A Bill for an Act of Parliament to amend the Public Procurement and Asset Disposal Act and for connected purposes
| CLAUSE | CONTENTS OF THE CLAUSE | OUR COMMENTS |
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| Clause 2 Amendment of section 2 of Cap,412C. | The Public Procurement and Asset Disposal Act, in this Act referred to as the “principal Act”, is amended- (a) in the definition of “asset” by inserting the words "or virtual or digital assets" immediately after "proprietary rights"; | The inclusion of virtual and digital assets aligns procurement laws with technological advancements by recognising emerging financial instruments such as cryptocurrencies, non-fungible tokens (NFTs), and digital intellectual property. This ensures modernisation and adaptability of public procurement regulations to the evolving nature of commerce. |
| (b) by inserting the following new definitions in their proper alphabetical sequence- | ||
| "debarment" means the exclusion of a person or a firm from entering into a public procurement contract as a supplier, contractor or service provider; | The proposed definition provides a statutory anchor for the exclusion of entities from public procurement due to misconduct, enhancing regulatory certainty and enforcement consistency, particularly in alignment with Section 41 which provides grounds for debarment. | |
| "foreign firm" means a firm whose shareholding is more than thirty percent owned or is wholly owned by a non-Kenyan and duly incorporated in or outside Kenya; | The new definition establishes criteria for distinguishing between local and foreign firms based on shareholding. This is intended to enforce preference policies favouring local companies in procurement processes. |
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| "foreign funded procurement" means acquisition of goods, works and services by the government of Kenya which are wholly or partly funded by foreign loans or grants pursuant to a bilateral or multilateral treaty; | The definition provides clarity procurement processes for projects financed through foreign loans or grants and would ensure compliance with international agreements while maintaining domestic regulatory oversight. | |
| "investigative agency" includes the National Police Service, Ethics and Anti-Corruption Commission, Kenya revenue Authority, Anti-Counterfeit Agency or any other government agency mandated with the role of investigation under any written law; | The definition is intended to provide clarity on the specific agencies authorised to investigate procurement irregularities thereby strengthening oversight and enforcement. | |
| "joint venture procurement" means a procurement that is jointly undertaken by a grouping of two or more persons; | The proposed definition provides a framework for procurement by multiple agencies working together thereby encouraging collaboration while maintaining accountability. | |
| Cap 486 | "local firm" means a company incorporated in Kenya under the Companies Act or any other written law whose shareholding is wholly owned by a Kenyan citizen; and | The definition would provide clarity by defining exactly what constitutes a local firm and this would support government initiatives for supporting preference policies under the Act. |
| "minor deviation" means – "minor deviation" means – (a) matter of form and not of substance; or (b) an immaterial defect in a bid or variation of a bid from the exact requirements of the invitation that can be corrected or waived without being prejudicial to other tenderers; Provided that the defect or variation does not affect the price, quantity, quality or delivery or the defect or variation is negligible when contrasted with the total cost or scope of the supplies or services being acquired. | The definition introduces flexibility in bid evaluations, ensuring that minor technical errors do not result in unnecessary disqualifications. This promotes fairness and efficiency in procurement by allowing correction of immaterial variances that do not alter price, quality, or delivery terms. |
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| Clause 3 Amendment of section 4 of Cap,412C. | Section 4 of the Principal Act is amended by inserting the following new subsection immediately after subsection (3)- "(4) For the avoidance of doubt, except where a bilateral or multilateral agreement between the Government of Kenya and any other foreign government, agency, entity or multilateral agency provides for use of foreign or international financing procurement procedures and guidelines, this Act shall apply to foreign funded procurement for goods, works and services by Government of Kenya." | The proposed amendment ensures transparency and regulatory oversight by subjecting foreign-funded procurements to domestic procurement laws, thereby mitigating loopholes that could allow such projects to circumvent national regulations. However, it may create conflicts with donor-imposed conditions, potentially affecting aid effectiveness and foreign investment. We recommend the creation of a harmonised legal framework to balance national procurement priorities with international obligation thereby preventing regulatory misalignment that could deter funding or project implementation. |
