Kemi 2
Kemi 2
MAURICE ODONDO
KEMI
8/23/2018 1
Public procurement is part of Public Financial
Management(PMF) reforms that the Government of
Kenya has been carrying out.
This is to enhance transparency and accountability
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3) Regulation of Public Procurement and Asset Disposal
The following are the bodies tasked with regulation of
public procurement and disposal under the new Act;
The National Treasury,
Public Procurement Regulatory Authority(PPRA)
Public Administrative Board
4) Procurement Function
The procurement function shall be handled by a
procurement professional and the head of the procurement
function in a procuring entity shall among other functions
be responsible for rendering procurement professional
advice to the accounting officer.
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5) Procurement Planning
Sec 44(2) (C) and (i) of the Act, provides that an accounting
officer shall ensure procurement plans are prepared in
conformity with the medium term fiscal framework and fiscal
policy objectives. It should also demonstrate application of
preference and reservations schemes.
Sec 53(2)also provides that preparation of procurement plans
must be realistic and within the approved budget and be
made prior to the commencement of a financial year.
6) Segregation of responsibilities
Sec 46 of the Act provides for appointment of an ad hoc
evaluation committee to deal with technical and financial
aspects of a procurement.
The accounting officer may establish an ad hoc inspection
and acceptance committee pursuant to Sec 48 of the Act.
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A key departure from past practice is that procurement awards
are not to be done by either the tender or procurement
committees, since committees have been done away with by
the Act. Sec 84 (1) provides that the head of procurement
function shall provide a signed professional opinion to the
accounting officer on the procurement or asset disposal
proceedings on receiving the evaluation report from the
evaluation committee.
Committees provided under the new Act are;
Tender opening committee – Sec 78(1)
Evaluation Committee – Sec 46(1)
Inspection and Acceptance Committee – Sec 48(1)
Disposal committee – Sec163(1)
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• Sec 78(1) of the Act provides that the accounting officer
shall appoint a tender opening committee specifically for
the procurement in accordance with the following
requirements
– The committee shall have at least three members and
– At least one member shall not be directly involved in the evaluation
of tenders.
FUNCTION
– Conduct a preliminary check of the received quotations to ensure
that they comply with conditions preset in the quotation request
form.
– Prepare list of all tender applications received and opened
– Prepare List of all qualified applications
– Prepare List of all disqualified applications
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An accounting officer shall appoint an adhoc evaluation committee
established in accordance with the Act and regulations and from
within the members of staff, with relevant expertise.
Composition
• Between 3-5 members appointed by the accounting officer on
Function
• Deal with the technical and financial aspects of procurement as
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Composition
• Chairperson
• Members – At least two others appointed by the
principal upon recommendation by PU.
Functions
• Inspect & where necessary test the goods and
services received to ensure compliance with the
terms and specifications of the contract. They accept
or reject the delivered goods or works on behalf of
the institution
• Determination of value for money. (Quality, Quantity,
Timeliness, Proper documentation/manuals.
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The principal shall cause the establishment of a
disposal committee in writing comprised of five
members as follows.
Chairman- a member appointed by the principal
Two heads of departments
Officer in charge of stores
Accountant/finance officer
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Disposal of unserviceable asset
Disposal of obsolete asset
Disposal of obsolescent assets
Disposal of surplus stores
Verification of all disposal recommendations by
accounting officer
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7) Methods of Procurement
The following are the methods of procurement provided
for by the new Act.
Open Tendering Method- this is the default method
Two - Stage Tendering Method
Design Competition
Restricted Tendering
Direct procurement
Request for Quotation
Low value procurement Method
Force Account
Electronic Reverse Auction
Framework Agreement
Request for Proposal
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Electronic Reverse Auction means an online real-
time purchasing technique utilized by the
procuring entity to select the successful
submission, which involves the presentation by
tenderers, suppliers or contractors of
successively lowered bids during a scheduled
period of time and the automatic evaluation of
bids;
E-procurement means the process of
procurement
using electronic medium such as the internet or
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other
Conditions for use of Reverse Auctions.
a procurement portal;
an appropriate secure software with electronic procurement
capabilities and functionalities approved by the Authority;
Procedure for Reverse Auction.
