THE ROLE AND PROCEDURE OF ACCOUNTING OFFICER (CEO), TENDER COMMITTEE, PROCUREMENT UNIT, PROCUREMENT COMMITTEE AND EVALUATION COMMITTEE DURING A PROCUREMENT PROCESS BY A STATE CORPORATION

We understand that you require an opinion on the Role and Procedure of Accounting Officer (CEO), Tender Committee, Procurement Unit, Procurement Committee and Evaluation Committee during a procurement process by a State Corporation as governed by the Public Procurement and Disposals Act, Act Number 3 of 2005.

We now advice you as hereunder:

Introduction

Procurement and disposal exercises by public bodies (State Corporations fall under Class A of public bodies as categorized by the Public Procurement Oversight Authority) are governed by the Public Procurement and Disposals Act, Act Number 3 of 2005. The Act stipulates the establishment of various internal bodies by a procuring entity with a view to providing a systematic management of the procurement process in a manner that:

a)       maximize economy and efficiency;

b)       promote competition and ensure that competitors are treated fairly;

c)       promote the integrity and fairness of those procedures;

d)      increase transparency and accountability in those procedures;

e)       increase public confidence in those procedures; and

f)        facilitate the promotion of local industry and economic development.

The Act prescribes the following offices and or bodies to manage the procurement processes within each public body:

1.       Accounting Officer or head of the Procuring Entity;

2.       Tender Committee;

3.       Procurement Unit;

4.       Procurement Committee; and

5.       Evaluation Committee.

1.       THE ACCOUNTING OFFICER OR HEAD OF THE PROCURING ENTITY

The Act provides at Section 27 (1) that a public entity shall ensure that the Act, the regulations and any directions of the Authority are complied with respect to each of its procurements. Further, the Accounting Officer of a public entity has the primary responsibility for ensuring that the public entity fulfills its obligations prescribed above. That being the case, the head of a procuring entity has a huge mandate of ensuring that public procurement law is adhered to at all levels of the procurement process and as such, would be answerable for the same. He must therefore ensure that various bodies working for her knows the law, adheres to the same. Other functions of the accounting officer/CEO include:

a)       Establishing a Procurement Unit staffed to an appropriate level with procurement professionals;

b)       Appointing a Procurement Committee;

c)       Appointing an Inspection and Acceptance Committee;

d)      Signing contracts for the procurement and disposal activities on behalf of the procuring entity for contracts entered into in accordance with the Act and the Regulations;

e)       Ensuring that the procurement plans are prepared.

f)        Ensuring all contracts are complied with;

g)       Issuing as appropriate Administrative Guides to clarify and implement Circulars issued by the Public Procurement Oversight Authority;

h)      Reporting to the Public Procurement Oversight Authority in accordance with directives of the Public Procurement Oversight Authority;

i)        Cooperating fully with any and all investigations launched by the Public Procurement Oversight Authority;

j)         Ensuring that all procurement procedures are properly documented and records and procurement and disposal files maintained in a secure location; and

k)       Performing any other functions provided for in the Act, the Regulations or as may be directed by the Public Procurement Oversight Authority.

2.       TENDER COMMITTEE

Establishment of a Tender Committee is warranted by Section 26 (4) of the Act as read with Regulation 10. Tender committee must consist of not less than five members; and have as its secretary, the procurement professional in charge of the procurement unit.[1]

Functions of the Tender Committee

The functions of the tender committee include to:

(a)     review, verify and ascertain that all procurement and disposal has been undertaken in accordance with the Act, these Regulations and the terms set out in the tender documents;

(b)     approve the selection of the successful tender or proposal;

(c)      award procurement contracts in accordance with thresholds prescribed in First Schedule;

(d)     ensure that funds are available for the procurement under consideration;

(e)      ensure that the procuring entity does not pay in excess of prevailing market prices;

(f)      review and approve aggregation of procurements where proposed;

(g)     review and approve the use of lots where packaging into lots has been proposed;

(h)     review the selection of procurement method and where a procurement method, other than open tender, has been proposed, to ensure that the adoption of the other procurement method is in accordance with the Act , these Regulations and any guidelines stipulated by the Authority;

(i)      approve the list of tenderers in cases of restricted tendering pursuant to regulation 54(3);

(j)      approve the list of persons qualified to submit proposals pursuant to section 80 of the Act;

(k)     approve the list of persons to be given requests for quotations pursuant to regulation 59(2);

(l)      approve negotiations under the Act, these Regulations and as may be stipulated by the Authority;

(m)   approve the amendment of contracts previously awarded by the tender committee, in accordance with the Act and these Regulations;

(n)     review the quarterly reports on quotations that have been awarded by the procurement committee; and

(o)     undertake any other functions and duties as are provided under the Act, these Regulations or as may be stipulated by the Authority.