| Clause 4 Amendment of section 9 of Cap,412C. | Section 9 of the principal Act is amended in subsection (1) by inserting the following new paragraph immediately after paragraph (l)- "(la) monitor and evaluate the transfer of technology, knowledge and skill plans as provided for under this Act and provide annual public reports;" | The proposed amendment reinforces regulatory oversight by mandating the Authority to evaluate and publicly report on technology and skills transfer, thereby enhancing accountability, fostering local capacity development, and aligning procurement with national industrialisation objectives. However, the provision lacks specificity on enforcement mechanisms, compliance thresholds, and sanctions for non-adherence, which may diminish its practical effectiveness. In order to safeguard policy objectives, the there should be clear regulatory obligations, measurable performance benchmarks, and a structured enforcement framework to ensure effective implementation and accountability. |
| Clause 5 Amendment of section 10 of Cap,412C. | Section 10 (1) of the principal Act is amended by deleting paragraph (b) and substituting therefor the following new paragraph- "(b) three members who shall be appointed by the Cabinet Secretary after nomination, through a fair process by- (a) the Institute of Certified Public Accountants of Kenya; (b) the Kenya Institute of Supplies Management; and (c) the Law Society of Kenya." | The inclusion of legal expertise on the Board enhances regulatory oversight and strengthens adherence to procurement laws. However, the expansion of the Board should be accompanied by mechanisms to prevent administrative inefficiencies and ensure a balanced representation of interests. |
| Clause 6 Amendment of section 33 of Cap,412C. | Section 33 of the principal Act is amended in subsection (2) by inserting the following new paragraph immediately after paragraph (g)- "(ga) ensure that goods and services manufactured in the respective county are prioritized in the procurement process;" | The proposed amendment reinforces local content requirements by mandating counties to prioritise domestically manufactured goods and services, which would foster industrial growth, creation of employment, and economic self-sufficiency at the county level. Although this would strengthen local supply chains and enhance SME participation in public contracts, it may inadvertently restrict market access for foreign entities, potentially raising procurement costs and affecting competition. We recommend the establishment of a structured implementation framework to ensure regulatory coherence, alignment with trade obligations, and a balanced approach that safeguards economic protection while upholding procurement efficiency and fair competition. |
| Clause 7 Amendment of section 35 of Cap,412C. | The principal Act is amended in section 35 by inserting the following new subsection immediately after subsection 3- "(4) An act that constitutes an offence under this Act shall be referred to an investigative agency for its action by the Authority, a public institution, or any other person." | The proposed amendment strengthens enforcement by mandating the referral of procurement violations to investigative agencies, thereby enhancing accountability and deterring malpractice. Formalising this obligation, closes potential enforcement gaps and reinforces procurement integrity. However, the absence of clear coordination mechanisms among agencies may result in jurisdictional conflicts, duplicative investigations, or procedural inefficiencies. It is therefore necessary to create safeguards to prevent delays or potential misuse. |
| Clause 8 Amendment of section 40 of Cap,412C. | The principal Act is amended by deleting section 40. | This amendment effectively removes the restriction on investigations where an issue is or has been under review by the Review Board. It broadens the investigative mandate, allowing inquiries to proceed regardless of parallel or prior proceedings before the Review Board. While this change may enhance oversight and accountability by preventing potential gaps in scrutiny, it also raises concerns about overlapping jurisdiction, potential conflicts, and procedural inefficiencies. Clear guidelines may be necessary to ensure procedural fairness and avoid duplicative or conflicting determinations. |
| Clause 9 Amendment of section 41 of Cap,412C. | The principal Act is amended in section 41- (a) by deleting subsection (4) and substituting therefor the following new subsection – "(4) A debarment under this section shall be for a specified period of time of not less than three years and not exceeding six years." (b) by inserting the following new subsection immediately after subsection (4)- “(4A) A person or a firm debarred by an international agency recognized by Kenya shall be deemed to have been debarred in Kenya as if the debarment procedures and proceedings were conducted in Kenya." | Standardising debarment periods enhances fairness and predictability in procurement regulations. However, automatic recognition of foreign debarments may raise due process concerns, as affected firms may not have been accorded the right to challenge such decisions under Kenya’s legal framework. |
