Public Procurement and Asset Disposal (Amendment) Bill, 2024

SPECIAL ISSUE

Kenya Gazette Supplement No. 194 (National Assembly Bills No.48)

REPUBLIC OFKENYA

KENYA GAZETTE SUPPLEMENT

NATIONALASSEMBLYBILLS,2024

NAIROBL,1st November,2024

CONTENT

| Bill for Introduction into theNational Assembly- | PAGE | |----------------------------------------------------|--------|

THEPUBLICPROCUREMENTAND ASSET

DISPOSAL(AMENDMENT)BILL,2024

Bill for

• AN ACT of Parliament toamend the Public Procurement and Asset Disposal Act and for connected purposes

ENACTED by theParliament ofKenya,asfollows-

• 1.This Act may be cited as the Public Procurement and Asset Disposal (Amendment) Act,2024.
• 2.The Public Procurement and Asset Disposal Act, in this Act referred to as the "principal Act",is amended
• (a) in the definition of"asset"by inserting the words "virtualasset" immediately afterthewords
• "proprietary rights";
• (b) by inserting the following new definitions in their
• proper alphabetical sequence-

"debarment"means the exclusion of a person or a firm from entering into a public procurement contract as a supplier,contractor or serviceprovider;

"foreign firm"means a firm whose shareholding is more than thirty percent owned or is wholly owned by a non-Kenyan and duly incorporated in or outside Kenya;

"foreign funded procurement" means acquisition of goods, works and services by the government of loans or grants pursuant to a bilateral or multilateral treaty;

"investigative agency" includes the National Police Service, Ethics and Anti-Corruption Commission, KenyaRevenue Authority,AntiCounterfeit Agency or any other government agency mandated with the role of investigation under any written law;

venture procurement" means a

"joint of two or morepersons;

Short title.

Amendment of

section 2of Cap. 412C.

"local firm" means a company incorporated in Kenya firm under the Companies Actwhose shareholding is wholly by Kenyan citizens;and

"minor deviation"means

• (a)matter of form and not of substance;or
• (b)an immaterial defect in a bid or variation ofa bid from the exact requirements of the invitation that can be corrected or waived withoutbeingprejudicial to other tenderers:

Provided that the defect orvariation does not affect the price,quantity, quality or delivery or the defect or variationis negligible when contrasted with the total cost or scope of the supplies or services being acquired.

• 3.Section 4 of the principal Act is amended by inserting the following new subsection immediately after subsection(3)-
• "(4) For the avoidance of doubt,except under bilateral or multilateral agreements between the Government of Kenya and any other foreign government,agency,entity or multilateral agency provides use of foreign or international financing procurement procedures and guidelines,this Act shall apply to foreign funded procurement for goods, works and services by Government of Kenya."

4. Section 9 of the principal Act is amended in subsection (l) by inserting the following new paragraph immediately afterparagraph(l)-

• "(la) monitor and evaluate the transfer of technology,knowledge and skill plans as provided for under this Act and provide annual public reports;"
• 5.Section 10 (1) of the principal Act is amended by deleting paragraph (b) and substituting therefor the following new paragraph-

Cap.486.

Amendment of section4of Cap. 412C.

Amendment of section9ofCap. 412C.

Amendment of section 10 of Cap. 412C.

• (b) three members who shall be appointed by the
• Cabinet Secretary after nomination,through a fair process by-
• i
• theInstituteofCertified Public Accountants of Kenya;
• (ii) theKenya
• InstituteofSupplies Management;and
• (iii)the Law Society of Kenya.
• 6.Section 33 of the principal Aet is amended in
• subsection (2) by inserting the following new paragraph immediately afterparagraph(g)-

(ga) ensure that goods and services manufactured in the respective county are prioritized in the procurement process;"

• 7.The principal Act is amended in section 35 by inserting the followingnew subsection immediately after
• subsection3-

"(4) An act that constitutes an offence under this Act shall be referred to an investigative agency for its action by the Authority,a public institution,or any other person."

• 40.
• 8.The principal Act is amended by deleting section
• 9.The principal Act is amended in section 41-
• (a) by deleting subsection (4) and substituting therefor
• the following new subsection-
• "(4) A debarment under this section shall be for a specified period of time of not exceeding ten years."
• (b) byinserting the following newsubsection immediately after subsection(4)
• "(5)A person or a firm debarred by an international agency recognized by Kenya shall be deemed to have been debarred in Kenya as if the debarment procedures and proceedings were conducted in Kenya."

Amendment of section33 of Cap. 412C.

Amendmentof section35 of Cap. 412C.

Amendment of section 40 of Cap. 412C.

Amendment of section.41of Cap.412C.

• 10.Section 44 of the principal Act is amended in
• subsection (2)by inserting the following new paragraphs immediately afterparagraph(h)-
• "(ha) ensure that locally produced products or services are prioritized in the procurement and asset disposal process;
• (hb) ensure, where applicable, technology,
• knowledge and skills transfer plans from foreign firms are prioritized in-the procurement and asset disposal process;"
• 11.Section 53 of the principal Act is amended
• (a) by inserting the following new subsections
• immediately after subsection(6)-
• "(6A) Any procurement of less than one billion shillings shall be awarded to a local firm.
• (6B) A foreign firm shall be eligible for
• procurement of contracts of more than one billion shillings where the foreign firm has entered into jointventure procurement with a local firm fornot less than thirty percent of the valueoftheprocurement.
• (b)by inserting the following newsubsections immediately after subsection(13)-
• "(14) A person who registers a company on
• behalfofa foreignerexhibitingunfair competition and seeks to benefit from the procurement under this section commits an offence and shall be liable,upon conviction,to a fine not exceeding five million shillings,or to a term of imprisonmentnot exceeding threeyears, or to both.
• (15) A foreigner who registers a company by misrepresenting himself or herself as being Kenyan exhibiting unfair competition and seeks to benefit from procurement under this section commits an offense and shall be liable,upon conviction,to a fine not exceeding five million shillings, or to a term of imprisonment not exceeding fiveyears, or to both."

Amendment of section 44of Cap. 412C.

Amendment of section 53ofCap. 412C.

12. Section 70 of the principal Act is amended by inserting the following new subsection immediately after subsection (6)- 2. "(6A) Where a procurement is of a value exceeding one billion shillings, in addition to the requirements set out in subsection (6), a procuring entity shall set out specific goods, works and services to be undertaken by a local firm under joint venture procurement." 13. The principal Act is amended in section 81 by 4. deleting subsection (2) andsubstituting therefor the followingnew subsection- 5. "(2)A clarification shall not change the terms of the tender or add any new document or information." 6. 14.The principal Act is amended in section 83 by deleting subsection (2) and substituting therefore the following new subsection- 7. "(2) The conduct of due diligence under 8. subsection (l) includes but is not limited to obtaining confidential references from personswith whom the tenderer has had prior engagement, visiting contractor's offices,inspecting of plant, equipment and completed works, in addition to confirming the validity of documents presented." 15. Section 86 of the principal Act is amended by inserting the following new subsection immediately after 10. subsection(2)- 11. "(3) A successful tenderer who is a citizen contractor, shall not subcontract a foreign company unless the knowledge, skill, good or service is not available in the country." 12. 16.Section 89 of theprincipal Act isamended by- 13. (a)renumbering as 14. the existingprovision subsection (1); 15. (b)insertingthe following new subsection immediately after subsection (1)-

Amendment of

section70 of Cap. 412C.

Amendment of section 81 of Cap. 412C.

Amendmentof

section 83 of Cap. 412C.

Amendment of section 86 of Cap.

412C.

Amendment of

section 89 of Cap. 412C.