Approvals by Tender Committees

Regulation 11 (1) stipulates that in considering submissions made by the Procurement Unit or Evaluation Committees, the Tender Committee may:

(a)     approve a submission; or

(b)     reject a submission with reasons; or

(c)     approve a submission, subject to minor clarifications by the procurement unit or evaluation committee.

In any event however, the Tender Committee shall not:

a)       modify any submission with respect to the recommendations for a contract award or in any other respect;

b)       reject any submission without justifiable and objective reasons;

c)       where the tender committee rejects the recommendation of the evaluation committee, the decision shall be reported to the head of the procuring entity or to the accounting officer;

It’s noteworthy that any submission rejected by the Tender Committee may be resubmitted and the Tender Committee shall provide an explanation and a justification for its decision thereof.

Procedure for Tender Committee Meetings

The procedure for tender committee meetings are governed by Regulation 12 of the Act, and are as follows:

(1)     The Accounting Officer or the Head of the Procuring Entity must appoint an Alternate Member for each member of the Tender Committee and only the alternate shall attend any meeting of the tender committee whenever the member is unable to attend.

(2)     The quorum of the Tender Committee must be five members including the chairman.

(3)     Decisions of the Tender Committee are made by consensus and where there is no consensus, the decision made through voting by simple majority and where there is a tie, the chairman has a second or casting vote.

(4)     Where any member of the Tender Committee has a direct or indirect interest in any matter, he or she must declare his or her interest in the matter and must not participate in the deliberations or decision-making process of the committee in relation to that particular matter.

(5)     Members of the tender committee may be paid such honoraria[2] as the procuring entity may determine.

(6)     The tender committee must cause to be prepared minutes of all its meetings and such records must include:

a)       A register of attendance;

b)       Date of the meeting;’

c)       List of all matters considered;

d)      The decisions made for each matter, including any major issues discussed, the reasons for any rejections and any clarifications or minor amendments to which the approval is subject;

e)       A note on the basis of any evaluation made;

f)        Any dissenting opinions among tender committee members; and

g)       Such other records as may be necessary.

(7)     The tender committee may invite independent advisers or members of the procurement unit to explain submissions or provide technical advice, where required.

(8)     To enhance transparency of the procurement process the Procuring Entity must invite in addition to the representative of various departments, at least two observers to attend its meetings in cases where the value of the contract is estimated to be above fifty million shillings.

(9)     At least one of the observers invited under paragraph (8) must come from a duly recognized private sector organization or discipline relevant to the procurement under consideration.

(10) The failure of an invited observer to attend a meeting does not nullify the procurement proceedings.

Considerations in Respect of Observers

The following considerations should be noted in respect of observers:

a)       The anticipated observers to be invited are to be decided on by the Procuring Entity and are expected to be stakeholders without vested interest or conflict of interest in the subject matter of procurement.

b)       The observers may include representatives of such known professional[3] or private sector organizations like Kenya National Chamber of Commerce and Industry, the media, Kenya Association of Manufacturers (KAM) or registered nongovernmental organizations.

c)       The observers invited are expected to attend as invited stakeholders who will be in attendance and will not participate in the deliberations of the Tender Committee.

d)      As stakeholders the Procuring Entity shall not be expected to make any payments to the observers for their attendance unless the internal regulations of the Procuring Entity expressly provides for such payments or fees.

According to Public Procurement Oversight Authority’s General Procurement and Disposals Manual, the observers may prepare reports indicating their observations made on the procurement proceedings conducted by the Tender Committee of the Procuring Entity. The observers have however be informed in good time before the date of the meeting to ensure they can participate, and the Letters of invitation form part of the records to be kept in the file.