| Clause 10 Amendment of section 44 of Cap,412C. | Section 44 of the principal Act is amended in subsection (2) by inserting the following new paragraphs immediately after paragraph (h)- "(ha) ensure that locally produced products or services are prioritized in the procurement and asset disposal process; (hb) ensure, where applicable, technology, knowledge and skills transfer plans from foreign firms are prioritized in the procurement and asset disposal process;" | The proposed amendment imposes a duty on accounting officers of public entities to prioritise locally produced goods and services and ensure that technology, knowledge, and skills transfer from foreign firms is embedded in procurement and asset disposal. While this aligns with industrialisation and local capacity-building objectives, it introduces additional compliance burdens on foreign entities, potentially limiting competitiveness unless they integrate local content strategies. Consequently, foreign firms may need to restructure operations, establish local partnerships, or incorporate technology transfer mechanisms to remain eligible and competitive in public procurement. |
| Clause 11 Amendment of section 53 of Cap,412C. | Section 53 of the principal Act is amended- (a) by inserting the following new subsections immediately after subsection (6)- "(6A) Any procurement of up to one billion shillings shall be awarded to a local firm. (6B) A foreign firm shall be eligible for procurement of contracts of more than one billion shillings where the foreign firm has entered into joint venture procurement with a local firm for not less than thirty percent of the value of the procurement. " (b) by inserting the following new subsections immediately after subsection (13)- "(14) A person who registers a company on behalf of a foreigner exhibiting unfair competition and seeks to benefit from the procurement under this section commits an offence and shall be liable, upon conviction, to a fine not exceeding five million shillings, or to a term of imprisonment not exceeding three years, or to both. (15) A foreigner exhibiting unfair competition who registers a company by misrepresenting himself or herself as being Kenyan and seeks to benefit from procurement under this section commits an offense and shall be liable, upon conviction, to a fine not exceeding five million shillings, or to a term of imprisonment not exceeding five years, or to both." | The proposed amendment strengthens local enterprise participation by reserving contracts below KES 1 billion for local firms and mandating foreign firms to form joint ventures for higher-value procurements, thereby promoting skills transfer and economic growth. The restrictions may, however, deter foreign investment, reduce competition, and inflate procurement costs, while the joint venture requirement could encourage nominal partnerships that fail to achieve substantive capacity building. We recommend the creation of a clear implementation framework to balance local content objectives with market competitiveness and prevent regulatory circumvention. |
| Clause 12 Amendment of section 70 of Cap,412C. | Section 70 of the principal Act is amended by inserting the following new subsection immediately after subsection (6)- "(6A) Where a procurement is of a value exceeding one billion shillings, in addition to the requirements set out in subsection (6), a procuring entity shall set out specific goods, works and services to be undertaken by a local firm under joint venture procurement." | This provision intends to strengthen participation by local entities in procurement, promote technology transfer, and enhance local capacity building. The lack of clear selection criteria and implementation guidelines could, however, lead to superficial compliance, where local firms are included merely to satisfy formal requirements without meaningful participation. In order to ensure effective enforcement and equitable market access, the amendment should incorporate transparent monitoring mechanisms and define minimum thresholds for local involvement to prevent tokenistic partnerships. |
| Clause 13 Amendment of section 81 of Cap,412C. | The principal Act is amended in section 81 by deleting subsection (2) and substituting therefor the following new subsection- "(2) A clarification shall not change the terms of the tender or add any new document or information." | The proposed amendment reinforces procedural certainty in tender evaluation by categorically prohibiting the introduction of new documents or information during clarification. This is intended to safeguard fairness and transparency in procurement. |
