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Are ‘big boys’ ready to share procurement gravy train seat?

BUSINESS
By - WINSLEY MASESE | November 28th 2013

BY WINSLEY MASESE

KENYA: Former Mandera Central MP and adviser to the president and Head of Legislation and Constitutional Affairs Abdikar Mohamed recently informed a local daily that two laptops, each valued at Sh45,000, were procured by the Government at an inflated price of Sh600,000.

His shocking revelation, however, only tend to confirm fears also expressed by a former Information Permanent Secretary Bitange Ndemo that Government paid exorbitantly for goods and services it procured through the competitive bidding system.

Ndemo in a past interview reckoned that a simple pen that should retail at Sh20 would be quoted at Sh80 by a lowest bidder through the procurement system, which in most cases must be honoured by the authorities simply because it’s the lowest bid on offer.

Despite these glaring procurement weaknesses that skeptic argue that the bulk of Sh1.6 trillion budgetary estimates, about 1.12 trillion (70 per cent), will be up for grabs by seasoned bidders, mostly crafty traders ready to supply goods and services to the Government.

But with President Uhuru Kenyatta administration hoping to impress voters after making a raft of election promises, has offered 30 per cent of all Government contracts to the youth, women and persons with disabilities.

This translates to Sh336 billion to be accessed by this disadvantaged group. In 2009, Public procurement was identified a major area of corruption, constituting about 80 per cent of all cases before the anti-corruption watchdog.

Though numerous efforts have seen the vice go down, it remains a major drain to Government coffers. And as the youth join the fray to leverage on this new window of business opportunity, the likelihood that they will be involved in this well-guarded system that has been an exclusive club for some few well-connected traders is high.

Statistics indicate that corruption in procurement increases the cost of doing business, which in turn adds to the cost of public tenders and leads to poor standards of project work, as contractors seek to recover the cost of their kickbacks.

Court awards

In some cases, through inside information, a tender is cancelled to which the winning bidder takes the government to court for damages. Every now and then, the government is compelled to award the winning bidder the actual cost of the project even when the bidder has hardly incurred any expenses.

Wanjiku Gathira of the Social Impact Institute-Africa notes that the youth are ill prepared for this intense competition for lucrative government tenders let alone benefit from these opportunities.

“They are likely to be fraudulently overpowered by briefcase businessmen who are experienced in what goes on in government tenders,” she explains.

In South Africa for example, the already established old and well-established traders who knew where the bread was buttered dominated the South Africa’s policy on Black Empowerment, which was meant to give indigenous people, previously locked out from economic activities an opportunity in business.

This was, however, rectified and subsequently the new system gave birth to a new crop of millionaires, like business mogul, Cyril Ramaphosa and Tokyo Sexawale in a short period of time.

 “The problem with the youth of today is that they want to jump and see themselves up there overnight,” cautioned Aliko Dangote when MTV of South Africa recently interviewed him. President Uhuru’s 30 per cent procurement rule, thus presents the biggest challenge to these special group, especially how they will be able to fund initial capital to service the expected big government contracts besides keeping the crafty traders at bay.

“The same people we hope to target to benefit from the 30 per cent in the government tenders are the same ones that would be acting on behalf of other interested parties after accepting bribes,” warned Jane Njoroge.

Njoroge, the general manager, Technical Services at the Public Procurement Oversight Authority says it would be hard for her office to stop such an unfortunate scenario from taking root under the new system.

“If we put restriction or throw out bids that are suspect then our action could be seen as a direct challenge to promises made by President Uhuru Kenyatta,” she noted.

The Youth Enterprise Development Programme chair Evans Gor Semelang’o does not, however, rule out the possibility of people in the government colluding with the youth to win tenders.

Industry insiders argue that hardened bidders would not allow losing contracts and they would be more than willing buy out players in these special groups who could prove to be a threat to their goals.

“The big boys would be more than will to cut out smaller companies that could have been considered for projects.”

Also a barrier is the existence of some rotten apples in public procurement baskets. The chairman of Kenya Institute of Supplies Management (KISM), Chris Oanda, admits that corrupt officials have soiled the institute’s reputation.

“These few people should not be allowed to contaminate the youth with the sins of old corrupt practices, which has led to huge wastage in public resources.”

However, Njoroge says that the system has been streamlined following an extensive market research to ensure that no single potential supplier quotes above prevailing market prices. “Pricing must be right as the public entities doing the buying must quote the real market price,” she said, and warns that anybody with an intention of inflating the price stands no chance of getting their way.

By law, the procuring entity, she reckons, ought to keep a data bank, which it will use as reference to check pricing and apply it to enforce the law.

She said the procurement authority in collaboration with the Kenya Bureau of Standards would establish the prevailing market price index that would guide them on pricing for the various goods and services.

 “I hope punitive action would be taken to send shock waves within the public sector that it’s not business as usual.”

One hurdle though is an assertion by KISM that a number of procurement officers are not professionals, besides they are not registered with the institute as required by law.

She warns that such officers would be closely watched and any misconduct would see them dealt with forthwith.

“Many procurement officers are however not members of the institute and this has handicapped the institute from taking necessary actions against the rotten apples,” Oanda stated.

Other administrative hitches faced by the procurement body include the lack of skilled and knowledgeable workers in rural areas. The means that the Government need to enrich training to ensure compliance by the procurement officers.

Procurement, he reckons, is a technical exercise that needs many years of investment, skills and knowledge upgrade.

However, Oanda observes that moving from a hustler to a competitive bidder needs reorientation through education, skill upgrade and mentoring of these special groups for them to leverage on expected business opportunities.

“The procurement system is dominated by networks with proxy bidders, who are likely to use the youth to gain some of these government tenders,” Oanda notes.

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