The report of the observers will be kept on file but cannot be shared with any other organization, including the observer’s organization, as divulgence of information that would prejudice legitimate commercial interests or inhibit fair competition is considered an offence under section 44 (1) (b) the Public Procurement and Disposal Act 2005. The reports of the observers where made should be copied to the Director General Public Procurement Oversight Authority.

In view of the above, in the event that any member of the Tender Committee is absence for a tender meeting for whatever reason, only the Alternate Member for that committee member should attend to deliberate and or vote in the absence of the principal tender committee member.

3.       PROCUREMENT UNIT

Establishment and Composition

The Procurement Unit is established pursuant to Section 26 (4) as read with regulation 10 of the Act. It must consist of not less than five members; and have as its secretary, the procurement professional in charge of the procurement unit.[4] The Unit must be staffed with procurement professionals whose qualifications have been recognized by the Authority.  A “procurement professional” means a person who:

a)       has professional qualifications in procurement and supply management from a recognized institution;

b)       is engaged in a calling or occupation in which recourse to procurement is directly or indirectly involved and has experience in the practice of procurement; and

c)       is a member of a recognized institute of purchasing and supply.

The head of the Procurement Unit must be a procurement professional who reports directly to the accounting officer or the head of the procuring entity/CEO.

Functions of Procurement Unit

The primary responsibility of the Unit is ensuring that the Procurement Thresholds Matrix specified in Schedule I –of the Regulations is strictly complied with.

Notwithstanding the generality of the above, the functions of the Procurement Unit are:

a)       maintain and update annually standing lists of registered tenderers required by the procuring entity and liaise with the Authority in respect of the Authority’s register of suppliers and procuring agents;

b)       prepare, publish and distribute procurement and disposal opportunities including invitations to tender, pre-qualification documents and invitations for expressions of interest;

c)       co-ordinate the receiving and opening of tender documents;

d)      maintain and safeguard procurement and disposal documents and records in accordance with these Regulations;

e)       submit shortlists and lists of pre-qualified tenderers to the tender committee or procurement committee for approval;

f)        issue procurement and disposal documents to candidates in accordance with the Act and these Regulations;

g)       propose the membership of evaluation committee to the accounting officer for approval;

h)      co-ordinate the evaluation of tenders, quotations and proposals;

i)        prepare and publish notices of award and notices of tender acceptance;

j)         recommend a negotiating team for appointment by the accounting officer where negotiations are allowed by the Act and these Regulations and participate in such negotiations;

k)       prepare and publish notices of award and notices of tender acceptance;

l)        prepare contract documents, in line with the award decision;

m)    prepare and issue rejection and debriefing letters;

n)      prepare contract variations and modifications to documents;

o)       maintain and archive documents and records of the procurement and disposal activities for the required period;

p)      provide information, as required, for any petition or investigation to debar a tenderer or contractor or any investigation under review procedures;

q)       implement the decisions of the procurement, tender and disposal committees, including co-ordinating all activities of these committees;

r)        act as a secretariat to the tender, procurement and disposal committees;

s)       liaise with the Authority and other bodies on matters relating to procurement and disposal;

t)        prepare and submit to the Authority reports required under the Act, these Regulations and guidelines of the Authority;

u)      monitor contract management by user departments to ensure implementation of contracts in accordance with the terms and conditions of the contracts;

v)       report any significant departures from the terms and conditions of the contract to the head of the procuring entity;

w)     recommend the delegation of a procurement or disposal function to another procuring entity by the head of the procuring entity whenever a need arises;

x)       prepare consolidated procurement and disposal plans;

y)       advise the procuring entity on aggregation of procurement to promote economies of scale;

z)       co-ordinate internal monitoring and evaluation of the supply chain function;

aa)   carry out periodic market surveys to inform the placing of orders or adjudication by the relevant award committee;

bb)   conduct periodic and annual stock taking;

cc)    certify the invoices and payment vouchers to suppliers;

dd)  approve extension of the tender validity period;

ee)    verify that the available stock levels warrant initiating a procurement process;

ff)      carry out any other functions or duties as may be provided under the Act or these Regulations and any other functions that might be stipulated by the Authority

4.       PROCUREMENT COMMITTEE

Establishment

Procurement Committees are established by procuring entity pursuant to Section 26 (4) as read with Regulation 13 of the Act.

