“Indeed, public procurement practically bristles with formalities, which bidders often overlook at their peril.”

 Hoexter, 2012 at page 275 as quoted by Justice John M. Mativo in Judicial Review Miscellaneous Application No. 118 of 2019

Introduction

Following the advertisement of an Invitation to Tender by a Procuring Entity, bidders who are interested in participating in the tender will usually obtain the tender document, either a hard copy or by downloading from the relevant website.

The procedure to be followed in obtaining the bid document depends on the instructions that the Procuring Entity has provided in the advertisement and the tender document.

It is important that bidders follow the instructions given regarding the procedure of acquiring the Tender Document since failure to do so may affect their ability to challenge the procurement process later in the process e.g. instructions on payment of a small fee or sending an email to the Procuring Entity after downloading the tender document etc.

Following the acquisition of the tender document, bidders then embark on the harrowing process of preparing their bid. The process of preparing a competitive bid document is a demanding and resource-intensive process. To increase one’s chances of success, bidders should start compiling their bid early and should read the tender document keenly.

It is also recommended that you consult an expert to assist you in compilation or review of your bid. Bidders must comply with all the requirements, including those they might consider to be petty formalities as those could be what leads to their bids being declared non-responsive.

For a detailed article on the process of tender preparation and important information that bidders should have, see the article by Sylvia Waiganjo “Part I – Information to Bidders-Preparation of Bids.”

Following the preparation and submission of the bids to the Procuring Entity on the tender closing/opening day, the Procuring Entity embarks on the process of tender evaluation of the bids that have been received by the deadline.

The tender closing/opening process will be the subject of a separate more detailed article.

This article is one in a series of articles that will look at the various stages of tender evaluation in Public Procurement in Kenya. The stages can be categorized into four. These are:

1. Preliminary/mandatory evaluation
2. Technical Evaluation
3. Financial Evaluation
4. Post qualification (due diligence)

This article will focus on stage one of the tender evaluation process i.e. preliminary/mandatory evaluation.

Look out for a detailed discussion on subsequent stages of evaluation in other articles to be posted on the Gerivia Advocates LLP Blog.

A background on preliminary/mandatory requirements and evaluation

There is no doubt that the process of tendering for public goods, works or services involves meeting many requirements as stipulated in the often-bulky tender documents.

Depending on the nature of the items being procured, tender documents can end up being very lengthy, some even running into hundreds of pages listing all the mandatory requirements and technical specifications which have been formulated by the Procuring Entity.

In addition to having very bulky tender documents, procurements for complex items can end up with many clarifications which result in several addendums being issued to clarify the specifications.

The addendums are deemed to be a part of the tender document and so bidders should not ignore them. Section 75 (4) of the Public Procurement and Asset Disposal Act (hereinafter the PPADA) states, “The addendum shall be deemed to be part of the tender document”.

The nature of evaluation at the preliminary stage of evaluation involves the requirement to provide specific documents, mostly as proof of certain qualifications, the absence of which results in an automatic disqualification.

There are also times when mandatory requirements may be contained in the technical evaluation stage and the absence of the mandatory requirements at that stage may also result in disqualification.

The subject of mandatory requirements at the technical evaluation stage will be a topic of discussion in the article on the technical evaluation stage.

The common approach though is to have the mandatory items in the first stage of evaluation (preliminary stage); the consequence of a bidder missing out on any of the mandatory requirements is automatic disqualification since these requirements cannot be waived.

Examples of Mandatory Requirements in Tender Documents

Usually, the most common mandatory requirements that bidders are expected to meet at the preliminary/mandatory evaluation stage include, but are not limited to the provision of:

• Valid Kenya Revenue Authority (KRA) tax compliance certificate. In addition to this, some bids may require a VAT certificate and/or provision of a KRA PIN certificate, even specifying that it should be the new generation PIN certificate.
• Certificate of registration / incorporation
• Copy of single business permit
• Provision of a CR12 (i.e. document from the Companies Registry showing the directors, shareholders and secretary (if any) of the company).
• Certified copies of identification documents of directors of the company i.e. national identity cards if local or passports for foreign directors.
• Valid tender security covering the required duration e.g. 120 or 150 days; or
• Tender Securing Declaration Form, duly filled, signed and stamped – for AGPO https://agpo.go.ke/ (Access to Government Procurement Opportunities) tenders. These are tenders which set aside for women, youth and persons with disabilities.
• Tender validity for the required period
• Requirement to fill in ALL sections and sign standard qualification forms, examples of which are listed below (next six documents). Check out for requirements to affix the official stamp or business seal on the documents below, in addition to signing.
• Duly filled and signed Form of Tender
• Duly filled and signed Confidential Business Questionnaire Form
• Duly filled and signed Integrity Declaration Form
• Duly filled and signed Litigation History Form
• Duly filled and signed Anti-corruption Declaration Form
• Duly filled and signed Non-debarment Declaration Form
• Duly signed Power of Attorney to persons authorised to sign the tender and bind the company
• Submission of the required number of original and specified copies of the bidding documents which are bound as specified
• Serialization and pagination of the bids
• Proof of credit line
• Proof of registration with the necessary authority or membership in certain bodies e.g. for tenders relating to works, you may be required to provide a certificate of registration from the National Construction Authority (NCA) at a certain level (e.g. NCA 1, 2 etc.).
• Proof of qualifications and accreditation for personnel with relevant professional bodies and/or proof that the professionals are in good standing e.g. provision of current practising certificates.
• Some tenders may require proof of ISO certifications
• Requirements for a manufacturer’s authorization (where the bidder is not the manufacturer)
• Audited accounts for a certain number of years
• Certificate of site visit duly signed and stamped by the Procuring Entity
• Requirement for a foreign bidder to have a local agent
• In the case of Joint Ventures (JVs), requirement for a joint venture agreement etc.

Other more tender specific requirements for mandatory/preliminary evaluation include, but are not limited to:

• AGPO certificate (when bidding for works under this category)
• Certificates from specific organisations depending on the nature of the tender e.g. NEMA Registration Certificates for services such as cleaning; Communications Authority of Kenya Certificates for tenders related to Communications issues, EPRA certificates for electrical works etc.
• Valid compliance certificate from the NSSF
• Valid compliance certificate from the NHIF
• Duly filled and signed schedule of major items of plant and equipment
• Duly filled and signed schedule of key personnel
• Duly filled and signed schedule of completed works
• Duly filled and signed schedule of non-completed works (history of non-performance)

It should be noted that the latter four requirements i.e. plant & equipment, key personnel, completed and non-completed works (there could be others), are usually items that are evaluated at the technical evaluation stage.

The evaluation of these items at the preliminary/mandatory stage should therefore only be limited to confirming completeness of the forms to ensure that this information has been availed in full to enable a detailed evaluation at the next stage.

The detailed evaluation of these criteria in terms of awarding scores based on the presence/absence or quality of each item should ideally be done at the technical evaluation stage.

Important Points to Note on Mandatory Requirements

Examples given above are not conclusive – the requirements listed above are only indicative but not exhaustive of the most common requirements that may be asked from bidders during the preliminary/mandatory evaluation stage.

Mandatory requirements vary depending on the tender – the mandatory requirements will vary from tender to tender and therefore every bidder should dedicate sufficient time to read through the tender document with a tooth comb and see what exactly is required of them.

Bidders should not assume that tender documents from the same Procuring Entity should or will always have the same requirements.

Hence, in a case where a bidder claimed that this was the first time the Procuring Entity had requested for a certain document in its tender document (a CR12 in that case), the Board held:

“There was however no indication that the Procuring Entity’s previous tender requirements were applicable to this tender or that there was any law barring the Procuring Entity from introducing new requirements in the tender documents for this or future procurements.”

(See PPARB 02 of 2017 – Nichros (K) Limited v Kenya Power & Lighting Company Limited, M/S Jumbo North (EA) Ltd -Interested Party).

Note the emphasis on forms being “duly filled and signed” – bidders should ensure that all the forms that require to be filled are properly and completely filled in every section and signed by the right person i.e. a person who has authority to bind the company.

It might be safer to also affix the company stamp in addition to signing. Where the form specifically requests you to affix the company stamp or business seal, ensure that you do so.

