Introduction
The Public Procurement and Asset Disposal (Amendment) Bill, 2021 was published through Kenya Gazette Supplement No. 121 (National Assembly Bills No. 32) dated 11th June 2021 (hereinafter, “the Bill”). The Bill sought to introduce a raft of changes ranging from the definitions to timelines under the Bill. The Bill can be found on the Kenya Law Report Website here: http://kenyalaw.org/kl/index.php?id=11332 .
Through a newspaper advertisement that appeared on 7th September 2021, the Twelfth Parliament of the National Assembly in conducting public participation invited submission of memoranda on the above Bill and the Public Procurement and Asset Disposal (Amendment) Bill, 2021 (National Assembly Bill No. 36 of 2021).
Gerivia Advocates LLP reviewed the two Bills and submitted memoranda on the Bill. The review feedback submitted by Gerivia Advocates LLP can be viewed on our Blog here:>> https://gerivia.co.ke/wp-content/uploads/2023/09/GERIVIA-REVIEW-FEEDBACK-ON-THE-PPAD-AMENDMENT-BILLS-2021-21.09.2021-Final.pdf
Following the consideration of the Bill and the memoranda received, the Departmental Committee on Finance and National Planning (hereinafter, “the Committee”) produced the Report on the Consideration of the Public Procurement and Asset Disposal (Amendment) Bill, 2021 (National Assembly Bill No. 32 of 2021) dated 23rd November 2021 (hereinafter, “the Report”). The Report analysed the contents of the Bill and summarized the memoranda received from stakeholders. That Report can be read here on the Parliament website (http://www.parliament.go.ke ) or on our website under here:>>https://gerivia.co.ke/wp-content/uploads/2023/09/Report-Public-Procurement-and-Asset-Disposal-Amendment-Bill-2021.pdf
As noted in paragraph 51 of the Report, the Committee received memoranda from two stakeholders, namely:
- Kenya Institute of Supplies Management (KISM) – https://kism.or.ke/ ; and
- Gerivia Advocates LLP – https://gerivia.co.ke/
Thereafter, the Public Procurement and Asset Disposal Act (“the Procurement Act), 2022 Edition came into effect (See http://kenyalaw.org:8181/exist/kenyalex/actview.xql?actid=No.%2033%20of%202015 ).
What changes did this Bill introduce into the 2022 Edition of the Procurement Act?
The 2022 PPADA Amendments
Definitions
The Bill introduced three main changes in the definitions section:
The definition of the term “complex and specialized contracts” was expanded to clarify the kind of contracts covered under this definition. The initial edition of the Procurement Act defined these contracts as “contracts that include procurement where the terms and conditions of the agreement are different from standard commercial terms and conditions”. The 2022 edition of the Procurement Act expanded that to include contracts for infrastructural works performed under international agreements containing international terms and conditions.
The Bill also introduced the definition of the term “local contractor” which was previously missing. A local contractor means a person or firm registered in Kenya under the Companies Act, 2015 or any other written law and whose operation is based in Kenya.
The Bill also widened the definition of a “procurement professional” to remove the restriction in the previous edition of the Procurement Act where only persons who were members of the KISM could be termed as procurement professionals. The current definition defines a procurement professional as someone who has professional qualifications in procurement or supply chain management from a recognized institution and is a member of KISM or any other procurement or supply chain professional body recognized in Kenya.
Abandoned amendments on the role of the National Treasury
The Bill had proposed an amendment to Section 7 of the Procurement Act to add two additional roles for the National Treasury in public procurement. These changes were in training and capacity development for procurement and supply chain management service cadre and in developing and managing the state portal on procurement and asset disposal.
These two proposed amendments were abandoned after the Committee considered the submissions made by KISM to the effect that these two roles essentially vest in the Public Procurement Regulatory Authority (PPRA) and were hence not included under Section 7 of the Procurement Act as additional roles to the National Treasury.
