The Public Procurement and Disposal (Preference and Reservations) Regulations

Legal Notice 58 of 2011

This is the latest version of this Legal Notice.
Citation
Legal Notice 58 of 2011
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Public Procurement and Asset Disposal Act
Date
31 December 2022
Language
English
Type
Legal Notice
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LAWS OF KENYA

PUBLIC PROCUREMENT AND ASSET DISPOSAL ACT

THE PUBLIC PROCUREMENT AND DISPOSAL (PREFERENCE AND RESERVATIONS) REGULATIONS

LEGAL NOTICE 58 OF 2011

  • Published in Kenya Gazette Vol. CXIII—No. 52 on 10 June 2011
  • Commenced on 10 June 2011
  1. [Amended by Public Procurement and Disposal (Preference and Reservations) (Amendment No. 2) Regulations, 2013 (Legal Notice 210 of 2013) on 29 November 2013]
  2. [Revised by 24th Annual Supplement (Legal Notice 221 of 2023) on 31 December 2022]

Part I – PRELIMINARY

1. Citation

These Regulations may be cited as the Public Procurement and Disposal (Preference and Reservations) Regulations.

2. Interpretation

In these Regulations, unless the context otherwise requires—"Constituency Development Fund" shall have the meaning assigned to it under the Constituencies Development Fund Act (Cap. 414);"disadvantaged group" means persons perceived to be denied, by mainstream society access to resources and tools which are useful for their survival in a way that disadvantages them, or individuals who have been subjected to prejudice or cultural bias because of their identities as members of groups without regard to their individual qualities, and includes enterprises owned by women, the youth and persons with disabilities;"disability" shall have the meaning assigned to it under the Persons with Disabilities Act (Cap. 133));"Local Authorities Transfer Fund" shall have the meaning assigned to it under the Local Authorities Transfer Fund Act (Cap. 272A);"local preference" means the right or opportunity to select a person from an identified target group that is considered more desirable than another in a constituency, local authority or county;"micro enterprises" means a business undertaking with an initial—
(a)staff establishment of not more than ten employees, and
(b)annual turnover or investment not exceeding Kenya Shillings five hundred thousand;
"preference" means the right or opportunity to select a person from an identified target group which is considered more desirable than another;"region" means a location designated by the Cabinet Secretary within which defined tenderers enjoy certain preferences and reservations;"reservations" means exclusive preference to procure goods, works and services set aside to a defined target group within a specified threshold or region;"small enterprises" means a business undertaking with an initial—
(a)staff establishment of not less than eleven and not more than fifty employees, and
(b)annual turnover or investment not exceeding five million Kenya Shillings;
"target group" means designated tenderers identified by the Cabinet Secretary to benefit from the preference and reservations schemes;"youth" means persons who have attained the age of eighteen years but have not attained the age of thirty-five years.

3. Application

These Regulations shall apply to procurements by public entities when soliciting tenders from the following target groups—
(a)small enterprises;
(b)micro enterprises;
(c)disadvantaged groups;
(d)citizen contractors;
(e)local contractors; or
(f)citizen contractors in joint-venture or sub-contracting arrangements with foreign suppliers.

4. Purpose of the Regulations

The purpose of these Regulations is to promote local, national and regional industry and support socio-economic development by defining —
(a)the target group and eligibility requirements for benefitting from the preference and reservations schemes;
(b)the percentage margin of the preference, where applicable;
(c)the goods, works and services set aside or reserved for specified target groups;
(d)the regions within which to apply the scheme, and
(e)the means of measuring its effectiveness in achieving the objectives.

Part II – QUALIFICATION OF TARGET GROUPS

5. Eligibility criteria

(1)A person shall be qualified to benefit from the preference and reservations schemes if the person—
(a)has the necessary qualifications, capability, experience, and, where appropriate, resources, equipment and facilities to provide the goods or services intended to be procured;
(b)has the legal capacity to enter into a contract for the procurement;
(c)is not insolvent, in receivership, bankrupt or in the process of being wound up and is not the subject of legal proceedings relating to the foregoing;
(d)is among the persons with whom the procuring entity may enter into a contract, not being precluded from doing so under section 33 of the Act;
(e)is not debarred from participating in procurement proceedings under Part IX of the Act; and
(f)is registered by the Ministry of Finance under regulation 6.
(2)A person shall not be qualified to benefit from preference and reservation scheme —
(a)as a contracting firm, unless that person is qualified as a local contractor or a citizen contractor; or
(b)as a, micro enterprise or an enterprise owner by a disadvantaged group unless the person is registered by the Ministry of finance as such upon application.

