Broadly, the Constitution of Kenya, 2010 provides the general principles that govern the procurement process in Kenya.
More specifically, the process of procurement of government contracts in Kenya (public procurement) is regulated by the Public Procurement and Asset Disposal Act, No 33 of 2015 (“The Act”) and the attendant subsidiary legislation, the Public Procurement and Asset Disposal Regulations, 2020 (“The Regulations”) (both referred to as the “Procurement Laws”).
The Procurement Laws apply to all State organs and public entities which utilise public money for purposes of procurement, ie, national government or a department thereof, county governments or a department thereof, parastatals, the Judiciary, public institutions and companies owned by a public entity, etc.
The Act applies to all state organs and public entities with respect to any contract for an acquisition by way of purchase, rental, lease, hire purchase, license, tenancy, franchise, or by any other contractual means for any type of works, assets, services or goods or any combination thereof, and includes advisories, planning and processing in a supply chain system.
The Procurement Laws also apply to contracts for the divestiture of public assets, including intellectual and proprietary rights and goodwill and other rights of a State entity by any means including sale, rental, lease, franchise, auction or any combination thereof.
The Procurement Laws apply regardless of the value of the contract, that is, there is no de minimus which would result in exclusion or exemption from the Procurement Laws. However different procurement methods may apply dependant on the value, or the nature of the goods, services and works.
Permitted Public Procurement Methods
Procuring entities are permitted to utilise either of the following methods under the Act:
Notably, public procuring entities are permitted to utilise the low value procurement method where the estimated cost of the goods, works or services being procured per item per financial year is as below the applicable threshold matrix of KES50,000 for goods and services and KES100,000 for works.
A tenderer is eligible to bid for a contract in procurement, only if the person satisfies a set criterion which includes the requirements that:
As regards the jurisdiction of the tenderers, the Procurement Laws do not prohibit tenderers from other jurisdictions. However, there are certain provisions which provide that preference shall be given to:
Additionally, preferential treatment may apply to the procurement of goods, services or works under any bilateral or multilateral agreements between Kenya's government and any other foreign government, agency, entity or multilateral agency.
Finally, the Act permits procuring entities to give preference to tenderers so as to enable disadvantaged persons (enterprises in which a majority of the members or shareholders are youth, women, persons with disability) more access to government contracts as is required in the Procurement Laws.
Obligations for Procuring Entity
The key obligations under Kenyan procurement laws include:
A procuring entity is under an obligation to take such steps as are necessary to bring the invitation to tender to the attention of those who may wish to submit tenders. In connection with this, if the value of the goods, works or services exceeds certain prescribed thresholds for advertising, the procuring entity will be under an obligation to advertise the tender in the state portal, or on its own website, or publish a notice in at least two daily newspapers of nationwide circulation. If the value of the goods, works or services is below certain prescribed thresholds for advertising, the procuring entity will be under an obligation to advertise the tender in the state portal as well as in a prominent place reserved for this purpose within its premises.
An invitation to tender should contain the following information:
Preliminary market consultations are implicit with respect to use of the following procurement procedures:
The Act prescribes various tender procedures which may be used for procurement of goods, works and services, in different circumstances. Notably, open tendering shall be the preferred procurement method, with alternative procurement procedures available where permitted under the Act and prescribed conditions are met.
Alternative procurement procedures include:
Negotiations are permissible under the direct procurement method provided that the Act is adhered to. An ad hoc evaluation committee appointed in accordance with the Act may negotiate on terms which include price, terms of contract, terms of delivery and scope of work or service.
Negotiations are also permissible in the procurement of consultancy services (Part X of the Act). In this instance the accounting officer of the procuring entity may negotiate with the person who submitted the successful proposal and may request and permit changes to the form of contract that had been supplied as part of the tender/bid documents. If the negotiations with the person who submitted the successful proposal do not result in a contract, the accounting officer may negotiate with the second person who submitted the proposal that would have been successful had the successful proposal not been submitted.