| Clause 14 Amendment of section 83 of Cap,412C. | The principal Act is amended in section 83 by deleting subsection (2) and substituting therefore the following new subsection- "(2) The conduct of due diligence under subsection (1) includes but is not limited to obtaining confidential references from persons with whom the tenderer has had prior engagement, visiting contractor's offices, inspecting of plant, equipment and completed works, in addition to confirming the validity of documents presented.” | The amendment intends to expand the due diligence framework by requiring rigorous verification measures, which include physical inspections and document authentication to enhance transparency and integrity in procurement. These stricter requirements may, however, raise compliance costs and create administrative challenges particularly for foreign entities, that may struggle with logistical hurdles in coordinating on-site assessments. While this provision would strengthen accountability in tender evaluation, it also carries the risk of prolonging procurement timelines, making it crucial to implement measures that balance oversight with efficiency. |
| Clause 15 Amendment of section 86 of Cap,412C. | Section 86 of the principal Act is amended by inserting the following new subsection immediately after subsection (2)- "(3) A successful tenderer who is a citizen contractor, shall not subcontract a foreign company unless the knowledge, skill, good or service is not available in the country." | The proposed amendment imposes a restriction on citizen contractors, preventing them from subcontracting foreign companies unless the required knowledge, skill, goods, or services are unavailable locally. This is intended to prioritise domestic capacity development and reinforce local industry growth and knowledge transfer. It may however limit opportunities for foreign entities to participate in subcontracting arrangements, potentially affecting their market access and collaboration with local contractors. A clear and objective assessment framework is necessary to prevent unjustified exclusions and ensure competitive procurement outcomes. |
| Clause 16 Amendment of section 89 of Cap,412C. | Section 89 of the principal Act is amended by- (a) renumbering the existing provision as subsection (1); (b) inserting the following new subsection immediately after subsection (1)- "(2) Where a foreign tenderer participates in the competition for procurement, the respective procuring entity shall obtain an advisory from the Attorney General on the propriety of the funding of the foreign tenderer.” | The proposed amendment introduces an additional requirement for procuring entities to seek an advisory from the Attorney General regarding the propriety of the funding of foreign tenderers, thereby strengthening regulatory scrutiny However, the absence of clear procedural timelines and defined criteria for such advisories may prolong procurement processes, create legal uncertainty, and inadvertently deter foreign participation, potentially impacting competition. To mitigate the risk of discretionary barriers, the provision should incorporate objective parameters and procedural safeguards to ensure predictability and fairness in implementation. |
| Clause 17 Amendment of section 135 of Cap,412C. | Section 135 of the principal Act is amended in subsection (6) by inserting the following new paragraph immediately after paragraph (g)- "(ga) transfer of skills and technology plan, where applicable;" | The proposed amendment seeks to enhance capacity building and local industry development by requiring a transfer of skills and technology plan, where applicable, therefore, expanding the mandatory contractual obligations in procurement. On the other hand, it may impose additional compliance burdens on procuring entities, especially in specialised or technology-intensive sectors. The amendment could also affect contract structuring and cost considerations, where suppliers need to allocate resources for training, technology transfer, and knowledge-sharing initiatives. We recommend the implementation of clear guidelines on applicability, enforcement in order to ensure practical implementation. Additionally, measurable outcomes should be established to create a balance between development objectives and procurement efficiency. |
| Clause 18 Amendment of section 136 of Cap,412C. | The principal Act is amended in section 136 by inserting the following new subsections immediately after subsection (1)- "(1A) Upon completion of an evaluation and the successful tenderer is established, the accounting officer shall notify all the other tenderers of the award in accordance with section 87 of this Act. (1B) Where a successful tenderer declines the contract, the accounting officer may- (a) issue the letter and notification of award to the next lowest evaluated tenderer; and (b) give a notice in writing to all other persons submitting tenders of the notification of the award. (1 C) A person aggrieved by the decision made by the accounting officer under subsection (1B) may seek administrative review of that decision by the Review Board within fourteen days of notification of award." | The amendment improves transparency by ensuring all tenderers are notified of the award and have the right to seek administrative review, if aggrieved. This would work to strengthen accountability in procurement decisions. Granting the accounting officer discretion to award the contract to the next lowest evaluated tenderer without requiring a re-evaluation may, however, compromise competitiveness and value for money, particularly where significant quality or pricing variations exist between bidders. To mitigate the risks of arbitrary decision-making, the provision should establish clear criteria for determining when an award may be reassigned. |
