A Summary of the Past and Present
Public Procurement in Kenya is currently governed by the Public Procurement and Asset Disposal Act, 2015 (hereinafter PPADA or the Act) and the Public Procurement and Asset Disposal Regulations, 2020 – Legal Notice No. 69 of 2020 (hereinafter the PPAD Regulations or the Regulations). The Regulations were adopted by the National Assembly on 2nd July 2019.
A detailed review of the PPADA Regulations, 2020 is the subject of a different article on the Gerivia Advocates LLP Blog which is titled, “A Review of the Public Procurement and Asset Disposal Regulations, 2020: The Pros, Cons and Everything in Between.”
Since the enactment of the Act in 2015 until 2nd July 2020 when the PPAD Regulations, 2020 were adopted by the National Assembly, the relevant regulations that were in use together with the 2015 Act were the 2006 Regulations.
This situation was far from ideal for procurement practitioners since the 2015 Act brought about quite a number of changes and therefore the 2006 Regulations were ill equipped to serve the 2015 Act. The more obvious challenge is that the sections of the Act were not in line with particular regulations and hence the regulations needed to be applied with the necessary changes.
Prior to the enactment of the 2015 Act, the governing procurement law in Kenya was the Public Procurement and Disposal Act, 2005 together with the Public Procurement and Disposal Regulations, 2006 (Legal Notice No. 174 of 2006).
The Public Procurement Regulatory Authority (PPRA) gives a good summary of the history of procurement in Kenya in its website. Other writers like Jerome Ochieng and Mathias Muehle have also written on Development and Reform of the Kenyan Public Procurement System in Kenya.
Therefore, this article need not go into great detail on this well-trodden path of revisiting the historical development of procurement in Kenya since others before me have competently captured it, but will instead leave room for more topical procurement issues.
In summary, the public procurement system in Kenya has evolved over the years from an almost non-existent or rudimentary procurement system which operated on circulars and manuals to a system with order and which is regulated by laws and regulations.
The PPRA which was previously known as the Public Procurement Oversight Authority (PPOA) under the 2006 Act is the body created by statute to oversee and currently regulate public procurement in Kenya.
The change from PPOA to PPRA was not merely an issue of change of name but bringing about a change in the role of the authority from simply being an oversight authority to a regulatory authority more roles especially those of ensuring compliance and facilitating debarment proceedings.
The need to move into a better-regulated procurement system was also necessitated by changes that were taking place not just in Kenya but also globally, and also not just within the public procurement space but also in related spheres.
Over time and as the Kenyan economy grew, public procurement expanded to involve multi-billion shillings transactions which the government expended to procure goods, services and works that the public needed.
It followed that the rudimentary system posed challenges as it was not comprehensive or robust enough to ensure that the system being used to procure the goods, services and works was efficient, fair, corruption-free and delivered value for money for the country.
Challenges of inefficiency and corruption in procurement became obvious and with the calls for government to be more accountable in how it spends public resources, the need to develop a proper system to govern public procurement in Kenya became inevitable.
Development partners such as the World Bank have also played a critical role in encouraging the government to adopt progressive laws and regulations in this field.
The above is just a glimpse of how the story of the evolution of the procurement process in Kenya happened. Needless to say, that the system is still evolving as challenges such as corruption and lack of cost-effectiveness still abound.
The Constitution of Kenya and Public Procurement
An obvious starting point in understanding the public procurement system in Kenya is by looking at the Constitution of Kenya, 2010.
The enactment of the Constitution played an important role in giving the evolution of the procurement system in Kenya a boost.
For the first time, the issue of Procurement was captured in the Kenyan Constitution, thus highlighting the important role that it occupies within the governance system.
It is important to note that the 2015 Act was necessitated by the change in the constitutional dispensation in Kenya following the promulgation of the Constitution of Kenya, 2010.