Functions

The Procurement Committee is responsible for procurements which are below the threshold of the Tender Committee set out in the First Schedule.

Composition

The Procurement Committee is to be composed of six members, namely —

a)       an official delegated by the Head of the Procuring Entity or the Accounting Officer, who serves as the Chairman of the committee;

b)       the Finance Officer or an officer carrying out related functions;

c)       three other members appointed by the Head of the Procuring Entity or the accounting officer.

d)      Secretary to the procurement committee, being an officer appointed by the Head of the Procurement Unit.

Approvals by Procurement Committee

In considering submissions made by the Procurement Unit, the procurement committee may:

a)       approve a submission; or

b)       reject a submission with reasons; or

c)       approve a submission, subject to minor clarifications by the Procurement Unit.

Procedure for Procurement Committee Meetings

The procedure for Procurement Committee meetings are prescribed under Regulation 15, and are as follows:

1)       The quorum for a meeting of the Procurement Committee must be the Chairman and at least two other members.

2)       Where any member is unable to attend a meeting of the Procurement Committee, that member should delegate authority to an appropriate official, who must attend the meeting in his or her place.

3)       Members of the Procurement Committee must ensure that their authority is only delegated to officials with appropriate skills and experience to represent them at a meeting of the procurement committee.

4)       Decisions of the Procurement Committee must be made by consensus and where there is no consensus, the decision must be through voting by simple majority and where there is a tie, the chairman has a second or casting vote.

5)       Where any member of the Procurement Committee has a direct or indirect interest in any matter, he or she must declare his or her interest in the matter and must not participate in the deliberations or decision-making process of the committee in relation to that particular matter.

6)       The Procurement Committee may invite independent advisers or members of the Procurement Unit to explain submissions or provide technical advice, where required.

7)       The Procurement Committee must cause to be prepared minutes of all its meetings and such records shall include:

a)       A register of attendance;

b)       Date of the meeting;’

c)       List of all matters considered;

d)      The decisions made for each matter, including any major issues discussed, the reasons for any rejections and any clarifications or minor amendments to which the approval is subject;

e)       A note on the basis of any evaluation made;

f)        any conflicts of interest declared by members;

g)       Any dissenting opinions among tender committee members; and

h)      Such other records as may be necessary.

Accordingly, unlike in the case of Tender Committees where the CEO must appoint alternate members in advance, where any member is unable to attend a meeting of the Procurement Committee, that member should delegate authority to an appropriate official, who must attend the meeting in his or her place.

EVALUATION COMMITTEES

Establishment

Where a procurement falls within the threshold of the Tender Committee and by extension the threshold matrix prescribed under Schedule 1, the Procuring Entity is required to establish an Evaluation Committee for the purposes of carrying out the technical and financial evaluation of the tenders or proposals.[5] Accordingly, for every contract award made by the Tender Committee there must be an Evaluation Report made by an Evaluation Committee.

An Evaluation Committee so established may comprise of:

(a)     a separate Financial Evaluation Committee and a separate Technical Evaluation Committee; or

(b)     a Combined Financial and Technical Evaluation Committee.

It is important that the Tender Evaluation Committee has the appropriate competence to properly assess the bids and it is crucial that the highest ethical standards be applied in carrying out their duties.

An Evaluation Committee must consist of a Chairman and at least two other members all appointed by the Accounting Officer or the head of the Procuring Entity upon recommendation by the Procurement Unit. In other words, members of the Evaluation Committee are appointed by the CEO but their names must be recommended by the Head of the Procurement Unit, who is also appointed by the CEO. Further, any member of staff can be appointed to be a member of an Evaluation Committee provided the person is capable of performing the work of the Evaluation Committee.

It is important to note that no person can be appointed into an Evaluation Committee if such person is also a member of the Tender Committee of the Procuring Entity. However, an alternate member of the tender committee may be appointed to be a member of an evaluation committee subject to that alternate member not participating in the tender committee meeting in which the subject procurement is to be determined.