• "(2)Where a foreign tenderer participates in the competition forprocurement, the.. respective procuring entity shall obtain an advisory from the Attorney-General on the propriety of the funding of the foreign tenderer."
• 17.Section 135 of the principal Act is amended in
• subsection (6) by inserting the following new paragraph immediately afterparagraph(g)-
• "(ga) transfer of skills and technology plan, where applicable;"
• 18.The principal Act is amended in section 136 by inserting the following new subsections immediately after subsection(1)-
• "(1A) Upon completion of an evaluation and the successful tenderer is established,theAuthority shall notify all the other tenderersof the award in accordancewiihsection87of this Act.
• (1B) Where a successful tenderer declines the contract,the accounting officer may-
• (a)issue the letter and notification of award to thenext lowest evaluated tenderer;and
• (b) give a notice in writing to all other persons submitting tenders of thenotification of the
• award.
• (1C) A person aggrieved by the decision made by the accounting officer under subsection (1B) may seek administrative review of that decision by the Review Board within fourteen days of notificationofaward."
• 19.Section 139 of the principal Act is amended in
• subsection(4) by-
• after the words "for goods" appearingin paragraph (d); and
• (b) deleting the word "professional appearing in
• paragraph (e).

20. The principal Act is amended by inserting the followingnew sectionimmediately after section 139

Amendment of section135of Cap.412C.

Amendment of section 136of Cap.412C.

Amendment of

section139of Cap.412C.

Insertion ofnew

section 139A into Cap.412C.

Promptpayment.

• 139A. A procuring entity shall make prompt and timelypayments to a contractor who satisfactorily performs the contractual obligations as stipulated in theprocurement contract.

21. Section 149 of the principal Act is amended by

• inserting new subsections-
• "(3) The Authority shall ensure that priority is given to citizen contractors in sub-contracting of tenders that have been allocated to citizen contractors.
• (4) Where it is deemed necessary to subcontract a
• tender toa foreign contractor-
• (a) the accounting officer shall cause a report to be prepared detailing reasons for the need to subcontract to a foreign contractor;and
• (b) the Authority shall ensure that a percentage of
• the margin preference is applied as shall be prescribed in the Regulations."

22. Section 150 of the principal Act is amended by inserting the following new subsections immediately after subsection(3)-

• "(4) An accounting officer or his or her appointed representativewho contravenessubsection(1), commits an offence.
• (5) A head of the procurement function or his or her appointed representative whocontravenes
• subsection(2),commits an offence.
• 23.Section 155of the principal Act is amended in subsection (3),by inserting the following new paragraph
• immediately after paragraph (a)-

"(aa) locally available skilled and unskilled labour;"

24. Section 157of the principal Act is amended 2. (a) in subsection (7)(a)by deleting subparagraph (i) and substituting therefore the following new subparagraph-

Amendment of section149of Cap.412C.

Amendment of section150of Cap.412C.

Amendmentof

section155of Cap.412C.

Amendment of section157of Cap.412C.

• "(ii) the prescribed threshold for exclusive preference shall be above one billion shillings;"
• (b) by deleting subsection (9) and substituting therefor the following new subsection-
• (9) For the purpose of ensuring
• sustainable promotion of local industries-
• (a)a procuring entity shall have in its tender documents a mandatory requirement as a preliminary evaluation criteria for all foreign tenderers participating in international tenders to source at leastfortypercentoftheir supplies from citizen contractors prior to submitting a tender;
• (b) a procuring entity shall procure local manufacturer or local service
• forty per cent of all its goods and services from a provider;
• (c) a procuring entity shall, on a quarterly basis,report to the Cabinet Secretary on its compliance with paragraph (b); and
• (d) the Cabinet Secretary may publish intheGazette aPreferential Procurement Master Roll specifying the locally manufactured goods that shall be procured locally by every procurement entity.
• 25.The principal Act is amended in section 175
• (e s ()
• therefore the followingnewsubsection-
• (3) The High Court shall determine the judicial review application in accordance with the Civil
• Procedure Act."

Amendment of section 175of Cap.412C.

Cap.21.

• (b) by deleting subsection (4)and substituting therefore thefollowing new subsection-

"(4)Appeals from the decision of theHigh Court shall be made in accordance with the Court of 福 Cap.9A Appeal (Organization and Administration) Act."

• ()by deleting subsection (5).
• 26.Section 176 of the principal Act is amended
• (a)in subsection(l)
• (i) by inserting the following new paragraph
• immediately afterparagraph (e)-

"(ea) submit substandard quality of works, goods or services contrary to the contract specifications, terms or conditions at the time of inspection"

• (ii) in paragraph (m) by inserting the words'Part
• VIlI,Part IX' immediately after the word 'under'; and
• (b) by inserting the following new subsection
• immediately after subsection (2)

"(2A)A person whocertifies or delivers substandard goods or works that are incomplete, non-existent,or whose quality is below the specifications contained in the contract commits an offence."

27. The principal Act is amended by repealing section 2. 177 and replacing it with the following new section

General penalty and

sanctions. to-

177. (1) A person convicted of an offence under this Act for which no penalty is provided shall be liable upon conviction 2. (a)if theperson is a natural person- 3. (i) a fine not exceeding one million shillings, or to imprisonment for a term of not less than ten years, or to both; and 4. (ii) an additional mandatory fine if, 5. as a result of the conduct that

Amendmentofs. 176 ofCap.412C.

Repealand replacement of s. 177ofCap.412C.

• constituted the offence,the person received a quantifiable benefit or any other person suffered a quantifiable loss.
• (b) if the person is a body corporate, to afine not less than ten million shillingsinadditiontothe mandatory fine provided forunder subsection (1) (a) (ii).
• (2) The mandatory fine referred to in subsection(1)(a) (ii) shall be determined as
• follows-
• (a) the mandatory fine shall be equal to two times the amount of the benefit or loss described in subsection (1)(a)(ii);
• (b) if the conduct that constituted the offence resulted in both a benefit and loss described in subsection (1(a)(ii),the mandatory fine shall be equal totwo timesthesum ofthe amount of the benefit and the amountofthe loss.

MEMORANDUM OFOBJECTSANDREASONS

Statement ofobjectsand reasons

The principal object of the Bill is to amend the Public Procurement and Asset Disposal Act (Cap.412C)to prescribe the threshold ofprocurements that shall be awarded to local firms in order topromote growth of local industries.

The Bill also prescribes a penalty for any person who registers a firm on behalf of a non-Kenyan for purposes of benefiting for a procurement that falls within a prescribed threshold. The Bill further seeks to ensure that procuring entities shall set out specific goods,works and services to be undertaken by a local firm in jointventureprocurement.

Clause 1 of the Bill provides for the short title of the Bill.

• Clause 2 of the Bill provides for new definitions including "debarment", "foreign firm","foreign funded procurement","investigative agency","joint
• Clause 3 of the Bill seeks to amend section 4 of the Act in order to ensure that foreign procurement contracts that have not been subjected to provisionsinternational procurementguidelines or laws,adhere to thelaws of procurement in Kenya.
• Clause 4 of the Bill seeks to amend section 9 of the Act to ensure that the Authority monitors and evaluates technology, knowledge and skills transferprogrammes.
• Clause 5 of the Bill seeks to amend section 10 of the Act in order to include a representative from the Law Society of Kenya as a member of the
• Board.
• Clause 6 of theBill seeks to amend section 33 of the Act to ensure that the procurement function shall prioritize goods and services manufactured in that respective county.
• Clause7 of theBill seeks to amend section 35 of the Act in order to allow the authority,a public institution or any other person to refer actions that constitute offences under the Act to investigative agencies such as the National Police. This will enable further investigations and subsequent prosecution ofoffences.
• Clause8of the Bill seeks torepeal section 40 of the Act in order to enable investigations to proceed despite the fact that the issues under investigation are in relation to an issue that the ReviewBoard isreviewing or hasreviewed under therelevantprovisions of thisAct.

