Reforming public contracting: Giving Kenyans value for money
Nairobi, Kenya: Monday, June 18th, 2012 – The performance of public contracts in Kenya has, for decades, dominated public debate on financial accountability. The success of public projects is determined by a well defined contractual process of competitive bidding that seeks to protect the public against the squandering of public funds and prevents abuses such as fraud, favouritism and extravagance. Corruption is further compounded by the lack of information and the veil of bureaucracy donned by public institutions. Kenya has similarly continued to score poorly in the global corruption perception reports.
It is against this background that a pioneer multi-stakeholder group - Contract Monitoring Kenya Network (CMKN)1 was established to empower citizens to hold public authorities accountable and to espouse transparency and accountability in public contracting. The network was officially launched today. Similar networks have been launched in Zambia, Uganda, Tanzania, Rwanda, Nigeria, Ghana, Sierra Leone and Liberia through the support of the World Bank Institute
A key activity that will guide the network’s future intervention is the ‘Baseline Study on Public Contracting in Kenya’ carried out by the network that was launched today. The study sought to obtain an overview of the current status of public procurement in Kenya. It focuses on four key public sectors: education, water, construction industry (particularly in roads/transport infrastructure) and health (mainly in pharmaceuticals).
The primary methodology of the study was a desk review of available literature- reports and documents on public procurement reforms in Kenya. The study reviews a number of reports from 2009 to date. It makes a summative review of the status of procurement in the targeted sectors, the recommendations made by the reports, the actions taken so far and existing gaps.
1 CMKN is a multi‐stakeholder group comprising the following institutions: Transparency International‐Kenya(TI‐K), Kenya Institute of Supplies Management (KISM), Kenya Alliance of Resident Associations (KARA), Kenyan Section of the International Commission of Jurists of Kenya (ICJ), Kenya Private Sector Alliance (KEPSA), Strathmore University, The Public Procurement Oversight Authority (PPOA), Management Science for Health, Kenya (MSH‐K), Kenya Medical Supplies Agency (KEMSA), National Taxpayers Association (NTA), Health Action International Africa, Kenya Federation of Pharmaceutical Manufacturers (KFPM), Ethics and Anti‐Corruption Commission (EACC), Internews Kenya, Forum for Transparency and Accountability in Pharmaceutical Procurement (FoTAPP), Kenya Association of Manufacturers (KAM).
Key limitations to the study included:
•Some public institutions blatantly refused to share information or provide documents to assist the study
•Many current reports are marked confidential and are not available for distribution or reference
•Some of the public agencies’ websites had outdated information, very old reports and could not provide information on the current status of procurement.
KEY FINDINGS AND RECOMMENDATIONS
The study identified factors that contribute towards inefficiencies in procurement in the four sectors and gave specific recommendations. The following are the overall findings and recommendations:
1.Poor Planning: Very little procurement preparation seems to take place in the public sector. This precipitates several small volume procurement sessions that result in high acquisition costs in both price and effort. For regularly consumed items, it is far more efficient for orders to be consolidated on a monthly or bi-weekly basis.
2.Corruption: There are legislative provisions for the rotation of contracts to pre-qualified suppliers, but these are seemingly not applied, and the same enterprises seem to get regular orders. In some instances, nepotism and ethnic affiliation plays a role in the award of contracts. The penalties may not be punitive enough to deter corruption. The penalty provided by the law should be specific to the offence to ensure deterrence.
3.Delays in payment: Legislation provides that payment should be made within 30 days. The reality is that payments may take as long as 180 days. Delays are caused by factors ranging from failure to adhere to legislated accounting stipulations, excessive bureaucracy, insufficient funds, quarterly draw-downs by public institutions, corruption, staff absences, and poor work ethics. Most suppliers are not aware of the penalty provision on delayed/outstanding payments, and those who are aware would be reluctant to apply it, in case it compromises future business with the public entity.
4.Information communication technology: There is limited use of Information Communication Technology (ICT) in the procurement processes. Computers are most often used to draft letters, prepare spread sheets, and compile tenders. The use of procurement software as a management tool cannot be overstated. Software that links the procurement process to the accounting authority would make the process much more efficient.
5.Statutory amendments: The current legislation governing public contracting contains loopholes which encourage corruption and an amendment of the law should be part of the reform process. Provisions requiring amendments include that pertaining to the termination of procurement proceedings to curb conflict of interest.
6.Public participation: The general public lacks automatic standing before the Public Procurement Administrative Review Board or the High Court as a form of redress on procurement issues. In practice, the proceedings of the Review Board are not open to the public but to the disputants only. As such accountability to the general public is lacking.
7.Payment procedures: Lack of proper payment procedures facilitate corruption. For instance, some payments are done before the delivery of goods or full payments are issued for partial delivery. In other circumstances, there is selective payment of suppliers based on which supplier has paid the highest amount of “kick-backs”. There is need for sufficient, clear and documented payment processes to seal this loophole.
The results of this baseline study will further advise the network’s strategy to espouse transparency and accountability in public contracting. The network intends to build the capacity of citizens to monitor public contracting and ensure value for money in public service delivery. CMKN will also advocate for leadership with integrity and free access to information which is the foundation of any monitoring system. The citizens of Kenya can only monitor what they know; hence access to information is paramount.
Teresa C. Omondi,
For the Contract Monitoring Kenya Network
Media contact Sheila Masinde: Tel: +254 20 2730324/5 or 2727763/5 +254 722 296389 or +254 733296389