The short title of the 2015 Act is clear that it is “An Act of Parliament to give effect to Article 227 of the Constitution; to provide for procedures for efficient procurement and assets disposal by public entities; and for connected purposes.”
Due to its importance, the constitutional provisions on procurement warrant a verbatim presentation here.
Article 227 of the Constitution of Kenya, 2010 provides:
227 (1) When a State organ or any other public entity contracts for goods and services, it shall do so in accordance with a system that is fair, equitable, transparent, competitive and cost-effective.
(2) An Act of Parliament shall prescribe a framework within which policies relating to procurement and asset disposal shall be implemented and may provide for any of the following –
a. Categories of preference in the allocation of contracts;
b. the protection or advancement of persons, categories of persons or groups previously disadvantaged by unfair competition or discrimination;
c. sanctions against contractors that have no performed according to professionally regulated procedures, contractual agreements or legislation; and
d. sanctions against persons who have defaulted on their tax obligations, or have been guilty of corrupt practices or serious violations of fair employment laws and practices.
A reading of Article 227 of the Constitution reveals a document that was eager to address certain rampant mischiefs and outstanding gaps within public procurement in Kenya.
As a minimum, the Constitution was keen to highlight those “irreducible minimums” on procurement to ensure that the legislative framework prescribed by the Act of Parliament to give effect to Article 227 must make provisions for those specific issues.
It is also clear that the Constitution wanted to set a tone of inclusivity within public procurement in Kenya through use of preferences and protection of previously disadvantaged groups.
These provisions were aimed at ensuring promotion of local contractors and groups that have been historically marginalized in the procurement process such as women, the youth and persons living with disability.
The Constitution was also clear that ‘bad manners’ within the procurement space in Kenya needed to be addressed. The Constitution thus emphasized that sanctions must be imposed against contractors who do not meet the professional and contractual obligations and those involved in corrupt practices and other forms of misconduct.
While Article 227 of the Constitution is the Article that deals directly with Procurement, all procurement related actions and activities are expected to pass the general test of Constitutionality.
Therefore, public officers are expected to honour and respect all other Articles of the Constitution that are relevant to Procurement. These include, but are not limited to;
- The national values and principles of governance contained in Article 10 of the Constitution;
- The provisions of fair administrative action in Article 47 of the Constitution which procuring entities must consider in their actions and decisions relating to procurement;
- The principles of public finance in Article 201 and especially the call to ensure that public money is used in a prudent and responsible way; and
- The values and principles of public service as espoused in Article 232 of the Constitution.
The courts have given life to Article 227 of the Constitution in Procurement disputes by highlighting the fact that the provision is key in the resolution of procurement disputes.
In the case of Republic v Public Procurement Administrative Review Board; Accounting Officer, Kenya Rural Roads Authority & 2 others (Interested Parties) Ex Parte Roben Aberdare (K) Ltd [2019] eKLR the Court held as follows in paragraph 103 of the judgement:
“Procurement disputes revolve around the proper interpretation and application of Article 227 of the Constitution; hence, they raise constitutional issues. This is because procurement so palpably implicates socio-economic rights that the public has an interest in its being conducted in a fair, equitable, transparent, competitive, and cost-effective manner”.
The court went on to state the following at paragraph 104 regarding the principles that are contained in Article 227 of the Constitution:
“…It is important to bear in mind that fairness, equitability, transparency, competitiveness and cost-effectiveness are the guiding principles, required by the Constitution in relation to all public procurement in Kenya. Thus, whatever is done should not cause the process to lose the attribute of fairness or, the attributes of transparency, competitiveness and cost-effectiveness. Fairness in the procurement process is a value in itself and a proper compliance with the procurement process is necessary for a lawful process.”
The court concluded its emphasis on the importance of Article 227 by noting the following:
…Fairness is inherent in the tender procedure. Its very essence is to ensure that before a State organ purchases goods or services, or enters into contracts for the procurement thereof, a proper evaluation is done of what is available and at what price, so as to ensure cost-effectiveness and competitiveness. Fairness, transparency, and the other facts mentioned in Article 227 of the Constitution permeate the procedure for awarding or refusing tenders.”
