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The government is in the process of acquiring a Sh560 million e-procurement system to automate the process and save taxpayers billions lost to procurement fraud.
National Treasury Cabinet Secretary (CS) John Mbadi said he has approved the budget for the end-to-end system that will do away with manual procurement.
The CS said the system should be in place by January and has the potential to save the country billions of shillings lost to procurement fraud.
He said the system will cure a broken procurement system in the country by minimising human interaction during procurement process.
“By automating the procurement process from budgeting to expenditure, we will be able to reduce wastage. If we automate our systems properly, I believe we can save more than Sh100 billion,” said Mr Mbadi.
“We have been dragging our feet for too long. It must come to an end. I have already given the go-ahead because there was no funding for it so that it is fast-tracked,” he added.
CS Mbadi acknowledged that much of the procurement process is still manual, hence the need for an end-to-end system: “If you minimise human interaction with a system, it becomes more efficient. It can easily reduce corruption in our procurement system,” he said.
Last year, the Institute of Economic Affairs (IEA) said the country loses billions of shillings annually to procurement fraud. The report said procurement fraud was a major breeding ground for corruption in the country.
IEA programme officer Noah Wamalwa said such fraud was largely catalysed by the slow and frustrated implementation of the automation process, and deliberate non-compliance by procuring entities.
“For example, the Public Procurement Regulatory Authority’s requirement for procuring entities to publish contract awards and tender notices on the Public Procurement Information Portal (PPIP) has recorded the least progress since 2015,” Mr Wamalwa said.
Current data from the portal shows that only nine percent of the nearly 4,000 procuring entities in the country have so far uploaded their contracts on the portal.
Ninety-nine percent have not uploaded their contracts, representing malicious contracts that undermine efforts to achieve full disclosure of public contracts as provided for in the Public Procurement and Asset Disposal Act.
The report noted that a significant proportion of contracts are still awarded through direct and selective methods, which is a recipe for procurement fraud.
The IEA also highlighted concerns that most procuring entities do not provide information on beneficial owners when uploading their contact details to the PPIP portal.
This is a breach of a requirement that it describes as crucial for the public to know exactly who is being awarded contracts at the expense of taxpayers’ money, in order to promote accountability.
A 2014 report by PriceWaterhouseCoopers faulted Kenya’s procurement processes for not being robust enough to ensure integrity at all levels, including invitation to tender, shortlisting, selection criteria, payment process and quality review.
A 2015 report by the Ethics and Anti-Corruption Commission (EACC) on corruption in public procurement in Kenya revealed that major corruption scandals in the country have revolved around public procurement.
According to the report, billions of shillings are lost in procurement through under-bidding, which takes years to trace and recover.
According to the EACC, the country loses over Sh500 billion every year to corruption.
Then EACC chairperson, Mumo Matemu, said the huge financial flows involved in public procurement made the sector most vulnerable to corruption.
The report recommended the rapid introduction of an e-procurement system to plug some of the loopholes that have been exploited over the years.
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