Members of the public are invited to submit comments on a bill which will protect suppliers to government entities from payment delays. If it passes, the Public Procurement and Asset Disposal Amendment Bill of 2020 will require national and county governments to offer payment guarantees upon awarding tenders. This will allow suppliers and contractors to collect their payments from the bank within 90 days in case the government fails to settle payments on time.
“The national and county government shall make payments to the successful tenderer by way of a bank guarantee. The bank guarantee shall take effect after ninety days,” reads the bill.
The Kenya Association of Manufacturers says that delay in payment of bills by the government has resulted in low liquidity in the market, which fuels mass layoffs and poor performance of businesses. Further, the low liquidity locks out local contractors from future tenders, which disadvantages local firms against foreign contractors who receive support from their home countries and take payments in forms of letters of credit.
Speaking on the draft law, the bill’s sponsor Thika Legislator Patrick Wainana, urged the public to give their comments to enrich the bill, which has already gone through the first reading.
The Public Procurement and Asset Disposal Amendment Bill of 2020 will also require the government to award split tenders to different bidders, allowing more companies to benefit.
“Where a procuring entity may structure procurement as two or more procurements, the procurement entity shall not award more than one tender to the same company,” reads the draft bill.
Public Procurement and Asset Disposal Bill Cap Contract Estimates
Amendments on the bill will limit the price of contracts to within 15% of engineer estimates. According to legislator Wainaina, this would prevent companies from setting high prices. Similarly, the caps will prevent underquoting, which could either result in substandard work or upward revision of the contract after awarding a tender.
“The successful tender price shall be within a range of fifteen per cent of the Engineers Estimate where applicable.”
The Public Procurement and Asset Disposal Amendment Bill of 2020 also requires international firms to source at least 4% of their materials from local suppliers to qualify for a government tender.
READ ALSO: Kenyan Businesses to Win with Amendments of the Public Procurement Act.