Function

The main role of the Tender Evaluation Committee is to select bids based upon technical and financial considerations the best submittal for a particular procurement request.

A Technical Evaluation Committee is responsible for:

a)       the technical evaluation of the tenders or proposals received in strict adherence to the compliance and evaluation criteria set out in the tender documents;

b)       performing the evaluation with all due diligence and prepare and submit its report to the Tender Committee within a period of thirty (30) days after the opening of the tenders[6].

The Technical Evaluation Process is a professional independent assessment of each bid. Accordingly, each member of the Technical Evaluation Committee must evaluate independently from the other members prior to sharing his or her analysis, questions and evaluation including his or her rating with the other members of the Technical Evaluation Committee.

A Financial Evaluation Committee on the other hand is responsible for:

a)       the financial evaluation of the tenders or proposals received in strict adherence to the compliance and evaluation criteria set out in the tender documents or request for proposals.

b)       performing the evaluation with all due diligence and within a period of five (5) days from the time of completion of the technical evaluation[7].

The Evaluation Committee must prepare a report on the analysis of the tenders received, and final ratings assigned to each tender and submit the report to the tender committee through the Secretary to the Evaluation Committee.

The report must include:

a)       minutes of the opening of the tenders or proposals;

b)       the results of the preliminary evaluation, with reasons why any tenders or proposals were rejected;

c)       the scores awarded by each evaluator for each tender or proposal;

d)      a summary of the relative strengths and weaknesses of each tender or proposal;

e)       the total score for each tender or proposal; and

f)        clear recommendation to award the tender to the LOWEST EVALUATED TENDERER or to THE PERSON WHO SUBMITTED THE PROPOSAL WITH THE HIGHEST TOTAL SCORE.

It is noteworthy that where the evaluation is by a Separate Technical Evaluation Committee and a Separate Financial Evaluation report, the Technical Evaluation Report must be given to the Financial Evaluation Committee directly without sending it to the tender committee. The Secretary of the Evaluation Committee would then give to the Tender Committee the Technical Evaluation Report and the Financial Evaluation Report at the same time together with the agenda prepared by the secretary to the tender committee.

On the other hand, where the evaluation is by an Evaluation Committee which is mandated to carry out both technical evaluation and financial evaluation, the evaluation committee must complete its work within thirty five (35) days from the date of opening of tenders.

CONCLUSION

In summary, we would advice that:

1.       Where any member of the Tender Committee is absence for a tender meeting for whatever reason, only the Alternate Member for that committee member should attend to deliberate and or vote in the absence of the principal tender committee member.

2.       No person can be appointed into an Evaluation Committee if such person is also a member of the Tender Committee of the Procuring Entity. However, an alternate member of the tender committee may be appointed to be a member of an evaluation committee subject to that alternate member not participating in the tender committee meeting in which the subject procurement is to be determined.

3.       Unlike the case of Tender Committees where the CEO must appoint alternate members in advance, where any member is unable to attend a meeting of the Procurement Committee, that member should delegate authority to an appropriate official, who must attend the meeting in his or her place. In the event that an principal member of the Procurement Committee is unavailable and didn’t appoint a delegate, the CEO has the right to appoint any member of staff who can serve in the Procurement Committee to fill the vacancy.

CONCLUSION

We trust we have been able to clarify the issues raised in your instructions. We however remain available at any time of your convenience to discuss and advice you further on any issue which may still be outstanding.

You may reach us at ceo@stralexgroup.co.ke or info@stralexgroup.co.ke. You may also call us on +254 715 310 677.

With complements,

For: Strategic Legal Solutions Group Limited

Centre for Public Procurement and Disposals Laws – a participating consultancy in the SLS Group of consultancies

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[1] See Section 26 (5) of Act No 3 of 2005.

[2] A payment given to a professional person for services for which fees are not legally or traditionally required.

[3] For instance, an advocate may be invited where the advocate has no direct or indirect interest in the tender in question.

[4] See Section 26 (5) of Act No 3 of 2005.

[5] See Regulation 16 (1) of the Act.

[6] See Regulation 16 (5) of the Act.

[7] See Regulation 16 (7) of the Act.