The above-cited case is just one of the numerous examples of how the courts have breathed life into Article 227 of the Constitution and are an indication that indeed, a proper knowledge and understanding of how the Constitution applies to procurement in Kenya plays an integral role in the understanding of public procurement in Kenya.
The Public Procurement and Asset Disposal Act, 2015 and the PPAD Regulations, 2020
As noted above, in a bid to give effect to Article 227 of the Constitution, the above Act of Parliament was passed. The Act brought about several changes such as the change of the PPOA to PPRA, changes in the evaluation process amongst others.
The PPAD Regulations, 2020 were adopted on 2nd July 2020 after a long five-year wait. The comprehensive regulations have provided detailed content and procedures for better implementation of the Act while also providing schedules which have provided forms for various applications.
An apt question to raise at this time is, did the 2015 Act comply with the requirements of the Constitution in terms of providing for the items highlighted in Article 227 (2)? The answer to this question must be in the affirmative, as demonstrated below. The question of the practical implementation of Article 227 (2) is a different topic which we will shelve for another day.
Part IV of the Act provides for Compliance Procedures. This section gives the Authority power to conduct investigations in section 34. In section 38, the Director General is empowered to make certain orders if the investigations reveal a breach of the law. The measures include termination of procurement proceedings and referral to relevant authorities to take action.
Section 41 gives the Board of the PPRA the power to debar a person for certain offences, acts or omissions as provided in that section.
Part XVI of the Act provides for offenses and sanctions in section 176. The offences range from divulging of confidential information, inappropriately influencing tender evaluations, committing fraudulent acts, withholding notifications of award to both the successful and unsuccessful bidders among others.
Section 171 (2) provides for the sanctions for committing the offences highlighted above. The fines levied on a natural person are four million shillings or imprisonment for a term not exceeding ten years or both and if a body corporate, the fine should not exceed ten million.
Section 177 provides for general penalties and sanctions for an offence under the Act for which no penalty is provided.
There are concerns about whether a fine of four million shillings is a sufficient penalty and deterrent for a public officer who may have benefitted in the millions through committing any of the offences listed in section 176. Perhaps a combination of both the fine and a prison term may be a more effective penalty.
To give effect to the Constitution, the Act and the regulations also provided for Preferences and Reservations in Part XII of the Act.
Preferences and Reservations
The Act provides in section 53 (6) that, “All procurement and asset disposal planning shall reserve a minimum of thirty per cent of the budgetary allocations for enterprises owned by women, youth, persons with disabilities and other disadvantaged groups.”
The Act also includes other provisions to make it easier for the disadvantaged groups to access procurement opportunities, such as sections 61 (5) and 142 (3) which make special exceptions on tender security and performance security respectively for the disadvantaged groups.
The two provisions provide that tender security shall not be required in procurements reserved for small and micro-enterprises or enterprises owned by women, youth, persons with disabilities and other disadvantaged groups (generally referred to here as disadvantaged groups). Instead, such groups shall be required to fill and sign the Tender Securing Declaration Form as prescribed.
In the case of performance security, it may not apply for consultant services, works and supplies where the value does not exceed a certain threshold or for works and supplies reserved for the disadvantaged groups, the requirement for performance security may be waived or fixed to not more than 1% of the tender sum.
The above provisions if well implemented can make procurement more accessible to the small and micro-enterprises and the disadvantaged groups. This is as long as payment for contracts is done within a reasonable period of time because delayed payments have contributed to stunting or even killing most businesses, especially those operated by disadvantaged groups.
Besides the above provisions, the PPADA provides for general procurement principles and rules (Part VI and VII), methods of procurement, procurement contracts, inventory control, asset and stores management and distribution and disposal of assets. Part XV discusses administrative review procedures which will be discussed in some detail below.
