The Prerequisites of a Sound Public Procurement System (PILLARS)

A sound public procurement system should emphasize four principles, namely

  • Competition,
  • Publicity,
  • Use of commercial criteria
  • Transparency

The principle of competition

This means that contracts should be awarded by holding a competition between a numbers of contractors to establish which can offer the most favorable terms for delivering government’s requirements. Competition not only ensures that government obtains value for money but is also important in maintaining the integrity of public procurement, “Since it is an effective means of achieving the transparency which prevents abuse of discretion. From an economy perspective, competition ensures that government obtains goods and services that are appropriate to its requirements from contractors with the requisite financial and technical capability on the best possible terms. There is danger, however, that rules established to promote competition in public procurement may be counterproductive. Thus government agencies that purchase complex equipment do not often get what they need. Because of open competition rules, governments are for example forbidden from consulting potential suppliers informally before contracting in order to tell them what they really need. Were governments allowed to do so, it would be easier for the potential suppliers to work with corrupt government officials to rig specifications to produce a contract for a particular supplier. Thus public law values that emphasize transparency and accountability may result in governments not obtaining value for money.

The principle of publicity

This principle complements that of competition by ensuring that suppliers who might be able to win contracts are able to find out about those contracts and put themselves forward. In an ideal setting, public procurement systems should therefore “include obligations for specifications to be drawn up so as not to artificially exclude certain products; rules requiring authorities to reject non-responsive bids (those which do not conform to the specifications or fail to meet other fundamental requirements); and minimum time limits for potential bidders to respond to contracting opportunities.”

Use of commercial criteria

The requirement to use commercial criteria in making procurement Decisions: involves basing decisions on the ability of firms to undertake the contract and consideration of bids on commercial criteria such as price, product and quality. Thus it is often the case that the lowest bidder does not win the contract. Indeed, noncommercial criteria– such as industrial and social policies – are often controlling. Thus governments may limit contract awards to disadvantaged ethnic groups.

The Principal of Transparency

This principle of sound procurement system means that procurement procedures should consist of clear rules and mechanisms for verifying that those rules are followed. An ideal public procurement system should therefore have sufficiently publicized rules of procedure which structure and circumscribe the discretion of procurement entities. Further, it should ensure that the procurement entities’ compliance with the applicable rules can be verified by providing for the publication of the results of contract awards, the keeping of (observing that “when purchasing computer equipment in particular, private firms (in the United States) view the vendor’s advice as crucial to the development of sensible specifications of their own requirements”) detailed records of decisions and the furnishing of reasons to participating firms. It should also have mechanisms for scrutinizing the decisions of procurement entities to ensure that they comply with legal norms. Such mechanisms including subjecting procurement decisions to oversight by regulatory body and providing a quasi-judicial forum to which unsuccessful bidders can obtain the review of procurement decisions.

From the foregoing account of the characteristics of a sound public procurement system, a question arises as to whether and the extent to which the reforms in Kenya have embraced the four principles.

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