6. Registration of enterprises and groups

A small or micro enterprise or a disadvantaged group wishing to participate in public procurement shall apply for registration with the Ministry of Finance in the form set out in the First Schedule.

7. Qualifications of contractors

A firm shall be qualified as—
(a)a local contractor, if it is registered in Kenya, or
(b)a citizen contractor, if its owners and shareholders are Kenyan citizens.

8. Application by foreign contractors

Notwithstanding the foregoing, a foreign contractor may apply benefit from the preference and reservation scheme where it enters into a joint venture or subcontracting arrangements, as evidenced by written agreement, with a local contractor, where the local contractor has a majority share.

Part III – ADMINISTRATION OF PREFERENCE AND RESERVATION SCHEMES

9. Regions where schemes apply

For purposes of section 39(4)(c) of the Act the regions preference and reservations schemes is applied shall be—
(a)constituencies;
(b)counties; and
(c)local authorities.

10. Local preference

Local preference and reservations shall be applicable in the constituencies, local authorities and counties where citizen contractors are based and operate.

11. Exclusive preference

Local contractors who are based and operate in the regions specified in Regulation 10 shall be given exclusive preference when participating in procurements using funds from the Constituency Development Fund and the Local Authority Transfer Fund, except where it is established that local capacity is not available.

12. National Reservations

For purposes of section 39(4)(d) of the Act, public entities shall grant exclusive preference to local contractors offering—
(a)motor vehicles, plant and equipment which are assembled in Kenya;
(b)furniture, textile, foodstuffs and other goods made in Kenya;
(c)goods manufactured, mined, extracted or grown in Kenya.

13. Threshold for exclusive preference

For the purposes of section 39(8)(a) of the Act, the threshold upto which exclusive preference shall be given to citizen contractors in all procurements using open tendering methods, shall be the sum of—
(a)five hundred million shillings for procurements in respect of road works;
(b)two hundred million shillings for procurements in respect of other works; and
(c)fifty million shillings for procurements in respect of goods or services.

14. National preference

For the purposes of section 39(8) (b) (i) of the Act, a fifteen percent margin of preference in the evaluated price of the tender shall be given to candidates offering goods manufactured, mined, extracted or grown in Kenya.

15. Margin of preference

For the purposes of section 39 (8)(b)(ii) of the Act, the margin of preference shall be—
(a)six percent of the evaluated price of the tender, where the percentage of shareholding of the Kenyan citizens is less than twenty percent;
(b)eight percent of the evaluated price of the tender, where the percentage of shareholding of Kenyan citizens is less than fifty-one percent but above twenty percent; and
(c)ten percent of the evaluated price of the tender, where the percentage of shareholding of Kenyan citizens is more than fifty percent.

16. Preference for joint-ventures with citizen contractors

Where citizen contractors have entered into contractual arrangements with foreign contractors pursuant to regulation 8, a ten percent margin of preference in the evaluated price of the tender shall be applied.

Part IV – GENERAL PRINCIPLES

17. Single preferences

A candidate shall be entitled to tender for one preference and reservation scheme at a time in a procurement proceeding.

18. More than one preference

Where a candidate is entitled to more than one preference scheme, the scheme with the highest advantage to the tenderer shall be applied.

19. Unbundling of procurements

For the purpose of ensuring maximum participation of disadvantaged groups, small and micro-enterprises in public procurement, procuring entities may unbundle goods, works and services in practicable quantities pursuant to Section 31(7) of the Act.

20. Preference to disadvantaged groups

For greater certainty, unbundled procurement proceedings shall be restricted to disadvantaged groups, small and micro-enterprises.

