State entities get nod to ignore tender laws

Government entities have been given powers to bypass the existing public procurement laws and use a special method under certain circumstances.

In the amendments contained in the Finance Bill 2017 that was tabled in Parliament on Tuesday, the National Treasury has amended the law to introduce Specially Permitted Procurement as an alternative method of acquiring public goods or services.

The new method, which becomes the eleventh alternative from the existing 10, will see procuring entities use this “special method” with permission from the National Treasury.

“Treasury may allow use of specially permitted procedure where exceptional requirements make it impossible, impracticable, or uneconomical to comply with the Act and the regulations,” the Bill says.

This is a complete departure from the procurement laws that were phased out in early 2016.

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At that time, the powers to decide procurement the method to be used solely lay in the hands of the Public Procurement and Oversight Authority, then called the Public Procurement and Regulatory Authority. Further, where market conditions or behaviour do not allow effective application of the 10 methods in the 2015 Public Procurement and Disposal Act (PPOA), the procuring entities will be allowed to use this special method.

Muthomi Thiankolu, a law lecturer at the University of Nairobi and a partner at Muthomi & Karanja Advocates, reads mischief in the provision, especially with the National Treasury getting new powers in procurement.

He said it could be a way of avoiding the conventional procedures, which have many accountability checks to fight corruption.

“What if the ministry is the huge procuring entity itself? Wouldn’t it be a conflict of interest? Why are we relocating this power from the independent entity to a member of the Executive?” asked Mr Muthomi.

He said each of the existing methods of procurement speaks to some unique circumstances.

Therefore, he said, there is no exceptional circumstance outside these to justify a new method.

Currently, a tendering method that is meant to address emergencies or situations where engaging in competition will not yield the desired economic efficiency and value for money is single-sourcing or direct procurement.

In the Bill that outlines six circumstances under which government entities may avoid sticking to the red tape in the PPOA, they may also use the special method for specialised or particular requirements, which are regulated or governed by international standards and practices.

Where strategic partnership sourcing or credit financing procurement is applied, the National Treasury has granted government entities the green light to use the method.

In what may be a loophole to allow other tenders into this classification, the Bill says the Treasury Cabinet secretary may also prescribe other circumstances.

“The Cabinet secretary may prescribe the procedure for carrying out specially permitted procurement under this section,” the Bill adds.

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