Procurement Methods notes

Procurement Methods

  • Open-tendering methods
  • Alternative procurement methods

An accounting officer of a procuring entity shall procure goods, works or services by a method which may include any of the following —

  • Open tender;
  • Two-stage tendering;
  • Design competition;
  • Restricted tendering;
  • Direct procurement;
  • Request for quotations;
  • Electronic reverse auction;
  • Low value procurement;
  • Force account;
  • Competitive negotiations;
  • Request for proposals;
  • Framework agreements;
  1. Open Tender

(1) The accounting officer of a procuring entity shall take such steps as are reasonable to bring the invitation to tender to the attention of those who may wish to submit tenders.

(2) Despite the provisions of subsection (1), if the estimated value of the goods, works or services being procured is equal to, or more than the prescribed threshold for county, national and international advertising, the procuring entity shall advertise in the dedicated Government tenders’ portals or in its own website, or a notice in at least two daily newspapers of nationwide circulation.

(3) In addition to subsection (2) a procuring entity shall—

  • Use Kenya’s dedicated tenders’ portal or any other electronic advertisements as prescribed;
  • Post advertisements at any conspicuous place reserved for this purpose in the premises of the procuring entity.

(4) In regard to county-specific procurements pursuant to section 33, the procuring entity shall advertise the notice inviting expressions of interest in the dedicated Government tenders portal; in its own website, or in at least one daily newspaper of county-wide circulation.

(5) Where the estimated value of the goods, works or services being procured is below the prescribed threshold for national advertising, the procuring entity shall advertise using the options available in subsection (3)(a) and (b).

Time for Preparing Tenders

(1) The time allowed for the preparation of tenders shall not be less than the minimum period of time prescribed for the purpose of this subsection.

(2) For the purpose of this section, the time allowed for the preparation of tenders shall be exclusive of the day of the tender notice.

Provision of Documents

(1) Upon advertisement, the accounting officer of a procuring entity shall immediately provide copies of the tender documents and in accordance with the invitation to tender and the accounting officer shall upload the tender document on the website.

(2) The accounting officer of a procuring entity may charge such fees as may be prescribed for copies of the tender documents.

Advantages of Open Tendering

  • No favoritism (everyone can apply for the tender)
  • High competition in pricing
  • New firms can enter into the market
  • Increased employment opportunities
  • New experience e.g. exposure to new technology
  • Helps contractors to grow

Disadvantages of Open Tendering

  • Lengthy timeframe for completion of the procurement action,
  • Requires strict adherence to procedures,
  • Assumes existing internal capacity for the completion of clear and precise specifications,
  • Restricts suppliers’ participation in determining the technical specifications,
  • Limits the possibility of building long-term relationship with suppliers,
  • Focuses only on a least-cost solution,
  • Suppresses innovation, and
  • Excessive formalism may limit supplier participation in the tendering process.
  1. Two-Stage Tendering

(1) A procuring entity may engage in procurement by means of two-stage tendering when, due to complexity and inadequate knowledge on its part or advancements in technology, 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 to its procurement needs.

(2) The provisions of this section shall apply to two-stage tendering proceedings except to the extent those provisions are excluded from in this section and the tendering document shall call upon tenderers to submit, in the first stage of the two-stage tendering proceedings, initial tenders containing their proposals without a tender price.

(3) In the second stage, the procuring entity shall invite 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.

(4) Any such modification or addition shall 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 that they may have been required to provide.

(5) The final tenders shall be evaluated and compared in order to ascertain the successful tenderer.

(6) The specifications developed under subsection (3) shall meet the requirements specified in PPAD Act, 2015.

(7) When developing the specifications, the procuring entity may engage experts.

  1. Design Competition

An accounting officer of a procuring entity may use a design competition procedure for the purpose of determining the best architectural, physical planning and any other design scheme, engineering, graphic or any other design scheme for its use.