A bidder can be disqualified if a form or even some sections of it are not filled and especially if the missing information is not provided anywhere else in the bid.

Even a day short is too short – take note that for criteria where validity is counted in days, even a day short may be too short. A good example is tender security where bidders have been disqualified on the allegation that the tender security was one day (or a few days) less than the required period.

Numerous cases before the Board have titled on the issue of counting of days, with the definitions of the words “from” and “after” been crucial in deciding whether the tender security is valid. (See PPARB 20 of 2020 – Longjian Road & Bridge Co. Ltd v Accounting Officer, KENHA)

Other important formalities

Other formalities that are important to note relating to mandatory requirements, but which may also apply to documents at other stages of evaluation and that may cause the bidder to be disqualified include:

Certification of documents – requirements to have the documents certified as true copies of the original. If certification is required and you fail to certify your documents, then your bid may be disqualified for being non-responsive.

Who should certify – take note of requirements to have the certification done by a specific person e.g. Commissioner for Oaths or in the case of foreign bidders, the documents to be certified by a Notary Public. If the tender documents require certification by a particular professional, certification by any other will not be sufficient.

Qualifications of the certifier should be clear on the face of it – where it is indicated that documents should be certified by a Commissioner for Oaths, certification by an Advocate using a stamp that simply indicates Advocate, even though the Advocate is also a Commissioner for Oaths, may not be sufficient.

Bidders should not expect the tender committee to go investigating the qualifications of the person certifying. (See PPARB No. 1 of 2017 – Nomads Construction Company Limited v Kenya National Highways Authority & M/S Northern Frontier Enterprises -Interested Party)

Institution to provide documents – requirements that certain documents can only be from a particular institution must be adhered to.

For instance, some tenders may specify that they will only accept a tender security issued by a bank and not an insurance company or that the tender security must come from a company approved the Public Procurement Regulatory Authority (PPRA). A tender security provided by a company that does not meet these requirements will not suffice.

Serialization and pagination – requirements that each and every page must be sequentially serialized and paginated should not be ignored as failure to do so will result in disqualification. Some tender documents may even indicate that pagination should not be handwritten.

While requirements on pagination may sound like petty formalities, you could be disqualified for failure to meet these requirements (see PPARB 129 of 2019, Island Homes Developers Limited v Kenya Ports Authority, Dr. Arch Daniel Manduku Accounting Officer Kenya Ports Authority and Wilfak Engineering, at page 38; PPARB 34 of 2020 -Petro Oil Kenya Limited v Accounting Officer, Kenya Ferry Services Ltd.).

So, take your time to read and meet all the mandatory requirements. If you need to burn the midnight oil on the eve of tender closing or to co-opt all your staff to help you complete certain final tender compilation steps such as pagination, please do so because failure to do so may have far-reaching repercussions on your bid.

It is heart-rending to see a technically and financially competent tender being thrown out over simple formalities such as failure to fill certain sections of a form or pagination noting how resource-intensive it is to put together a bid document.

In essence, it does not matter how technically qualified or competitively priced your bid was, if you omit any of the items that were required at the preliminary/mandatory evaluation stage, your bid will be knocked out of the process and will not be evaluated any further.

Procuring Entities often state categorically at the end of the section where mandatory requirements are listed that failure to meet or provide any of the mandatory requirements will lead to disqualification and such a bidder will not proceed to the next stage of evaluation.

Bidders, forewarned is forearmed! Therefore, be advised accordingly on how crucial it is to meet these mandatory requirements at the preliminary stage. These requirements are not considered minor deviations and they cannot be waived.

Discussion and Application

As already mentioned above, bidders may sometimes or often feel that some of the requirements in a tender document are superfluous and unnecessary.

This is especially considering that some of the documents requested may easily be available to the Procuring Entity by logging into existing government portals to confirm their availability or authenticity or by making a simple request to another government entity.

Looking at the example cited above (PPARB 2 of 2017 – Nichros v KPLC) of a bidder who was disqualified for omitting a CR12, it can be argued that this is a document that a Procuring Entity can easily access from the relevant government portal, in this case, Business Registration Service (BRS) or even upon request. The same could be said of other documents such as a tax compliance certificate.