| Clause 19 Amendment of section 139 of Cap,412C. | Section 139 of the principal Act is amended 10 subsection (4) by- (a) inserting the words "and works" immediately after the words "for goods" appearing in paragraph (d); and (b) deleting the word "professional" appearing in paragraph (e) | The proposed amendment harmonises contract variation limits by extending the 25% cumulative price variation cap to both goods and works, which would ensure uniformity in procurement cost controls. The removal of the term "professional" broadens the scope of regulated service variations, potentially enhancing budgetary discipline but also restricting flexibility in adjusting service-based contracts, particularly where specialised expertise is required. While these amendments strengthen cost predictability and fiscal accountability, they may also constrain procuring entities in responding to unforeseen project complexities, necessitating clear implementation guidelines to balance rigidity with operational efficiency. |
| Clause 20 Insertion of new section 139A into Cap, 412C | The principal Act is amended by inserting the following new section immediately after section 139- 139A. A procuring entity shall make prompt and timely payments to a contractor who satisfactorily performs the contractual obligations as stipulated in the procurement contract. | The proposed amendment mandates prompt and timely payments to contractors who fulfill their contractual obligations. This change enhances payment certainty for these entities and reduces financial risks for contractors, thereby improving the business environment. The lack of specific timelines or enforcement mechanisms may, however, create ambiguity in implementation. |
| Clause 21 Amendment of section 149 of Cap,412C. | Section 149 of the principal Act is amended by inserting new subsections- "(3) The accounting officer shall ensure that priority is given to citizen contractors in sub-contracting of tenders that have been allocated to citizen contractors. (4) Where it is deemed necessary to subcontract a tender to a foreign contractor- (a) the accounting officer shall cause a report to be prepared detailing reasons for the need to subcontract to a foreign contractor; and (b) the accounting officer shall ensure that a percentage of the margin preference is applied as shall be prescribed in the Regulations." | The proposed amendment strengthens preference for citizen contractors in subcontracting while imposing additional reporting and compliance requirements when engaging foreign subcontractors. Although this is advantageous for local entities, foreign entities may face increased scrutiny and reduced competitiveness in subcontracting arrangements. |
| Clause 22 Amendment of section 150 of Cap,412C. | Section 150 of the principal Act is amended by inserting the following new subsections immediately after subsection (3)- "(4) An accounting officer or his or her appointed representative who contravenes subsection (1), commits an offence. (5) A head of the procurement function or his or her appointed representative who contravenes subsection (2), commits an offence." | The amendment introduces criminal liability for accounting officers and heads of procurement who fail to ensure that goods, works, and services meet the required quality and quantity standards. This will increase compliance risks for public sector procurement and could, as a result, deter entities from bidding on contracts due to concerns about strict enforcement and potential legal exposure. Entities will have to assess whether these changes impact their contractual obligations and risk management strategies. |
| Clause 23 Amendment of section 155 of Cap,412C. | Section 155 of the principal Act is amended in subsection (3), by inserting the following new paragraph immediately after paragraph (a)- "(aa) locally available skilled and unskilled labour;" | The proposed amendment broadens the preferential procurement framework by mandating the use of locally available skilled and unskilled labour, fostering domestic employment and economic empowerment. It may, however, impose additional compliance burdens on foreign entities, necessitating local hiring obligations that could escalate operational costs and restrict workforce flexibility. A balanced implementation framework is essential to promote local participation while ensuring procurement efficiency and competitiveness. |
