IMPROVING EFFICIENCY IN PUBLIC PROCUREMENT - KENYA

1. IMPROVING EFFICIENCY IN PUBLIC PROCUREMENT - KENYA H.K. Kirungu Manager, Policy & Research Public Procurement Oversight Authority, Kenya

2. OUTLINE Areas of Inefficiency Over-pricing RFQ Transactions Procurement Capacity Procurement Appeals Pre-qualification Adverts Common-User Items Self-Monitoring Culture

3. OUTLINE Areas of Inefficiency Procurement Planning Over-Pricing Transaction Frequency Procurement Capacity E-Procurement Framework Common User Items Self-Monitoring Culture Administrative & Judicial Reviews Conclusion

4. Areas of Inefficiency • Lack Procurement planning • Over-Pricing of Common User Items • Over-use of the RFQ Method • Inadequate Procurement Capacity • Manual Procurement System • Decentralized Procurement of Common User Items • Lack of Self-Monitoring Culture • Frivolous appeals • Long judicial review process

5. Procurement Planning • It is commonly known that “failure to plan is planning to fail” • Though procurement planning is legal requirement, lack of it is still a major cause of inefficiencies • It has lead to:- • End-of year artificial emergency procurements • Failure to absorb allocated funds • Application of inappropriate procurement methods • Circumvention of legal & regulatory procedures • PPOA is forestalling this challenge by:- • Issuance of mandatory procurement planning Circular • Enhanced surveillance through procurement assessments and reviews.

6. Over-pricing • In a 2007 Baseline Survey of Prices of Common User Items it was found that PEs were buying at an average of 60% above the prevailing Market Price

7. Over-pricing • PPOA developed a Price Reference Guide that is updated from time to Time • In the subsequent Impact Assessment of application of Price Reference Guide prices reduced to an average of 20% above the market price • The Guide is used as a benchmark for investigations by:- • KACC/E&ACC • KENAO • Parliament

8. Transaction Frequency

9. Transaction Frequency • Over-reliance of the RFQ Method depicted inefficient use of procurement unit’s time • PPOA issued Framework Contract Guidelines • Allows PEs to arrange indefinite quantity and delivery contracts

10. Procurement Capacity • Capacity in Public Procurement for all stakeholders must be developed such as:- • Policy makers • Regulators • Procuring entities • Suppliers/Providers • Since 2007 PPOA has conducted several capacity building initiatives:- • developed a capacity building strategy • trained at least 10,000 persons/organizations • sponsored PG-degrees courses for professionals • setting up of a professional body

11. E-Procurement Framework • Manual systems are a source of major inefficiencies in regulation and operations of the function. • PPOA has/is addressing this situation by:- • Developed an e-procurement Strategy • Dedicated tenders portal for e-adverts and publication of contract awards • Developed Statement of Work for e-procurement software • Attempted procurement of e-procurement software but contract curtailed by an on-going court process • As an alternative identified the “Procure To Pay” module in the IFMIS Re-engineering framework of the MoF • EOI for procurement of “Procure to Pay” software is underway • The re-engineering process targets elimination of all redundant steps in the function.

12. Common-User Items • Inefficiencies in procurement of common user items was inexperienced in • The noted inefficiencies were duplication of newspaper advertisement costs. • PPOA targets centralization of tender adverts by clustering them in the following sectors:- • Health • Districts • Local Authorities • Education • Modernization of the Government shop

13. Self-Monitoring Culture • PPOA introduced the IPPMT Tool with 4 main Objectives: • To inculcate self-monitoring culture in PEs • To improve performance of procurement units. • To structure PPOA’s M&E requirements. • To improve compliance with the Procurement Law • The tool uses 21 selected indicators within the procurement cycle • Indicators to be monitored among others, include: • Procurement planning • Bidding process • Evaluation process • Awarding process • Contract management

14. How IPPMT Tool Works

15. Impact of the IPPMT Tool Increased efficiency & effectiveness in Procurement process Enhanced working relationship between PPOA & PEs Increased fairness & confidence in the procurement process IPPMT’s Full Application Means Value for money Returns

16. Administrative & Judicial Reviews • These reviews are just a drop in the ocean of the multiplied millions of transaction in public procurement. • However, there two are great inefficiencies experienced:- • Frivolous appeals • Delays in judicial review process

17. Review Remedies • Commissioned a study on dealing with frivolous appeals in 2011. • Study proposed amendments to the Law to forestall challenge including short term measures • Held discussion with judges in their 2010 Annual Colloquium to acquire understanding of perishable nature of procurement transactions & proposed:- • Expedition of cases • Creation of special procurement courts

18. CONCLUSION • Kenya is committed to improving efficiency in the public procurement system at every opportunity for the purpose of enhancing:- • Accountability in decision-making structures. • Responsiveness to citizens of the country. • Professionalism to improve performance. • Transparency in the procedures and policies. • Appeal rights to redress meritorious grievances of suppliers.

19. Asante Sana WebaleNnyo Murakoze ! 19