1. 1Monday, November 30, 2015 1 Public Procurement Oversight Authority TRAINING FOR JKUAT MOMBASA CAMPUS

2. 2 OUTLINE  Definition of some terms  Part I: Preliminary-Introduction  Part II : Internal Organisation of Procuring Entities  Part III: General Procurement Rules.  Part IV: Open Tendering  Part V :Alternative Procurement Methods  Part VI- Administrative Review of Procurements and Proceedings  Part VII Investigation, Debarment and Disposal  Schedules

3. 3 DEFINITIONS OF TERMS Procurement Acquisition by purchase, rental, lease, hire purchase, tenancy, franchise or any other contractual means of any type of works, assets, services of goods including livestock or any combination Assets Movable and immovable property, tangible and intangible including immovable property stores equipment, shares, intellectual rights vested in the state or proprietary rights. Procurement Plan A document prepared annually to plan all procurement requirements Public private partnership Agreement between a procuring entity and private party under which a private party undertakes to perform a public function or provide a service on behalf of the procuring entity.

4. 4 DEFINITIONS OF TERMS Pre-qualification procedure Pre-qualification procedure set out in the regulations (Reg.23 that is- ……..to include nature of requirements, quantities….timetable for delivery, etc. Note: This is not same as procedures for maintaining and updating annually a registered list of potential tenderers as per Reg.(8) (3) (a). A tenderer A person submitting a tender

5. 5 PART I PRELIMINARY INTRODUCTION These Regulations apply to public entities as enlisted under Section 3(1) of the ACT that is-  Any body using public assets in any form of contractual undertaking.  Companies owned by public entity  Any body in which the Government has a controlling share Capacity building levy( Regulation 4 )  The capacity building levy payable under section 18(5)(d) of the Act shall be 1.5 % of the contract price  Payable in respect to the portion funded by the Government for contracts partly funded by donors.  Not applicable where the contract is 100% funded by donor.

6. 6 PART I PRELIMINARY cont’d The Advisory Board (Regulation 5) Membership  Nine members from prescribed institutions as per First Schedule of the Act plus the Director General  A total of 14 prescribed bodies to nominate two persons –one a woman {(Reg.5(1)}.  The appointments to be approved by Parliament.

7. 7 PART I PRELIMINARY cont’d Threshold matrix (Reg.6). Prescribed under First Schedule of the Regulations Apply to PEs differently according to Classes A,B & C – Gazette Notice - Legal No3 of 2007 dated 24 th January 2007. Contains:  Responsibility for awarding contracts  Responsibility for signing contracts  Responsibility for Inspection/Verification and Acceptance of Goods,services and works

8. 8 PART I PRELIMINARY cont’d Role of User Department (Reg. 9) Initiation of requirements and participating in management of contracts. Preparing specifications and undertaking conformity assessment. Preparation of procurement plan Compliance with the Act and regulations Note : In response to Section 27(3) of the Act- “Responsibility for compliance with the Act and regulations by employees, members of a board or committee”

9. 9 PART II INTERNAL ORGANISATION OF PROCURING ENTITIES. Role of Accounting officer(Regulation7) Pursuant to Sub- Section27(2) of the Act – Accounting officer shall:  Ensure establishment of Tender /Procurement Committees.  Ensures establishment of Procurement Unit (staffed with procurement professionals)  Ensures that Procurement Plans are prepared  Ensure proper documentation of procurement proceedings.

10. 10 PART II INTERNAL ORGANISATION OF PROCURING ENTITIES cont’d Tender committee ( Reg. 10) Member of the tender committee may be paid such honoraria as the procuring entity may determine. Where the value of the contract is above Kshs 50,000,000 at least two observers will be invited to the tender committee meetings. Decisions to be by consensus, and minutes prepared or by vote if consensus is not feasible Declared conflicts of interest and dissenting views to be recorded.

11. 11 PART II INTERNAL ORGANISATION OF PROCURING ENTITIES cont’d Tender committee ( Reg. 10) No ratification of decisions made outside the committee. Reviewing decisions made by Procurement Committees Review, verify and ascertain that all procurement and disposal are undertaken in accordance with the Act and the Regulations. Alternate members with adequate experience to be appointed Quorum-Five members including the Chairman

12. 12 PART II INTERNAL ORGANISATION OF PROCURING ENTITIES cont’d Procurement committee Procurement committee established by as per Section 26 (4) Functions similar to those of the Tender Committee but for procurement values below the Tender Committees thresholds. Approve, reject or approve subject to clarifications submissions by the procurement unit. Alternate members with adequate experience to be appointed Quorum-Chairman and at least two other members.

13. 13 PART II INTERNAL ORGANISATION OF PROCURING ENTITIES cont’d Establishment of Procurement Unit Summary of responsibilities  Maintaining and updating registered list of tenderers.  Preparing and publishing procurement opportunities  Managing the whole procurement and disposal process including inventory management  Advising the entire PE on aggregation of procurement to promote economies of scale  Coordinating internal monitoring and evaluation of the supply chain function  Verifying that available stock levels warrant initiation of procurement process.