Access to Government Procurement Opportunities (AGPO)
As a way of implementing the preference scheme required by the Constitution and the PPADA, the Government of Kenya set up the AGPO program.
The website describes the function of AGPO as follows:
“The aim of the AGPO Program is to facilitate the enterprises owned by youth, women and persons with disability to be able to participate in government procurement. This will be made possible through the implementation of the Legal requirement that 30% of government procurement opportunities be set aside for the youth, women and persons with disability. It is an affirmative action program aimed at empowering disadvantaged groups by giving them more opportunities to do business with Government.”
The website requires registration of the enterprises owned by the youth, women and persons with disability to be registered on the website where the requirements are provided.
Administrative Review of Procurement and Disposal Proceedings
Part XV of the Act is crucial as it discusses the administrative review of procurement and disposal proceedings before the Public Procurement Administrative Review Board (PPARB) and procedures and timelines including those of filing appeals from the PPARB to the High Court.
Section 167 of the Act provides that a candidate or tenderer who claims to have suffered or to risk suffering loss or damage due to the breach of a duty imposed on a procuring entity by this Act or the Regulations, may seek administrative review within fourteen days of notification of award or date of occurrence of the alleged breach at any stage of the procurement process, or disposal process as in such manner as may be prescribed. It is important to note the following:
- Locus standi – you should either be a candidate (a person who has bought a tender document) or a tenderer (actually submitted a bid). The reason for allowing candidates access to the PPARB is to allow them to challenge issues such as breaches of the law in the tender documents even before submission of bids e.g. discriminatory or criteria that violates the Act in the tender documents.
- Breach of duty –indicate the sections of the law that have been violated in the tendering process, either the Constitution and the provisions of the Act and regulations.
- File within fourteen days – the timelines within which you should approach the Board are strict and your case will be thrown out if you approach the PPARB after fourteen days. This is the case even if you are only one day late or even if you argue challenges such as the COVID-19 pandemic delayed the filing process (see PPARB No. 52 of 2020 – Adrian Kenya Ltd. v the CEO, ICT Authority).
- Timelines – section 171 of the Act provides that the Review Board shall complete its review within twenty-one (21) days after receiving the request for review.
The Application to the Board is made through a Request for Review (RFR) Application supported by a Statement in Support while the Respondent files a Memorandum of Response which may be supported by an Affidavit. The format for the RFR is provided for in the PPAD Regulations, 2020 in the Fourteenth Schedule.
The interested parties may file Replying Affidavits either in support or opposition to the RFR. The Applicant usually has the last right of reply by filing a further statement.
Parties then file written submissions in support of their cases as a last step before hearing (pre-Covid-19) or the ruling. Due to the breakout of the COVID-19 pandemic and the resultant social distancing measures, the PPARB dispensed with oral hearings and cases are currently canvassed by way of submissions.
Section 168 of the Act is clear that upon filing of the RFR, the Secretary of the PPARB notifies the accounting officer of the procuring entity of the pending review and the suspension of the procurement proceedings. This is to ensure that no contract is signed with the successful bidder during the pendency of the procurement proceedings.
While the general perception is that tribunals and courts in Kenya are generally slow in resolving disputes, the PPARB is an exception to this rule as it actually makes its decision within twenty-one (21) days which time includes the time which the parties are given to exchange pleadings and file submissions.
Parties are therefore expected to file their pleadings before the Board within strict timelines (a few days) to ensure that the Board has enough time to issue its Ruling within the twenty-one (21) days. For instance, a Respondent is only given 3 days to file a response after they have been served by the Applicant and if they fail to do so, the case may be heard and decided without their input.
Appeals from decisions of the PPARB / Judicial Review
A party aggrieved by the decision of the PPARB has a right to file a judicial review application before the High Court within fourteen (14) days from the date of the PPARB decision, failure to which the Review Board’s decision shall become final and binding to both parties (see section 175 of the Act).