21. Tender security

(1)No tender securities shall be required from small and micro enterprises or enterprises owned by disadvantaged groups participating in procurement proceedings.
(2)Notwithstanding paragraph (1), target groups shall be required to complete and sign the Tender Securing Declaration Form set out in the Second Schedule.
(3)Any bidder from the target group who fails to adhere to the terms of the Tender Securing Declaration Form shall be liable to debarment pursuant to section 115 of the Act.

22. Term limit

An enterprise registered by the Authority in a target group benefitting from the preference and reservation schemes shall be entitled to such benefits for a period of five years, which may be renewed once.

23. Open tender advertisement

An advertisement relating to open tender under these Regulations shall state that such tender is open to small and micro enterprises and to disadvantaged groups registered with the Ministry of Finance.

24. Procurement to be competitive

Procurement of goods, works and services under these Regulations shall be conducted on competitive procedure among the qualified target groups pursuant to regulation 6.

25. Framework contracts with target groups

Procuring entities shall make use of existing framework contracts with disadvantaged groups, small and micro enterprises wherever appropriate to provide an efficient, cost effective and flexible means to procure goods, works and services that are required repeatedly or continuously over a set period of time.

Part V – MONITORING OF COMPLIANCE

26. Monitoring and evaluation

Application of the preference and reservations schemes by procuring entities shall be monitored by the Authority.

27. Authority to maintain register

The Authority shall maintain and update a register of all small and micro enterprises and disadvantaged groups qualified to benefit from the scheme and post it in its website or dedicated portal.

28. Integration of preference and reservations schemes

Procuring entities shall integrate preference and reservations schemes in their procurement plans.

29. Procurement plan

A procuring entity shall submit to the Authority the part in its procurement plan demonstrating application of preference and reservations schemes in relation to the procurement budget within sixty days after commencement of the financial year.

30. Report to the Authority

All procurement awards by procuring entities where a preference or reservation scheme was applied shall be reported to the Authority on a quarterly basis.

FIRST SCHEDULE [r. 6]

APPLICATION FORM FOR ENTERPRISES OWNED BY YOUTH, WOMEN, OR PERSONS WITH DISABILITY AND SMALL, MICRO ENTERPRISES TO SUPPLY GOODS, WORKS OR SERVICES TO PROCURING ENTITIES

[L.N. 210/2013.]The registration of suppliers is aimed at building a profile for each supplier regarding information on general particulars of the company. You are advised that it is a serious offence to give false information on this form.

Part I – Details of the Applicant

1.Name of Applicant: ..............................................................................................
2.Physical Address/Business Location: .................................
3.Postal Address: .....................................................................................................
4.Postal Code: ........................................................................................................
5.County: ............................................................................................
6.Constituency: .........................................................................................................
7.E-mail: ..................................................................................................................
8.Mobile Phone No: .....................................................................................................
9.Landline No: ...................................................................................................................
10.Fax No: ............................................................................
11.Name of Contact Person: .............................................................................................
12.Type of Ownership Details: ...............................................................................
Part 12(1) (Compulsory)Overview of the Enterprise
  //(Please tick one asappropriate)//
Type of ownershipSole Proprietor 
Partnership 
Limited Company 
Co-operative Society 
Others (Specify) 
(Fill only one table relevant to your ownership details (i.e. a, b, c or d). Cancel inapplicable table)
Part 12(2)(a)— Sole Proprietor
Name in Full ........................................................................................
Identity/Passport No. .........................Age .........................Sex .........................
Date of incorporation/registration ...........................................................................
Certificate of Incorporation/Registration No.
Part 12(2) (b) — Partnership Details
No.NameGenderNationalityID/Passport No.% Shares
      
      
      
      
Part 12(2) (c) — Registered CompanyState the nominal and issued capital of companyNominal KES. ............................................. Issued KES. ............................................Date of Incorporation ....................................................................................................Certificate of Incorporation No. ..................................................................................Directors' Details
No.NameGenderNationalityID/Passport No.% Shares
      
      
      
