SEALING THE LOOPHOLES

Kenyans secure 50% project jobs as state tightens tender laws

Public Procurement and Disposal Regulations 2020 came into force on July 2

In Summary

• The new rules provide that contractors executing mega projects in a government-to-government deal must ensure 50 per cent of jobs are reserved for Kenyans.

• Ministries, state departments and agencies must give exclusive preference to citizen contractors offering goods, services and works produced locally.

A section of SGR at DK 31 Mtito Andei. /FILE
A section of SGR at DK 31 Mtito Andei. /FILE

President Uhuru Kenyatta has tightened procurement laws to secure jobs for Kenyans.

The new rules provide that contractors executing mega projects in a government-to-government deal must ensure 50 per cent of jobs are reserved for Kenyans.

Bidders in restricted tenders will be required to reserve at least 75 per cent of employment opportunities in consultancy and non-consultancy services to locals.

 

At the same time, a contractor must prove at preliminary evaluation that not less than 20 per cent of management jobs will be reserved for Kenyan professionals.

Treasury Cabinet Secretary Ukur Yatani said in a July 9 gazette notice that the Public Procurement and Asset Disposal Regulations, 2020 came into force on July 2.

The law says ministries, state departments and agencies (MDAs) must give exclusive preference to citizen contractors offering goods, services and works produced locally.

It defines citizen contractors as firms wholly owned by Kenyans while local contractors are those registered in Kenya with over 51 per cent local shareholding.

Foreign firms will only get preference if they enter into joint ventures or subcontract local firms.

Citizen contractors will get tenders of up to Sh1 billion for works, construction materials and other materials; and Sh500 million in respect of goods and services.

In this regard, bidders supplying locally assembled motor vehicles, motorcycles, bicycles, plant and equipment will be given preference.

 

President Kenyatta also wants tenders for furniture, textile, foodstuffs, oil and gas, information communication technology reserved for Kenyans.

Supplies of steel, cement, leather, agro-processing, sanitary products, and any other goods made in Kenya have been given preference.

The government has also barred state agencies from awarding foreign entities tenders for hospitality, air travel and security services.

Accounting officers are required to allocate at least 30 per cent of the annual procurement budget for enterprises owned by youth, women and persons with disability. 

Payments for the special interest groups will have to be made within 60 days from the date of receipt of the invoice, subject to certification of works or supplies.

A Sh4 million fine or a 10-year jail term awaits officials from procuring entities that contravene the provisions of the new regulations, public officers who vary or amend a contract, procure goods at inflated prices or engage in skew tendering.

Procurement professionals from respective MDAs will now negotiate project contracts before any financing agreement is signed.

Government-to-government procurement will no longer be exempt from the provisions of Public Procurement and Asset Disposal Act.

Contracts will have to be published within 14 days after signing of the project agreement.

“An accounting officer of a procuring entity shall publish and publicise all procurement contracts at its notice boards and websites,” the rules read.

This is expected to end the secrecy around mega projects like the Standard Gauge Railway, Konza City, Nairobi-Mombasa dual carriageway, Mombasa Port expansion and so on.

To save Kenyans the costs arising from terminated contracts, no tender will be terminated without approval of the Attorney General.

Contractors, the new rules state, must ensure 40 per cent of material they use are sourced locally and show plans for technology transfer to locals.

The local content plan must also show the positions reserved for employment of citizens, capacity building and competence development programmes.

The National Assembly Public Accounts Committee in the report covering financial year ending 2017 flagged procurement as source of corruption in government.

PAC chair Opiyo Wandayi at the time told the Star that the biggest problem in the government’s management of funds is in the procurement process.

“Through and through, you find there are issues in departments and ministries where there is procurement of huge capital projects, which involve huge amounts of money,” he said.

He decried a prevalent situation of deliberate attempts by accounting officers to circumvent the law and guidelines in the Constitution, Public Finance Management Act and PPADA.

“These Regulations will ensure that when they tender for services or goods, they do proper due diligence,” Lagdera MP Mohamed Hire observed.

Funyula MP Wilberforce Oundo said that breaches in procurement procedures are the reason for many court cases touching on contracts.

He wants Yatani to move with speed to prepare a particular code of ethics for procurement professionals.

“This should be so that some of the drama, the obvious illegalities and immoral decisions being made by procurement professionals cease,” he said.

Under the new regulations, contractors will be given preference on the basis they deal in supplies which are wholly mined and produced in Kenya.

Those dealing in supplies that are partially mined or produced or assembled in Kenya will also get preference in procurement.

The law also gives preference for engagement or reservation of contracts to firms with more than 50 per cent Kenyan shareholding.

It is also mandatory for tender documents by bidders to specify what aspects of technology would be transferred and how.

International tenders that don’t meet the set criteria will have to get specific approval of the National Treasury.

The new law also prescribes that contracts can only be varied after 12 months of contract signing, and under strict conditions.

The Public Procurement and Assets Disposal Act says: “No contract price shall be varied upwards within 12 months from the date of the signing of the contract.”

The regulations further limit instances where the National Treasury can use ‘specifically permitted procurements.’

These will, going forward, be applicable to tenders “in the public interest or interest of national security.”

E-procurement processes are also properly outlined in the new regulations, hailed as a potential to save costs, reduce paperwork, and improve transparency.

The regulations also provide the procedure for the hearing and determination of applications to bar contractors who breach the law.

A person submitting a tender will also file a declaration form stating that they are neither debarred nor will engage in corrupt or fraudulent practice.

Ndaragwa MP Jeremiah Kioni wants the focus to be on disposal, noting that country is losing more money at disposal than at procurement.

The new regulations provide the procedure for disposal of public assets with the focus on how the same can earn maximum returns in revenue to the exchequer.

 

- mwaniki fm