PROCUREMENT METHODS AND PROCEDURES
Classified procurements and disposals.
All state organs including national security organs and other procuring entities that deal with procurements of classified nature, manage their procurements and disposals on the basis of a dual list maintained by the respective procuring entity.
Procuring entities that procure classified items are required to request the Cabinet Secretary for approval of the classified list of items annually where the approval list will include:
a. the justification for use of classified procurement and asset disposal for each category;
b. the description and quantity of each item required;
c. the estimated cost of each item;
d. the budgetary provision; and
e. the proposed procurement and asset disposal methods for each item and the justification for use of the method.
The dual list usually distinguishes items subject to open procurement and to classified procurement & disposal proceedings respectively.
Procuring entities that deal with classified items need to agree annually with the Cabinet Secretary on the category of classified items to be included in the classified list of procurements or disposals.
The Cabinet Secretary then submit the list of classified items to Cabinet for approval.
Any person carrying his or her duties or responsibilities is required to maintain confidentiality and not disclose any information that may otherwise compromise national security. It is an offence to use classified procurement in order to avoid open tendering.
The accounting of a procuring entity that deals with classified items is required to nominate a special committee where they will be the secretary, to handle the procurement and disposal of its classified items and submit the names of the nominated member to the Cabinet Secretary, County Executive Committee member or governing body of that procuring entity for approval. The special committee is responsible for—
a. developing the specifications of classified items;
b. coordinating the process of sourcing and identification of suppliers;
c. establishing and updating a list of registered and prequalified suppliers for the supply of classified items;
d. conducting market surveys of the classified items to be procured;
e. conducting the evaluation, inspection, acceptance and negotiations;
f. managing and implementing all contracts of a classified nature;
g. preparing reports and recommendations for the procurement and disposal activities; and
h. maintaining and archiving all records and relevant documentation.
Methods of procurement of goods, works and services.
i. Open tendering.
Open tendering allows anyone to submit a tender to supply the goods, services or works required and offers an equal opportunity to an organisation to submit a tender. This method provides the greatest competition among suppliers and has the advantage of creating opportunities for new or emerging suppliers to try to secure work. The tendering process may take time because all bids will need to be evaluated.
Open tendering can be done either as International Open Tendering or as National Open Tendering
a. International Open Tendering
International Open Tendering is used where there is ineffective competition for a procurement and so foreign tenderers need to participate. The following needs to apply –
a. the invitation to tender and the tender documents is to be in English;
b. the procuring entity advertises the invitation to tender in Kenya’s dedicated tender portal or one or more English-language newspapers or other publications that, together, have sufficient circulation outside Kenya to allow effective competition for the procurement;
c. the period of time between the advertisement and the deadline for submitting tenders should not be less than 7 days.
d. the technical requirements are based on international standards or standards widely used in international trade;
e. a tenderer submitting a tender may, in quoting prices or providing security, use a currency that is widely used in international trade and that the tender documents specifically allow to be used; and
f. where local or citizen contractors participate, they are entitled to preferences and reservations.
b. National Open Tendering
When using national open tendering, the procuring entity should seek to make available the invitation to tender to the attention of those who may wish to submit tenders.
The procuring entity is required to advertise in the dedicated Government tenders’ portals or in its own website, or a notice in at least two daily newspapers of nationwide circulation, as well as Kenya’s dedicated tenders’ portal.
The minimum time for preparation of tenders is 7 days for national and county specific tenders. Upon advertisement, the procuring entity immediately provides copies of the tender documents in accordance with the invitation to tender and uploads the tender document on the website.
Fees may be charged to a maximum of Ksh. 1,000 for copies of the tender documents, unless the cabinet secretary of the National Treasury decrees otherwise, and the fees should be reflective of the cost of printing and m.
ii. Two stage tendering
This procurement method is used when there is complexity and inadequate knowledge in the procuring entity or there is rapid advancements in technology and as a result, it is not feasible for the procuring entity to formulate detailed specifications for the goods or works or non- consultancy services in order to obtain the most satisfactory solution for procurement.
In the first stage, tenderers are required to submit, in the first stage of the two-stage tendering proceedings, initial tenders containing their proposals without a tender price.
In the second stage, the procuring entity invites tenderers whose tenders were retained to submit final tenders with prices, with respect to a single set of specifications and in formulating those specifications, the procuring entity may modify any aspect, originally set forth in the tendering document.
Modification or addition is be communicated to tenderers in the invitation to submit final tenders and a tenderer not wishing to submit a final tender may withdraw from the tendering proceedings without forfeiting any tender security.