Will a bidder who fails to include a copy of a mandatory document that is easily accessible from a government online portal be disqualified?

What if the bidder who omits to attach these documents which a Procuring Entity can easily access upon request is technically qualified and offers the country a considerable financial advantage compared to the next bidder (perhaps even a saving of a billion shillings)? Should such a bidder be disqualified simply because they omitted a document that the Procuring Entity can access from a government portal or upon request?

The answer to the above questions is a resounding YES. Such a bidder will be disqualified from proceeding to the next level of evaluation and it matters not that the bidder would have been found to be the most technically qualified of all the bidders or even if they offer the lowest bid price had they proceeded beyond the preliminary evaluation stage.

Our current procurement law is that we bristle with such technicalities even at the risk of eliminating very qualified bidders or at the expense of great financial loss to the country.

There is no doubt that this form over substance/technicality-oriented approach to preliminary/mandatory evaluation in Kenya sometimes leads to absurd results by awarding bids to less technically qualified or expensive bidders thus violating the value for money concept.

It is submitted that there is room for law reform on this aspect of Public Procurement in Kenya and we promise to deliver a more detailed exposition on this issue in the fullness of time.

The Public Procurement Administrative Review Board (PPARB) and the Courts have noted in various cases, “that price, is not the only consideration by a procuring entity when determining the bidder to be awarded a tender.”

(See Republic vs Public Procurement Administrative Review Board & 2 Others exparte Coast Water Services Board and Another [2016] e KLR); PPARB 129 of 2019, Island Homes Developers Limited v Kenya Ports Authority, Dr. Arch Daniel Manduku Accounting Officer Kenya Ports Authority and Wilfak Engineering, at page 38).

The Board and courts have also held that mandatory requirements cannot be waived and failure to comply with them cannot be treated as a minor deviation (see PPARB No. 1 of 2017 – Nomads Construction Company Limited v Kenya National Highways Authority & M/S Northern Frontier Enterprises -Interested Party, at page 24).

The clear message to bidders is to ensure that they treat each and every requirement (especially the mandatory requirements) in a tender document seriously, regardless of how petty they might consider them to be.

Advancement to the next level of evaluation will depend on whether you meet these mandatory requirements; as noted above, they are not minor deviations and cannot be waived.

A discussion of what amounts to a minor or material deviation will be the subject of a different article as it is not possible to exhaustively dissect those issues in this article.

Whereas the Constitution of Kenya, 2010 states in Article 159 (2) (d) that, “justice shall be administered without undue regard to technicalities”, players in the procurement field should understand that certain requirements which may be defined as technicalities are not considered as mere technicalities or formalities in the procurement context.

An argument based on Article 159 (2) (d) to try to explain or seek a waiver on a non-conformity may not work in public procurement matters in Kenya.

Decisions of the Public Procurement Administrative Review Board (PPARB) and the Courts on Judicial Review, some which are referred to in this article, demonstrate that the clear position in Kenya on the evaluation of tenders especially at the preliminary evaluation stage is as often cited by Justice John Mativo while quoting Hoexter, that, “Indeed, public procurement practically bristles with formalities, which bidders often overlook at their peril.”

Case Review on Mandatory Requirements

In concluding this article on preliminary/mandatory evaluation, we shall look at a well-reasoned Judicial Review decision delivered by Justice John M. Mativo in order to gain a deeper understanding of how the courts have dealt with the issue of mandatory/preliminary evaluation.

In Republic vs Public Procurement Administrative Review Board; Kenya Medical Supplies Authority (KEMSA) Ex-parte Emcure Pharmaceuticals Limited {2019}, the court dealt with the issue of mandatory requirements.

Facts:  The Applicant (Emcure Pharmaceuticals Limited) attached an expired retention certificate for the year 2018 from the Pharmacy and Poisons Board. Attachment of a valid certificate was listed as a mandatory requirement for this open tender for the supply for ARV medicines-adults.

The Applicant stated that it had paid for the required certificates for the current year though it not attach receipts. It argued that the renewed certificate would be uploaded on the Pharmacy and Poisons Board portal where the evaluation committee for the Interested party could verify.