Debarment for filing frivolous and vexatious claims
The two stakeholders who submitted Memoranda, KISM and Gerivia Advocates LLP were both opposed to this amendment.
In its submissions to the Committee, Gerivia Advocates LLP indicated that it was strongly opposed to this proposed amendment and consider it retrogressive because its effect is to scare potential litigants from challenging procurement proceedings, thus discouraging scrutiny of procurement proceedings.
The stakeholders were of the view that the current powers of the Public Procurement Administrative Review Board (hereinafter, “the Review Board”) under Section 172 of the Procurement Act to order forfeiture of the deposit for bidders who file frivolous and vexatious claims and in Section 173 (d) to order payment of costs are a sufficient remedy to this challenge.
Debarment opens the door for further litigation because a bidder who is debarred under this proposed section would still have a right to appeal this decision to the High Court.
Despite the strong opposition by stakeholders on introduction of a clause that is meant to discourage bidders from filing requests for review, this amendment passed.
Section 41 (1) (j) of the Procurement Act 2022 Edition now states that the Board [of the PPRA] shall debar a person from participating in procurement and asset disposal proceedings on the ground that the person-
(j) is determined by the Review Board to have filed a request that is frivolous or vexatious or was made solely for the purpose of delaying the procurement proceeding or a performance of a contract.
Section 172 of the Procurement Act which allows the Review Board to dismiss frivolous appeals and for forfeiture of the deposit is further reinforced by debarment of the Applicant of the frivolous and vexatious appeal.
It is our considered view that the powers of the Review Board to dismiss frivolous and vexatious appeals and to order forfeiture of the deposit are enough to punish such conduct. The additional punishment of debarment by the PPRA is therefore excessive, unnecessary and borders on being unconstitutional as it infringes on Article 48 of the Constitution which provides for access to justice.
Amendments relating to the Director General of the PPRA
Sections 39 and 40 of the Procurement Act are amended in the 2022 Edition to replace the word Board (meaning the Board of the PPRA) with the term Director-General of the PPRA. The amendment on Section 39 of the Procurement Act was aimed aligning it to Section 38 (2) of the Procurement Act, such that the person/entity seeking judicial review under Section 39 of the Procurement Act would be doing so against the order of the Director-General made in Section 38 of the Procurement Act. It was an anomaly to be seeking judicial review against the order of the Board when the order is made by the Director-General of the PPRA and not the Board.
Section 48 (2) of the Procurement Act was amended to clarify the fact that the inspection and acceptance committee shall be appointed by the accounting officer or the head of the procuring entity on the recommendation of the head of the procuring function as opposed to the recommendation of the procurement unit. This amendment serves the function of utilising the term “procurement function” as opposed to “procuring unit” which term is not defined under the Procurement Act. The amendment also identifies the specific person to recommend members of the committee to be appointed, this being the head of the procurement function.
The change in Section 51 of the Procurement Act which deals with procuring and asset disposal agents has been amended at section 51 (2) (b) to replace the term “procurement and disposal unit” with the term “procurement function” for consistency, since procurement function is the term defined under the Procurement Act. A similar change was also made to Section 114 of the Procurement Act, by deleting the reference to procurement management unit and replacing it with the term “procurement function”.
Increased transparency in procurement planning
The amendments to Section 53 of the Procurement Act are some of the most progressive additions in the 2022 Edition. The addition of Section 53 (12) and 53 (13) require the Accounting Officer of a procuring entity and the National Treasury to publish and publicize the approved procurement plans on the website of the procuring entity and on the state tender portal,[ https://tenders.go.ke/] respectively, as an invitation to treat.
Section 53 (11) of the Procurement Act clearly spells out that a state or public officer who fails to prepare procurement and asset disposal plans shall be subject to disciplinary action. It is possible that the compliance by procuring entities in preparing procurement plans can be attributed to enforcement measures in the form of disciplinary action for failure to prepare the plans. Perhaps similar consequences should have applied to the failure by the relevant state/public officers to publish and publicize procurement plans.