Clause 9 of theBill seeks to amend section 4l of theActinorder to limit the period that a person can be debarred and approve any debarment done by an international agency recognized in Kenya.

• Clause10 of theBill seekstoamend section 44of theAct in order to task an accounting officerto ensure thatlocallyproduced products orservices are prioritized and technology,knowledge and skills transfer plans from foreignfirms areprioritized in theprocurementand asset disposal process.
• Clause 11 of the Bill seeksto amend section53 of theActto prescribe prescribe a penalty for any person who registers a firm on behalf of a foreigner for purposes of benefiting for a procurement that falls within a prescribed threshold.
• Clause 12 of the Bill seeks to amend section 70 of theAct to require procuring entities to set out specific goods,works and services to be undertakenby alocal firm injointventureprocurement.

Clause 13of theBill seekstoamend section81 of theActinorder to expound on whatclarification of tenders should comprise.

• Clause 14 of the Bill seeks toamendsection83of theActin order to expound themeaningof the conduct of due diligence.
• Clause 15of the Billseeks toamend section 86of theAct toprohibit citizen contractorswho become successful tenderers to sub-contract to foreign companies unless the knowledge,skill,good or service is not available in the
• country.
• Clause 16of the Bill seeks to amend section 89 of theAct to task the procuring entity to seek the advice of the Attorney-General before accepting
• bids from a foreign company.

Clause 17 of the Bill seeks to amend section 135of the Act in order to include as part of the tender documents the transfer of skills and technology

plan.

• Clause 18 of the Bill seekstoamend section 136of theAct toprovide theprocessfor issuinga letter and notification ofaward to thenext lowest evaluated tendererwhere a successful tenderer fails to sign the contract.
• Clause 19of theBill seekstoamendsection 139 of theActin order to
• correct inconsistencies in the section.
• Clause 20 of the Bill seeks to insert a new clause 139A to provide for safeguards for contactors whosepayments are overdue.

• Clause 21 of the Bill seeks toamend section 149 of theAct to task the Authority to ensure that priority is given to citizen contractors in the sub-contracting of tenders.
• Clause 22of the Bill seeks to amend section 150 of theActin order to providefor offenceswithregard to contract administration.
• Clause 23 of the Bill seeks toamend section 155of theActin order to give preference to procurement of locally skilled and unskilled labour and where not available, the accounting officer should provide a report to prove unavailability of local skilled orunskilled labour.
• Clause 24 of the Bill seeks to amend section 157of theAct in order to increase the maximum amounts for citizen contactors, to prohibit subcontracting of local procurement contracts to foreign contractors and to prioritise contractors from respective counties where the project is fully funded by the county government unless such services are unavailable. It also provides for the mandatory procurement of forty percent of goods and services from local manufacturers or local service providers and grants the Cabinet Secretary the power to prescribe the Preferential Procurement Master Roll.
• Clause25of theBill seeks to amend section 175of theActin order to align the provisions of the Act to the Court of Appeal (Organization and Administration) Act and the Civil Procedure Act.
• Clause 26 of the Bill seeks to amend section 176 of the Bill in order to provide for offences for where a contractor submits non-completed or substandard works.
• Clause27 of the Bill seeks to amend section 177 of the Act toprovide mandatory fines and enhance the penalties.

Statement on the delegation of legislative powers and limitation of

fundamental rights and freedom

The Bill does not delegate any legislative powers, and it does not limit fundamental rights and freedoms.

Statement as to whether the Bill concerns county governments

The Bill seeks to amend the Public Procurement and Asset Disposal Act to prescribe the threshold of procurement to be awarded to a local firm in order to promote local industries. Procurement is undertaken by both the national government and the county governments.

In view of this, the Bill concerns county governments in terms of Article 110(1)(a) of the Constitution as it affects the functions and powers of county governments recognized in the Fourth Schedule to the Constitution and is therefore a Bill concerning county governments.

Statement as to whether the Bill is a money Bill within the meaning of Article 114 of the Constitution

The enactment of this Bill may occasion additional expenditure ofpublic funds.

Dated the1stNovember,2024.

KURIAKIMANI,

Chairperson,Departmental Committee onFinance and National Planning.

Section2of Cap.412which it isproposed to amend

2.Interpretation

In this Act,unless the context otherwise requires-

"accounting officer" has the meaning assigned to it under section 2 of

the Public Finance Management Act (Cap.412A);

"appeal" means a request for administrative review or complaint filed

with the Appeals Review Board pursuant to section 167 of thisAct;

"assets" means movable and immovable property, tangible and

intangible, including immovable property, stores, equipment, land, buildings, animals, inventory, stock, natural resources like wildlife, intellectual rights vested in the state or proprietary rights;

"Authority" means the Public Procurement Regulatory Authority

established under section & of this Act;

"Board" means the Public Procurement Regulatory Board established under section 10 of this Act;

"Cabinet Secretary" means the Cabinet Secretary for the time being

responsible for matters relating to finance;

"candidate"means a person who has obtained the tender documents

from a public entity pursuant to an invitation notice by a procuring entity;

"citizen contractor" means a person or a firm wholly owned and

controlled by persons who are citizens of Kenya;

"common-user items"means goods,works or services that are usable by procuring entities across the board irrespective of type or category, and the items include office equipment, furniture, motor vehicles and

stationery;

"complex and specialized contracts" means contracts that include procurement where the terms and conditions of an agreement are different from standard commercial terms and conditions,and includes contracts for infrastructural works performed under international agreements containing international terms and conditions;

"consultancyservices"means services of predominantly an intellectual,technical or advisory nature,and includes services offered by allprofessionals;

"contract period"means the period between contract signing and the

end of thedefectsliabilityperiod;

"contract administration"means management of termsof procurement or asset disposal contracts made with contractors or suppliers after tender award by a procuring entity, for the purpose of assuring compliance with obligations such as timely delivery,quality and quantity inspection,acceptance,payment,claims, disputeresolution and completion,among other terms;

"contractormeans a person who enters into a procurement contract with a procuring entity,and includes the main contractor;

"corruption" has the meaning assigned to it under section 2 of the Anti-Corruption and Economic Crimes Act (Cap.65);

"design competition"means a procurement procedure for obtaining competitive tenders for services which are creative in nature and which require that part of the services be carried as part of the tender to facilitate evaluation of the tenders and such services may include architecture, landscaping, engineering, urban design projects, urban and regional planning, fine arts, interior design, marketing, advertising and graphic

designs;

"Director-General" means the Director-General of the Authority provided for under section 15 of this Act;

"disadvantaged group" means persons denied by mainstream society access to resources and tools thatare useful for their survival in a way that disadvantages them or individuals who have been subjected to prejudice or cultural bias because of their identities as members of groups or categories of persons without regard to their individual qualities, and includes enterprises in which amajority of themembers or shareholders areyouth, women, persons with disability or categories as shall be prescribed;

"disposal means the divestiture of public assets, including intellectual and proprietary rights and goodwill and other rights of a procuring entity by any means including sale,rental,lease, franchise, auction or any combination however classified;

"electronic reverse auction" means an online real-time purchasing technique utilized by the procuring entity to select the successful submission,which involves the presentation by tenderers,suppliers or contractors of successively lowered bids during a scheduled period of time

and the automaticevaluation ofbids;

"e-procurement" means the process of procurement using electronic medium such as the internet or other information and communication technologies;

"framework agreement"means a pact between a procuring entity and a selected supplier (or suppliers) or contractor (or contractors) identified for a definite term to supply goods works or service whose quantities and delivery schedules are not definable or determinable at the

beginning;

"framework contract"means a pact between a procuring entity and a selected supplier (or suppliers) or contractor(or contractors) identified for a definite term to supply goods works or service whose quantities and deliveries are not definable or determinable at the beginning,with a commitment to order a minimum quantity of the required goods,works,or services;