The final tenders are evaluated and compared in order to ascertain the successful tenderer.
iii. Design competition.
This procurement is used for the purpose of determining the best architectural, physical planning and any other design scheme, engineering, graphic or any other design scheme.
Steps in design competition:
1. preparation of tender documents
2. appointment of independent assessors
3. issuance of the notice of invitation to participate in the design competition
4. submission of design proposals by the tenderers
5. opening of bids
6. appointment of an ad hoc evaluation committee
7. evaluation of the design proposals in accordance with the criteria set out in the bid documents
8. submission of design competition report to the head of procurement function for review
9. preparation of a professional opinion by the head of the procurement function who submits it to the accounting officer for approval
10. notification of results to all bidders and declaration of the best three design schemes;
11. payment of honorarium as provided in the bid document inviting the design competition. The evaluation of design proposals is undertaken by an evaluation committee.
Prior to publishing an invitation notice, the accounting officer prepares tender documents and appoint as part of the ad hoc evaluation committee, at least one independent lay assessor, and technical assessors recommended by the professional regulatory body governing the design competition.
The best three assessed design schemes, receive as a prize a payment as provided for in the internal policies of the procuring entity subject to the guidelines set out in the applicable county or national level.
In participating in design competitions, all bidders undertake to transfer all copyrights, intellectual property rights and patents relating to their designs to the procuring entity.
Upon completion of the design competition, all the submitted design schemes become property of the procuring entity.
iv. Restricted tendering.
Restricted tendering only allows suppliers to submit tenders by invitation. These suppliers are those who have undergone a prequalification process and deemed compliant. This method excludes bidders who aren’t in a position to fulfil the obligations from participating.
The procuring entity invites tenders from at least ten persons selected from the list of registered (prequalified) suppliers maintained.
The minimum time for preparation of tenders is a period of seven days. Restricted tendering is used when:
a. The nature of the goods, works or services is complex or specialised in nature
b. the time and cost required to examine and evaluate a large number of tenders would be disproportionate to the value of the goods, works or services to be procured
c. if there is evidence that there are only a few known suppliers of the whole market of the goods, works or services
d. an advertisement is placed, where applicable, on the procuring entity website regarding the intention to procure through limited tender.
Where there are only a few known suppliers, the procuring entity is required to publish the restricted tender on its website or state portal for not less than 3 days before inviting tenders and outside bidders are invited to bid.
v. Direct procurement.
A procuring entity may use direct procurement as long as the purpose is not to avoid competition.
When this method is used, the accounting officer must record the reasons for direct procurement. The accounting officer is required to report any direct procurement exceeding Ksh. 500, 000 to the PPRA within 14 days of notification of award.
Direct procurement items can’t be procured above the prevailing market rates. Direct procurement cannot be used in a discriminatory manner.
Direct procurement bids must be evaluated.
Direct procurement negotiations are conducted by the ad hoc evaluation committee appointed and may negotiate on the price, terms of contract, terms of delivery, scope of work. The committee then prepares a report and submits it to the head of procurement for a professional opinion and onward submission to the accounting officer for approval and award.
Direct procurement requires the prior approval of the accounting officer in writing except under urgent need.
Direct procurement is used when:
a. the goods, works or services are available only from a particular supplier or contractor, or a particular supplier or contractor has exclusive rights of the goods, works or services, and no reasonable alternative or substitute exists;
b. due to war, invasion, disorder, natural disaster or there is an urgent need for the goods, works or services, and engaging in tendering proceedings or any other method of procurement would therefore be impractical, provided that the circumstances giving rise to the urgency were neither foreseeable by the procuring entity nor the result of slow conduct on its part;
c. owing to a catastrophic event, there is an urgent need for the goods, works or services, making it impractical to use other methods of procurement because of the time involved in using those methods;
d. the procuring entity, having procured goods, equipment, technology or services from a supplier, determines that additional supplies should be procured from that supplier for
reasons of standardization or because of the need for compatibility with existing goods, taking into account:
o the effectiveness of the original procurement in meeting the need
o the limited size of the proposed procurement in relation to the original procurement
o the effectiveness of the original procurement in meeting the need
o the limited size of the proposed procurement in relation to the original procurement
e. for the acquiring of goods, works or services provided by a public entity provided that the acquisition price is fair and reasonable and compares well with known prices of goods, works or services in the circumstances.
Steps in direct procurement:
a. issue a tender document which is the basis of tender preparation by tenderer and subsequent negotiations.
b. appoint an ad hoc evaluation committee to negotiate with a person for the supply of goods, works or non-consultancy services being provided;
c. ensure appropriate approvals under the Act have been granted;
d. ensure the resulting contract is in writing and signed by both parties
vi. Request for proposals.
