request for quotations

    A procuring entity may use a request for quotations from the register of suppliers for a procurement only if the estimated value of the goods, works or non-consultancy services being procured is not more than 1 Mio. KES (see public_procurement_regulations_2006, (Page 1163, pdf-File). The goods or services must also be readily available and known from an established market. The persons and companies who are asked for a quotation must be registered. At least three must be asked – but enough to “ensure effectiver competition). See Public Procurement and Asset Disposal Act, Section 105 and 106

(g) Electronic reverse auction

This is a type of auction in which the roles of buyer and seller are reversed. In an ordinary auction (also known as a forward auction), buyers compete to obtain a good or service by offering increasingly higher prices. In a reverse auction, the sellers compete to obtain business from the buyer and prices will typically decrease as the sellers undercut each otherThe Authority may in exceptional circumstances approve a system of electronic reverse auction method of procurement for goods, works or non-consultancy services by a procuring entity. (for more details see: Sec. 110 of the Public Procurement and Disposal Act)

(h) Low Value Procurement

A procuring entity may use a low-value procurement procedure if the entity is procuring low value items which are not procured on a regular or frequent basis and are not covered in framework agreement.

The public_procurement_regulations_2006  state that the “Maximum level of expenditure under this method is Kshs 30,000 per procurement per item” (p.1153) and in Sec. 63, that
“a procuring entity may use a low value procurement procedure only if-
(a) the estimated cost of the goods, works or services being
procured per item is less than or equal to the prescribed
maximum value as set out in the First Schedule;
(b) no benefit would accrue to the procuring entity in terms of
time or cost implications if the procuring entity uses
requests for quotations or any other procurement method;
Kenya Subsidiary 1153 Legislation, 2006
(c) the procedure is not being used for the purpose of
avoiding competition;
(d) the use of the procedure has been recommended by the
procurement committee after a market survey
(2) The following procedure shall apply in respect to low value
procurement-
(a) the procurement unit shall procure the goods, works or
services from a reputable outlet or provider through direct
shopping;
(b) an original invoice or receipt for the low value procurement of
goods, works or services and the price paid shall be obtained
and signed by the person undertaking the procurement.;”

(i) Force Account

The work is done and billed by a public entity with labour and equipment owned by the public. The Law in Art. 109 is very clear about the conditions:
“(2) … A procuring entity may use force account by making recourse to the state or public officers and using public assets, equipment and labour which are competitive and where
(a) quantities of work involved are small and scattered or in remote locations for which qualified construction firms are unlikely to tender at reasonable price and the quantities of works cannot be defined in advance;
(b) unforeseen and urgent work is required to be carried out without disrupting on-going operations;
(c) the procuring entity is to complete works delayed by the contractor after the written warnings did not yield any tangible results.

(3) This method shall only be applied
(a) with the prior approval of the accounting officer;
(b) within the limit prescribed in Regulations;
(c) where the total cost of procuring the goods, works and non-consultancy services are, at most, set at the prevailing market rate.

(4) The procedure to use force account shall be as prescribed in the Regulations”

(k) Request for proposals

Used for Consultancy Services. There are elaborate provisions for requests for proposals in Sections 115 to 130 of the  Public Procurement and Asset Disposal Act. They are “used if the services to be procured are advisory or otherwise of a predominately intellectual nature.” Those who win a contract from a request for proposal are barred from delivering goods and services once the proposal is put into practice (Sec. 130 )

(l) Framework Agreeement

The law states – among other provisions – in Sec. 114 (1):
“A procuring entity may enter into a framework agreement open tender if—
(a) the procurement value is within the thresholds prescribed under Regulations to this Act;
(b) the required quantity of goods, works or non-consultancy services cannot be determined at the time of entering into the agreement; and
(c) a minimum of seven alternative vendors are included for each category.”

Classified Procurement

For reasons of national security some procurements are of a classified nature. Which means that the list of items is confidential and must not be disclosed. Procurement can be managed with dual lists of goods and servicese, of which one is confidential. The procurement itself falls nevertheless under the Public Procurement and Asset Disposal Act. If a procuring entity is not a national security organ, it shall request the Cabinet Secretary for approval of the classified list of items annually. The Cabinet shall approve of the list of classified items. Details are in Sec. 90 of the Act.

Hints for Reporting

Whereas there are these many types of tenders, most County Governments either use open Tenders or Request for Proposals/quotations. In both cases, journalists may examine the documents seeking for tenders to determine whether they contain all necessary details in a clear manner. For example, a request for proposals should state in specific terms the purpose, objectives scope and nature of services required, clearly outline the expected outputs and desired qualifications. Further, it should outline the application procedure and give proper addresses. The specifications of goods and services being sought should be very clear. Journalists can also conduct a market survey to determine whether the specifications stated in the request for proposals or tender advertisements are up to standard. It is possible to determine whether the procurement entities understand what they are looking for from the details of the tender advertisement.