"fraudulent practice" includes a misrepresentation of fact in order to influence a procurement or disposal process or the exercise of a contract to the detriment of the procuring entity or the tenderer or the contractor, and includes collusive practices amongst tenderers prior to or after tender submission designed to establish tenderpricesat artificial non-competitive levels and to deprive the procuring entity of the benefits of free and open competition;

the Constitution;

"fiscal agency" means a person or an organization, or trust company, that acts on behalf of the Government of Kenya in performing various financial duties,including assistance in the arrangement for issuance of international sovereignbonds,redemptionofbonds or coupons,handle tax issues,replace lost or damaged securities;

"goodsincludes raw materials,products,equipment,commodities in solid,liquid or gaseous form,electricity and services that are incidental to the supply of the goods,works and services;

"loans" has the meaning assigned to it under Article 260 of the

Constitution;

"local contractor" means a person or a firm registered in Kenya under

the Companies Act (Cap. 486) of or any other written law and whose operation is based in Kenya;

"locally produced product or service" means goods and services that are manufactured in Kenya by firms that are registered and undertaking

their business in Kenya;

"obstruction" means acts intended to materially impede access to required information in exercising a duty under this Act;

"person" has meaning assigned to it in Article 260 of the Constitution and includes sole proprietorship;

"person with disability"means a person with disability who has attained the age of eighteen years and includes a company,association or body of persons, corporate or unincorporated in which at least seventy percent of the shareholders, members or persons and a majority of the directors are persons with disability;

"public procurement" means procurement by procuring entities using

public funds;

"prescribed" means prescribed by Regulations under this Act;

"preference"means the right or opportunity to select a tenderer from

an identified target group that is considered more desirable than another;

"pre-qualification" means the procedure to identify and shortlist

tenderers that are qualified,prior to invitation for tenders;

"pre-qualification procedure" means a procedure by which candidates are invited to demonstrate their qualifications prior to, and as a condition for, being invited to tender or submit proposals;

"Principal Secretary" means the Principal Secretary for the time

being responsible for matters relating to finance;

"procurement" means the acquisition by purchase, rental, lease, hire purchase, license, tenancy, franchise, or by any other contractual means of any type of works, assets, services or goods including livestock or any combination and includes advisory, planning and processing in the supply

chain system;

"procuring agent" means an organization which has been registered by the Authority, and competitively engaged by a procuring entity on its

behalf, or an organization established under this Act, to carry out procurement or asset disposal activities;

"procurement contract" means an agreement concluded between the procuring entity and a contractor (or contractors) resulting from a

tendering proceeding;

"procuring entity" means a public entity making a procurement or asset disposal to which this Act applies;

"procurement professional" means a person who has professional recognised institution and is a member of the Kenya Institute of Supplies Management or any other procurement or supply chain professional body

recognised in Kenya;

"procurement function"means a division within a procuring entitystaffed withprocurementprofessionalswho areofficially concerned with managing the procurement and asset disposal process and reports directly to the head of procuring entity functionally and administratively;

"professionalmeans a person who has professional qualifications in a specialized field and who is engaged in the practice of a skill or trade, having undertaken the relevant formal academic and professional training including undertaking practical learning in the form of apprenticeship or tutelage under the guidance of a suitably qualified and experienced person in thefield of training or tutelage;

"professional body" means a body representing members of a profession, which is regulated by statute, code of conduct or rules as may

be amended from time to time;

"public entity"includes-

• (a) the national government or any organ or department of the national government;
• (b) a county government or any organ or department of a county government;
• (c) the Judiciary and the courts;
• (d) the Commissions established under the Constitution;
• (e) the Independent Offices established under the Constitution;
• (f) a state corporation within the meaning of the State Corporations
• Act (Cap. 446);
• (g) the Central Bank of Kenya established under the Constitution;
• (h) a public school within the meaning of the Basic Education Act
• (Cap. 211);
• (i) a public university within the meaning of the Universities Act (Cap.210);
• (i) a city or urban area established under the Urban Areas and Cities Act (Cap. 275);
• (k) a company owned by a public entity;
• (l) a county service delivery coordination unit under the National Government Co-ordination Act (Cap.127);
• (m) a constituency established under the Constitution;

• (n) a Kenyan diplomatic mission under the state department responsible for foreign affairs;
• (o) a pension fund for a public entity;
• (p) a body that uses public assets in any form of contractual undertakingincludingpublicprivatepartnership;
• (q) a body in which the national or county government has
• controlling interest;
• (r) a college or other educational institution maintained or assisted out ofpublicfunds;
• (s) an entity prescribed as a public entity for the purpose of this paragraph;or
• (t) any other entity or a prescribed class of public entities or particular public entities that uses public money for purposes of procurement or any other entity as declared under sections 4 and 5ofthe Public Finance Management Act (Cap.412A);

procuring entities through the budgetary process, as well as extra budgetary funds, including aid, grants and loans, put at the disposal of procuring entities by donors;

section 2 ofthePublicPrivatePartnerships Act(Cap.430);

"publicise" has the meaning assigned to it under section 2 of the Public Finance Management Act(Cap.412A);

"registration of suppliers" means the process of identifying and obtaining a list of prospective providers of a specified category of goods, works or services by a procuring entity for a specified period of time but not exceeding more than two years, and maintaining them for the purpose ofinviting them on rotational basis for subsequent tenderingproceedings such as request for quotations or restricted tendering,that may arise during

the period of listing;

"regulations" means regulations made under this Act;

"Review Board" means the Public Procurement Administrative

ReviewBoard established under section 27of thisAct;

"reservations" means exclusive preference to procure goods, works, and services set aside to a defined target group of tenderers within a specified threshold or region;

"services"means any objects of procurement or disposal other than works and goods and includes professional, consultancy services, technical services,non-professional and commercial types of services as well as goods and workswhich are incidental to but not exceeding the

value ofthose services;

"standard"means characteristics or set of characteristics for an item

whichforreasonsof quality level or compatibilitywith otherproductsis accepted by the manufacturers and users of that item as a required characteristic for all items of that type;

"supplier" means a person who enters into a procurement contract with a procuring entity to supply goods, works or services;

"supply chain management"" means the design, planning, execution stock control, contract management and distribution, with an objective of

control and monitoring of supply chain activities which includes procurement, purchasing,logistics, transportation, warehousing, storage, creating value to meet the objectives of the procuring entity;

"tender" means an offer in writing by a candidate to supply goods, services or works at a price; or to acquire or dispose stores, equipment or

other assets at a price, pursuant to an invitation to tender, request for quotation orproposal by aprocuring entity;

"tenderer" means a person who submitted a tender pursuant to an

invitation by a public entity;

"tender box" means a lockable secure physical or virtual box where

tenders are submitted including by electronic means so as to be opened only after the tender submission deadline;

"tender security" means a guarantee required from tenderers by the procuring entity and provided to the procuring entity to secure the fulfillment of any obligation in the tender process and includes such arrangements as bank or insurance guarantees, surety bonds, standby letters of credit, cheques for which a bank is primarily liable, cash deposits, promissory notes and bills of exchange tender securing declaration, or other guarantees from institutions as may be prescribed;

"urgent need" means the need for goods, works or services in circumstances where there is an imminent or actual threat topublichealth, welfare, safety, or of damage to property, such that engaging in tendering proceedings or other procurementmethods would not bepracticable;

"user department" means the unit of a procuring entity that requisitions the goods,works or services being procured;

"works" means a combination of goods and services for the construction,repair,renovation,extension,alteration,dismantling or demolition of buildings,roads or other structures and includes

• (a) the designing, building, installation, testing, commissioning and
• setting up ofequipment and plant;
• (b) site preparation; and
• (c) other incidental services;

"woman" means a person of the female gender who has attained the persons, corporate or unincorporated in which at least seventy percent of

age of eighteen years and includes a company, association or body of the shareholders, members or persons and a majority of its directors are of the female gender;

"writing" means printing, photography, facsimile, lithography, typewriting, electronic media and any other means of representing or reproducing words in a visible form;and

"youth" means a person who has attained the age of eighteen years and has not attained the age of thirty-five years and includes a company, association or body of persons, corporate or unincorporated in which at least seventy percent of shareholders are persons who have attained the age of eighteen years and have not attained the age of thirty-five years.