A procuring entity may use a request for proposals for a procurement if –
a. the procurement is of services or a combination of goods and services;
b. the services to be procured are advisory or otherwise of a predominately intellectual nature.
The procuring entity invites proposals from only the prequalified suppliers.
The Procuring Entity selects Quality and Cost Based Selection (QCBS) method as the preferred method to be used to evaluate proposals and states the selection procedure in the Request for Proposals.
The request for proposal, requests submission of both technical and financial proposals at the same time, but in separate envelopes.
Technical proposals are opened first before the opening of financial proposals where the tender document requires submission of separate technical and financial bids.
The evaluation is carried out within a maximum of twenty-one days.
The successful proposal is the responsive proposal with the highest score determined in accordance with procedure and criteria set out in the RFP.
The procuring entity may negotiate with the successful proposal and may request and permit changes. Where negotiations don’t result in a contract, the procuring entity may negotiate with the second person who would have been successful.
A procuring entity may use any of the following alternatives in the selection methods to evaluate proposals and states the selection method in the Request for Proposals:
1. Quality Based Selection method uses a competitive process that takes into account the quality of the proposal and the cost of the services in the selection of the successful firm. It is to be used for:
a. complex or highly specialized assignments for which it is difficult to define precise terms of reference and the required input from the consultants;
b. assignments that have a high downstream impact and in which the objective is to have the best experts;
c. assignments that can be carried out in substantially different ways;
d. assignments and professional services which are regulated by Acts of Parliament which stipulate fees and charges applicable for such assignments.
2. Least-Cost Selection method is used for selecting consultants for assignments of a standard or routine nature where well-established practices and standards exist.
3. Fixed Budget Selection indicates the available budget and request the consultants to provide their best technical and financial proposals in separate envelopes, within the budget. Fixed budget selection method is appropriate only when the assignment is simple and can be precisely defined and when the budget is fixed.
Proposals under Fixed Budget selection method that exceed the indicated budget are rejected and the consultant who has submitted the highest ranked technical proposal among the rest is selected and invited to negotiate a contract.
4. Single Source Selection may be appropriate in the following cases, and only if it presents a clear advantage over competition—
a. where it can be evidenced that goods, works or services are available only from a particular supplier, or a particular supplier has exclusive rights in respect of the consultancy services, and no reasonable alternative or substitute exists; or
b. for tasks that represent a natural continuation of previous work carried out by the firm;
c. in exceptional cases, such as, but not limited to, in response to natural disasters and for a declared national emergency situation.
5. Consultants Qualifications Selection (CQS) – It applies to small assignments for which the cost of a full-fledged selection process would not be justified. Under CQS, the procuring entity
first requests expressions of interest and qualified information relating to the experience and competence of the consultants relevant to the assignment. The procuring entity then evaluates the information, establishes a short list, and then selects the firm with the best qualifications and references among those who confirm to be willing to submit a proposal if selected. The selected firm is sent the RFP (including the ToR), asked to submit technical and financial proposals, and invited to negotiate the contract if the technical proposal proves acceptable.
6. Individual Consultants Selection (ICS) – Individual Consultants are selected on the basis of their qualifications and experience for the assignment. They may be selected on the basis of references, or through a comparison of capabilities among those expressing interest in the assignment or approached directly by the procuring entity. The choice on how consultant is selected depends on duration of assignment. However, details on how the assignment will be carried out are stated in the Request for Proposal which comprises of Terms of Reference. In response to the RFP, consultants are requested to submit detailed/ updated CVs and Financial Proposal that means is combined submission in separate envelopes. In regard to understanding the ToR, consultants are requested to make comments on the ToR of the assignment if any.
vii. Request for quotations.
This procurement method is used for goods or services. It is a fast procurement process; the procurement entity selects a minimum of three suppliers or service providers from the list of registered suppliers that they wish to get quotes from. An evaluation of the quotes is done upon submission and the lowest evaluated quote is chosen.
A request for quotation is used when:
a. the estimated value of the goods (Ksh. 3,000,000), works (Ksh. 5,000,000) or non- consultancy services (Ksh. 3,000,000) being procured is less than or equal to the prescribed maximum value in the threshold.
b. the procurement is for goods, works or non-consultancy services that are readily available in the market.
c. the procurement is for goods, works or services for which there is an established market. The following should be observed during RFQ:
a. the procuring entity gives the request to suppliers registered (prequalified) by the procuring entity.
b. the request is given to as many persons as necessary to ensure effective competition and is given to at least three persons, unless that is not possible.
c. the procuring entity issues the request early enough so that the bidder has adequate time to prepare a quotation.
d. at least three persons should submit their quotations prior to evaluation.
