2-Preference & Reservations Presentation
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Transcript of 2-Preference & Reservations Presentation
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PREFERENCE & RESERVATIONS PREFERENCE & RESERVATIONS REGULATIONS
Presented to NDMA
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Presentation Outline
Introduction
Preliminary
Target Groups
Purpose of the Regulations
Eligibility Criteria
Regions
Local Preference
National Reservations
National Preference
General Principles
Monitoring of Compliance
Conclusion
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Introduction
The Study Report was successfully validated in a
Stakeholder Consultative Forum held on 25th
January, 2011.
Based on the findings the Minister promulgated the
Public Procurement and Disposal (Preference andPublic Procurement and Disposal (Preference and
Reservations) Regulations, 2011 which were
gazetted on 8th June, 2011 under Legal Notice No.
58 and as Amended Vide Legal Notice No. 114 of
18th June, 2013
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Introduction Contd
Sec. 39 of the PPDA, 2005 stipulated provisions for
Preference and Reservations empowered the Minister
for Finance to issue Regulations on the same.
The Minister made provisions under Regulation 28 of
PPDR, 2006 but appeared inadequate for applicationPPDR, 2006 but appeared inadequate for application
by stakeholders.
Since 2009, the Ministry of Finance through PPOA, with
the support of the ADB commissioned a Study on
Establishment of the Extent of Participation of SMEs
and Disadvantage Groups in Public Procurement and
Development of a Framework for Their Participation
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Preliminary Cited as Public Procurement and Disposal (Preference and
Reservations) Regulations, 2011
Definitions include:-
Constituency Development Fund
Disadvantaged group
Disability
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Local preference
Micro-enterprises
Preference
Region
Reservations
Small enterprises
Target group
Youth
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Application/Target Group
Small enterprises
Micro enterprises
Disadvantaged groups
Citizen contractors
Local contractors; and Local contractors; and
Citizen contractors in Joint Venture or Sub-
Contracting arrangements with foreign suppliers
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Purpose of the Regulations
To promote local, national and regional industry and
support socio-economic development by defining:
the target group and eligibility requirements for benefitting
from the preference and reservations schemes;
the percentage margin of the preference, where applicable;
the goods works and services set aside/ reserved for specified the goods works and services set aside/ reserved for specified
target groups;
the regions within which to apply the scheme; and
the means of measuring its effectiveness in achieving the
objectives.
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Eligibility Requirements
Tenderer must have legal capacity, qualifications,
experience and resources where applicable
Must belong to a target group
Registered with the National Treasury or respective
county treasury with which they operate and are county treasury with which they operate and are
located as SME or Disadvantaged Group
A list of registered enterprises from national and
county levels shall be submitted to PPOA for
consolidation and publication.
If a foreigner(s) must be in joint-venture or sub-
contracting arrangements with citizens
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Regions
Constituencies
Local authorities
Counties
Threshold applicable when using CDF and LATF funds Threshold applicable when using CDF and LATF funds
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Local Reservations
Applicable to:-
Constituencies;
Local authorities; and
Counties.
Exclusive preference to resident tenderers in the Exclusive preference to resident tenderers in the
regions to a maximum threshold of Kshs. 1M to all
procurements except where established that local
capacity is not available
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National Reservations/Exclusive Preference
Local contractors enjoy reservations where:-
Motor vehicles plant and equipment assembled in Kenya
Construction material and other material used in transmission
and conduction of electricity of which such material is made in
Kenya.
Furniture, textiles and foodstuffs and other goods made or Furniture, textiles and foodstuffs and other goods made or
locally available in Kenya
Exclusive preference for citizen contractors up to:-
Kshs. 1Billion for procurement of road-works
Kshs. 500M -other works
Kshs. 100M-Goods
Kshs. 50 M -Services
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National Preference
15% margin of preference for goods, manufactured,
mined, extracted or grown in Kenya
Margin of preference to citizens:-
6% if citizen shareholding is less than 20%
8% if citizen shareholding is between 20% and 50% 8% if citizen shareholding is between 20% and 50%
10% if citizen shareholding is above 51%
10% if in joint-venture or sub-contracting arrangements
with citizens
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Application of Margin of Preference
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General Principles
Candidates entitled to only a single preference scheme at a time in a
procurement proceeding.
Where more than one preference scheme is entitled to a candidate,
the highest advantage to the tenderer shall be applied.
Unbundling of Procurements limited for SMEs and Other Disadvantaged
GroupsGroups
Only Tender Securing Declaration required instead of tender security
Target group candidate entitled to such benefits for a period of five
years renewable for a further one more term.
Competition limited to target group and same requirement must be
stated in invitation notice
PE shall use framework contracting arrangement with SMEs and
disadvantaged groups
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Monitoring of Compliance
PPOA shall monitor the schemes and maintain aregister of SMEs and disadvantaged groups
PEs shall integrate schemes in procurementplans and submit the relevant part to PPOAwithin 60 days after commencement of the F/Y.
All procurement awards where preference orAll procurement awards where preference orreservations schemes are applied must bereported to PPOA on quarterly basis
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Monitoring of Compliance Contd.
At least 30% of PEs Procurement Spend for purposes ofprocuring goods, works and services from Micro andSMEs owned by Youth, Women and Persons withDisability. This should be factored in the budgets,Procurement plans, tender notices, contract awards andsubmit quarterly reports to PPOA.
An enterprise owned by youth, women and persons withdisability shall be a legal entity registered with therelevant government body.
Has at least 70% membership of youth, women andpersons with disability respectively.
A PE shall facilitate financing of local purchase orservice orders with the relevant financing institution.
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Monitoring of Compliance Contd.
Prompt payments for performed contracts through electronic mediaand shall not delay beyond 30 days.
Where delay is inevitable, a PE shall make at least 30% partpayment and shall give a written explanation for the delay to theenterprise.
Where delay of payments for works performed are likely to happen,a PE may facilitate invoice discounting arrangements with aa PE may facilitate invoice discounting arrangements with afinancial institution for the purpose advancing credit to theaffected enterprises.
For the purposes of ensuring sustainable promotion of localindustry, A PE in its tenders documents shall have a mandatoryrequirement for preliminary evaluation for all foreign tenderersparticipating in international tenders to source at least 40% of theirsupplies from citizen contractors prior to submitting a tender.