The Report by the Committee noted that the publication of procurement plans is one of the sub-indicators (under transparency and public information) that is checked during the Public Expenditure and Financial Accountability (PEFA) and the United Nations Convention against Corruption (UNCAC) assessments to which Kenya ascribes.
Duty to carry our market surveys
Clause 54 was amended to introduce section 54 (2A) of the Procurement Act which provides that “the head of the procurement function shall carry out market surveys to inform the placing of orders or decision making on a procurement by the relevant awarding authority.” Section 54 (2B) introduced additional provisions on market surveys but specific to infrastructure projects.
Gerivia Advocates LLP’s submission on this amendment was to reconcile this requirement with the provisions of Sections 9 (m) and 54 of the Procurement Act which mandate the PPRA to create a central repository or database of benchmarked prices and price comparisons for goods, services and works and Section 54 (3) which also requires PPRA to issue quarterly market price index as a reference guide to assist accounting officers in making informed decisions.
It was Gerivia’s view that the additional duties of carrying out market surveys vested on the head of the procurement function needs to be clarified against the role of PPRA on this issue to avoid duplication and conflict where the procuring entity and PPRA end up with different prices.
Even in its current form, this is a useful clause aimed at avoiding the purchasing of standard items at inflated prices and if well implemented, could avoid wastage of public resources.
Clauses on Timelines
The Bill had various clauses that proposed to reduce timelines under the Procurement Act for various activities, but which were all abandoned by the Committee, probably due to the strong submissions made by the stakeholders opposing the introduction of unrealistic timelines.
For instance, clause 19 of the Bill had proposed to reduce the period for tender evaluation under Section 80 of the Procurement Act from 30 days to 7 days. Clause 24 sought to amend Section 94 (4) of the Procurement Act, which essentially is the period provided after a Tender is advertised from 14 days to 7 days. Clause 32 of the Bill sought to amend Section 126 of the Procurement Act by reducing the period for evaluation of proposals from 21 days to 7 days and Clause 33 of the Bill in amending Section 135 of the Procurement Act to reduce the period for contract signing from 14 days to 7 days.
Some of the arguments made in retaining the timelines under the Procurement Act, and which should dissuade any proposals to reduce timelines in the future include the following:
- Unrealistic timelines and expectations result to non-compliance with the law which reduces the impact of the law.
- The 14 days provided under Section 94 (4) is a reasonable timeline that allows bidders to submit quality and responsive bids. Tenders are bulky, tender review is a time consuming and labour-intensive exercise. The 14 days are also useful in cases of complex tenders where bidders need to form joint ventures or such other teaming arrangements which may take time. The law provides for emergency procedure where procurement needs to be undertaken in a speedier manner.
- Procuring entities have many tenders to review and they also have other tasks. It is hence important that they be given sufficient time to do a proper tender review that will stand the test of scrutiny by the Review Board and the Courts.
- With regard to the proposed amendment for timelines under Section 126, our submission was that there is no point in creating unrealistic timelines then start creating provisos (the proposed Section 126 (3A)) which add petty tasks like extending deadlines to the already busy accounting officers.
Amending Section 135 of the Act to reduce the timelines for signing the contract from the current 14 days to 7 days would have created confusion with the timelines under Section 167 of the Procurement Act since the current 14 days period before signing a contract is tied to the standstill period within which aggrieved bidders should approach the Review Board.
Reducing the timelines for signing the contract to 7 days would have meant procuring entities could sign contracts during the 14-day stand-still period, thus rendering procurement disputes filed before the Review Board after a contract has been signed within the 7 days nugatory.
Minor edits and corrections in cross referencing
The 2022 edition of the Procurement Act also corrected some errors in the old edition of the Procurement Act, such as the erroneous reference in Section 67 (4) to Section 67 (2) (d) (iii) which does not exist instead of referring to Section 68 (2) (d) (iii).