(a) A school shall;
(i) Invite all registered suppliers in the specific category to compete;
(ii) Advertise its requirements on its website including the period of
time and goods specifications;
(b) The prices of bidders within the prescribed time shall be visible to
other bidders without revealing the bidder’s identity; and
(c) A pre-qualified supplier shall not revise its bid upwards within the
prescribed time.
Subject to the reserve price set by the school, the successful bid shall
be the bid with lowest price at the bid submission deadline.
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Framework Agreement means a pact between a
procuring entity(school) and a selected supplier (or suppliers) or
contractor (or contractors) identified for a definite term to
supply goods works or service whose quantities and
delivery schedules are not definable or determinable at the
beginning.
Framework Contract means a pact between a procuring
entity(school) and a selected supplier (or suppliers) or
contractor (or contractors) identified for a definite term to
supply goods works or service whose quantities and deliveries
are not definable or determinable at the beginning, with a
commitment to order a minimum quantity of the required
goods, works, or services;
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(1) A school may enter into a Framework Agreement
through 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.
The maximum term for the framework agreement shall
be three years and, for agreements exceeding one year,
a value for money assessment undertaken annually to
determine whether the terms designated in the
framework agreement remain competitive. 5/23/2017 18
When implementing a framework agreement, a school
may;
(a) Procure through call-offs order when necessary; or
(b) Invite mini-competition among persons that have
entered into the framework agreement in the respective
category.
Call-offs order means an order made using a framework
agreement with one or more contractors, suppliers or
consultants for a defined quantity of works, goods,
consultancy, covering terms and conditions including price
that users require to meet the immediate requirements.
Evaluation of bids is by an evaluation committee as
provided for under this Act.
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Design Competition means a procurement procedure
for obtaining competitive tenders for services which
are creative in nature and which require that part of
the services be carried as part of the tender to
facilitate evaluation of the tenders. Such services
may include; architecture, landscaping, engineering,
fine arts, interior design, marketing, advertising and
graphic designs.
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An accounting officer of a public school may use
a design competition procedure for the purpose
of determining the best architectural, physical
planning, engineering, graphic or any other design
scheme for its use.
Procedure for design competition.
(a) invite design proposals through a public
advertisement;
(b) ensure the preparation of an invitation sets out
the following;
(i) the name and address of the school;
(ii) the tender number assigned to the procurement
proceedings by the school; 5/23/2017 21
(iii) Description of technical and functional needs;
(iv) An explanation of where and when tenders shall be
submitted and where and when the tenders will be opened;
(v) A statement that those submitting tenders or their
representatives may attend the opening of the design
proposals;
(vi) A statement that a copyright or other intellectual property
shall vest in the school.
The evaluation shall be conducted by the evaluation
committee
The best three assessed design schemes shall receive a
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Itis not a preferred method because it is completely devoid
of competition and transparency. Sec 103 of the Act
Where it has to be used, it must be provided for in the
procurement plan
Direct procurement of value of Kshs500,000 and above
shall be reported to PPOA within 14 days after notification
of award of contract.
Conditions for direct tender
◦ When the goods works and services are available only from a
particular supplier, or a particular supplier has exclusive rights in
respects to the goods, works or services and no reasonable
substitute or alternative exists.
◦ Where goods procured are urgent and due to this urgency other
methods are not practical.(not dilatory conduct or negligence, not
foreseeable)
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This method is used where the school does not see
any benefit accruing to it in terms of time or cost
implications by using any other method. Sec 107
The procedure is not used to avoid competition
The method is reflected in the annual procurement
plan.
The purchase is done by the school through direct
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Sec 115, provides that this method shall be used for
procurement of services which are predominately
intellectual or advisory in nature.
It is therefore suitable for procurement of consultancy
services.
The school should obtain a minimum of six (6)
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8) Publication of Procurement Contracts
Section 138(1) of the Act requires that a procuring
entity shall publish and publicize all contracts
awards on their notice boards at conspicuous
places, and on its website if available, in addition to
submitting reports to the Authority.
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The above legal notice amended the Public
Procurement and Disposal Regulations(Preference and
Reservations) following the presidential directive
Regulation 31(1) of the amendment stipulates that 30%
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◦ Provision of repair services for the office equipment and
machines
◦ Event organizing
◦ Design and branding of promotional materials such as T/
shirts, caps, banners and posters
◦ Photocopy and videography.