The successful quotation is the quotation with the lowest price that meets the requirements set out in the request for quotations.
Where the lowest price is above the prevailing market rates, the request for quotations is cancelled or terminated.
viii. Low-value procurements.
A procuring entity may use a low-value procurement procedure if –
a. the entity is procuring low value items which are not procured on a regular or frequent basis and are not covered in framework agreement;
b. the estimated value of the goods, works or non-consultancy services being procured are less than or equal to the maximum value per financial year for that low-value procurement.
c. the estimated cost of the goods, works or services being procured per item per financial year is as per the threshold matrix;
d. no benefit would accrue to a procuring entity in terms of time or cost implications if a procuring entity uses requests for quotations or any other procurement method;
e. the procedure is not being used for the purpose of avoiding competition; or
f. the procedure has been recommended by the head of procurement function after conducting a market survey and approved by the accounting officer.
The goods, works or services are procured from a reputable outlet or provider through direct shopping or using credit cards or direct funds transfer to that outlet.
Any low value procurement is to be supported by the original Kenya Revenue PPRA Electronic Tax Receipt (KRA ETR Receipt) duly signed by the person undertaking the low value procurement of goods, works or services.
The goods procured are taken on charge by the officer responsible for the stores after the user department has confirmed the quantity and quality of the goods, works or services, before they are issued to the respective user department.
ix. Force account.
A procuring entity may use force account by making recourse to the state or public officers and using public assets, equipment and labour. A procuring entity may use force account to complete the works where the contractors either abandoned or delayed completion of works or services and the cost of retendering is uneconomical.
A procuring entity may use force account using public assets, equipment and labour which are competitive and where-
a. quantities of work involved are small and scattered or in remote locations for which qualified construction firms are unlikely to tender at reasonable price and the quantities of works cannot be defined in advance;
b. unforeseen and urgent work is required to be carried out without disrupting on-going operations;
c. the procuring entity is to complete works delayed by the contractor after the written warnings did not yield any tangible results
Force account is used when:
• the total cost of procuring the goods, works and non-consultancy services are, at most, set at the prevailing market rate
• it is established that it is uneconomical to outsource the goods or works or services
• the procurement of inputs (materials) is done as per the Act.
• a procuring entity identifies and include the activity in the annual procurement plan
• the accounting officer approves the procedure for use of force account based on the report which includes an assessment and availability of a state officer’s or public officer’s capacity including public assets, equipment and labour;
• preparation of relevant bills of quantities, cost estimates and technical drawings, where applicable
• preparation of relevant bills of quantities, cost estimates and technical drawings has been done.
x. Electronic reverse auction.
A procuring entity may request for approval from the PPRA to use the electronic reverse auction system.
To use reverse auction a procuring entity should possess:
• A procurement portal
• An appropriate approved secure software with e-procurement capabilities.
This method applies to goods, works and services which have standard and comprehensive specifications.
The procuring entity ensures that the reverse auction bidding is completed within a period of five hours.
The automatically generated report is submitted to the head of the procurement function for a professional opinion and for onward submission to the accounting officer who notifies the successful bidder, in writing, that his or her bid has been accepted.
In the event that the successful bidder declines the offer, the next lowest bidder is offered the bid subject to the reserve price.
Steps in reverse auction:
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
iii. ensure the prices of bidders within the prescribed time are visible to other bidders without revealing the bidder’s identity
iv. pre-qualified supplier is not allowed to revise its bid upwards within the prescribed time.
xi. Framework contracting.
A procuring entity may enter into a framework agreement open tender if –
a. the procurement value is within the thresholds
b. the required quantity of goods, works or non-consultancy services cannot be determined at the time of entering into the agreement;
c. a minimum of seven alternative vendors are included for each category.
The maximum term for the framework agreement is three years and, for agreements exceeding one year, a value for money assessment is undertaken annually to determine whether the terms designated in the framework agreement remain competitive.
When implementing a framework agreement, a procuring entity 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 off order: an order with one or more suppliers 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 are undertaken by an evaluation committee.
xii. Community participation.
A procuring entity may involve a beneficiary community to participate in the delivery of services if it is established that it contributes to-
a. the economy;
b. value for money;
c. project sustainability; and
d. socio-economic objectives such as creation of employment. Community participation method may involve two approaches, namely—
a.direct community participation – this is where the procuring entity transfers the project funds in tranches to the community project management and implementation committee.
b. organized community participation – this is where the procuring appoints a community- based service provider.