Section 67 (4) of the Procurement Act provides for the level of disclosure of information allowed to an applicant seeking a review under Part XV of the Act, which is limited to the summary provided under Section 68 (2) (d) (iii). This summary includes a summary of the proceedings of the opening of tenders, evaluation and comparison of the tenders, proposals or quotations, including the evaluation criteria used as prescribed.
The marginal note in Section 69 of the Procurement Act which previously read “procurement approvals” has been widened to read “procurement approvals and delegation of responsibility” to ensure that the marginal note aligns with the content of the section.
Section 71 (3) of the Procurement Act was corrected to clarify the fact that it is a procuring entity that may seek clarification from the candidate or government agency and not a tenderer.
The correction of cross-referencing errors was also made in Section 80 (1) which previously indicated that the evaluation committee appointed under Section 46 of the Procurement Act shall evaluate and compare the responsive tenders other than tender rejected under Section 82 (3), when in fact the Procurement Act does not have a Section 82 (3). This section was corrected to leave out the erroneous reference to a non-existent Section 82 (3).
It is our view that the drafters of the old Section 80 (1) probably intended to state that the evaluation committee could not evaluate tenders rejected for being submitted after the deadline under Section 77 (3).
The erroneous reference to Section 74 of the Procurement Act in Section 117 (a) of the Procurement Act on initiation of procurement has been corrected to read Section 73 of the Procurement Act.
Tender sum as read out is and remains final
Section 82 of the Procurement Act is well known since it injected further transparency into the procurement process under the 2015 Procurement Act by introducing the concept of the tender sum that is read out at the tender opening being the final sum that is not subject to any correction or adjustment. The section reduced the mischief that came with the clandestine correction of arithmetic errors or “errors” in favour of preferred bidders.
The 2022 edition of the Procurement Act has revised the marginal note in Section 82 from simply reading “No correction of errors” to reading “Correction, revision, adjustment and amendment of tender”. It is our view that a more appropriate marginal note should have referred to the words “tender sum”.
Section 82 of the Procurement Act was further amended to introduce Section 82 (2) which clarifies that Section 82 (1) shall not apply to Section 103 (Direct Procurement), section 131 (Competitive Negotiations) and Section 141 (Framework Contracting and Multiple Awards).
The obvious explanation behind the introduction of Section 82 (2) is that for these methods of procurement, the concept of the tender sum being read out is inapplicable. This is because in the case of direct procurement, there is only one bidder; for competitive negotiations, even if the tender sum is read out, it cannot be final since it is likely to change due to negotiations; and in the case of framework contracting and multiple awards, the tender sum cannot be pre-determined hence there is no tender sum to be read out.
Section 86 of the Procurement Act which defines how to arrive at the successful tender has been amended to clarify that it does not apply to framework contracting and multiple awards under Section 141 of the Procurement Act.
Section 89 of the Procurement Act provides for rules on international tendering and competition. Section 89 (f) of the Procurement Act was corrected to address a cross referencing error to clarify that where local or citizen contractors participate, they shall be entitled to preferences and reservations set out under Section 155 of the Procurement Act, and not Section 85 of the Procurement Act. Section 85 of the Procurement Act relates to recommendation of awards and not preferences and reservations.
Competitive Negotiations
Section 92 of the Procurement Act which provides for procurement methods for goods, works and services has been expanded to include a Section 92 (2) which clarifies that the procedure for competitive negotiations provided under Section 131, 132 and 133 of the Procurement Act, shall apply with necessary modifications to procurement of goods, works and non-consultancy services.
It should be noted that the procedure for competitive negotiations in Sections 131, 132 and 133 of the Procurement Act applies to consultancy services under Part X of the Procurement Act. Even though competitive negotiations is listed as a procurement method under Part X of the Procurement Act and competitive negotiations may be applied to procurement of goods, works and non-consultancy services, no procedure for such negotiations had been provided in the Procurement Act.
The introduction of Section 92 (2) cures that oversight thus allowing procuring entities to save public funds by utilizing competitive negotiations for non-consultancy procurements.
