Opportunities to Special Groups in Public Procurement 1 OUTLINE - - PowerPoint PPT Presentation

Opportunities to Special Groups in Public Procurement

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OUTLINE

• Introduction
• Initiatives/Strategies in promoting special groups

access to opportunities in public procurement

• Kenyan case: Gains/milestones; Challenges &

solutions/interventions

• Conclusion

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Introduction

• In any given economy the government is the single

largest buyer

• Public procurement is a budget implementation tool

as well as tool to achieve socio-economic development

• Public procurement therefore is an important strategy

to promote employment, local industries special and disadvantages groups, through targeted initiatives &

• verly economic growth and development
• SMEs are key in driving socio-economic development

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Enhancing access of Special groups to opportunities in the Public Procurement How? By:

• encouraging and supporting the participation of

special groups

• developing specifications/requirements, designs and

technologies within the capacity of special groups contractors/ suppliers.

• increasing and enhancing the capacity of institutions

and special groups through the transfer of technology and expertise

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Enhancing access of Special groups to opportunities in the Public Procurement How? By:

• putting in place an enabling legal framework

addressing identification and registration of the special groups, application of reservations and preferences relating to opportunities set aside to the groups

• Ensuring international firms/ suppliers/ contractors

enter into joint venture with special groups suppliers/contractors

• Ensuring international firms/bidders/contractors

source locally available supplies including labour from special groups where capacity is available .

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Enhancing access of Special groups to opportunities in the Public Procurement How? By:

• Setting aside/reservations/ exclusive preference of

procurement opportunities to special groups

• unbundling contracts into different affordable sized

packages

• Simplifying tendering requirements/documents/

issuance of guidelines to potential bidders

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Enhancing access of Special groups to opportunities in the Public Procurement

How? By:

• reduce cost of tendering and contracting

 exempt special groups from providing tender security/ bid bonds  exempt special groups from providing performance guarantee/provide a ceiling on the amount of gurantee

• Ensure access to finance/credit by special groups

create dedicated funds/ collaborate with banks and financing institutions to support the special groups) LPO/LSO financing Invoice discounting

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Kenya’s Experience: Gains/Milestones in Widening/Enhancing Special Groups Accessing Procurement Opportunities; Challenges and Suggested Solutions

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Kenya has made strides towards supporting access to

• pportunities in public procurement by special groups’

suppliers/contractors

1. Enactment of a conducive legal framework to guide implementation of the preference and reservations in the public procurement targeting special/disadvantaged groups such as the Youth, Women and Persons with Disability to enable them take full advantage .

• In addition, the National Treasury and the Authority have

issued directives to Accounting Officers to guide implementation of Preferences & Reservations.

Kenya’s experience: Gains/ Milestones

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• The National and County Governments have

facilitated identification and registration of the special groups.

• Recognition of the target groups through regulations

and Legal Notices thus empowering them to participate in public procurement.

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Other Gains/Milestones cont’d.

2. Establishment of the Preferences & Reservations Secretariat under the National Treasury responsible for: a) registration, prequalification and certification of the persons, categories of persons or groups b) training & capacity building of the target groups including a manual for submission of responsive bids; c) providing technical & advisory assistance to procuring entities in the implementation of the preferences and reservations d) monitoring and evaluating the implementation of the preferences and reservations under the procurement law

Gains/Milestones cont’d.

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• 3. Reservations

PES are required to reserve 30% of their budgetary allocation to the special groups: youth, women & PWDS.

• 4. Creation of additional employment and income for the

target groups arising from doing business with the governments at national and county level. This has enhanced their livelihoods/welfare including contributing in economic development.

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Gains/Milestones cont’d.

• 5. Elaborate M& E mechanisms of implementation

through reporting and oversight by Parliament

• 6. LPO Financing

PES are required to facilitate financing thro; authenticating their notification of award, LSO,LPO to financial institutions

Gains/Milestones cont’d.

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• 7. Prompt Payment

 Payment shall not delay beyond 30days.  Where there is delay 50% payment will be made with written explanation for delay.

• 8. Invoice discounting

Where there is possibility of delay in payments for works performed, a procuring entity is allowed to facilitate invoice discounting arrangements with a financial institution for the purpose of advancing credit to the affected enterprises

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Gains/Milestones cont’d.

• 9. Unbundling of contracts

PE’S shall unbundle goods , works or services into practicable quantities to ensure maximum participation

• f special/disadvantaged groups.eg lots for goods.
• 10. Exemption from Provision of Tender Security

The youth, women & PWDS do not submit tender security, instead they shall fill in an undertaking to fulfill the conditions of the tendering through tender securing declaration form.

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Gains/Milestones cont’d.

Gains/Milestones cont’d

• Automation of Registration of special groups’

suppliers

• Establishment/Creation of digital villages to widen

access of technology to special groups especially those domiciled in rural areas

• Establishment of Huduma centres across the country-

a dedicated desk to assist special groups’ suppliers

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Gains/Milestones cont’d

• Existence of a dedicated & interactive Tender portal

providing consolidated information on procurement

• pportunities
• Establishment of funds to support the special groups

Youth Enterprise Development Fund Women Fund Uwezo Fund Informal table banking initiatives

• Plans are at advanced stage to merge Youth

Enterprise Development Fund, Women Fund and Uwezo Fund

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• The following set of preferences outlined in the procurement law

creates avenues/opportunities to special groups to benefit from public procurement:  preference for manufactured articles, materials and supplies partially mined or produced in Kenya or where applicable have been assembled in Kenya; or firms where Kenyans are shareholders at 51%.  exclusive preference shall be given to citizens of Kenya where the funding is 100% from the national government or county government or a Kenyan body and the amounts are below the prescribed threshold;  Margin preference for goods manufactured, assembled, mined, extracted or grown in Kenya and also based shareholding  International tenderers must demonstrate that they will source 40% from citizen contractors

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Other Gains/Milestones cont’d.

