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Friday, November 26, 2010

Debating transparency in Kenya: a case for reform

Note: This post contains a number of labels, as the opinion piece in this post is a comprehensive critique of the procurement situation in Kenya. You should read the full article, particularly if you do not understand the reference to any particular label.

Transparent and competitive public procurement system key to a functioning economy
all governmental entities are struggling in the face of unrelenting budget constraints, downsizing, public demand for increased transparency in public procurement and greater concerns about efficiency, fairness and equity. Additionally, public procurement professionals have faced a constantly changing environment typified by rapidly emerging technologies, increasing product choice, environment concerns, and the complexities of international and regional trading agreements.

Further, policy makers are increasingly using public procurement as a tool to achieve socioeconomic goals. In this environment, public procurement has become much more complex than ever before, and public procurement officials must deal with a broad range of issues.

They have been walking on a tight rope in balancing the dynamic tension between (a) competing socioeconomic objectives, (b) national economic interests vis-à-vis- global competition as required by regional and international trade agreements, (c) satisfying the requirements of fairness, equity and transparency, (d) maintaining an overarching focus on maximising competition; and (d) utilising new technology to enhance procurement efficiency, including e-procurement and purchase cards.

A sound procurement system is based on four major elements or pillars: legislative and regulatory framework, institutional framework and management capacity, procurement operations and market practices, and integrity of procurement system. A weakness in one of the four pillars inevitably leads to an unsound public procurement system. This contribution highlights the weakness in the current legal and regulatory framework on public procurement—the Public Procurement and Disposal Act 2005.

The principal reason for the enactment of the Act was to have a legal regime that weeds out inefficiencies in the procurement process, remove patterns of abuse, and the failure of the public purchaser to obtain adequate value in return for the expenditure of public funds.

However, these objectives have never been fully achieved in practice. Key provisions of the Act and the regulations are replete with textual weaknesses that have often been abused by procuring entities. Moreover, the Act does not envisage contemporary market realities hence the need to continuously revise it to keep pace with these developments.

The authors’ review of more than 100 decisions from the Review Board and the High Court has revealed an inconsistent implementation of these policy objectives. There are no set guidelines, judicial or statutory, that ought to guide decision makes in the interpretation and application of the policy objectives. It is proposed that the Act is amended to restate and redefine the stated policy objectives.

transparency and non-discrimination are the key pillars of the legal regime on public procurement and disposal. A transparent and openly competitive public procurement system with clear procedures and contract award criteria is a prerequisite to a functioning economy.

A good procurement system must therefore provide watertight provisions amongst others , (a) requiring procuring entities to publish tender notices in good time to allow adequate responses from bidders, (b) clearly stipulating any technical specifications and procedures, (c) outlining bid opening procedures and detailing the terms and conditions of the contract awarded, and (d) requiring the procuring entity to maintain reliable record of proceedings, disclose all relevant information and avail for inspection the name and address of the successful bidder and the value of the winning bid.

the right of unsuccessful tenderer to challenge the award of the tender is a key feature of the public procurement process. An ideal public procurement legal regime should contain bid-challenge procedures that are non-discriminatory, timely, transparent and effective.

A critical review of the Act reveals that while the mere fact of lodging of a request for administrative review to the Review Board automatically operates to suspend the procurement proceedings, there are no concomitant provisions for automatic interim measures when an applicant seeks to challenge the decision of the Review Board by way of judicial review to the High Court.

This conflict was played out in the case of Republic Versus the Public Procurement Administrative Review ex parte Egerton University where the Review Board’s decision to direct procuring entity to extend the disputed contract for three months was stayed by the High Court. This created a hiatus that led to the completion of the original project thereby rendering the judicial and administrative review proceedings nugatory.

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