Conditions for use of community participation method.
Where a procuring entity intends to use community participation as a method of procurement that procuring entity ensures—
a. the project is aligned to the procuring entity’s mandate and strategic plan;
b. the project has positive socio-economic outcomes with the community as its main beneficiary;
c. the project requires community involvement in part or in whole for its success and its continued implementation;
d. the project is included in the annual procurement plan for that procuring entity;
e. the project proposal prepared is in line with its strategic plan and which includes—
i. setting out the key result areas and the specific roles of the target community; and
ii. the objectives, estimated budget and the target community beneficiaries.
Procedure for use of community participation method.
Where the procuring entity uses community participation procurement method for delivery of services that procuring entity—
a. organises a meeting of the beneficiary community, whereby—
i. the community is informed of the activity, the scope of their participation and the benefit to the community in return;
ii. through its representatives, the procuring entity explains to the community the document containing obligations of both sides, the appropriate payment, the period after which participants are paid, payment modalities and any other details related to goods, works or non-consultancy services execution; and
iii. the procuring entity establishes a list of community members committed to participate in the procurement proceedings and those members affix their signatures or fingerprints as evidence for their commitment;
b. requires the community to elect or nominate their representative in all communication and transaction processes and that procuring entity identifies a contact person and where there is a change to the representatives each party communicates the change to the other;
c. avails technical equipment needed for the execution and informs the community of any equipment they will bring for the execution of the community project, where applicable;
d. uses its public officers or hire a consultant to technically assist the community for the supervision of works execution, if needed;
e. with the help of supervisors, assists every participant to sign on daily basis in the register or on a card prepared for that purpose, as appropriate;
f. before execution of the community project, requires every participant to provide his or her full identification, and if necessary, her or his bank account where the payment may be deposited;
g. where a procuring entity is unable to organize the community participation, delegates to another public entity capable of managing that activity; and
h. ensures that a project management committee composed of at least five volunteer members is elected or nominated by the beneficiary community who—
i. participate in the preparation, management and implementation of the project;
ii. monitor the implementation of the project; and
iii. report to the accounting officer of the procuring entity.
The accounting officer ensures that a person is appointed as project supervisor, who may be the head of the user department, or a consultant where a procuring entity does not have the internal capacity to supervise the project.
xiii. Competitive negotiation
A procuring entity may conduct competitive negotiations as prescribed where:
a. there is a tie in the lowest evaluated price by two or more tenderers;
b. there is a tie in highest combined score points;
c. the lowest evaluated price is in excess of available budget; or
d. there is an urgent need that can be met by several known suppliers. The procuring entity:
a. identifies the tenderers affected by tie;
b. identifies the tenderers that quoted prices above available budget; or
c. identifies the known suppliers as prescribed.
Where the tenderers that quoted above the available budget, the procuring entity:
a. reveals its available budget to tenderers; and
b. limits its invitation to tenderers whose evaluated prices are not more than twenty five percent above the available budget.
The procuring entity will request the identified tenderers to revise their tenders by submitting their best and final offer within a period not exceeding seven days.
The revised prices should not compromise the quality specifications of the original tender. Tenders are evaluated by the evaluation committee are appointed in the initial process.
The successful best and final offer is the best rated tender using evaluation criteria set forth in the tender documents.
i.Specially permitted procurement procedure
A procuring entity may use a procurement procedure specially permitted by the National Treasury:
a. where exceptional requirements make it impossible, impracticable or uneconomical to comply with the Act and the Regulations;
b. where the market conditions or behaviour do not allow the effective application of the Act and Regulations;
c. for specialized or particular requirements which are regulated or governed by harmonized international standards or practices;
d. where strategic partnership sourcing is applied;
e. where credit financing procurement is applied;
Procurement methods procedures
Open tendering is the preferred procurement method for procurement of goods, works and services.
The procuring entity may use an alternative procurement procedure only if that procedure is allowed and satisfies the conditions under the Act for use of that method.
Open tendering is still adopted for procurement of goods, works and services for the threshold prescribed in the respective national and county Regulations.
Quality and Cost Based Selection will be the preferred method for evaluation of non- consultancy services procured under request for proposal method.
Procurement method include:
a. open tender;
b. two-stage tendering;
c. design competition;
d. restricted tendering;
e. direct procurement;
f. request for quotations;
g. electronic reverse auction;
h. low value procurement;
i. force account;
j. community participations;
k. request for proposals;
l. framework agreements;
m. any other procurement method and procedure as prescribed in regulations and described in the tender documents.