In design competitions, a procuring entity shall—

(a) Invite design proposals through a public advertisement;

(b) Ensure the preparation of an invitation sets out the following—

  • The name and address of the procuring entity;
  • The tender number assigned to the procurement proceedings by the procuring entity;
  • Description of technical and functional needs;
  • An explanation of where and when tenders shall be submitted and where and when the tenders will be opened;
  • A statement that those submitting tenders or their representatives may attend the opening of the design proposals;
  • A statement that a copyright or other intellectual property of the top three shall vest in the State

(2) The evaluation of design proposals shall be undertaken by an evaluation committee established under PPAD Act, 2015.

(3) The design process shall be as prescribed in the Regulations.

(4) Prior to publishing an invitation notice, an accounting officer of a procuring entity shall prepare tender documents and appoint at as part of ad hoc evaluation committee instituted pursuant to PPAD Act, 2015 at least one independent lay assessor, and technical assessors recommended by the professional regulatory body governing the design competition.

(5) The best three assessed design schemes shall receive as a prize an honorarium as provided for in the internal policies of the procuring entity subject to the guidelines set out in the applicable county or national level or the Regulations to PPAD Act, 2015.

(6) In participating in design competitions, all bidders shall undertake to transfer all copyrights, intellectual property rights and patents relating to their designs to the procuring entity.

(7) Upon completion of the design competition, all the submitted design schemes shall become property of the procuring entity.

  1. Restricted Tendering

(1) An accounting officer of a procuring entity may use restricted tendering if any of the following conditions are satisfied—

  • Competition for contract, because of the complex or specialized nature of the goods, works or services is restricted to prequalified tenderers resulting from the procedure under section 94;
  • 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; or
  • If there is evidence to the effect that there are only a few known suppliers of the whole market of the goods, works or services;
  • An advertisement is placed, where applicable, on the procuring entity website regarding the intention to procure through limited tender.

(2) An accounting officer of a procuring entity may engage in procurement by means of restricted tendering in such manner as may be prescribed.

  1. Direct Procurement

(1) A procuring entity may use direct procurement as allowed under sub-section (2) as long as the purpose is not to avoid competition.

(2) A procuring entity may use direct procurement if any of the following are satisfied —

  • The goods, works or services are available only from a particular supplier or contractor, or a particular supplier or contractor has exclusive rights in respect of the goods, works or services, and no reasonable alternative or substitute exists;
  • 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 dilatory conduct on its part;
  • 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;
  • The procuring entity, having procured goods, equipment, technology or services from a supplier or contractor, determines that additional supplies shall be procured from that supplier or contractor for reasons of standardization or because of the need for compatibility with existing goods, equipment, technology or services, taking into account the effectiveness of the original procurement in meeting the needs of the procuring entity, the limited size of the proposed procurement in relation to the original procurement, the reasonableness of the price and the unsuitability of alternatives to the goods or services in question;
  • 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.

(3) A public officer who contravenes the provisions of subsection (2) commits and offence.

An accounting officer of a procuring entity shall adhere to the following procedures with respect to direct procurement —

Procedure for direct procurement

(a) Issue a tender document which shall be the basis of tender preparation by tenderer and subsequent negotiations.

(b) Appoint an ad hoc evaluation committee pursuant to section 46 to negotiate with a person for the supply of goods, works or non-consultancy services being provided;

(c) Ensure appropriate approvals under PPAD Act, 2015 have been granted ;

(d) Ensure the resulting contract is in writing and signed by both parties.

  1. Request for Quotations

A procuring entity may use a request for quotations from the register of suppliers for a procurement if—

  • The estimated value of the goods, works or non-consultancy services being procured is less than or equal to the prescribed maximum value for using requests for quotations as prescribed in Regulations;
  • The procurement is for goods, works or non-consultancy services that are readily available in the market; and
  • The procurement is for goods, works or services for which there is an established market.

(1) A procuring entity shall prepare a request for quotations that sets out the following —

  • The name and address of the procuring entity;
  • The specific requirements prepared under section 67 relating to the goods, work or services being procured;
  • An explanation of where and when quotations shall be submitted; and
  • Anything else required under PPAD Act, 2015 or the Regulations to be set out in the request for quotations.

