Budget office rejects CS Henry Rotich's plan to control tenders

Cabinet secretary, National treasury Mr. Henry Rotich

The National Treasury Cabinet Secretary Henry Rotichwants to have sweeping powers to decide the people to sit in two key bodies that make final decisions on multi-billion shilling government procurement.

But, the technocrats in Parliament have told him: You can’t do that! In a digest to MPs explaining the Finance Bill, 2017, the Parliamentary Budget Office (PBO) – the team of economists, fiscal analysts and tax experts who advise MPs on the budget and the economy — have asked the MPs to “delete” Rotich’s proposal.

The CS wants to pick appointees to the Public Procurement Regulatory Board (PPRB) and the Public Procurement Administrative Review Board, a move that will tilt the decision-making towards what the government wants.

“These clauses are changing the procedure of appointments into the key procurement organs by replacing most nominees by independent institutions with the CS appointees, without specifying if there will be consideration of merit or any process,” the PBO report noted.

In the PPRB, the Board that runs the procurement authority, Rotich wants the government to pick seven of the nine nominees, while he picks four.

The nominees from the youth and the disabled, plus the nominees of the Law Society of Kenya and the Association of Professional Association of East Africa will all be dropped. Currently, the government has direct influence over three appointees to the Board. If Rotich’sproposal sails through, the government will control seven of the nine slots.

Eradicate competition

In the Review Board, Rotich wants to appoint seven nominees, and has brought in representatives from the Institute of Engineers of Kenya and the Architectural Association of Kenya.

The PBO said Rotich’s proposals negated the principle of checks and balances within the procurement architecture. They warn that if the proposal is allowed to go through, then the procurement process will be subject to abuse.

The report was handed to the Departmental Committee on Finance, Planning and Trade which is responsible for the procurement policy in the country, and whose chairman Benjamin Lang’at (Ainamoi) will be pushing the Finance Bill, 2017 through the House on behalf of Rotich.

The House mandarins have also rejected a new procurement method referred to as “Specially Permitted Procurement” because it looks like a shortcut that will allow the CS to give a blanket approval for any government agency to buy anything, without any scrutiny whatsoever. Apart from the likelihood that such a method will eradicate competition in government tenders, it is also prone to abuse.

“The National Treasury may allow the use of specially permitted procedure where exceptional requirements make it impossible, impracticable or uneconomical to comply with the (procurement law),” reads part of the proposal in the Bill.

It is a controversial proposal, because, the law has all the red tape to ensure that people do not play the system to win multi-billion tenders without due diligence on their probity and capacity to deliver. What Rotich has in mind is a blanket clause that will open the door for any government agency to take an alternative shorter route.

“A new procurement method has been proposed which shall be authorised by the National Treasury, again without any provision for checks and balances. Therefore, proposing to provide discretionary powers to the Cabinet Secretary for the National Treasury to determine the management as well operations in procurement may affect the independence of the procurement institutions,” the PBO notes in its report to MPs.

That is an important caution especially in a country where cartels target billions of shillings in government tenders.

According to the Bill, the “specially permitted procedure” shall also be allowed “for specialised or particular requirements which are regulated or governed by harmonised international standards or practices; where strategic partnership sourcing is applied; where credit financing procurement is applied; or in such other circumstances as may be prescribed.”

The Budget Office also asked MPs to cut the 50 per cent tax on gambling. “The punitive taxation is anticipated to help reverse the negative socio-economic effects that are believed to have resulted out of the gambling undertakings. Nonetheless, the exorbitant gambling taxes that are now viewed in the lenses of “sin” taxes may potentially fuel ‘in-formalisation’ of the activities, perhaps, leading to tax evasion,” the PBO said.

It added: “Were the above scenario is realised, then the two pronged efforts of deterring the attendant negative societal effects of gambling and raising additional revenue may fail to be effective. It is a considered that probably, other measure(s) may be instituted, for instance, prescription of a policy that the gambling activities must ensure creation of tangible economic value in the country, in the wake of digital commerce, to spearhead self-correction of the negative effects so created.”

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