Section 4 of Cap.412Cwhich it is proposed to amend

4. Application of the Act

• (1) This Act applies to all State organs and public entities with respect to-

2. (a) procurement planning; 3. (b) procurement processing; 4. (c) inventory and asset management; 5. (d) disposal of assets; and 6. (e) contract management.

• (2) For avoidance of doubt, the following are not procurements or

8. asset disposals with respect to which this Act applies-— 9. (a) the retaining of the services of an individual for a limited term if, in providing those services, the individual works primarily as though he or she were an employee, but this shall not apply to persons who are under a contract of service;

• (b) the transfer of assets being disposed off by one state organ or public entity to another state organ or public entity without financial consideration;
• (c) acquiring of services provided by government or government department;
• (d) acquisition and sale of shares or securities, fiscal agency by a public entity, investments such as shares purchased by cooperative societies,state corporations or other public entities;
• (e) procurement and disposal cf assets under Public Private Partnerships Act (Cap.430); and
• (f)procurement and disposal of assets under bilateral ormultilateral agreements between the Government of Kenya and any other foreign government, agency, entity or multilateral agency unless as otherwiseprescribed in the Regulations.
• (3) For greater certainty,all public procurement are procurements with respect to the application of this Act.

Section 9 of Cap.412C which it is proposed to amend

9.Functions of Authority

• (1) The functions of theAuthority shall be to-

2. (a) monitor, assess and review the public procurement and asset disposal system to ensure that they respect the national values and other provisions of the Constitution,including Article 227 and 3. make recommendations forimprovements; 4. (b) monitor the public procurement system and report on the overall functioning of it and present to the Cabinet Secretary and the county executive member for finance in each county, such other reports and recommendations for improvements; 5. (c) enforce any standards developed under this Act; 6. (d) monitor classified procurement information, including that of specific items of security organs and make recommendations to the Cabinet Secretary; 7. (e) monitor the implementation of the preference and reservation schemes by procuring entities; 8. (f)prepare,issue and publicise standard publicprocurement and asset disposal documents and formats to be used by public entities and other stakeholders;

• (g) provide advice and technical support upon request;
• (h) to investigate and act on complaints received onprocurement and asset disposal proceedings from procuring entities, tenderers, contractors or the general public that are not subject of administrativereview;
• (i) research on the public procurement and asset disposal system and any developments arising from the same;
• (j) advise the Cabinet Secretary on the setting of standards including international public procurement and asset disposal standards;
• (k) develop and manage the State portal on procurement and asset
• disposal and ensure that it is available and easily accessible;
• (l) monitor and evaluate the preference and reservations provided for under thisAct andprovidequarterlypublicreports;
• (m) create a central repository or database that includes-
• (i) complaints made on procuring entities;
• (ii) a record of those prohibited from participating in tenders or those debarred;
• (ili) market prices of goods, services and works;
• (iv) benchmarked prices;
• (v) State organs and public entities that are non-compliant with procurement laws;
• (vi) statistics related to public procurement and asset disposal;
• (vii) price comparisons for goods, services and works; and
• (viii) any information related to procurement that may be necessary for the public;
• (n) inform, as applicable, the Cabinet Secretary, Parliament, the relevant County Executive member for finance,the relevant County Assembly or Auditor-General on issues of noncompliance with procurement laws once the relevant State organ or public entity ignores the written directives of the Authority, including material breaches of the measures established under this Act;
• (0) generally report to Parliament and the relevant county assembly;

• (p) develop a code of ethics to guide procuring entities and
• winning bidders when undertaking public procurement and disposal with State organs and public entities;
• (q) in undertaking its functions, cooperate with state and non-state actors with a view to obtaining recommendations on how public procurement and disposal can be improved;
• (r) ensure the procurement entities implement the preference and reservationsand provide data to the Authority disaggregated to indicate thenumberof disadvantaged groups that havebenefitted;
• (ra) develop, promote and support the training and capacity development of persons involved in procurement and asset
• disposal;
• (s)perform such other functions and duties as are provided for under this Act and any other relevant law.
• (2) If in the course of monitoring in accordancewith section 9(i)(a), theAuthority is of the opinion that civil or criminal proceedings ought to be preferred against a State Organ, public entity, state officer or public officer,theAuthority shall refer thematter to therelevant authorities.

Section 10 of Cap. 412C which it is proposed to amend

10.Public Procurement Regulatory Board

• (1) The management of the Authority shall vest in a board to be known as the Public Procurement Regulatory Board which shall consist of

2. (a) a chairperson nominated by the Cabinet Secretary and appointed by the President; 3. (b) two members who shall be appointed by the Cabinet Secretary after nomination,through a fairprocess by- 4. (i) the Institute of Certified Public Accountants of Kenya, and 5. (ii) the Kenya Institute of Supplies Management; 6. (c)deleted by Act No.15of2017,s.55; 7. (d) the Cabinet Secretary orhis or her representative; 8. (e) the Attorney-General or his or her representative;and 9. (f) four other persons appointed by the Cabinet Secretary.

• (2) In the appointment of the chairperson and members under this section, the appointing authority shall ensure regional and gender balance.

Section33of Cap.412Cwhich it is proposed to amend

33.Roles and Responsibilities of the County Government

• (1) A County Treasury shall be the organ responsible for the implementation ofpublic procurement and asset disposal policy in the

2. county.

• (2) Without prejudice to the general provisions of sub-section (1), the County Treasury shall establish a procurement function which shall

4. (a) implement public procurement and asset disposal procedures; 5. (b) coordinate administration of procurement and asset disposal contracts; 6. (c) coordinate consultations with county stakeholders of the public procurement and asset disposal system in liaison with the National Treasury and the Authority; 7. (d) advise the accounting officers of county government entities on 8. public procurement and asset disposal matters; 9. (e) co-ordinate county government monitoring and evaluation of the supply chain function of county government entities including 10. ensuring compliance; 11. (f) promote preference and reservations schemes for small and micro enterprises and other disadvantaged groups,citizen contractors, women,youth,personswith disabilities,minorities and 12. marginalized groups in public procurement at the county; 13. (g)promote preference and reservation schemes for residents of the procurement at the county; 14. (h) administer the scheme of service for county government procurement and supply chain management officers and capacity 15. building.

• (3) The County Treasury may prescribe an institutional framework to provide for the procurement,administration and management of common user items for thecountygovernment

Section35of Cap.412Cwhich it isproposed to amend

35.Investigations

• (1) The Authority,may undertake investigations, at any reasonable time,by among other things examining the records and accounts of the procurement or disposal proceeding or contract with respect to a
• procuring entity and contractor, supplier or consultant relating to the procurement or disposal with respect to a State organ or public entity for

the purpose of determining whether there has been a breach of this Act or the Regulations made thereunder.

• (2) An investigation under sub-section (1) may be initiated by the Authority or on request in writing by a public institution or any other person.
• (3) Investigation shall be conducted by an investigator appointed for

3. the purpose by the Authority.

Section 40 of Cap. 412Cwhich it is proposed to amend

40.No investigation if issue before Review Board

• (1) No investigation shall be commenced or continued under this Part,and no order shall be made under this Part,in relation to an issue that S provisions of this Act.
• (2) Subsection (1) ceases to apply if, after the Review Board has completed its review,information comes to the attention of theDirectorGeneral thatwas not broughtbefore the Review Board in the course of its

3. review.