Advertising of Tenders
Section 96 of the Procurement Act. Act provides for advertising of tenders mainly in the dedicated Government tender portal,[ https://tenders.go.ke/], the website of the procuring entity and in two newspapers of nationwide circulation.
The amendment to this section is aimed at accommodating advertising by putting a notice in at least two free to air television stations and radio stations of nationwide reach to accommodate Kenyans who may not have ready access to newspapers or websites but are interested in participating in tendering processes.
Mandatory Notices for Expressions of Interest
Under the 2015 edition of the Procurement Act, the requirement by the accounting officer to prepare a notice inviting persons to submit expressions of interest under Section 119 of the Procurement Act was couched in optional language, using the word “may”. Under the 2022 Edition, the requirement to prepare the notice is couched in mandatory terms.
Article 119 (1) of the Procurement Act states, “An accounting officer of a procuring entity shall prepare a notice inviting interested persons to submit expressions of interest as prescribed.” This seemingly minor tweak advances the principles in Article 227 (1) of the Constitution by ensuring such processes are fair, transparent and competitive, which also advances the value of cost-effectiveness. (Emphasis added)
Evaluation and Shortlisting for Consultancy Services
The 2022 edition of the Procurement Act introduced several useful changes to Section 121 of the Procurement Act which will make procurement of consultancy services more efficient. These changes include:
- Amending Section 121 (1) of the 2015 edition of the Procurement Act which implied that it was the role of the accounting officer to record the evaluation results of the expression of interest to clarifying that the recording of the evaluation results shall be done by the evaluation committee. This change aligns with the provisions of Section 46 of the Procurement Act on the role of the Evaluation Committee and with Section 121 (4) which states that the results should be submitted to the accounting officer for review and approval.
- The introduction of Section 121 (5) to the Procurement Act allows the procurement process to proceed even where the process elicits less than the number of candidates envisaged under Section 121 (3) of the Procurement Act i.e., three proposals, thus unlocking the process and facilitating speedy and efficient procurement processes.
Selection methods for Requests for Proposals
Section 124 (14) of the Procurement Act which requires placement of an advertisement for single source selection has been deleted since it contradicts the provisions of Section 124 (12) which provides for the circumstances that justify single source selection by ensuring it presents a clear advantage over competition.
The conditions in Section 124 (12) oust the need for placement of an advertisement, which Section 124 (14) required in the case of single source selection. For instance, some of the conditions for single sourcing is if there is only one known supplier or where only one supplier has exclusive rights, situations which do not require advertising.
Publication of National Security Contracts
Section 138 of the Procurement Act provides for the publication of procurement contract awards to ensure transparency and accountability.
The amended Section 138 (5) of the 2022 edition of the Procurement Act seeks to extend transparency to defence contracts by limiting the exemption to publish contracts awarded by national security organs only to contracts awarded through classified methods and procedures provided for under Part VIII of the Act, which provides for Classified Procurement Methods and Procedures.
The 2015 edition of the Procurement Act provided a blanket exemption from publication of all procurement contracts awarded by national security organs. The amendment introduced under the 2022 edition means that national security contracts relating to the open list under Section 90 (4) of the Act should be published as per the requirements of Section 138 of the Procurement Act.
Quantity Variations before the end of 12 months
The purpose behind the amendment of Section 139 (4) was to allow procurement contracts to be varied at any time, to cover a variation in terms of quantity which might be occasioned due to unforeseen circumstances.
Since the amendment was only aimed at allowing for a quantity variation before the end of 12 months, this was achieved by deleting the limitation in the introductory part of Section 139 (4) which previously stated that “any variation of contract shall only be considered after twelve months from the date of signing the contract…”
It should be noted that the limitation on price variation remains the same under Section 139 (3) such that no contract price shall be varied upwards within twelve months from the date of signing the contract. It may be argued that an increase in quantity will result to price variation, but this may not be the case when looking at price per unit.