| Clause 24 Amendment of section 157 of Cap,412C. | Section 157 of the principal Act is amended – (a) in subsection (8)(a) by deleting subparagraph (iii) and substituting therefore the following new subparagraph- "(iii) the prescribed threshold for exclusive preference shall be above one billion shillings;" (b) by deleting subsection (9) and substituting therefor the following new subsection- (9) For the purpose of ensuring sustainable promotion of local industries- (a) a procuring entity shall have in its tender documents a mandatory requirement as a preliminary evaluation criteria for all foreign tenderers participating in international tenders to source at least forty percent of their supplies from citizen contractors prior to submitting a tender; (b) a procuring entity shall procure forty per cent of all its goods and services from a local manufacturer or local service provider; (c) a procuring entity shall, on a quarterly basis, report to the Cabinet Secretary on its compliance with paragraph (b); and (d) the Cabinet Secretary may publish in the Gazette a Preferential Procurement Master Roll specifying the locally manufactured goods that shall be procured locally by every procurement entity. | The amendment raises the exclusive preference threshold from KES 500 million to KES 1 billion, thereby narrowing the procurement space available to foreign entities for contracts below this threshold. Additionally, it imposes stringent local content requirements, compelling procuring entities to source at least 40% of goods and services from local manufacturers and obligating foreign tenderers to subcontract a similar percentage to citizen contractors. While these measures promote domestic industrial growth and enhance local enterprise participation, they may restrict competition, increase procurement costs, and pose compliance burdens for foreign firms, particularly in sectors where local supply chains remain underdeveloped. |
| Clause 25 Amendment of section 175 of Cap,412C. Cap 21 | The principal Act is amended in section 175- (a) by deleting subsection (3) and substituting therefore the following new subsection- "(3) The High Court shall determine the judicial review application in accordance with the Civil Procedure Act." (b) by deleting subsection (4) and substituting therefore the following new subsection- "(4) Appeals from the decision of the High Court shall be made in accordance with the Court of Appeal (Organization and Administration) Act." (c) by deleting subsection (5). | The proposed amendment removes the strict 45-day timeline for the High Court and Court of Appeal to determine judicial review applications and appeals, making them subject to broader procedural laws. |
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| Clause 26 Amendment of section 176 of Cap,412C. | Section 176 of the principal Act is amended- (a) in subsection (1) by inserting the following new paragraph immediately after paragraph (e)- "(ea) submit substandard quality of works, goods or services contrary to the contract specifications, terms or conditions at the time of inspection;" and (b) by inserting the following new subsection immediately after subsection (2) – "(2A) A person who certifies or delivers substandard goods or works that are incomplete, non-existent, or whose quality is below the specifications contained in the contract commits an offence." | The amendment expands the scope of procurement offences to explicitly criminalise the submission and certification of substandard goods, works, or services that do not meet contractual specifications. This would strengthen accountability in procurement and may increase compliance risks for entities supplying goods or services, as they could face legal consequences if their deliveries fail to meet agreed standards. Contractors should ensure strict quality control to avoid potential fines, contract voidance, or debarment. |
| Clause 27 Repeal and replacement of section 177 of Cap,412C. | The principal Act is amended by repealing section 177 and replacing it with the following new section General penalty and sanctions. 177. (1) A person convicted of an offence under this Act for which no penalty is provided shall be liable upon conviction to- (a) if the person is a natural person- (i) a fine not exceeding one million shillings, or to imprisonment for a term of not exceeding ten years, or to both; and (ii) an additional mandatory fine if, as a result of the conduct that constituted the offence, the person received a quantifiable benefit or any other person suffered a quantifiable loss. (b) if the person is a body corporate, to a fine not less than ten million shillings in addition to the mandatory fine provided for under subsection (I) (a) (ii). (2) The mandatory fine referred to in subsection (1)(a) (ii) shall be determined as follows- (a) the mandatory fine shall be equal to two times the amount of the benefit or loss described in subsection (l)(a) (ii); (b) if the conduct that constituted the offence resulted in both a benefit and loss described in subsection (1)(a)(ii), the mandatory fine shall be equal to two times the sum of the amount of the benefit and the amount of the loss. | The amendment introduces a mandatory fine for offences where a quantifiable benefit is gained or a quantifiable loss is suffered, significantly increasing financial liability for both individuals and corporate entities. It also raises the minimum penalty for corporate offenders to at least ten million shillings, making compliance more stringent for foreign entities operating under the Act. This change could impact risk assessments, financial planning, and legal strategies for affected businesses. |