PROCUREMENT PROCESSES PRESENTED DURING THE INDUCTION TRAINING OF

PROCUREMENT PROCESSES PRESENTED DURING THE INDUCTION TRAINING OF PRINCIPALS ON EMERGING ISSUES HELD AT THE GREEN HILLS HOTEL - NYERI ON 10 TH NOVEMBER 2015 PRESENTER; SNR AUDITOR MOEST NELSON M. CHEGE COUNTY SCHOOLS AUDITOR MURANG’A. 10/11/2015 1

Opening quotes We cannot solve our problems with the same thinking we used when we created them- Albert Einstein. Creativity is a key component of success. You cannot solve today’s problem with yesterday’s thinking. There are plenty of ways to get ahead. The first one and so basic is spend less than you earn. The beginning of wisdom is to define. - Aristotle 10/11/2015 2

Procurement is the acquisition of goods, services and works, from outside the school in return for a price. Schools are governed by the government procurement procedures. These procedures find their authority from; Public Procurement & Disposal Act 2005 Public Procurement and Disposal Regulations 2006 Procurement Procedures Manual for Secondary Schools and Colleges(2007) 10/11/2015 3

School Procurement Unit Organization structure. Principal Head of Procurement/ Bursar Procurement Clerk Stores keeper 10/11/2015 4

Methods of procurement 1)Open Tender This is the default method when no special circumstances permit the application of restrictions to the level of competition and when the estimated value is not below the thresholds permitting the application of a restricted competition such as RFQ or Restricted tender for efficiency purposes. International Open Tender National Open Tender. - thresholds Goods- Minimum Kshs 3, 000 Works – Minimum Kshs 3, 000 Services – Minimum Kshs 1, 000 10/11/2015 5

2) Restricted Tendering method This method shall be used only as allowed by the Act and Regulations. The procurement method must be provided for in the procurement plan and approved by the Tender committee. Applicable where there are only a few known bidders and there is no advantage seen in advertising an open tender. Thresholds; where procurement is considered complex Maximum is budget allocation and minimum Kshs 500, 000 Sec 73(2)(a)of the Act Otherwise, the maximum is Kshs 3, 000 and min Kshs 500, 000 The procurement shall be processed through a pre-qualification to determine the pre-qualified bidders who shall participate in the bidding process. 10/11/2015 6

3) Request For Quotations Used for goods, works and services which are readily available in the market and whose costs is below the set thresholds in schedule one of the regulations. The school must have a pre-qualified suppliers list approved by the tender committee. At least three(3) quotations but as many as ten(10) drawn from the list of approved suppliers, while ensuring fair and equal rotation among the persons. RFQ should be prepared in duplicate and given to the supplier. He submits original and retains duplicate. Suppliers shall be given seven-fourteen days to quote Threshold is Kshs 5, 001 -Kshs 500, 000 10/11/2015 7

4) Direct Procurement It is not a preferred method because it is completely devoid of competition and transparency. Where it has to be used, it must be provided for in the procurement plan and approved by the tender committee. Direct procurement of value of Kshs 500, 000 and above shall be reported to PPOA within 14 days after notification of award of contract. Conditions for direct tender When there is only one supplier and no reasonable substitute or alternative for the good, works or services. Where goods procured are urgent and due to this urgency other methods are not practical. (not dilatory conduct or negligence, not foreseeable) 10/11/2015 8

5) Low - value procurement This method is used where the school does not see any benefit accruing to it in terms of time or cost implications by using any other method. The procedure is not used to avoid competition The method is approved by tender committee and is reflected in the annual procurement plan. The purchase is done by the school through direct shopping from a reputable outlet or provider. An original receipt or invoice is obtained to account for the money and item purchased. The threshold is Kshs 5, 000 per item. 10/11/2015 9

6) Request for Proposals This method is used for procurement of services of a predominantly intellectual in nature. It is therefore suitable for procurement of consultancy services. The school should obtain at least three (3) RFPs but not more than seven(7) obtained from a shortlist of selected candidates through expression of interest procedure. 10/11/2015 10

Procurement committee Composition chairman –official delegated by the principal Secretary-finance officer Members-three other members appointed by principal Quorum Chairman and at least two other members. Functions To ensure that the selection of bidders are based on fair competition and in compliance with the legal and regulatory frame work. Review the submission of the procurement unit for a particular procurement requirement. 10/11/2015 11