Framework Contracting and Multiple Awards
Section 141 of the Procurement Act has been amended to add clarity to the concept of framework contracting. Framework agreements allow for supply of goods or services whose quantities and delivery schedules are not definable or determinate at the beginning of the contracting period.
Framework agreements and contracts allow procuring entities to order the required quantity of items once they are determined from a pre-qualified list of suppliers and enter into contract with one or more suppliers for the specific quantity, thus saving procuring entities the trouble, expense and time delays of conducting a new procurement process every time they need to procure for these goods or services.
Section 141 of the Procurement Act has been amended to include Section 141 (2) which defines “multiple award” to mean award of separate (partial) contracts to two or more bidders of the same item.
Section 167 on Requests for Review
This section of the Procurement Act is well known as it deals with Requests for Review.
Section 167 (2) of the Procurement Act which requires that a request for review be accompanied by a refundable deposit of not less than 10% of the cost of the contract has been amended by adding a proviso that exempts tenders reserved for women, youth, persons with disabilities and other disadvantaged groups from this deposit requirement.
In practice, this deposit requirement has never come into force because the same was stayed on 27th July 2020 by Hon. Mr. Justice W. Korir in Petition No. E226 of 2020, Roads and Civil Engineering Contractors Association & Another v. Attorney General & 3 Others and the stay orders remain in force.
It remains our firm view that this deposit requirement is the most retrogressive provision in the Procurement Act and is unconstitutional as it violates Article 48 of the Constitution provides that, “The state shall ensure access to justice for all persons and, if any fee is required, it shall be reasonable and shall not impede access to justice”.
Rather than amend the Procurement Act to exempt disadvantaged groups from payment of the deposit, Parliament should have amended the Procurement Act to do away with Section 167 (2) and the corresponding Regulations, such as Regulation 222.
The amendment in Section 167 (4) (b) is welcome as it corrects a cross referencing error on termination, by referring to Section 63 of the Act which provides on termination, instead of Section 62 of the Act.
Rejection of Requests for Review filed without filing fees
Section 169 of the Procurement Act which allows the secretariat of the Review Board to reject Requests for Review where no filing fees have been filed has been amended to waive the requirement of filing fees for disadvantaged groups.
This amendment was introduced by adding Section 169 (2) of the Act which allows for waiver of such fees or where required, the fees shall be as prescribed, meaning that the Regulations can provide for more affordable filing fees for candidates under procurements reserved for women, youth, persons with disabilities and other disadvantaged groups.
Other amendments
The 2022 edition of the Procurement Act also made amendments to Part XVI of the Procurement Act which provides for offences and sanctions, mainly to correct cross referencing errors in citing other provisions of the Procurement Act. There were also amendments to the Schedules aimed at giving flexibility to the Board of the PPRA in determining the leadership of the Board and meeting schedules.
Conclusion
The amendments introduced through the 2022 edition of the Procurement Act are generally positive, having introduced amendments that promote transparency and inclusivity to disadvantaged groups while also correcting the many cross-referencing errors in the previous edition of the 2015 Procurement Act.
In as much as not many stakeholders sent memoranda with feedback following invitation by Parliament on public participation, we must commend the Departmental Committee for keenly considering the feedback received by the two stakeholders which sent memoranda, this being KISM and Gerivia Advocates LLP.
It was through consideration of the feedback that some of the proposed amendments such as reduction of timelines and the amendment to Section 175 (5) of the Act were abandoned.
Despite the positive aspects of the 2022 edition of the Procurement Act, the introduction of debarment as a punishment for bidders who are considered to have filed frivolous and vexatious requests for review, in addition to the already existing safeguards in the Procurement Act, and despite the strong opposition by the stakeholders, remains the most retrogressive aspect of the 2022 edition of the Procurement Act.
Law reform is a continuous process and so if parliament continues to engage stakeholders on new laws and proposed amendments Bills, there is hope for improvement of existing legislation and enactment of better laws.
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