By many estimates public procurement roughly accounts for 25-30 per cent of developing countries’ expenditures according to a World Bank report.
Procurements may range from frequent small and standardized request for quotations type, procurements of pens and computers, to large and more complex, albeit fewer in number, request for proposal type, procurement of roads, IT systems and public private partnership arrangements.
The promulgation of the 2010 Constitution committed the government to the principles of Good Financial Governance under Article 227.
The enactment of Public Procurement and Disposal Act 2015 ushered in a new regulatory environment. Public Procurement and Regulatory Board, the Public Procurement Department, National Treasury are some of the institutions that were set up in line with the new dispensation.
Among notable reform initiatives include the operationalization of the procurement portal as well as the enactment of the public procurement regulations. The national procurement policy was rolled out in 2021 thus strengthening the regulatory and institutional framework.
There however remains a number of corruption risks across pre-tendering, tendering and post-award stages. For example, the expose on Covid-19 procurement irregularities by the Auditor General and Parliament oversight committees at the Kenya Medical Supplies Authority (Kemsa) makes for an uncomfortable reading. The scale and nature of the procurement irregularities is an indictment of corporate governance controls in government agencies. For example, annual procurement plans and large government contracts are rarely published that leads to limited transparency.
With such robust legislation and institutional architecture in place to regulate public procurement in the country, one wonders why the same corruption-related practices keep recurring. In order to answer this, one has to appreciate the context of public procurement.
Automation becomes another remedial intervention. There is, currently, no comprehensive e-procurement system in the country. Some e-procurement functionality exists within IFMIS, such as supplier and government entity registration, annual procurement planning, bid solicitation, contract and payment information.
A lot of the information, however, is not publicly available. It is important to note that tangible progress has been made by the Public Procurement Department over the last five years. The public procurement department is in the process of designing and developing a new electronic Government Procurement system (E-GP). The process of tendering for the contractor to develop the software is almost complete. Piloting of the system is expected to be done by year-end. The full rollout is expected in June 2023 barring no further delays.
International experience of high middle-income countries such as Kyrgyzstan and the Philippines suggest that deployment of even a partial procurement automation solution could save at least 10 per cent of procurement money spent. These would translate into savings of approximately Sh200 billion for the country, enough to cover the cost of construction of six projects like Thika Superhighway annually. Yet, we do not have to wait for the e-Procurement system that may take a few more years to fully materialize. There is a lot that can be done now.
Large public procurement contracts should be made public. In practice, government procurement is subjected to different transparency standards compared to private sector procurement. In public procurement, there should be a distinct audit trail, with all information clear and accessible.
In my view, if a supplier is willing to do business and profit from public monies, they should be ready and willing to have such contracts made public for scrutiny. In fact, the PFM Reform Strategy 2018-2023 envisages this kind of transparency. That is, full publication of information on large and complex procurements.
Contrary to international good practice, the annual procurement plans for government agencies are not published centrally on the existing PPRA Public Procurement Information Portal. Yet this would go a long way in helping suppliers better prepare for the upcoming bids, increase competition, reduce cost and improve quality of goods and services procured.
Regardless, whether contracts are published or not, the award notices on the portal must be much more informative to include quantities of goods/services purchased so that people can see the unit price and other “beneficial ownership information”.
Indeed, the primary, if not, the significant bottleneck in procurement reforms remains the close-knit relationship between politicians and private businesses. One significant take-away from the parliamentary inquiry into the “Kemsa Covid scandal” is the realization that most companies that won the lucrative tenders were referred by or had close relationship with politicians.
The legal counter argument of contract confidentiality lacks merit, why would a public contract, meant for public benefit, be made confidential? To what end? Good international practice suggests that the most important contract information should be captured in the e-GP system and be made publicly available.
Also, it is an increasingly good practice for the full text of the contracts themselves, and especially larger government contracts, to be publicly available. We have to adopt international best practices and localize them. Like adopting and operationalizing an end-to-end e-procurement system.
Courtesy of Kenneth Mwenda; The standard