TENDER OPENING COMMITTEE Sec 60(1) of the Act provides that the accounting officer shall appoint a tender opening committee specifically for the procurement in accordance with the following requirements The committee shall have at least three members and At least one member shall not be directly involved in the evaluation of tenders. FUNCTION Conduct a preliminary check of the received quotations to ensure that they comply with conditions preset in the quotation request form. Prepare list of all tender applications received and opened Prepare List of all qualified applications Prepare List of all disqualified applications 10/11/2015 12

Tender Evaluation committee Composition Chairperson Members – at least two other members All appointed by the principal upon recommendation by the procurement unit Function Carrying out the technical and financial evaluation of the tenders. 10/11/2015 13

Compositioncommittee Tender Chairman- Deputy principal Members – At least six HODs Secretary – Head of procurement unit (stores) Quorum Five members including the chairperson Functions Review and award tenders Approve selection of successful tenders Ensures that the school does not pay in excess of prevailing market prices Review a selected procurement method whenever needs arises Approve bids through open tender for sale of institution’s stores. 10/11/2015 14

Inspection and Acceptance committee Composition Chairperson Members – At least two others appointed by the principal upon recommendation by PU. Functions Inspect & where necessary test the goods and services received to ensure compliance with the terms and specifications of the contract. They accept or reject the delivered goods or works on behalf of the school. Determination of value for money. (Quality, Quantity, Timeliness, Proper documentation/manuals. 10/11/2015 15

TENDERING PROCESS The annual budget- only budgeted items can be procured. Preparation of annual procurement plan – sec 26(3) of the Act and Regulations 20 and 21 makes procurement planning mandatory. It is based on the approved annual budget and should be approved by the BOM. Packaging or aggregation and lotting is necessary while preparing the plan. 10/11/2015 16

Procurement plan Format S/No LOT NAME ITEMS IN LOT UNIT QTY RATE AMOUNT TENDER METHOD DATE OF DELIVERY • Approval of list of potential suppliers by the tender committee. 10/11/2015 17

. Invitation of quotations Receiving quotations- completed quotation request forms should be deposited in the tender box. Those received through the post should also be deposited into the box. Two padlocks are recommended for the tender box and their keys kept by two different officers. Opening of tenders. The date of opening tenders is the date of close of request submission. The tender opening committee and representatives of suppliers open the tender box and a preliminary report is prepared. Evaluation of tenders by the evaluation committee. The weighted method is recommended (price x quantity in the procurement plan/ budget). The committee ranks the suppliers starting with the lowest, second lowest etc 10/11/2015 18

Weighted evaluation technique Assume that the school has received the following quotation for tender category MUG/Veg. /20/2014. Item Quantity Consolata required stores Graham Groceries Jack and Jill stores Mama Mboga stores cabbages 75, 000 kgs 10 20 30 40 Kales 20, 000 kgs 60 50 40 30 Onions 5, 000 kgs 6 5 4 3 15 15 10 5 tomatoes 10, 000 kgs • Who was the lowest tender in this regard? 10/11/2015 19

Weighted Evaluation approach Item Quantity required Consolata stores Graham Groceries Jack and Jill stores Mama Mboga stores Cabbages 75, 000 kgs 750, 000 1, 500, 000 2, 250, 000 3, 000 Kales 20, 000 kgs 1, 200, 000 1, 000 800, 000 600, 000 Onions 5, 000 kgs 30, 000 25, 000 20, 000 15, 000 Tomatoes Totals Kshs 10, 000 kgs 150, 000 2, 130, 000 150, 000 2, 675, 000 100, 000 3, 170, 000 50, 000 3, 665, 000 Has your answer changed? Who is the lowest tender after using the weighted technique? 10/11/2015 20

. Tender award, the tender committee upon the recommendations of the evaluation committee reviews and awards the tenders Appointment of suppliers. The principal appoints the suppliers who qualify in writing while they submit acceptance letters. Regret letters are also issued to those who fail to qualify. Placing orders. This is done using the LPO/LSO or as per contract agreement Inspection and acceptance. - the committee checks the quantity, quality standards, documentation and timeliness of the delivery. The committee may reject or accept the delivery. The committee may invite technical persons for inspection purposes depending on the nature of goods or services being delivered. 10/11/2015 21

VARIATION OF TENDER A supplier may apply for variation of procurement contract terms. This may arise due to change of prevailing market conditions, change of initial plan in case of structural works. Such variations should be occasioned by genuine causes. The variations should be approved or ratified by the tender committee. 10/11/2015 22

THE END If you want to get what everyone is getting, do what everyone is doing. You cannot do things the same way all the time and expect different results. You cannot change anything by seeing things getting done but you change them by beginning to do them. Be ye different! As a man thinketh so is he! 10/11/2015 23