• Despite the gains realized, the uptake of the

procurement opportunities reserved for the special groups is low (see table next slide). Note that the statistics are only for few procuring entities that filled returns/reports with the Authority as the level of reporting is low.

• A study to identify and assess factors that Influence the

Uptake of 30% Procurement Spend Set Aside for Youth, Women, and People with Disabilities in Kenya to inform action to be taken to enhance uptake is ongoing.

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Other Gains/Milestones cont’d.

Summary of Reservations for the Special Groups (June, 2016 – June 2019)

Reporting Period FY Total Planned Procurement Budget (Kes) Amount Reserved for Disadvantaged Groups (Kes) %

2015/2016 206,666,287,925.00 (USD:2066,662,879) 47,510,361,053.35 (USD:475,103,611) 22.99 2016/2017 203,526,193,984.11 (USD:2,035,261,940) 35,311,660,615 (USD:353,116,606) 17.39 2017/2018 194,840,106,412.77 (USD:1,948,401,064) 45,502,968,613.41 (USD:455,029,686) 23.35 2018/2019 210,044,280,763.06 (USD:2,100,442,808) 46,020,549,183.51 (USD:460,205,492) 22 TOTAL 815,076,869,084.94 (USD:8,150,768,691) 174,345,539,466.02 (USD:1,743,455,395) 21.39

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Summary of Level of Absorption of Reserved Funds for the special Groups (June, 2016 – June 2019) Reporting Period FY Amount Reserved for Disadvantaged Groups (Kes) Amounts Awarded Kes Level of Absorption of Reserved Funds

2015/2016 47,510,361,053.35 (USD:475,103,611) 16,068,980,485.21 (USD:160,689,805) 33.82% 2016/2017 35,311,660,615 (USD:353,116,606) 24,412,160,837.17 (USD:244,121,608) 69.13% 2017/2018 45,502,968,613.41 (USD:455,029,686) 28,463,970,095.65 (USD:284,639,701) 62.55% 2018/2019 46,020,549,183.51 (USD:460,205,492) 22,164,176,673.93 (USD:221,641,767) 48.16% TOTAL 174,345,539,466.02 (USD:1,743,455,395) 91,109,288,091.96 (USD:911,092,881) 52.26%

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Value of procurements awarded to firms owned by special groups (June, 2016 – June, 2019) for PEs that Reported

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Other Gains/Milestones cont’d.

Category Number of Contracts Percent Value of Contracts Awarded (KES) Percent Women 58,953 51% 40,215,466,644.55 (USD:402,154,666) 44% Youth 48,817 42% 44,096,804,585.05 (USD:440,968,045) 48% PWDs 7,282 6% 6,797,016,862.36 (USD:67,970,168) 7% Total 115,052 100% 91,109,288,091.96 (USD:911,092,880) 100%

Challenges Faced By Special Groups’ Suppliers

• Most of the special groups do not get the

information on tender opportunities. Bidders with hearing and/or speech impairments experience challenges in access of information from the PEs

• Financing- Limited access to financing; most of the

Financial Institutions require the borrower to provide collateral to access financial services and hence pose a challenge to the target group to mobilize financial resources for government tenders

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Challenges Cont’d

• High degree of risk aversion within procuring

entities, leading to emphasis on well established, reputable and tested suppliers or one large supplier, which work against special groups’ suppliers

• Demand for unnecessarily high technical & financial

qualification levels/ requirements including access to credit lines

• perceived lack of resources even when the special

groups’ supplier possess requisite capabilities

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Challenges cont’d

• Delays in payments
• Inadequate capacity and non performance by the

special groups’ suppliers

• designing of projects with focus to large

local/foreign bidders

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Challenges cont’d Challenges in use of Technology

• Some special groups’ suppliers are not exposed to the

requirements of online procurement thus affecting their ability to respond to government tenders through the system.

• Inadequate capacity in use of technology by special groups’

suppliers

• Inadequate capacity leads to increased costs of bidding where

supplier use a guide to offer assistance

• Technology inaccessibility due to connectivity challenges

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Solutions and Interventions

• Continuous targeted training to both procuring entities and

special groups’ suppliers

• Fully operationalization of the Preferences & Reservations

Secretariat under the National Treasury responsible for training and capacity building of the above target groups;

• Widen Access to technology through spread of fibre optical

cable connectivity in villages and upgrading of systems (e.g. 4G speed connectivity);

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Solutions and Interventions

• Implement measures to ensure prompt payment e.g.

promissory notes/legal instruments to guarantee payment, enforcement by National Treasury through IFMIS

• Continuous monitoring and compliance enforcement
• Adopt web based reporting platform for use by

procuring entities to ensure real time submission of information and data to facilitate timely monitoring

• n the overall function of the scheme

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Conclusion

• There exist opportunities to special groups in public procurement.

Note successful bidding opportunities for special groups’ suppliers has great potential of enhancement of socio-economic development in our economies.

• However, there is need for deliberate, focused/targeted and

dedicated initiatives and strategies to widen and guarantee access of the existing procurement opportunities by the special groups

• I urge each delegate, with devotion to candidly and openly

discuss this subject during the break out session and the plenary to identify additional feasible strategies that can be used to further create and widen access to opportunities in public procurement by the special groups as well as devise measures and mechanisms to mitigate the challenges that will be identified.

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OPEN DISCUSSION SESSION

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