Both the Act and judicial decisions are clear that no contract can be signed with the successful bidder during the fourteen (14) days after notification and the fourteen (14) days after the decision by the PPARB to allow any aggrieved person to file an appeal.
Any contract entered into before the lapse of the 14 days is voidable (see Republic v Public Procurement Administrative Review Board; Kenya Medical Supplies Authority (KEMSA) (Interested Party) Ex parte Emcure Pharmaceuticals Limited [2019] eKLR, paragraphs 80-84 and paragraph 89).
The Act further provides at section 175 (3) and (4) that the High Court and Court of Appeal shall determine the judicial review application within forty-five (45) days and if they fail to make a decision within the prescribed time the decision of the PPARB shall become final and binding.
Whereas the PPARB usually adheres to the strict timelines in the Act in its decision-making process, this may not be the case for appeals to the High Court, though the process is still faster compared to the speed at which other cases move through the courts.
The strict timelines, especially at the PPARB level where most procurement disputes are resolved, is an indication of the importance that is attached to speedy and efficient procurement processes in the country. Indeed, development and smooth operations would be hampered greatly if procurement processes were stuck for months or years in slow dispute resolution processes.
It should be noted that nothing stops an aggrieved bidder from filing a case directly to the High Court, either for judicial review or for other application including constitutional petitions and civil cases without going through the PPARB, depending on the issues that the aggrieved candidate or tenderer wishes to ventilate in their case.
In support of the above proposition that the PPARB-judicial review path is not the only dispute resolution path for procurement issues, section 174 of the Act provides that, “the right to request a review under this Part is in addition to any other legal remedy that a person may have.”
For instance, it has long been held that judicial review is limited in the sense that it mostly addresses the decision-making process and does not go into the merits of a case and that in contentious cases where facts need to be verified, judicial review may not be the best forum.
While there has been some kind of shift in this approach since the passing of the Constitution and the Fair Administrative Action Act (FAAA) and it is said that judicial review may look into merits to some extent, it is still limited.
In the case of Suchan Investment Ltd vs The Ministry of National Heritage And Culture & 3 Others, [2016] eKLR, it was held:
“Analysis of Article 47 of the Constitution as read with the Fair Administrative Action Act reveals the implicit shift of judicial review to include aspects of merit review of administrative action…”
Even with the implicit shift in judicial review to handle certain aspects of merit review, the courts are clear that judicial review is not well suited to handle cases where there are many contested facts and where there are serious and weighty arguments to be considered.
It was held in Super Nova Properties Limited & another v District Land Registrar Mombasa & 2 others; Kenya Anti-Corruption Commission & 2 others (Interested Parties) [2018] eKLR, at paragraph 32 (while citing the case of Funzi Island Development Ltd & 2 Others vs County Council of Kwale & 2 Others [2014] e KLR), that:
“It is true that generally speaking, judicial review procedure is not well suited for resolving disputes on material fact.”
Karanja JA in the aforementioned case also expressed that:
“It is common ground that the subject matter herein is property worth a substantial amount of money. There were also serious and weighty arguments, for instance, whether the property in question was Trust Land or not; whether it was forest land or not; whether it formed part of Funzi Island or it formed part of the foreshore which could not be set aside for allocation.
In my view, a matter such as this ought to have been fully heard as a civil claim where all the parties would have had an opportunity to bring all their legal ammunition in support of their claim. That way, issues of fraud as envisaged under the Registration of Titles Act (RTA), and other disputed facts would have been fully canvassed and conclusive determinations made on the same.” (emphasis added)
In this regard, a bidder who is presented with a case where there are many contested material facts which they would want resolved, as opposed to reviewing whether the decision-making process that led to the award of the tender to a particular bidder was proper, then the route of going through the PPARB and appeal for judicial review at the High Court may not be suitable.
