Public Procurement and Asset Disposal
Procurement
Public Procurement and Asset Disposal
Syllabus tag: KASNEB CPA | Advanced Level | CA35S2 Advanced Public Financial Management
1. Legal framework
Public procurement in Kenya is governed by the Public Procurement and Asset Disposal Act 2015 (PPADA) and its Regulations 2020. The Public Procurement Regulatory Authority (PPRA) oversees compliance and issues guidance. Procurement is a key interface between the budget and delivery of public services — weak procurement drives cost overruns, delays, and fraud.
2. Procurement methods
Open competitive tendering: the default method for all procurements above a specified threshold. All qualified suppliers are invited to bid; award is to the most advantageous tender (not necessarily the lowest price — value for money).
Restricted tendering: a limited number of pre-selected suppliers are invited. Used where the number of potential suppliers is inherently limited or urgent.
Direct procurement: awarded directly to a specific supplier without competition. Permitted only in exceptional circumstances: extreme urgency, sole source supply, follow-on contracts, defence/security, or standardisation. Must be approved by the Accounting Officer.
Request for quotations: for low-value procurement below specified thresholds.
Design and build: for complex infrastructure projects where the contractor both designs and constructs.
3. Preference and reservation schemes
The PPADA provides for: local content preference (Kenyan firms given a price preference over foreign firms); youth, women, and persons with disabilities (AGPO) reservation scheme — 30% of government procurement to be set aside for these groups (funded by national or county budgets).
4. Threshold values
The PPRA sets threshold values distinguishing between: low value (quotations), medium value (restricted), and high value (open competitive). Different thresholds apply for goods, works, and services. Accounting officers must apply the correct method; non-compliance is irregular expenditure.
5. Asset disposal
Assets that are no longer required must be disposed of in accordance with PPADA. Disposal methods: public auction (transparent, recommended for most assets); tender (for high-value assets); trade-in (replacing old assets with new when procuring); write-off (assets with no salvage value — requires approval). Proceeds from disposal go to the Consolidated Fund (national) or County Revenue Fund.
6. Procurement integrity and fraud
Common procurement irregularities: splitting of contracts to avoid thresholds; conflict of interest (awarding to related parties); collusive tendering (bid-rigging); failure to advertise openly; irregular single-sourcing. The Ethics and Anti-Corruption Commission (EACC) investigates corruption in public procurement. Contracts awarded in breach of PPADA are void.
7. Public-Private Partnerships (PPPs)
PPPs are long-term contractual arrangements between a government entity and a private party for the provision of a public asset or service. The private party finances, constructs, operates, and maintains the asset, recovering costs through user fees or government payments (availability payments). Governed by the PPP Act 2021 in Kenya. Key risk: government contingent liabilities from minimum revenue guarantees or termination payments.