Kenya installs online tender system with in-built pricing to curb graft

 President Uhuru Kenyatta (Right) officially launches IFMIS electronic Procurement (E-Procurement)

NAIROBI: Public servants could be the biggest losers in newly-introduced procurement guidelines that will see Government buying goods and services at rates comparable to market prices. Weak procurement procedures have ensured corrupt government workers double up as major suppliers to the State and at exorbitant prices, either directly or through proxies.

Several Cabinet Secretaries have separately told The Standard on Saturday how big a problem collusion between workers in their ministries have been fleecing the State through fraudulent procurement – piling pressure on already unsustainable recurrent budgets.

But starting next month, the new electronic-procurement platform, the Integrated Financial Management Systems (IFMIS) will have an in-built pricing component that would act as a reference point. “We will roll out the eProcurement module, fully inbuilt with active price reference to ensure Government does not procure any supplies above the market prices,” National Treasury Cabinet Secretary Henry Rotich said in his budget speech on Thursday.

HIGHEST PRICE

Outliers in pricing would be rejected automatically, weeding out exorbitant bids for various types of procurement. The highest price the State could buy a packet of milk could be capped at Sh60, for instance, meaning any bids above that level would be dismissed. Currently, a quarterly pricing survey on the goods and services consumed by the State is compiled by the Public Procurement Oversight Authority. Procurement officers are allowed to accept bids of up to the ceiling of 10 per cent mark-up on the published prices. The allowance is hoped to make up for the payments lag, because the State could settle debts up to six months after delivery.

But compliance to the stated mark-up has been almost nil, interviews with different ministry officials have revealed. Our surveys in different ministries indicate that the State has been paying prices that are multiples of the open market rates.

It is common for suppliers to deliver the ordinary biro pen to a government department at anywhere around Sh80 a piece, enough to buy five or more pens from any retailer.Mining Cabinet Secretary Najib Balala said last month that he was disgusted about the procurement rot in his ministry. In a specific acquisition of office stationery, he was shocked to find that the tender committee had approved the purchase of a desktop computer at over Sh120,000. “I was obviously very disappointed,” he said in an interview.

That tender would be cancelled soon as he sought to probe the ‘obviously blatant theft’. Officials involved told him that the winning supplier was actually the lowest bidder, a position he was not convinced with. A broader probe was initiated whose findings will be made public before the end of June, he promised.

But that incident could be only one among thousands of similar cases of skewed procurement across other government ministries, which has presented President Uhuru Kenyatta with one of the single largest budgeting headache. Kenyatta initiated the electronic procurement and payment system while he was finance minister but the battle to streamline public procurement might be far from being won, specifically because the perpetrators are insiders who would easily manipulate the structures.

Almost always, the super profits from the premium prices will be shared out between the contractor and civil servants in procurement scandals that cost the State billions every year.