Section 41 of Cap. 412C which it is proposed to amend

41.Debarment

• (1) The Board shall debar a person from participating in procurement or asset disposal proceedings on the ground that theperson-

2. (a) has committed an offence under this Act; 3. (b) has committed an offence relating to procurement under any other Act or Law ofKenya or any other jurisdiction; 4. d g including poor performance; 5. (d) has, in procurement or asset disposal proceedings, given false information about his or her qualifications; 6. (e) has refused to enter into a written contract as required under 7. section 135ofthis Act; 8. (f) has breached a code of ethics issued by the Authority pursuant to section 18l of this Act or the code of ethicsof the relevant 9. profession regulated by an Act of Parliament; 10. (g) has defaulted on his or her tax obligations; 11. (h) is guilty of corrupt or fraudulent practices;

• (i) is guilty of a serious violation of fair employment laws and practices;or
• (j) is determined by the Review Board to have filed a request that is frivolous or vexatious or was made solely for the purpose of delaying the procurement proceeding or a performance of a contract.
• (2) Without limiting the generality of subsection (1) the Board may s d nd sd e person-
• (a) has breached the requirements of the tender securing declaration form in the tender documents;or
• (b) has not performed according to professionally regulated procedures.
• (3) The Authority, may also debar a person from participating in procurement or asset disposal proceedings-
• (a) on the recommendation of a law enforcement organ with an investigative mandate;
• (b) on grounds prescribed by the Authority in Regulations.
• (4) A debarment under this section shall be for a specified period of time of not less than three years.
• (5) The procedure for debarment shall be prescribed by Regulations. Section 44 of Cap. 412C which it is proposed to amend

44. Responsibilities of the accounting officer

• (1) An accounting officer of a public entity shall be primarily responsible for ensuring that thepublic entity complies with theAct.
• (2) In the performance of the responsibility under subsection (1), an accounting officer shall-

3. (a) ensure that procurements of goods,works and services of the public entity are within approved budget of that entity; 4. (b) constitute all procurement and asset disposal committees within a procuring entity in accordance with the Act; 5. (c) ensure procurement plans are prepared in conformity with the medium term fiscal framework and fiscal policy objectives and, subject to subsection (3), submit them to the National Treasury;

• safe custody of allprocurementrecordsin accordance with the
• Act;
• (e) ensure compliance with sections 68,147,148 and 149 of the Public Finance Management Act (Cap.412A);
• (f) approve and sign all contracts of the procuring entity;
• (g) ensure the procurement and asset disposal process of the public entity shall complywith thisAct;
• (h) ensure that the procurement processes are handled by different professional offices in respect of procurements, initiation,
• processing and receipt of goods, works and services;
• 1 submit to the Authority the part in its procurement plan demonstrating application ofpreference andreservations schemes in relation to the procurement budgetwithin sixty days after commencementofthefinancialyear;and
• (j)ensure compliance with any otherresponsibilities assigned by this Act or any other Act of Parliament or as may be prescribed in Regulations.
• (3) The procurement plans prepared by the national security organs shall be exempted from submission to the National Treasury.
• (4) An accounting officer involved in a procurement transaction on exploitationofnaturalresourcesshall complywithprovisionsofArticle 71of the Constitutionand any otherwritten law.
• accounting officer shall seek assistance from the National Treasury.

Section53 of Cap.412Cwhich it isproposed toamend

53.Procurement and asset disposal planning

• (1) All procurement by State organs and public entities are subject to therulesandprinciples of this Act.
• (2) An accounting officer shall prepare an annual procurement plan which is realistic in a format set out in the Regulations within the approved budgetprior tocommencementofeachfinancialyearaspartof

3. the annual budget preparation process.

• (3) Any public officer who knowingly recommends to the accounting officer excessive procurementofitems beyond a reasonable consumption

5. of the procuring entity commits an offence under this Act.

• (4) All asset disposals shall be planned by the accounting officer concerned through annual asset disposalplan in a format set out in the Regulations.
• (5) A procurement and asset disposal planning shall be based on indicative or approved budgets which shall be integrated with applicable budget processes and in the case of a State Department or County Department,such plans shall be approved by the Cabinet Secretary or the County Executive Committeememberresponsiblefor that entity.
• (6) All procurement and asset disposal planning shall reserve a minimum of thirty per cent of the budgetary allocations for enterprises owned by women, youth, persons with disabilities and other disadvantaged groups.
• (7) Multi-year procurement plans may be prepared in a format set out in the Regulations and shall be consistent with the medium term budgetary expenditure frameworkforprojects or contractsthatgobeyond oneyear.
• (8) Accounting officer shall not commence any procurement proceeding until satisfied that sufficient funds to meet the obligations of the resulting contract are reflected in its approved budget estimates.
• (9) An accounting officer who knowingly commences any procurement process without ascertaining whether the good,work or service is budgeted for,commits an offence under this Act.
• (10) For greater certainty, the procurement and disposal plans approved under subsection (5) shall include choice of procurement and disposal methods and certain percentages referred to under subsection (6).
• (11) Any state or public officer who fails to prepare procurement and
• disposal plans shall be subject to internal disciplinary action.
• (12) Upon submission of the procurement plans to the National Treasury pursuant to section 44(2)(c) of this Act, the accounting officer of a procuring entity shall publish and publicize its approved procurement plan as invitation to treat on itswebsite.
• (13) On receipt of the procurement plans submitted by the procuring entities,the National Treasury shall publish and publicize theprocurement plans asinvitation to treat on the state tenderportal.
• Section70 of Cap. 412C which it is proposed to amend

70.Standard tender documents

• (1) The Authority shall issue standard procurement and asset disposal documents and formats as prescribed for use by procuring entities.

• (2) A procuring entity shall use standard procurement and asset

2. disposal documents prescribed under subsection (1), in all procurement and asset disposal proceedings. 3. (3) The tender documents used by a procuring entity pursuant to subsection (2) shall contain sufficient information to allowfair competition among thosewhomaywish tosubmit tenders.

• (4) An accounting officer of a procuring entity shall be responsible for preparation of tender documents in consultationwith the user and other relevant departments.
• (5) A procuring entity may charge a fee for obtaining tender documents as prescribed by regulations and stated in the tender documents.
• (6) The tender documents shall set out the following-

7. (a) the specificrequirementsprepared under section 60 relating to the goods, works or services being procured and the time limit for delivery or completion; 8. (b) if works are being procured, relevant drawings and bills of quantities shall be disclosed and the projects total estimated cost evaluated only on thebasis of criteria disclosed,but aperson shall not bedisqualified on the basis that a bidder quoted above or 9. below a certain percentage of engineer's estimates; 10. (c) the general and specific conditions to which the contract will be subject, including any requirement that performance security be 11. provided before the contract is entered into; 12. (d) the tender number assigned to the procurement proceedings by the procuring entity; 13. (e) instructions for the preparation and submission of tenders including- 14. (i)the forms for tenders; 15. (i) the number of copies to be submitted with the original tender; 16. (ii) any requirement that tender security be provided and the 17. form and amount of any such security; 18. (iv) any requirement that evidencebe provided of the 19. qualifications oftheperson submitting the tender; 20. (v) the procuring entity facilitation and the submission of tender 21. documents by the tenderer through either soft or hard copy,

• but itwill be the onus of the tenderer to ensure the adequate submission of said documents;
• (vi) the procurement function ensuring that where necessary, the preferences and reservations of the tender are clearly spelt out in the bidding documents;
• (f)an explanation of where and when tenders shall be submitted,a statementthat the tenderswill be opened immediatelyafter the deadline for submitting them and an explanation of where the tenders will be opened;
• (g) a statement that those submitting tenders or their representatives may attend the opening of tenders;
• (h) a statement of the period during which tenders must remain valid;
• (i) the procedures and criteria to be used to evaluate and compare the
• tenders;
• (j) a statement that the accounting officer of a procuring entity may, at any time terminate the procurement proceedings without enteringinto a contract in accordance withsection63 of theAct;
• (k) a provision for providing details of sub-contractors for the bidder, where applicable,and a declaration that the sub-contractors have complied with this Act;and
• (1) anything else required,under this Act or the regulations, to be set
• out in the tender documents.