14. 14 PART II INTERNAL ORGANISATION OF PROCURING ENTITIES cont’d Evaluation committee To be formed for each procurement with threshold of tender committee It is advised that procurements within the threshold for the procurement committee also warrant some evaluation for effective adjudication by the Procurement Committee To comply with the evaluation procedures – Section 66(3) i.e.” Using procedures and criteria in the tender documents. No other criteria to be used The criteria must be to the extent possible be objective and quantitative

15. 15 PART II INTERNAL ORGANISATION OF PROCURING ENTITIES cont’d Evaluation committee cont’d Criteria (as stipulated in the bid document) to be expressed taking into account price, quality and service to enhance effective evaluation Evaluation may be by by Technical Committee and Financial Committee Technical Evaluation to be completed within30 days Financial Evaluation Committee to complete the exercise within 5 days after completion of technical evaluation

16. 16 PART II INTERNAL ORGANISATION OF PROCURING ENTITIES cont’d Inspection and Acceptance Committee Composed of Chairman and at least two other members To inspect,test goods to ensure correctness of quantity, and compliance with specifications. To ensure effectiveness in completion of works and services as well. Ensure required manuals and documents are submitted Issue interim or a complete certificate or reject goods, works or services

17. 17 Transfer of procurement responsibility By the Authority to:  Procuring agents.  Or another Procuring Entity  A procuring agent shall pay a registration fee of Ksh.20,000 to the authority. This role is also vested in the Accounting Officer but remains responsible. PART II CONTD.

18. 18 PART II CONTD. Procurement planning Reg.20(1) to(5) pursuant to Section 26(3)(a)( b) and (c) of the Regulations Plan to be integrated in the applicable budgetary processes and based on indicative and approved budget as appropriate Where appropriate Multi-year procurement plans may be prepared and shall be integrated into the medium term expenditure framework (MTEF) A head of department shall submit procurement plan to Accounting Officer at least 30 days before the close of each financial year

19. 19 PART II CONTD. Procurement planning cont’d Consolidated plan to be approved by the Head of the procuring entity and where applicable by the Board of Directors or similar body. Note: Role of Board of Directors in PPOA’s circular Ref:PPD.4/07Vol.1/(47) dated 2 nd February 2007

20. 20 PART II CONTD. Procurement plans shall include: A breakdown of goods, works or services A schedule of planned delivery, implementation or completion dates An indication and justification for whether an procurement shall be undertaken within a single year or under a multi-year arrangement. An indication of which items can be aggregated for a procurement a single package or for procurement through any applicable arrangement for common user items

21. 21 PART II CONTD. Procurement plans shall include An indication of which items will be packaged into lots An estimate of value of each package of goods, works or services. The budgets available and sources of funds Procurement method for each procurement Format to be provided by PPOA NB: But it is advised that you do not wait for the format-use an appropriate one to capture the above and others necessary information.

22. 22 PART II CONTD. Purchase requisition and authorization. Requisitions to have estimates that reflect up-to-date information on economic and market conditions. Approval as per First Schedule of the Regulations -the Threshold Matrix. Procurement unit to prepare plan for each individual requirement to include TIME for each stage in the procurement cycle.

23. 23 PART III GENERAL PROCUREMENT RULES Prequalification procedure.  Candidates to be allowed 14 days to prepare and submit application( for specific procurement).  Maintain and update a list( for future purchases) Procuring entity shall maintain and update a list of suppliers –Section39 (7) Procuring approvals. A procuring entity shall maintain specimen signatures of all persons authorised to make approvals in the procurement process

24. 24 PART III GENERAL PROCUREMENT RULES Restrictions-Limitation on contract with employees and relatives etc by PE ( Reg.26 )  For purpose of section 33 (2) of the Act relative is limited to spouse and child. Conflict of interest -Pursuant to Section 43 An employee or agent of PE or member of Committee, Board, shall no take part in the proceedings or on any matter to do with the contract awarded to a relative A relative means:  A spouse child, parent brother or sister  A child. parent brother or sister of a spouse  or any prescribed relative. NB: Note the relationship between this provision with limitation to entering into contract with persons under Section 33 and 43 of the Act

25. 25 Preferences and Reservation-Section 39(8) (a) &(b)  Preferences to citizens of Kenya-Applicable thresholds for:  Goods and services Kshs. 50 M.  Works Kshs. 200M.  Section 39(8) (b) (i) goods manufactured, mined extracted and grown in Kenya– margin of preference :15% or  Section 39(8) (b) (ii) works, goods and service where preference may be applied depending on shareholding as follows: - Less than 20% shareholding-margin of preference :6% -Less than 50% shareholding -margin of preference: 8% PART III CONTD. 1

26. 26 PART III CONTD. Tender documents – Third schedule. 1.Standard tender document for design construction, supply, installation, testing commissioning and handing over of plant/project (turnkey project.) 2.Standard tender document for supply installation and commissioning of plant and equipment. 3Standard tender document for prequalification of procurement candidates. 4Standard tender document for procurement of works (Roads, Bridges, Water and other Civil Engineering works).