(2) An accounting officer of a procuring entity shall deal with the request for quotations in accordance with the following —

  • The accounting officer of a procuring entity shall give the request to such persons as are registered by the procuring entity;
  • The request shall be given to as many persons as necessary to ensure effective competition and shall be given to at least three persons, unless that is not possible;
  • The accounting officer of a procuring entity shall give the request to each person early enough so that the person has adequate time to prepare a quotation;
  • At least three persons shall submit their quotations prior to evaluation.

(3) The successful quotation shall be the quotation with the lowest price that meets the requirements set out in the request for quotations.

(4) Where the lowest price is above the prevailing market rates, the request for quotations shall be cancelled or terminated in accordance with the cancellation and termination procedures set out in PPAD Act, 2015.

(5) The following shall apply with respect to the contract resulting from procurement by a request for quotations —

(a) The procuring entity shall place a purchase order with the person submitting the successful quotation;

(b) The person submitting the successful quotation shall confirm the purchase order in writing; and

(c) An accounting officer shall consider recommendations for award arising from a contract under procurement by a request for quotations for approval or rejection.

  1. Low – Value Procurement

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 procedure as may be prescribed.

  1. Force Account

(1) A procuring entity may use force account by making recourse to the state or public officers and using public assets, equipment and labor.

(2) A procuring entity may use force account by making recourse to the state or public officers and using public assets, equipment and labor which are competitive and where—

  • 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;
  • Unforeseen and urgent work is required to be carried out without disrupting on-going operations;
  • The procuring entity is to complete works delayed by the contractor after the written warnings did not yield any tangible results.

(3) This method shall only be applied—

  • With the prior approval of the accounting officer;
  • Within the limit prescribed in Regulations;
  • Where the total cost of procuring the goods, works and non-consultancy services are, at most, set at the prevailing market rate

(4) The procedure to use force account shall be as prescribed in the Regulations.

  1. Electronic Reverse Auction

The PPRA may in exceptional circumstances approve a system of electronic reverse auction method of procurement for goods, works or non-consultancy services by a procuring entity.

For an accounting officer of a procuring entity to be qualified to use the reverse auction method it shall possess—

(a) A procurement portal;

(b) An appropriate secure software with electronic procurement capabilities and functionalities approved by The PPRA;

In the reverse auction method of procurement (procedure):

(a) A procuring entity shall—

  • Invite all registered suppliers in the specific category to compete;
  • Advertise its requirements on its website including the period of time and goods specifications;

(b) The prices of bidders within the prescribed time shall be visible to other bidders without revealing the bidder’s identity; and

(c) A pre-qualified supplier shall not revise its bid upwards within the prescribed time.

Subject to the reserve price set by the procuring entity, the successful bid shall be the bid with lowest price at the bid submission deadline.

  1. Framework Agreement

(1) A procuring entity may enter into a framework agreement through open tender if—

  • The procurement value is within the thresholds prescribed under Regulations to PPAD Act, 2015;
  • The required quantity of goods, works or non-consultancy services cannot be determined at the time of entering into the agreement; and
  • A minimum of seven alternative vendors are included for each category

(2) The maximum term for the framework agreement shall be three years and, for agreements exceeding one year, a value for money assessment undertaken annually to determine whether the terms designated in the framework agreement remain competitive.

(3) When implementing a framework agreement, a procuring entity may—

  • Procure through call-offs order when necessary; or
  • Invite mini-competition among persons that have entered into the framework agreement in the respective category.

(4) For the purposes of subsection (3) (a), “call-offs order” means an order made using a framework agreement with one or more contractors, suppliers or consultants for a defined quantity of works, goods, consultancy covering terms and conditions including price that users require to meet the immediate requirements.

(5) Evaluation of bids under category specified by subsection (3)(b) shall be undertaken by an evaluation committee as provided for under PPAD Act, 2015.

(6) A procurement management unit shall prepare and submit to the accounting officer with a copy to the internal auditor quarterly reports detailing an analysis of items procured through framework agreements and these reports shall include an analysis of pattern of usage, procurement costs in relation to the prevailing market rates and any recommendations.

(7) For greater certainty procurements undertaken through framework agreements may be subject to preferences and reservations as provided for in PPAD Act, 2015.

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