Section81of Cap.412Cwhichit isproposed to amend

81. Clarifications

• (1) A procuring entity may, in writing request a clarification of a

2. tenderfrom tenderer to assist in the evaluation and comparison of tenders.

• (2) A clarification shall not change the terms of the tender.

Section 83of Cap.412C which it is proposed to amend

83.Post-qualification

• (1) An evaluation committee may,after tender evaluation,but prior to the award of the tender,conduct due diligence and present the report in writing to confirm and verify the qualifications of the tenderer who submitted the lowest evaluated responsive tender to be awarded the contract in accordance with this Act.

• (2) The conduct of due diligence under subsection (l) may

2. include obtaining confidential references from persons with whom the tenderer has hadprior engagement.

• (3) To acknowledge that the report is a true reflection of the proceedings held, each member who was part of the due diligence by the

4. evaluation committee shall- 5. (a) initial each page of the report;and 6. (b) append his or her signature as well as their full name and designation.

Section86of Cap.412Cwhich it isproposed to amend

86.Successful tender

• (1) The successful tender shall be the one who meets any one of the following as specified in the tender document

2. (a) the tender with the lowest evaluated price; 3. procuring entity by combining,for each proposal,in accordance with the procedures and criteria set out in the request for proposals, the scores assigned to the technical and financial proposals where Request for Proposals method is used; 4. (c)the tender with the lowestevaluated total costof ownership;or 5. (d) the tender with the highest technical score,where a tender is to be evaluated based onproceduresregulated by an Act of Parliament which provides guidelines for arriving at applicable professional 6. charges:

Provided that the provisions of this subsection shall not apply to section 141 ofthis Act.

• (2) For the avoidance ofdoubt,citizen contractors,or those entities in which Kenyan citizens own at least fifty-one per cent shares, shall be entitled to twenty percent of their total score in the evaluation,provided the entities or contractorshave attained theminimum technical score.

Section89of Cap.412C which it is proposed to amend

89.International tendering and competition

If there will not be effective competition for a procurement unless foreign tenderers participate, the following shall apply-

• (a) the invitation to tender and the tender documents shall be in English;

• (b) if the procuring entity is required to advertise the invitation to tender under sections 96(2) and 118(1),the procuring entity shall alsoadvertisetheinvitationto tenderinKenya'sdedicated tenders publications that,together,have sufficient circulation outside Kenya to allow effectivecompetitionfor theprocurement;
• (c) the period of time between the advertisement under paragraph (b) and the deadline for submitting tenders shall be not less than the minimum period of time prescribed for the purpose of this paragraph;
• (d) the technical requirements shall, to the extent compatible with requirements under Kenyan law,be based on international standards or standardswidelyused in international trade;
• (e) a tenderer submitting a tender may,in quoting prices or providing security,usea currency that is widely used in international trade and that the tender documents specifically allow to be used;and
• (f)where local or citizen contractorsparticipate they shall be entitled topreferences and reservations as set out in section 155.
• (g) any other conditions as may be prescribed.

Section135ofCap.412Cwhich itisproposedtoamend

135. Creation of procurement contracts

(1) The existence of a contract shall be confirmed through the signature ofa contract document incorporating all agreements between the parties and such contract shall be signed by the accounting officer or an officer authorized in writing by the accounting officer of the procuring entity and the successful tenderer.

(2) An accounting officer of a procuring entity shall enter into a written contractwith theperson submitting the successful tender based on the tender documents and any clarifications that emanate from the procurement proceedings.

• (3) The written contract shall be entered into within the period specified in the notification but not before fourteen days have elapsed following the giving of that notification provided that a contract shall be signedwithin the tendervalidityperiod.

(4) No contract is formed between the person submitting the successful tender and the accounting officer of a procuring entity until the written contract issigned by theparties.

• (5) An accounting officer of a procuring entity shall not enter

2. into a contract with any person or firm unless an award has been made and where a contract has been signed without the authority of the accounting officer,such a contract shall be invalid.

• (6) The tender documents shall be the basis of all procurement

4. contracts and shall, constitute at a minimum- 5. (a) Contract Agreement Form; 6. (b) Tender Form; 7. (c) price schedule or bills of quantities submitted by the tenderer; 8. (d) Schedule of Requirements; 9. (e) Technical Specifications; 10. (f) General Conditions of Contract; 11. (g) Special Conditions of Contract; 12. (h) Notification of Award.

• (7) A person who contravenes the provisions of this section commits an offence.

Section136ofCap.412Cwhich it isproposed to amend

136.Refusal to sign contract

• (1) If the person submitting the successful tender refuses to enter into a written contract in writing as required under section 135 and section 64 of this Act, he or she shall forfeit his or her tender security and the tenderer.

2. shall remain valid has already expired.

Section139of Cap.412Cwhichit isproposed toamend

139.Amendments orvariations to contracts

• (1) An amendment or a variation to a contract resulting from a procurementproceedingis effective onlyif-

2. (a) the variation or amendment has been approved in writing by the respective tender awarding authority within a procuring entity; and 3. (b) any contract variations or amendments for goods, works and services shall be as prescribed.

• (2) An accounting officer of a procuring entity, on the recommendation of an evaluation committee or as prescribed in the signed Contract Agreement, may approve the request for--

2. (a) use of prime costs; 3. (b)use of contingencies; 4. (c) reimbursable costs; and 5. (d) use ofprovisional sums. 6. (2A) Despite subsection (2), an accounting officer of a procuring entity, on the recommendation of an evaluation committee or as prescribed in the signed contract agreement, may approve the request for the extension of the contract period,which request shall be accompanied by a letterfrom the tenderer makingjustifications for such extension. 7. (3) No contract price shall be varied upwards within twelve months from the date of the signing of the contract. 8. (4) For the purposes of this section,any variation of a contract shall only be considered if the following are satisfied- 9. (a) the price variation from the original price is based on the prevailing consumer price index obtained from Kenya National Bureau of Statistics; 10. (b) the quantity variation for goods does not exceed fifteen per cent of the original contract quantity; 11. (c) the price or quantity variation is to be executed within the period ofthe contract; 12. (d) the cumulative value of all contract variations for goods do not 13. result in an increment of the total contract price by more than twenty five per cent of the original contract price; and 14. (e) the cumulative value ofprofessional services does not result in an incrementof the total contractpricebymore than twenty-fiveper cent of the original contract price.

• (5) An accounting officer of a procuring entity shall submit a quarterly report of their varied or amended procurement contracts to the

16. Authority. 17. (6) Where variations result in an increment of the contract price by 18. more than twenty-five percent,such variations shall be tendered for separately.

• (7) The method for computing price variation under this section shall be prescribed inregulations.

Section 149 of Cap.412Cwhich it isproposed toamend

149.Sub-contracting

• (1) If the tender documents do not prohibit subcontracting,the person to be subcontracted has not been debarred from procurement proceedings in accordance with this Act or has participated in the procurement of goods,works or servicesrelated to that contract.
• (2) The successful tenderer shall be responsible towards the procuring entity for the obligations of the sub-contractor.