Finally, competitive negotiations are permissible where:
The choice of procurement procedure is not at the sole discretion of the procuring entity. The Act sets out the default procurement procedure for goods, works and services (open tendering). The Act permits use of alternative procurement procedures only where various criteria set out for use of those particular procurement procedures have been satisfied.
The obligation imposed by legislation is that the standard tender documents contemplated by the Act to be developed by the Public Procurement Regulatory Authority (the “Authority”) and to be used by procuring entities shall bear references to, among other matters, procurement requirements, provision for dates and signatures of authorising officers.
The time limits for each procurement process are prescribed in the tender documentation issued by the procuring entity.
A person is eligible to bid for a contract in procurement if that person satisfies the following criteria:
A procuring entity is bound to ensure that its tender documentation contain a mandatory requirement of preliminary evaluation criteria specifying that the successful bidder shall:
A procuring entity may use restricted tendering if any of the following conditions are satisfied:
Where the procuring entity utilises restricted tendering as per bullet point two, the entity shall invite tenders from at least ten persons selected from the list they are under an obligation to maintain in accordance with the Act.
Where the procuring entity utilises restricted tendering by reason as per bullet point three, the entity shall invite tenders from all the known suppliers of goods, works or services.
Generally, tenders will be evaluated on the basis of the criteria set out in the tender documents: the Act requires that such criteria shall be, to the extent possible, objective and quantifiable.
Where the tender is for professional services, regard will be had to the selection method adopted by the procuring entity (the default of which is the quality and cost-based selection method) as well as the statutory instruments issued by the relevant professional associations regarding regulation of fees chargeable for services rendered. Alternate selection methods in a tender for professional services include, quality-based selection, least cost selection, consultants’ qualification selection, individual consultants’ selection, fixed budget selection and single source selection.
There is an obligation to disclose the technical and financial evaluation criteria. These criteria are to be contained in any tender documents to be used by a procuring entity in a procurement process.
Where expressions of interest have been invited, the procuring entity is under an obligation to notify participants in writing of the results of the expression of interest. There is no express provision in the Act or the Regulations making it an obligation for the procuring entity to set out within such notification the reasons that informed the expression of interest results.
Before the expiry period during which tenders must remain valid, the procuring entity is under an obligation to notify in writing the person submitting the successful tender that their tender has been accepted. Simultaneously, all the unsuccessful bidders shall be notified in writing of the contact award decision (together with reasons – related only to their specific bid – on their lack of success).
A successful bidder in accordance with the Act is one who meets any one of the following as specified in the relevant tender document:
The Act provides for a standstill period of 14 days as from notification of the contract award decision, provided always that the execution of the contract shall be signed within the tender validity period.
Review of Awards
The Public Procurement Administrative Review Board (PPARB) has been granted the mandate under the Act to deal with any administrative reviews of procurement proceedings regarding the award of any government contract.
Review of PPARB Decisions
The Act enables persons aggrieved by the decisions of the PPARB to appeal further to the High Court and further to the Court of Appeal, should the legal circumstances permit any such further appeal.
Remedies from the PPARB
The remedies available to aggrieved parties at the PPARB include either of or a combination of:
Under the Act, a challenge from an aggrieved candidate at the PPARB triggers the immediate suspension of the contract award for a period of 14 days following notification of the appeal to the PPARB as well as 14 days following the decision of the PPARB to allow for any subsequent appeal to be filed by an aggrieved party.
The PPARB Secretary is required to notify the accounting officer of the procuring entity of the pending review and the suspension of the procurement proceedings so as to ensure that no contract is signed by the successful candidate during the pendency of the procurement proceedings.
To have standing to request a review of an award before the PPARB, one must produce evidence that they either:
An aggrieved tenderer is required to file an appeal to the PPARB within 14 days of the award citing a breach of duty on the part of the procuring entity while ensuring to indicate the sections of the law that have been breached in the procurement process.
