1. Introduction to Public Procurement: Basic Principles and Concepts
Joel Munyori – Senior Procurement Specialist, World Bank

2. Content Public Procurement: Definition
Legal Framework for Public Procurement Contracts
Key Objectives of Public Procurement
Key Principles for Implementing Procurement Objectives
Procurement as a Business Process
Status of Procurement Reforms in East African Countries
General Institutional Set-up of the Procurement Function in the East African Countries
Parliament as an Oversight Institution to Public Procurement
Reforms in the Public Procurement Function

3. Public Procurement: Definition
Public Procurement may be defined as the Government’s activity of purchasing the goods and services which it needs to carry out its functions;
Public Procurement process comprises three key Phases:
Although the three phases are distinct and at times involves different players, they should be regarded as a single cohesive “Cycle” for the process to be successful;
Regulatory rules on public procurement generally focus on the second stage where legal rules and other regulatory measures are important tools of policy;
Procurement Planning
Procurement Process
Contract Management
Objective: (i) Participant is aware of the importance of procurement in the completion of an investment operation; (ii) Participant is aware of the nature of interest of various project stakeholders and the link between these interests and sound procurement.
Instruction:
Divide the room in 3 groups and ask each group to discuss one component. Groups will discuss for 15 min. and then will report back to all.
Prepare in advance 5 cartons mentioning: “Quality”, “Economy”, “Efficiency”, “Transparency”, “Fairness”, “Development of national industries”. Ask the audience to help you identify the stakeholders and their interests, use flipcharts. Then ask participants to stick the cartons under each category of stakeholders.

4. Public Procurement : Definition
Procurement is divided into three broad categories:
Goods; (b) Works; and, (c) Services
A good procurement law should address each of these categories separately since the procurement approach is largely different;
Distinction between Public Procurement and In-house provision:
Public procurement refers to acquisitions of goods, works, and services from entities outside the procurement entity itself; while;
In-house provision of goods, works and services refers to acquisition through the government’s own employees and organization (force account);
Emerging global best practices are such that governments are moving away from in-house provision to outsourcing;
Instructions:
Use the interests of stakeholders to show that this leads to the basic principles of sound procurement.
Explain then that these principles are contradictory by nature, therefore compromise is unavoidable. The objective is to maximize the surface.

5. Legal Framework for Public Procurement Contracts
Government contracts are often subject to the ordinary private law of the state concerned;
In order to make sensible policy decisions, there is need to understand the objectives of public procurement, how they relate to each other, and their relevance to a particular procurement system;
The key objectives of public procurement are:
(1) Value for money
(2) Integrity
(3) Accountability
(4) Equal opportunities and treatment for providers
(5) Fair treatment of all suppliers and service providers
(6) Efficient implementation of industrial, social and environmental objectives in procurement (horizontal policies)
(7) Opening up public markets to international trade; and,
(8) Efficiency in the procurement process

6. Legal Framework for Public Procurement Contracts
Different procurement objectives would result in different approaches and rules that governing it; for example, a system that places great weight on “accountability” is more likely to provide detailed “rule-based” system which also allows close public contract monitoring of the procurement process;
It is however important to mention that the said objectives compete among each other ; rigid rules that emphasize accountability may result in reduced “Value for Money” or “Efficiency” in certain procurement procedures; It is therefore necessary to strike the right balance on the relative importance of each of the objectives in policy formulation;

7. Key Principles for Implementing Procurement Objectives
Transparency
This principle entails; (a) publicity for contract opportunities; (b) publicity for the rules governing each procedure; (c)rule-based decision making; and (d) mechanism for verification and enforcement ;
Competition
To ensure that government obtains; (a) best contract terms; (b) enhance transparency; and (c)regulate the functioning of the international market;
Equal Opportunities and Treatment
Provide all bidders with fair access to (a) bidding opportunities; and (b) similar treatment during and after contract award;

8. Public Procurement as a Business Process
Public Procurement is a function that encompasses both economic and political dimensions; A good procurement system enhances transparency in the management of public resources and encourages firms to have confidence in the process thus attracting the best firms to participate in the process;
It is a major economic activity of the government; in most economies it accounts for 15 percent of the GDP;
It is a significant factor for achieving development objectives of the government; It can be used to provide strategic outcomes;
It is everybody’s business and every citizen must play their part; stake-holder participation should be encouraged;
It is however vulnerable to abuse, wastage, corruption, and most of the time affects government spending; there is therefore need for continuous reforms and improvement so as to bring on board emerging international best practices;

9. Procurement Reforms in East Africa
Kenya
Public Procurement law was enacted in 2007;
The Government is in the process of revising the law to be in tandem with the new Constitution;
Tanzania
The Public Procurement Law was enacted in 2004 and revised in 2011; however, the associated Regulations are not yet finalized;
Drafting of the Procurement Policy is progress;
Uganda
The Public Procurement law was enacted in 2003 and a major overhaul of the law done in 2012;

10. General Institutional Set-up of the Procurement Function in East Africa
The responsibility for the management and regulation of the public procurement function is spread over five institutions:
Procurement Entities: Responsible for conducting and managing the procurement process on a day-to-day basis;
Public Procurement Policy Unit: Formulates procurement policies; employment and deployment of staff; and formulation of capacity development strategies;
Public Procurement Oversight/Regulatory Authority: provides implementation oversight, compliance monitoring and enforcement of the procurement law;
Public Procurement Appeals Board: Adjudicates on appeals not resolved by the regulatory authorities

11. General Institutional Set-up of the Procurement Function in East Africa
Procurement and Supplies Professionals: Responsible for the career development and regulation of procurement and supplies professionals in both the public and private sector;
Supplies Branch (Kenya) and Government Procurement Services Agency (Tanzania): Administration of framework contracts for common user items and services;

12. Parliament as an Oversight Institution to the Procurement Function
Debates and passes the Procurement Bill
This sets the legal and institutional framework, market practices and the integrity of the procurement function; due diligence and thorough scrutiny is therefore required at this stage before enacting the bill into law;
Debates and passes the Fiscal Budgets
Scrutiny of the budget against Annual Workplan Activities; Is the planning stage supported by rational procurement plans? Are the plans linked to the available budget?; Are all the lines of expenditure in the plan necessary? How is the cash flow, is it sufficient?

13. Parliament as an Oversight Institution to the Procurement Function
Debates and passes the Financial Audit Reports
Does the Financial Audit Reports comprehensively capture procurement management issues? What are the audit qualifications? Based on previous audit reports, is there need for integrating procurement reviews with financial audits?
Procurement Audit/Review Reports conducted by the Public Procurement Oversight Authority are submitted to the Minister responsible for Finance; is there need to have these reports submitted to and discussed by Parliament for independent review?
Are the oversight institutions adequately staffed and funded to be able to discharge their responsibilities?

14. Reforms in the Public Procurement Function is Critical
Automation of operations: This would enhance overall operational efficiency, improver reporting and allow structured records management;
E-procurement: This is still at elementary level; embracing e-procurement would enhance transparency, minimize transaction costs, and increase efficiency;
Use of Framework Agreements: used in the procurement of common user items by a central agency; it eliminates duplication of effort, wastage, and reduces costs of goods through economies of scale and enhances overall operational efficiency;

15. Q & A?