Preferences
◦ Car leasing
◦ Cab/taxi services
◦ Courier services
◦ Provision of security services
◦ Contracts for small works
◦ Provision of painting works
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Procuring entities are mandatorily required ta
allocate 30% of all their procurement for the
purposes of procuring goods, services and works
from micro and small enterprises owned by youth,
women and persons with disabilities.
Where applicable, express notification on the 30%
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Allprocuring entities shall implement the directive
through their Budgets, procurement plans, tender notices
and contract awards
An entity may lot goods, works and services in quantities
that are affordable to the target group participating in
public procurement proceedings.
Procurement entities shall facilitate the youth, women
and disabled persons by authenticating their
notifications of tender awards and local purchase or
service orders and subsequently entering into an
agreement with the relevant financing institution with
conditions that shall include paying the contracted
enterprise through their account opened with the
financier. 5/23/2017 38
For purpose of ensuring sustained growth for
enterprises owned by youth, women and persons
with disabilities, procuring entities shall make
prompt payments for all performed contracts and
shall not delay beyond 30days.
No tender securities shall be required of entities
owned by youth, women and persons with
disability under Preference and Reservation
Scheme. However, the enterprise shall be required
to sign a Tender Security Declaration Form.
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The annual budget- only budgeted items can be
procured.
Preparation of annual procurement plan –
The Act and Regulations makes procurement planning
mandatory. It is based on the approved annual
budget and should be approved by the BOM.
◦ Packaging or aggregation and lotting is necessary while
preparing the plan.
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S/No LOT ITEMS IN UNIT QTY RATE AMOUNT TENDER DATE OF
NAME LOT METHOD DELIVERY
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Invitationof quotations
Receiving quotations- completed quotation request
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Placingorders. This is done using the LPO/LSO or
as per contract agreement
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A supplier may apply for variation of procurement
contract terms. This may arise due to change of
prevailing market conditions, change of initial plan in
case of structural works. Such variations should be
occasioned by genuine causes.
The variations should be on recommendation by the
evaluation committee.
Contract prices shall not be varied upwards within
twelve months from the date of signing of the
contract. And shall only be considered if the following
are satisfied;- price variation is based on the
prevailing consumer index obtained from Kenya
National Bureau of statistics or the monthly inflation
rate issued by the Central Bank of Kenya 5/23/2017 45
The quantity variation for goods does not exceed
15% original contract quantity
Quantity variation of works does not exceed 20%
of original contract quantity
The price or quantity variation is to be executed
within the period of the contract
The cumulative value of all contract variations do
not result in an increment of the total contract
price by more than 25% of the original contract
price
If the variation result to an increment of the total
contract price by more than 25% such variations
shall be tendered separately
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Disposal is a critical element of the stores, equipment
and other assets management of a procuring entity.
When any equipment is obsolete, its keeping, through
maintenance costs, storage, insurance etc may well
exceed the returns that can be derived from that piece of
equipment and the investment of additional monies.
Disposal is necessary as it guarantees that public monies
are not applied to useless or obsolete equipment and
assets and that when stores are disposed of, they are
sold at the best achievable value in the market.
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Disposalmaybe considered as the third life of any
acquired item.
◦ First, it is procured and accepted
◦ It is utilized by the school or procuring entity in the
discharge of its duties
◦ Disposed.
Since disposal involves values that may be received and can
contribute to the cost of renewal, it involves deciding when
to dispose of a certain item and may involve health and
safety standard issues. It has to be regulated and managed
as provided for by the Act and Regulations
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Unserviceable
Obsolete
Surplus
Authority to Dispose
The principal shall be primarily responsible for
ensuring the school fulfils its obligations under the
Act and Regulations and PPOA manual
The user department shall have the responsibility
of identification of items to be disposed of while
the disposal committee shall recommend the
disposal including the disposal method
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The principal in consultation with the BOM has the
final authority of accepting or rejecting the
recommendations of the disposal committee.
Where items become unserviceable for reasons
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Methods of disposal include; sec 165
◦ Transfer to another public entity
◦ Sale by open tender
◦ Sale by public auction
◦ Waste disposal management (Destruction, dumping or
burying)
◦ Trade in
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The Act does not provide for a condition of reserve
price when disposal is by sale by open tender or by
public auction. However, schools are encouraged to
apply reserve price where it is found necessary to
ensure a fair price is achieved.