The dispute resolution procedure that will be followed in each case will depend on the facts of each case and it is important that aggrieved persons, whether candidates or tenderers seek counsel from their Advocates on record to advise them on the most appropriate route to take.
Decisions of the PPARB and Courts
For a good understanding of procurement law in Kenya by procurement practitioners (not only lawyers but other procurement professionals), it is recommended that you read the decisions of the PPARB or the courts such as the High Court and Court of Appeal.
These decisions of the PPARB and the Courts will give you an understanding of the interpretation of various day to day issues that are applicable in procurement law e.g. whether the evaluation was properly conducted, assessing responsiveness, tender validity, timelines etc.
The decisions are also very helpful for procuring entities who are often the Respondents before the PPARB as they will guide them on the legalities of their actions, right from the procurement planning process, tender preparation and all the way to evaluation and contract award.
Decisions of the PPARB are posted on the PPRA website where you will find decisions of the Board going back to 2004.
Procurement related decisions of the Courts are found on the Kenya Law Reports website, where you can search for a case by name or even do a search by issue. The search engine tool on eKLR is enhanced by google and it is quite effective and will quickly give you results which are relevant to your search topic.
Other Useful Resources
The Public Procurement Information Portal (PPIP)
The Public Procurement Information Portal is a portal that is operated by the PPRA. The PPIP is described on the website as “an online platform provided by Public Procurement Regulatory Authority (PPRA) for publication of contract awards and tender notices by Procuring Entities.”
The PPRA indicates on the portal that procuring entities should consolidate/upload the information on a monthly basis by the 15th day of every subsequent month.
In addition to providing general statistics on government tenders, it provides information on:
- All government open and closed tenders, including addendums and other notices;
- Contracts entered into by procuring entities;
- List of procuring entities such as name and contacts;
- List of suppliers who can be identified by a portion of their KRA PIN, business number, county of operation and an indication whether they are approved.
- The portal requires that procuring entities log into the portal to upload the relevant information.
The portal is regularly updated by most procuring entities and you can find useful information such as tender documents and addendums for most of the advertised tenders.
However, there are a few instances when the tenders will not be available or addendums and notices related to the tenders may be missing.
Private Sector Tender Websites
The private sector is obviously an important stakeholder in the public procurement process in Kenya since it supplies most of the goods, services and works that the government procures.
In addition to participating in public procurement as suppliers, some of the private sector players are playing an important role in mirroring the work done by PPRA through the PPIP through provision of information on tenders. This is through creation of vibrant websites that will provide information on government tenders and other related services.
The Government operated information portal i.e. the PPIP should be the first port of call for all government tender related information as it is directly and regularly updated by procuring entities. The Government will not accept any responsibility for any loss suffered by persons who may have relied on erroneous information in the private websites.
Nevertheless, these private sector run websites still serve as a useful backup in case you cannot find some information in the PPIP or even in alerting you on available tenders based on which you can proceed to the Government portal or contact the procuring entity to verify and get further information.
Some of the most common private sector operated websites include TenderSoko and Bunisha. These private sector players play an important role, not as competitors to the government-run portal, but as necessary complements.
Conclusion
This article was aimed at providing a general overview of the public procurement process in Kenya to enable anyone who is new in the field but is eager to learn, whether a Kenyan or foreigner, to understand the basics.
To this end, the article has provided a sneak preview into the relevant laws, bodies involved, a highlight of a few issues, dispute resolution in public procurement in Kenya while also providing other pertinent information such as useful websites on the topic.
It was beyond the scope of this article to provide comprehensive information on each of the sub-topics that were covered as it is not possible or even desirable to try and summarise public procurement law in Kenya in one article.
Regular readers of the Gerivia Advocates LLP Blog can be assured that comprehensive articles on various topics related to public procurement in Kenya will be uploaded. So, keep reading!!!