      
13.Target Groups(Fill only one table relevant to your target group i.e. (1) or (2). Cancel inapplicable table)
Part 13(1) — Small and Micro Enterprises (SMEs)
ParameterRangeTarget Group (Please tick one as appropriate)
Number of employees0-10(Micro)
11-50(Small)
Initial Investments/ Total Annual Sales (Turnover) (KES)0-500,000(Micro)
500,000—5,000,000(Small)
Part 13(2) — Disadvantaged Group such as enterprises owned by Youth, Women or Persons With Disability(NB: the thresholds for SMEs on Number of employees, Initial Investments or Total Annual Sales (Turnover) are not applicable to these disadvantaged groups)
 Target Group(Please tick one asappropriate)
Category of Disadvantaged GroupYouth 
Women 
Persons with disability 
14.Bank Account Name: ........................................................................
15.Branch of the Bank: ........................................................................
16.Bank Account Number: ........................................................................
17.Bank SWIFT Code: ........................................................................
18.VAT Registration Number: ........................................................................
19.PIN Number: ........................................................................
20.Type of business: (tick as appropriate)
CATEGORY OFBUSINESSDETAILS
GOODSStationery, Computer Accessories, Furniture, Agricultural commodities, foods stuffs, Supply of medicines, etc.
SERVICESConference and accommodation, Transport, Consulting, Web design, cleaning services, software development, etc.
WORKSCounty roads, Building markets, Construction of dams/shallow wells, Water supply and sanitation, etc.
21.Prepared by (full name in capital letters) ................................................Title: ........................................................................Signature: ................................. Date ....................................

Part II – List of Attachments

The following attachments are essential for appraisal and you are required to ensure that they are all attached, failure to which-your application may be rejected:
1.Copy of certificate of incorporation/registration;
2.Tax PIN Certificate;
3.Valid Tax Compliance Certificate;
4.Original Bank Statement/Bank reference of not more than six months old from date of applying;
5.Copy of certificate of registration with relevant regulatory bodies;
6.Business/Company profile;
7.Evidence of having paid the non-refundable fee for the Application Form;
8.Copies of Annual Return Forms, filed by Limited Companies, the Business Names for business names (sole trader and partnerships), and a stamped receipt which bears the Accounts Stamp from the Registrar of Companies/Societies; and
9.Annual Return Status Report from Registration Office.

SECOND SCHEDULE [r. 22]

TENDER-SECURING DECLARATION FORM

[L.N. 210/2013, r. 3.][The Bidder shall fill in this Form in accordance with the instructions indicated.]Date: [insert date (as day, month and year) of Tender Submission]Tender No. [insert number of tendering process]To: [insert complete name of Tenderer]We, the undersigned, declare that:
1.We understand that, according to your conditions, -tenders must be supported by a Tender-Securing Declaration.
2.We accept that we will automatically be suspended from being eligible for tendering in any public procurement proceeding for the period of time of not less than five years, if we are in breach of our obligation(s) under the tender conditions, because we:—
(a)have withdrawn our Tender during the period of tender validity specified by us in the Tender Data Sheet; or
(b)having been notified of the acceptance of our Tender by the Procuring Entity during the period of tender validity;
(i)fail or refuse to execute the resultant Contract, if required, or
(ii)fail or refuse to furnish the Performance Security, in accordance with the Instructions To Tenderers.
3.We understand this Tender Securing Declaration shall expire if we are not the successful Tenderer, upon thirty days after the expiration of our Tender validity period.
4.We understand that if we are a Joint Venture, the Tender Securing Declaration must be in the name of the Joint Venture that submits the bid. If the Joint Venture has not been legally constituted at the time of bidding, the Tender Securing Declaration shall be in the names of all future partners as named in the letter of intent.Signed: [insert signature of person whose name and capacity are shown]In the capacity of [insert legal capacity of person signing the Tender Securing Declaration]Name: [insert complete name of person signing the Tender Securing Declaration]Duly authorized to sign the tender for and on behalf of: [insert complete name of Tenderer]Dated on the _____________ day of _____________, ________ [insert date of signing]
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History of this document

31 December 2022 this version
29 November 2013
10 June 2011
Commenced