Held: “the ex parte applicant has failed to demonstrate the decision [of the PPARB upholding the decision of the Procuring Entity to disqualify the Applicant] is unreasonable or irrational. This is because the omitted documents were mandatory requirements under the tender documents. It follows that the Respondent did not take into account irrelevant considerations.”

Case Analysis

The court dealt with the issue of responsiveness in section 79 of the Act at length from paragraphs 38 of the judgement. The court started by reproducing the provisions of section 79 of the Act, which is the provision that addresses responsiveness to eligibility and mandatory requirements in a tender.

Section 79 (1) of the Act Provides:

• A tender is responsive if it conforms to all the eligibility and other mandatory requirements in the tender documents.

(2) A responsive tender shall not be affected by—

(a) minor deviations that do not materially depart from the requirements set out in the tender documents;or

(b) errors or oversights that can be corrected without affecting the substance of the tender.

(3) A deviation described in subsection (2)(a) shall—

(a) be quantified to the extent possible; and

(b) be taken into account in the evaluation and comparison of tenders.

The learned Judge held as follows in paragraph 39:

“A proper construction of the above provision [section 79 of the Act] shows that the requirement of responsiveness operates in the following manner: – a bid only qualifies as a responsive bid if it meets with all requirements as set out in the bid documents. Bid requirements usually relate to compliance with regulatory prescripts, bid formalities, or functionality/technical, pricing and empowerment requirements. Bid formalities usually require timeous submission of formal bid documents such as tax clearance certificates, audited financial statements, accreditation with standard-setting bodies, membership of professional bodies, proof of company registration, certified copies of identification documents and the like. Indeed, public procurement practically bristles with formalities, which bidders often overlook at their peril. (emphasis mine. The quote in underline is attributed to Hoexter, 2012).

The learned Judge went on to note in paragraph 40 of the Judgement as follows:

“Such formalities are usually listed in bid documents as mandatory requirements – in other words, they are a sine qua non for further consideration in the evaluation process.[24] The standard practice in the public sector is that bids are first evaluated for compliance with responsiveness criteria before being evaluated for compliance with other criteria, such as functionality, pricing or empowerment. Bidders found to be non-responsive are excluded from the bid process regardless of the merits of their bids. Responsiveness thus serves as an important first hurdle for bidders to overcome.” (emphasis mine)

In upholding the decision of the Public Procurement Administrative Review Board (PPARB) that the Applicant had not met the requirements, the court held that in the circumstances, the Applicant had failed to show that the decision of the Board was unreasonable.

After explaining at length on the requirement for Procuring Entities to only consider conforming tenders, the court held as follows at paragraph 63:

“The applicant admits that it did not attach the documents in question in its bid documents. Considering the bid requirements, the requirements for bid documents to be substantive, and the mandatory requirements in the enabling statute, I am not persuaded that a different person or tribunal properly addressing itself to the same facts and circumstances could have arrived at a different conclusion.”

In concluding the issue that the decision of the PPARB to uphold the Procuring Entity’s conclusion that the Applicant unresponsive for failure to attach mandatory documents was not unreasonable, the court further noted:

“the ex parte applicant has failed to demonstrate the decision is unreasonable or irrational. This is because the omitted documents were mandatory requirements under the tender documents. It follows that the Respondent did not take into account irrelevant considerations.”

Conclusion

The use of the word “mandatory” in preliminary/mandatory evaluation means exactly that, MANDATORY. These requirements are obligatory, inescapable and cannot be waived and in their absence, no arguments or explanations can rescue a bidder.

A bidder cannot proceed to the next level of evaluation without these requirements, regardless of how highly technically qualified they are or how financially favourable their bid is to the Procuring Entity. If they happen to, then it is probably due to an oversight by the evaluation committee.

As the Board noted in one case, “how fast a sprinter can run does not count if she or he has been lawfully disqualified from the race” (see PPARB 02 of 2017 – Nichros v KPLC, cited in full above). 

The same applies to bidders with strong technical and financial bids but who fail to meet the mandatory requirements. In the context of Public Procurement in Kenya under the current laws, they are nonstarters in the tendering race.