27. 27 PART III CONTD. Tender documents – Third schedule. 5 Standard tender document for procurement of works (small works 6 Standard tender document for procurement of Works (Buildings and associated civil engineering Works) 7Standard tender document for procurement of works. (Electrical and mechanical works) 8 Standard tender document for procurement of goods.

28. 28 PART III CONTD. Tender documents co 9Standard tender document for procurement of insurance services 10 Standard tender document for procurement of services 11 Standard tender document for letting, leasing, licensing, tenancy, franchise and management contracting. 12 Standard request for proposals (RFP) (Selection of consultants

29. 29 PART III CONTD. Tender documents cont’d 13 Standard tender document for Request for Proposals (RFP) (selection of individual professional consultants 14 Standard tender document for sale of boarded stores and equipment. The standard tender documents are usually customized by purchasers.

30. 30 PART III GENERAL PROCUREMENT RULES cont’d Contract Administration The Act covers contract management Section 4(1) of the Act and detailed in the Regulations in respect of:  Price variation to be based on prevailing consumer price index obtained from CBS or the monthly inflation rate issued by CBK  Quantity variation for goods and services not to exceed 10% of the original contract quantity.  Quantity (bill of quantities /scope of works) variation for works not to exceed 15% of the original contract quantity. 

31. 31 PART III GENERAL PROCUREMENT RULES cont’d Contract Administration  Contract termination.  Grounds and procedures for termination to be specified in the contract  The request for termination to be made by procurement unit for the tender committee approval prior to termination  The request for termination to include  Reasons for termination  Contractual grounds for termination and  Cost of termination Discussion: How can costs of contract termination be avoided or minimized?

32. 32 PART IV OPEN TENDERING Threshold for Open tendering advertisement CLASSGOODSWORKSSERVICES A6000000/- 3000000/- B4000000/- 2000000/-- C3000000/-3000000/1000000/

33. 33 PART IV OPEN TENDERING Advertisement period.  ICB – 30 days minimum  NCB – 21 days minimum. Evaluation of tenders  Preliminary Evaluation  Technical Evaluation  Financial Evaluation  Evaluation within 30 days after opening of tenders. See timeframe for Technical and Financial evaluation above

34. 34 Issuance of Tender Documents Fee for tender documents –Not to Exceed Ksh 5,000. Tender Security –Not to exceed 2% of the estimated value of contract. –Insurance company guarantee acceptable if approved by the Authority. PART IV CONTD.

35. 35 PART V – ALTERNATIVE PROCUREMENT METHODS. Restricted Tendering. Request for proposals. Request for quotations. Direct procurement. Low value procurement. Specially permitted procedure. -It is important to know the following: -When a procedure may be used -Have prior approval of the Tender committee. For choice of procurement methods –see Matrix Presentation

36. 36 PART V CONTD. Award of contract ( As per the first schedule-the Matrix) By Tender /Procurement Committee depending on threshold for each class of PE By user in case of Low Value Procurement Notification of award:  To successful tenderers as well as unsuccessful tenderes.  After notification of award where an unsuccessful tenderer requests a procuring entity shall within 14 days after a request provide written reasons as to why the tenderer was unsuccessful

37. 37 PART VI - ADMINISTRATIVE REVIEW OF PROCUREMENTS AND PROCEEDINGS Composition of membership of Review Board The Director General shall appoint from amongst the staff of the Authority to be the secretary to the Review Board To be appointed for a term of three years The membership to be six appointed from the names submitted by 13 professional bodies and COTU Three other persons appointed by the Minister A Chairman appointed by the Minister from six persons referred above. Procedures in review (Refer to presentations for the Overview of the ACT)

38. 38 Part VII INVESTIGATION, DEBARMENT AND DISPOSAL Investigation.  Investigator pursuant to section103 not to advice PE on matters being investigated. Debarment  The Director General with the approval of the Advisory Board may debar a person from participating in procurement proceedings on the ground that the person has breached a code of ethics (s.139 of the Act)  Where a person is debarred from participating in procurement proceeding as under section 115 of the Act, the debarment extends to any firm in which a person has a controlling interest

39. 39 PART VII CONTD. Disposal  As recommended by disposal committee  May be by :  Sale by Open tender  Transfer to another public entity or part of public entity with or without financial adjustment  Sale by public auction  Destruction, dumping or burying  Trade-in

40. 40 PART VII CONTD. Disposal cont’d Disposal to employees  When:  Time and cost required to dispose to any other person would be disproportionate to the value of the item  The employee is in the possession of the stores or equipment to be disposed of and may be given the firstly priority to purchase the same  Any disposal made to staff should be reported to the authority within 14 days of the disposal by the accounting officer

41. 41 SCHEDULES First - Threshold matrix Second – Composition of Tender Committee Third – Standard tender documents Fourth – Review forms and fees for review

42. 42 Never decide to do nothing just because you can do a little Do the little you can Thank you!

43. 43 END DISCUSSIONS “THANK YOU”