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Procurement in Project Environment
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Procurement in Project Environment
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BPS 122 - PROCUREMENT IN PROJECT ENVIRONMENTGeneral Procurement Policies and Guidelines
The procurement and management of complex projects requires the involvement of many
staff members at different stages of the procurement cycle. In order to design, tender,
administer and report on project procurements effectively and successfully, it is critical
for the Procuring Entity (PE) to clearly define roles and responsibilities of each staff
member involved in this activity. Procuring Entities are required to establish a functional
and effective Procurement Unit. The size and level of staffing will depend on the
procurement workload, considering the volume, value, complexity and type of procurements
carried out throughout the year. The head of the PE shall ensure that the procurement
unit is staffed with personnel with appropriate technical skills and high integrity. The
Head of the Procurement Unit must be a procurement professional who should preferably
report to the Head of the Procuring Entity. This reporting structure will enhance
transparency and separation of powers within the PE.
4.1 Procurement Committee Conducting Procurement
The Procurement Unit’s main responsibility is to coordinate procurement activities from
inception through to completion in total compliance with the applicable rules and
regulations. This includes active involvement in the planning and contract management of
projects. Given the high value of project procurements,
Procurement Committees are unlikely to be involved in them. In accordance with Schedule
I of the Regulations, the establishment of a Tender Committee (TC) is a requirement for
all procurement actions in excess of Kshs 500,000. Sections 10, 11 and 12 of the Public
Procurement and Disposal Regulations 2006 provide more information on the functions and
rules of the Tender Committee. The TC is responsible for ensuring that the selection of
bidders is based on fair competition and in compliance with the legal and regulatory
framework for the supply of goods and services. The members of the TC are appointed by
,the Head of the PE but in accordance with the statutory composition stipulated in
Schedule II of the Regulations. The secretary to the TC is the procurement professional
in charge of the Procurement Unit of the PE. Tender Committee meetings must be
attended by at least five (5) members of the Committee including the Chairman, or their
nominated alternates, forming the quorum. The Tender Committee shall fulfil the following
functions:
Award contracts where the value exceeds the thresholds of Schedule I;
Approve contract variations
Approve tender validity extension
Ensure availability of funds
Review the selection of procurement method and approve the selection of other
than open tendering method
Consider recommendations of the Evaluation Committee (EC).
TCs, like the other committees for procurement, should endeavour to reach decision by
consensus, but if that cannot be achieved they should hold a vote on the decision required.
If the vote is tied the Chairman of the TC has a casting vote. Where the procurement
under consideration is greater than KShs 50 million in value, as it may well be for projects,
the PE must invite two observers, at least one of whom must be from the private sector or
a relevant professional discipline, to attend the meeting of the TC. It is good practice to
give the observers at least a week’s notice of the meeting, but the meeting may proceed to
conduct its business even if the observers do not attend the meeting.
The Evaluation Committee (EC) selects bids following a technical and financial analysis.
Members of the EC shall be appointed by the AO or the head of the PE. The EC shall have
at least three (3) members including the Chairman. No member of the EC shall be a
member of the TC, per Regulation 16. Members should be knowledgeable in the operational,
technical and financial aspects of the type of procurement being carried out. A
representative of the End User Department and a member of the Procurement Unit should
normally be included in
,the membership. The EC shall submit a written comprehensive evaluation report for the
Tender Committee’s review and approval.
The Tender Opening Committee (TOC) is composed of at least three (3) members
appointed by the AO or Head of PE. All but one member may also be members of the EC.
Section 60 of the Act provides more information on tender opening procedures.
The Inspection and Acceptance Committee (IAC) is responsible for ensuring that goods,
works and/or services received are fully compliant with the terms of the procurement
contracts. They shall comprise at least three (3) members. The members should include
those with expertise in the subject matter of the project. It is recommended that in
addition members include those from the User Department, the Procurement Unit and the
Finance Unit. Regulation 17 provides more information on the IAC.
The End User Department plays a critical role in the procurement cycle starting with the
initiation of the procurement requirements. The end user should proactively participate in
the evaluation of tenders, report any deviation from the contract to the PU, prepare
technical specifications, assist with procurement plans, etc. They should be involved from
inception through successful completion of the project. Project procurement and
management is a team effort if it is to be successful. All staff members while involved in
the procurement must adhere to the strictest ethical standards and avoid conflicts of
interest or the perception of a conflict of interest.
4.2 Procurement Procedures for Projects
a) Feasibility Study
Once the procurement needs have been identified by the End User, the very first activity
to be undertaken by the PE is to conduct a feasibility study. This is a critical stage for
complex projects. If the expertise does not exist in-house, the PE should make provision
to procure the services of a consultant. Procedures for procurement of consultant services
should be followed, as stipulated in the Public Procurement and Disposal General Manual.
The
, PU and the end user will prepare terms of reference for the consultant, to be advertised
in national and/or international media with an opportunity to respond within at least thirty
(30) days. The TOR to be included in the Request for Proposals (RFP) may include any or all
of the following functions:
To conduct national and international market surveys
To propose design options
To develop specifications or terms of reference for tender documents
To conduct stakeholder analysis
To assist with the evaluation of tenders and
To supervise the performance of the contractor.
The feasibility study allows the PE to determine the scope, duration, financial, human and
material resource requirements, procurement method and sources of funds to undertake
the requirements of the project. The consultant hired to perform the tasks above is
EXCLUDED from bidding on the procurements derived from the feasibility study.
b) Environmental Impact Assessment
An additional important step that the Procuring Entity must undertake for any project
involving works is to submit to NEMA (National Environment Management Authority) a
project report in the prescribed form. NEMA may require the PE to carry out an
environmental impact assessment of the proposed project. No such project may commence
prior to receiving NEMA’s approval.
c) Procurement Strategy
Before the procurement plan is developed, PEs should consider the procurement strategy
to be adopted. In particular, the PE needs to decide whether to engage a single contractor
in a turnkey approach, or use multiple contractors. The former minimises the effort
required for project management but makes it less likely that Kenyan contractors will be
able to qualify for the contract. The latter greatly increases the chances of at least
some of the
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