Historical Background of the Procurement of Building and Associated Civil Engineering Works in Kenya
Public procurement is “the process of acquisition, normally through contractual arrangements, of goods, works and services by the public service” (Kuloba, 2015). He further added that procurement covers issues of procurement strategy, storage, distributions, contract monitoring and supplier management. Procurement entities are required to promote sustainable development objectives through a procurement practice that is consistent with the legal framework and for procurement and value for money (Kuloba, 2015).
Mokaya (2014) and Kuloba (2015) have traced the historical evolution of public procurement in Kenya since the colonial era up to the establishment and the operation of the present-day Public Procurement and Oversite Authority (PPOA), under the Constitution of Kenya 2010. The historical development/background can be summarised as follows:
- The Colonial Period
- Post-Colonial Era (1963-1978)
- The era of World Bank Reform (1978-2001)
- The era of Public Procurement Reform (2001-2010)
- The Era of the New Constitution (2010-to present)
1.1 The Colonial Period
During this period, Kenya as a colony of the British had an economy that was structured to be a source of cheap raw materials and manufactured goods to serve the economy of Great Britain. According to Mokaya (2014), the following procurement structure was in place during the colonial period:
Crown Agents: these handled overseas purchases on behalf of the government up to the 1970s.
Central Tender Committees (CTB): these are established in 1955 by a Treasury Circular. Their mandate was to handle all government tenders.
Procurement Supplies Unit: was established in the year 1959 under the Ministry of Public Works to handle the procurement of common user goods and services. It was later in 1960 converted to the Supplies Branch which still exists up to date.
However, in 1960, the Supplies Branch went through further restructuring (the chief storekeeper became the chairman, while the chief purchasing officer became the secretary of the branch).
1.2 The Post-Colonial Era (1963-1978)
At independence in 1963, Kuloba (2015) says that supplies services continued to be provided by the Supplies Branch, with the Crown Agents organizing procurement for the government up to the year 1970.
In 1974, the Crown Agents were placed under the Treasury of the Ministry of Public Works. Treasury circulars continued to guide procurement as from 1969 to 1978.
1.3 Era of World Bank Reform (1978-2001)
The 1978 to 2001 era was characterised by Supplies Manuals and Treasury Circulars that contained the good practices of procurement as at that time, according to the then government policies. These circulars and manuals were the main guiding government in supplies matters in the country.
The World Bank would later conduct a review of the existing legal framework for procurement in the country and identified the following shortfalls which didn’t make it easy for the procurement of personnel during this period:
- There were too many superseding circulars with some superseding the others
- There was no well-defined legal framework to enforce procurement works in the country.
- Circulars were also emanating from the Ministry of Public Works that was also to clear a department when getting common user supplies outside Supplies Branch.
- The government was unable to deliver procurement services effectively.
- Obscure rules not based on fair competition and transparency rendering the system to abuse
1.4 Era of Public Procurement Reform (2001-2010)
This period came about with major reforms in public procurement, with the following notable advances:
Enactment of the Exchequer and Audit Act, Cap 421 Laws of Kenya (2001)
It marked the abolishment of the Central Tender Committees and the establishment of the Public Procurement Directorate and Public Procurement Appeals Board.
Tender committees were to obtain their chairmen from the private sector, with parastatals also being subject to the regulations of the public procurement.
According to Kuloba (2015), “each public procuring entity was to establish a procurement unit within it and all purchasing and disposal processes were to be managed by the same unit”.
This legislation was found to have the following weaknesses that prompted the need for better legislation:
- Conflict of interest amongst the various players in the procurement process.
- There was no ceiling on how much the variation could be effected on a contract, hence there were uncontrolled contract variations.
- Overpricing of goods and services.
- Lack of fair and transparent competition.
- Inappropriate use of procurement methods and an excessive delay in procurement due to lack of strict time schedules.
Public Procurement and Disposal Act (2005)
This act was approved and gazetted in 2005 but became operationalised in 2007 by the Public Procurement and Disposal Regulations, 2006. The act and the regulations therein constitute the basic law on procurement in Kenya that ushered a move into a better system of government procurement.
It provides for the setting up of the Public Procurement Oversight Authority (PPOA) and the Public Procurement Advisory Board, including their functions and the office of the general director.
Section 26 (1) of the act provide that procurement entities shall “establish procedures to provide for the making of decisions, on behalf of the entity, and relating to procurement.” It further prescribes the procurement methods, defines the offences related to procurement and hold to handle them (e.g. collusion, misinterpretation, unauthorised disclosure, inducements, conflict of interest etc.), bid protest mechanism and the disposal of obsolete and surplus equipment.
According to the Public Procurement and Disposal Act (2005), the Public Procurement Oversight Authority (PPOA) has the following functions:
- Ensuring that procurement procedures established under the Act are complied with;
- Monitoring the procurement system and reporting on its overall functioning;
- Initiating public procurement policy; and
- Assisting in the implementation and operation of the public procurement system by:
- -preparing and distributing manuals and standard tender documents,
- -providing advice and assistance to procuring entities, and
- -develop, promote and support training and professional development of staff involved in procurement (Ochieng and Muehle).
1.5 The Era of the New Constitution (2010-to present)
Ochieng and Muehle say that the 2010 constitution of Kenya which is currently in force commits the government to the principles of good financial governance (i.e. transparency, target-orientation and cost efficiency) which are laid down in chapter twelve of the same constitution.
Kuloba (2015) argues that the 2010 constitution lays down policy guidelines and objectives of the public procurement regime in Kenya.
Of worth noting is Article 227 of the 2010 Constitution of Kenya on the “Procurement of Public Goods and Services” which states that:
(1) When a State organ or any other public entity contracts for goods or 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 all or 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 not 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.
“Constitution refers to the possibility of using procurement to enforce tax compliance by contractors: if one does not meet their tax obligations, then they should not be allowed to enjoy doing business with the Government.”
The above is an outline of the evolution of the procurement laws in Kenya. It captures its development since the colonial era to the provisions of the present day constitution on how public goods and services should be procured under the oversight of the Public Procurement and Oversight Authority.
The “Standard Tender Document for the Procurement of Building and Associated Civil Engineering Works” is a publication of the Public Procurement and Oversight Authority which was as a result of the amendments of the past existing laws since the colonial period to capture the principles of good financial governance, as earlier mentioned.
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Recommended Further Reading:
Kuloba, I. S (2015) Milestones in the Reform of Public Procurement Regulation in Kenya: Training on ‘Recent Development in Procurement Regulation’. Kenya School of Law, available at https://www.academia.edu/11967222/Milestones_in_the_Reform_of_Public_Procurement_Regulation_in_Kenya.
Mokaya, J. M. K. (2014) Historical Evolution of Public Procurement in Kenya, University of Nairobi Procurement Department, available at http://procurement.uonbi.ac.ke/node/844.
Ochieng, J. and Muehle, M. (n.d) Development and Reform of the Kenyan Public Procurement System, available at http://www.ippa.org/images/PROCEEDINGS/IPPC5/Part7/PAPER7-7.pdf.
Kenya Law Reporting (2010) The Constitution of Kenya 2010, Republic of Kenya, Government Printer.