Presentation to the 3 rd East Africa Procurement Forum 2010 held at White Sands Hotel, Dar-es-Salaam 29 th to 1 st October, 2010 Historical Highlights Procurement Reforms in Kenya o Aims of the Current Dispensation o Regulators of Public Procurement War on Corruption in Procurement o Causes of Corruption o Effects of Corruption o Strategies Against Corruption o Recent Achievements o Way forward 2 1
HISTORICAL HIGHLIGHTS 1963 69 - Local Purchases determined by individual entities - International Procurement conducted by Crown Agents 1969 78 - Treasury Circulars 1978 2001 - Supplies Manual 2001 07 - Exchequer & Audit (Public Procurement) Regulations 2007-Present - Public Procurement and Disposal Act, 2005 Current constitution 3 A World Bank-sponsored study was launched in 1997 (Country Procurement Assessment Review ) The Review identified the following weaknesses in procurement system:- Reduced effectiveness of the public financial management Government s inability to deliver services efficiently Obscure rules Not based on a sound and transparent legal framework and Did not promote fair competition, thereby rendering it to serious abuse. To forestall theses weaknesses, the Public Procurement Reform Programme was launched on 25 th November, 1998 4 4 2
Public Procurement Regulations were issued in year 2001under the Exchequer and Audit Act. Promulgation of Regulations was a great milestone but could not forestall problems such as: Uncontrolled contract variations Overpricing (buying at inflated prices) Lack of a structured authorization of expenditure levels Lack of fair and transparent competition Inappropriate application of procurement methods 5 5 The Public Procurement & Disposal Act, 2005 was enacted in October, 2005 and operationalised on 1 st January, 2007. The legal dispensation was intended to transform the procurement system by providing procedures for procurement and disposal by pubic entities. 6 6 3
Economy & Efficiency Local Industry & Economic Development Promote Competition Transparency & Accountability Integrity & Fairness 7 4
Public procurement accounts for huge proportion of any government expenditure thus providing the largest single market in any economy The total value of Public Procurement in Kenya is currently estimated to be between 12% to 20% of the GDP. Stiff competition to win public tenders make public procurement prone to corruption by providing conducive environment for corrupt practices Corruption includes offering, giving, receiving or soliciting of anything of value to influence the action of public official 9 Corruption perpetuated by any person who is in a position to take or give bribes, take undue advantage of his position etc to influence the award of tender and implementation of contract. Corruption is effected by: o Asking for or accepting bribes o Offering or granting bribes o Acting or refusing to act o Diverting actions or omitting to take actions Tools used in corruption includes money, valuable goods or gifts, favours, promises, undue advantages etc 10 5
Identify possible causes Identify possible effects Need to identify components of procurement cycle Identify how each component of procurement cycle could be corrupted Who corrupts who and when 11 Purchaser can: Tailored/skewed/vague specifications/tors Non comprehensive/vague specifications making post contract negotiations inevitable Restrict information/release tender documents or information to particular supplier(s) Poor planning leading to urgency/emergency purchases Breach of confidentiality requirement Splitting tenders into smaller lots to circumvent a particular procurement method Unjustifiable use of alternative procurement methods 12 6
Supplier can: Collude to fix/inflate price Interference with evaluation Offer bribes 13 Falsification of quality standards, documentation and certificates of performance Over invoice Failure by Inspection and Acceptance to prepare reports upon inspect of deliveries Bribing contract supervisors Unjustifiable/unapproved contract variations Diversion of goods for personal use 14 7
Non enforcement of law Lack of transparency and accountability Breakdown or erosion of values and norms Weak management systems, procedures and practices Lack of professional integrity Greed Abuse of discretionary power 15 a) Undermines development (funds intended for public utilities diverted to individuals) b) Increased costs of goods, works and services c) Supply of poor quality goods d) Loss of integrity e) Reduced credibility f) Negative corporate image g) Low stakeholders confidence h) Reduced investment i) Stalled projects j) poverty 16 8
Simplify procurement laws and procedures Improve efficiency Demystify procurement by creating awareness e.g. through seminars, publish laws, rules etc. Depersonalize procurement by rotating personnel Increase accountability Disclosure of gifts as contained in the code of regulations Improve ethical standard 17 Disclosure of conflicts of interest Strengthen the bid protest/review mechanism Automation of procurement processes Placing procurement unit in a strategic position in the organization structure 18 9
Depoliticize law enforcement Check powers of investigators to ensure no witch-hunting Protect whistle blowers Punish the guilty 19 Institute linkages by liaising with other anticorruption agencies like Efficiency Monitoring Unit, Public Procurement Oversight Authority and Kenya National Audit (KENAO) Change management Regional cooperation Professional development Partnership Involve non-state actors Benchmarking Inter-linkage with prosecution, investigation and adjudication 20 10
Baseline to ensure progress/establish levels of corruption Create understanding of causes and effects of corruption Publicity Focus on target groups e.g. bidders, politicians, procurement officers 21 Ratified the United Nations Convention Against Corruption in 2003 Have also ratified African Union Convention on Preventing and Combating Corruption and Related Offences Kenya has enacted the following anticorruption legislations to prevent and combat corruption: o Anti-Corruption and Economic Crimes Act, 2003 o Public Officers Ethics Act, 2003 22 11
Government Financial Management Act, 2004 Public Procurement and Disposal Act, 2005 and the Regulations Procurement entrenched in the current constitution (Article 227) Supplies Practitioners Management Act, 2007 Kenya Anti-Corruption Commission entrenched in the current constitution making it firm, independent and permanent 23 A large number of cases handled by KACC are procurement related. For instance according to the KACC annual report (2008/2009): a) Out of the 12 cases taken to Court, 8 were procurement related b) Nine out of 16 cases being investigated by KACC are also procurement related. 24 12
Fifteen pieces of land valued at Kshs. 142.5 million had been recovered by KACC through Civil Court Proceedings Grand Regency Hotel-Kshs. 3b 25 Uncoordinated approach in the implementation of anti-corruption measures Unstructured coordination/linkages amongst anti-corruption agencies Political interference Inadequate investigation leading to acquittal of persons suspected of corruption Inadequate sensitization on corruption Lack of support from international community in tracing and recovery of corruption related proceeds 26 13
Lack of understanding of procurement law by the actors Stoppage of procurement processes midstream 27 Inadequate provisions on disposal of real property Inadequate provision of security related procurements Charges formulated by anti-corruption lead to acquittal 28 14
Code of ethics for procurement professionals Amendment of the procurement act Public education on the corruption and its effects Harmonization of the anti-corruption measures Inclusion of other stakeholders in procurement processes e.g. in evaluation Make users, evaluation and tender committees culpable of their actions 29 Training on public procurement Hiring of procurement experts for investigation 30 15
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