Under the circumstances care must be taken in the
establishment of reserve prices.
Where disposal is by public auction, the auctions
must be by registered auctioneers and the rates
charged shall be those approved by the regulating
authority.
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The disposal committee should be responsible for the
evaluation of the items indicated in the disposal plan.
Where the school has no capacity to value the items
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The school should award the disposal proceedings in
compliance with the procedures described for each
disposal method
No disposal should be awarded without due process
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Inviting bids through the publication of an announcement of
tendering proceedings at least once in a newspaper of
national wide circulation
Issue and sale of bidding documents (issue an official
receipt)
Deposits for items for items on sale- amount should not be
price
Receiving bids through tender box or appointed staff –
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Where the transfer is free of charge, the approval
of the accounting officer and the BOM shall be
adequate and the approval of the tender
committee shall not be required.
Where the transfer is subject to payment of any
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A school that conducts disposal using the destruction,
dumping or burying method should be cautious of the fact
that there are other laws regarding safety and health to be
observed in the disposal.
Justification should be done by the disposal committee
The disposal committee should conduct evaluation to
determine if the school is capable of disposing of the
stores, assets or equipment itself or if it should seek the
assistance of an agent or contract a qualified entity.
The committee should determine if the destruction,
dumping or burying method presents a risk of non
compliance to public health and safety and environmental
protection laws and standards.
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The disposal committee should conduct a
financial evaluation and comparison to determine
if the destruction, dumping or burying method is
the most economical method and efficient use of
public funds.
An evaluation of cost benefit analysis should be
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It may also be opened to all bidders participating
in the procurement in which case the bidders shall
quote the value of the item to be traded in.
Where direct procurement is used, the value of the
item to be traded in shall be negotiated by the
parties.
The disposal committee should conduct a
financial evaluation and comparison to determine
if the trade in method is the most economical
method and if it secures value for money and
efficient use of public funds.
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Anevaluation of the costs and benefits of the trade in
should be performed to assess;
◦ Costs of trade in if different from procurement requirement
transaction costs,
◦ Transaction costs without trade in, such as sales
◦ Comparison of the estimated sale value of the assets with
the estimated discount as part of the procurement
requirement
◦ Any other considerations that may inform the decision of the
disposal committee to ensure value for money and efficiency
in the use of public funds.
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The school may establish a reserve price below which
the asset, stores or equipment shall not be disposed.
Such price should shall be disclosed to the bidder(s).
If the price offered is below the reserve price, the
school can choose to award the procurement contract
at full price and retain the trade in item.
The school may also choose to proceed to direct
negotiations with the selected bidders on the value of
the trade in item subject to approval by the tender
committee.
The school may negotiate with the selected bidder of
the procurement proceedings where the reserve price
is not acceptable.
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Ifthe negotiations do not result in an agreement, the
school should cancel all disposal proceedings without
cancelling the procurement proceedings subject to
approval by the tender committee.
The school should prepare a plan for the negotiations
specifying the issues to be negotiated, objectives to be
achieved and to the extent possible quantify the
objectives and set maximum and minimum negotiation
parameters.
Negotiations should be conducted by a minimum of two
staff of the school who should not commit the school to
any proposed arrangements or agreements, but should
seek approval of the relevant authority , prior to
confirming any agreement reached.
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Staffconducting the negotiations should prepare
minutes of the negotiations which should form
part of the record of the disposal and should
obtain the other party written agreement that they
are true and accurate record of the negotiations
held
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Schools should document the disposal cycle.
For each disposal method, the school should
document;
◦ Initiation of disposal requirement i.e., need for disposal,
justification of the disposal method, reference to the
disposal plan.
◦ Selection of the winning candidate securing the best value
for money.
◦ Contract award
◦ Certification of completion of the disposal
◦ Receipt of monies as provided in the disposal documents.
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The complete disposal cycle
Establish annual assets and stocks
Establish needs for disposal
Appointment of disposal committee
Plan each individual disposal
Conduct Auction
Advertise sale if open tender
Receive and open bids
Evaluate bids
Award contracts
Notify contract award
Receive payments
Administer contract
Write off the records
Report and deposit all monies from disposal
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THANK YOU
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