Ideas & Debate

Public procurement challenges during crisis

covid

Summary

  • The law permits the use of special procurement procedures approved by the National Treasury where exceptional requirements make it impossible, impracticable or uneconomical to comply with the procurement law.
  • The Covid-19 pandemic meets these requirements and a specially permitted procurement procedure appears to be one of the options that could have been urgently developed, so as to meet the demands at the dawn of the pandemic.

At the dawn of the Covid-19 pandemic, government agencies around the world came under pressure to deliver essential goods —particularly those required for health services, in greater quantities and within a shorter timeframe than would have been expected under normal circumstances. To compound matters, procurement supply chains were adversely affected by lockdowns and closure of borders, making it even more difficult to procure the much-needed goods and services.

In a bid to ensure that public procurement continued to be carried out in a credible manner while at the same time meeting the unique and urgent needs of the time, governments and regulatory authorities around the world rushed to pass new laws and issue guidelines and policy notes to guide on conduct of procurement during the crisis. Kenya was not an exception.

Markedly however, the guidelines issued locally focused more on physical distancing measures and other administrative measures to curb the spread of Covid-19, than on actual processes to be adhered to during the crisis.

It would appear that some of the challenges now emerging from the Covid-19 procurements may have been averted or mitigated had more specific guidelines been issued at the dawn of the Covid-19 pandemic.

To begin with, President Uhuru Kenyatta issued an Executive Order on procurement of public goods, works and services in 2018, which exempted procurements arising from the declaration of a national emergency from publication. While one can see the rationale for this exemption, the Covid-19 pandemic has demonstrated the contrary, that even procurements arising from a national emergency should be published if we are to avoid having claims of fraud and misconduct by contracting agencies, suppliers and service providers.

Going on to the existing legal framework, although Kenya’s public procurement law allows government agencies to use direct procurement under specific circumstances, the Covid-19 pandemic is a health emergency like no other and would have been deserving of special guidelines for procurement, as opposed to a blanket adoption of direct procurement as appears to have been the case in the early phase of the pandemic.

The law permits the use of special procurement procedures approved by the National Treasury where exceptional requirements make it impossible, impracticable or uneconomical to comply with the procurement law or where market conditions do not allow the effective application of the procurement law.

The Covid-19 pandemic meets these requirements and a specially permitted procurement procedure appears to be one of the options that could have been urgently developed, so as to meet the demands at the dawn of the pandemic.

Looking at the response from other jurisdictions, the UK for instance issued a Procurement Policy Notice in March containing a raft of measures to be integrated into public procurement in response toithe Covid-19 pandemic.

Some of the measures contained in the UK Procurement Policy Notice that would have been useful in the Kenyan context, include recommendations to contracting authorities to keep written justification for any single sourcing/direct procurement undertaken as well as recommendations on continued achievement of value for money and use of good commercial judgement during any direct award.

Whilst taking cognisance that prices would likely be higher than would be the case under regular market conditions, UK contracting authorities were advised to have any abnormally high pricing approved by the relevant authority. In our case, Kenya’s procurement law requires public entities to only undertake procurements that are within their budget.

Given the extra-ordinary situation that Covid-19 presented, it is unlikely that agencies involved in the procurement of the much-needed essential goods and services had budgeted for these goods and services considering the large numbers that were required. There was therefore need for guidance on how to conduct procurements in such a scenario, noting the limitations in the law.

In addition, as the disruptions in the procurement supply chains were not expected to last forever, guidance should have been provided on contractual mechanisms that would enable procuring entities secure price reductions through the life of contracts whose pricing had been affected by the disruption.

Moving forward, public procurement still has a significant role to play in rebuilding the economy post pandemic.

There is still an opportunity for the regulatory authorities to issue procurement guidelines covering recovery and transition strategies.

These may entail revisiting procurement and public investment plans and making necessary adjustments and reactivating non-essential procurement activities which may have been put on hold during the pandemic.

Beatrice Nyabira is a Partner and Head of the Projects, Energy & Restructuring practice of DLA Piper Africa, IKM Advocates and Cynthia Olotch is a Legal Director within the same team.