The PPARB is required under statute to conduct and complete its review within 21 days of its receipt of the request for review. Similarly, the High Court, and any subsequent appeal through the Court of Appeal, is required to determine the appeals within 45 days of the filing of the relevant appeal. These timelines may, however, be affected by the ordinary delay experienced in the court system.
In recent years, the volume of procurement claims has been as follows:
It is estimated that there are, on average, roughly 150 claims per year before the PPARB, excluding the matters that are contested further at the High Court or the Court of Appeal. It is impossible to determine how many matters proceed on appeal to the superior courts from decisions from the PPARB due to the lack of a register of pending court proceedings in Kenya.
The Regulations, at the Fifteenth Schedule, mandate the applicable filing fees for instigating a review of an award by a procuring entity. The filing fees for reviews by the PPARB are calculated on a graduating scale basis based on the value of the tender in question. Generally, filing fees for a review before the PPARB will depend on the ascertainable value of the contract under bid and will range from a minimum of KES5,000, for filing a preliminary objection, to a maximum of KES250,000 for unquantifiable tenders as well as for tenders whose value exceeds KES50,000,000.
Amendments to procurement contracts already awarded are permissible provided that the amendment has been approved in writing by the respective tender awarding authority within a procuring entity as from 12 months after the date of signing the contract and shall only be considered if the following conditions are satisfied:
It is worth noting that the Regulations distinguish between a variation and amendment of a contract entered into following a tender award. An amendment is defined in the Regulations as a change to the terms and conditions of an awarded contract whereas a variation is defined as a change to the price, completion date or statement of requirements of an awarded contract.
Procuring entities may utilise direct procurement as long as the intention is not to avoid competition and provided that either of the following requirements have been satisfied:
Recent Landmark Decisions
In a recent from Webb Fontaine Group FZ – LLC v Public Procurement and Administrative Review Board & 3 others  eKLR before the Court of Appeal, the appellant sought to have an award overturned on account of a purported illegality in the procurement proceedings. The PPARB had ruled prior that it lacked jurisdiction to hear the matters due to the appellant’s delay in lodging a complaint as against the tendering process undertaken which resulted in the complaint being time bound. The appellant then proceeded to the High Court by way of a Judicial Review application which was also dismissed by the court on account that such an appeal would involve the Court delving into the merits of the decision in a manner to suggest that it was sitting on appeal on the decision itself which is not within its ambit.
Still being dissatisfied with the decision of the High Court, the appellant proceeded further to the Court of Appeal seeking to overturn the order of the High Court which preserved the award of the tender as is. The Court of Appeal, in dismissing the final appeal, found that any Request for Review ought to be filed within the time limits pronounced in the Act. The Court of Appeal held that where time limits have lapsed, the PPARB was correct in finding that it lacked the jurisdiction to hear to hear any contentions over an award, particularly as the Act does not provide for an extension of this time. This further precluded the High Court from having the jurisdiction to hear the appeal before it brought by the appellant.
The significance of this decision lies in the importance of complying with time restrictions in the procurement process as the Procurement Laws do not provide for the extension of time under any circumstance. Any delay in contesting an award beyond the time permitted in the legislation will inevitably lead to a lack of forum through which to lodge any such complaint.
On 25 February 2021, the Cabinet Office in the Executive Office of the President released a press statement announcing, among other matters, that the Cabinet is to transmit to the Parliament for due consideration various bills, among them a Public Procurement and Asset Disposal (Amendment) Bill, 2020 (the "Bill"), as a priority be passed in its legislative program for the year 2021. One of the key amendments in the current version of the Bill seeks to address issues pertaining to the delay in payments to local contractors and suppliers by the national and county governments. The Bill seeks to introduce payments by way of an Irrevocable Bank Guarantee so as to ensure that contractors are remunerated in a timely manner.