Section150of Cap.412Cwhich it is proposed to amend

150. Contract administration

• (1) An accounting officer or his or her appointed representative shall be responsible for ensuring that the goods,works and services are of the right quality and quantity.
• (2) The head of the procurement function shall be responsible for assisting the accounting officer to confirm theright quality and quantity of goods,works and serviceshave been delivered to theprocuring entity and shall issue a certificate of acceptance to the accounting officer except where technical specifications are from another technical department or

3. professionals engaged to work on behalf of the accounting officer.

• (3) Where goods,works and services under sub-section (2), are of technical nature and the specifications were provided by a technical department or professionals engaged to work on behalf of the accounting officer, that technical department or professionals engaged to work on behalf of the accounting officer shall be responsible for confirming the rightquality and quantity ofgoods,works orservices havebeen delivered and issue a certificate to therecipient accounting officer.

Section155ofCap.412Cwhichit isproposed to amend

155.Requirement for preferences and reservations

• (1) Pursuant to Article 227(2) of the Constitution and despite any other provision of thisAct or any other legislation,all procuring entities shall complywith theprovisions of thisPart.

2. (2) Subject to availability and realisation of the applicable international or local standards,only such manufactured articles,materials

• or supplies wholly mined and produced in Kenya shall be subject to preferential procurement.
• (3) Despite the provisions of subsection (1),preference shall be given to-
• (a)manufactured articles,materials and supplies partially mined or produced in Kenya or where applicable have been assembled in Kenya;or
• (b)firms where Kenyans are shareholders.
• (4) The threshold for the provision under subsection (3) (b) shall be abovefifty-onepercentofKenyan shareholders.
• (5) Where a procuring entity seeks to procure items not wholly or partiallymanufactured in Kenya-
• (a) the accounting officer shall cause a report to be prepared detailing evidence of inability to procure manufactured articles,materials and supplieswholly mined orproduced in Kenya;and
• (b) the procuring entity shall require successful bidders to cause technological transfer or create employment opportunities as shall be prescribed in the Regulations.

Section 157ofCap.412Cwhichit isproposed toamend

157.Participation of candidates in preference and reservations

• (1) Candidates shall participate in procurement proceedings without discrimination except where participation is limited in accordance with this Act and the regulations.
• (2) Subject to subsection (8),the Cabinet Secretary shall,in consideration of economic and social development factors, prescribe preferences and or reservations in public procurement and asset disposal.
• (3) The preferences and reservations referred to in subsection (2) shall-

4. (a) be non-discriminatory in respect of the targeted groups; 5. (b) allow competition amongst the eligible persons;and 6. (c)bemonitored and evaluated by the Authority. 7. (4) For the purpose of protecting and ensuring the advancement of persons, categories of persons or groups previously disadvantaged by unfair competition or discrimination,reservations,preferences and shall applyto-

• (a) candidates such as disadvantaged groups;
• (b) micro,small and medium enterprises;
• (c)works,services and goods,or any combination thereof;
• (d)identified regions;and
• (e) such other categories asmay be prescribed
• (5) An accounting officer of a procuring entity shall,when processing procurement,reserve a prescribed percentage of its procurement budget, which shall not be less than thirty per cent,to the disadvantaged group and comply with the provisions of this Act and the regulations in respect of preferences and reservations.
• (6) To qualify for a specific preference or reservation,a candidate shall provide evidence ofeligibility asprescribed.
• (7) The Authority shall maintain an up-to-date register of contractors
• in works,goods and services,or any combination thereof,in order to be cognizant at all timesof theworkload andperformancerecord.
• (8) In applying the preferences and reservations under this section-
• (a) exclusive preferences shall be given to citizens of Kenya where
• (i) the funding is 100% from the national government or county government or a Kenyan body;and
• (ii) the amounts are below theprescribed threshold;
• (ii) the prescribed threshold for exclusive preference shall be above five hundred million shillings;

(b) a prescribed margin of preference shall be given

• (i) in the evaluation of tenders to candidates offering goods manufactured,assembled,mined,extractedor grown in Kenya:or
• (ii) works, goods and services where a preference may be applied depending on the percentage of shareholding of the locals on a graduating scale as prescribed.
• (9) For the purpose of ensuring sustainable promotion of local industry,a procuring entity shall have in its tender documents a mandatory requirement aspreliminary evaluation criteria for all foreign tenderers participating in international tenders to source at least forty percent of their supplies from citizen contractors prior to submitting a tender.
• (10) Despite subsection (2)or any other provisions of this Act,every procuring entity shall ensure that at least thirty percent of its procurement

value in every financial year is allocated to the youth,women and

persons with disability.

• (11)Every procuring entity shall ensure that all money paid out to an enterprise owned by youth,women or persons with disability is paid into an account where the mandatory signatory is a youth,woman or a person with disability.
• (12) The procuring entities at the national and county level shall
• make a report after every six months to the Authority.
• (13) A report under subsection(12) shall-
• (a) certify compliance with the provisions of this section; and
• (b) provide data disaggregated to indicate the number of youth, women and persons with disability whose goods and services have beenprocured by theprocuring entity.
• (14) The Authority shall make a report to Parliament after every six months for consideration by the relevant committee responsible for equalization of opportunities for youth, women and persons with disability,which report shall contain details of the procuring entities and
• how they have complied with the provisions of this section.
• (15) The Cabinet Secretary shall prescribe the preferences that shall facilitate the attainment of the quota specified in subsection (10) in order for the State to achieve the objectives of Articles 55 and 227(2) of the
• Constitution.
• (16) The preferencesreferred to in subsection(15) shall-
• (a) be prescribed within ninety days after commencement of this Act;
• (b) be subject to such conditions as the Cabinet Secretary may specify therein but such conditions shall not pose any
• unnecessary impediment to the youth from participating in public procurement.
• (17) The National Treasury shall operationalize a preference and reservations secretariat to be responsible for the implementation of the preferences and reservations under this Act which shall be responsible for--
• (a) registration, prequalification and certification of the persons, categories of persons or groups asprovided for in under Part Xll;
• (b) training and capacity building of the above target groups;
• (c)providing technical and advisory assistance to procuring entities in the implementation of the preferences and reservationsunder this Act;and

• monitoring and evaluating the implementation of the
• (P) preferences and reservations under this Act.
• (18) The National Treasury shall provide adequate staff and resources for the operations of the secretariat.

Section175ofCap.412Cwhichit isproposed toamend-

175.Right to judicial review to procurement

• (1) A person aggrieved by a decision made by the Review Board may

2. seekjudicial reviewby theHigh Courtwithin fourteen daysfrom the date of the Review Board's decision, failure to which the decision of the ReviewBoard shall be final and binding toboth parties.

• (2) The application for a judicial review shall be accepted only after

4. the aggrieved party pays a percentage of the contract value as security fee as shall be prescribed in Regulations.

• (3) The High Court shall determine the judicial review application withinforty-five days after such application.
• (4) A person aggrieved by the decision of the High Court may appeal to the Court of Appeal within seven daysofsuch decision and the Court of Appeal shall make a decision within forty-five days which decision shall

7. be final.

• (5) If either the High Court or the Court of Appeal fails to make a decision within the prescribed timeline under subsection (3) or (4), the decision of the Review Board shall be final and binding to all parties.

9. (6) A party to the reviewwhich disobeys the decision of the Review Board or the High Court or the Court of Appeal shall be in breach of this 10. Board or theHigh Court or the Court of Appeal shall benull and void.

• (7) Where a decision of the Review Board has been quashed, the

12. High Court shall not impose costs on either party.

Section 177 of Cap. 412C which it is proposed to amend

177.General penalty and sanctions

A person convicted of an offence under this Act for which no penalty

isprovided shall be liable uponconviction

• (a) if the person is a natural person, to a fine not exceeding four million shillings or to imprisonment for a term not exceeding ten
• years or to both;
• (b) if the person is a body corporate, to a fine not exceeding ten million shillings.