February 14, 2022

The contract manager shall prepare a management plan which shall give a background of the contract and capture key focus area of the contract. It shall contain the following. Background Information. Contract management team. Contractor details. Scope of contract management. Key provisions of the contract. Duties and responsibilities.

Risk is the single word that determines every contract. Adequate steps for risk mitigation must be taken in all public procurement contracts. Where the tender document so requires, an unconditional performance security must be provided by the successful tenderer issued by a reputable bank or a PPOA approved insurance company based in Kenya or by cash. Where a tender is international the security must be partly payable in Kenya Shillings and be issued by local institutions. The value of the two securities shall be in the same proportions of foreign and local currencies as requested in the form of foreign currency requirements. Failure of the successful tenderer to lodge the required performance security shall constitute a breach of contract and sufficient grounds for the annulment of the award and forfeiture of the tender security and any other remedy under the contract. In the circumstance the procuring entity may award the contract to the next ranked tenderer. The greatest risks which must be mitigated in the management of procurement contracts are: The supplier delivering late or not delivering at all. The quality of the required goods, works or services being of inferior quality Being charged a higher cost than what the contract provided for. The risk of paying for work not done A risks register should be maintained in which identified risks should be recorded and monitored. The common contract risks that should be watched are: Incomplete or incorrect specifications. Poor communication. Supplier lacking sufficient resources. Production problems.  Quality problems including technology. Shipment details. Underestimation of costs by supplier. Inflation trends. Unexpected events. Any risks identified shall be isolated and addressed before it is too late.

For each contract entered into, the Procuring Entity must designate a member of staff, or a team of staff, as the Contract Administrator responsible for administering the contract. The Procuring Entity must issue a signed letter naming and appointing the Contract Administrator that must be included in the procurement files and contract. It is the responsibility of the Contract Administrator to perform the obligations and duties of the Procuring Entity specified in the contract; and to ensure that the contractor performs the contract in accordance with all of the terms and conditions of the contract. In particular it is important that the Contract Administrator ensure that the contractor supply the quality and quantities specified in the contract. It should be noted that this may require rather specialized methods for measuring quantities. Such measurements must be independent and not rely solely on the contractor‘s submitted measurements of quantity. The Contract Administrator is responsible for: Monitoring the performance of the contractor, to ensure that all delivery or performance obligations are met or appropriate action taken by the Procuring Entity in the event of obligations not being met; Ensuring that the contractor submits all required documentation as specified in the bidding documents, the contract and as required by law; Ensuring that the Procuring Entity meets all its payment and other obligations on time and in accordance with the contract. Ensuring that there is adequate cost, quality and time control, where required; Preparing any required contract variations or change orders and obtaining all required approvals before their issue. Such variations or change orders must be clearly justified in writing backed by supporting evidence; Managing any handover or acceptance procedures; Making recommendations for contract termination, where appropriate, obtaining all required approvals and managing the termination process; Ensuring that the contract is complete, prior to closing the contract file including all handover procedures, transfers of title if need be and that the final retention payment has been made; Ensuring that all contract administration records are complete, up to date, filed and archived as required; and Ensuring that the contractor and the Procuring Entity act in accordance with the Provisions of the Contract. Discharge of performance guarantee where required Administration of Sub-Contracts The prime contractor shall be responsible for administering any subcontracts and the Procuring Entity shall monitor only the prime contractor‘s management of its subcontracts. The Procuring Entity shall not directly administer any subcontracts, except where: There is a risk of the Procuring Entity incurring undue cost or delay; Successful completion of the prime contract is threatened; or Special surveillance of high risk or critical subsystems is required. Technical Inspection of Goods and Works The Procuring Entity shall inspect goods or works at any reasonable time or place, including: During manufacture or construction; prior to shipment; on delivery or completion; or prior to final acceptance the Procuring Entity‘s may also inspect subcontractors. The Procuring Entity may observe tests conducted by the contractor, or any subcontractors, under their own quality control procedures, conduct its own inspection; or employ an independent third party to undertake technical inspection. Inspection and Acceptance of Goods, Works and Services The Procuring Entity shall ensure that all goods, works and services are subject to inspection and verification by Inspection and Acceptance Committee, prior to their acceptance. The inspection and verification shall ensure that: The correct quantity has been received; The goods, works or services meet the technical standards defined in the contract; The goods, works or services have been delivered or completed on time, or that any delay has been noted and appropriate actions as indicated in the contract have been taken; All required deliverables have been submitted; and All required manuals or documentation have been received. The Inspection and Acceptance Committee responsible for inspecting the goods, works or services shall issue interim or completion certificates or goods received notes, as appropriate and in accordance with the contract.

In a procuring contract the contractor has the responsibility of performing the contract as per the terms and conditions of the contract. The procuring entity has the responsibility of meeting its obligation of paying the contractor as per terms and conditions of the contract. These are the basic responsibilities of the parties. For the purpose of ensuring that both parties perform and meet their obligations procurement contracts must be managed. On the part of the procuring entity the procurement contract must be managed with an aim of obtaining goods, works and services as per contract and achieve value for money THE PROCUREMENT FILE The Procurement file is important in the management of a procurement contract. The file is opened for the purpose of processing the procurement before the contract is awarded. It contains the following. Procurement initiation requisition.. All correspondence on the procurement. Bid document. Bids received. Evaluation and award of the contract. Information on the award of the contract and particulars of the contract. This file contains very important information and must be handled carefully. THE CONTRACT FILE No contract is formed between the person submitting the successful tender and the procuring entity until the written contract is entered into. The contract file shall be opened after the procurement contract is signed and it shall be opened by the contract manager. The file shall be used for recording the actual performance of the requirements indicated in the contract. The file should contain the following: Signed original procurement contract. Any signed modifications to the contract. Contract correspondence between the parties. Information on the performance. Correspondence on the contract. Management progress reports Minutes of meetings of project team Payment records and close-up documents.  Copy of performance security (where required)  Any other relevant information.

A procurement Contract is a written agreement between a procurement entity and a supplier, contractor or consultant which is enforceable by law. Administration is defined as the activities involved in managing a business organization or institution. Management is defined as the process being responsible for a business organization or institution. In this part, contract administration and contract management shall have the same meaning and may be used interchangeably. Contract administration pertains to the preparation of procurement documentation, the processing and approval of such documentation, monitoring contract implementation, approving and administering contract variations and modifications, and possibly cancelling or terminating contracts. Weak contract administration is an invitation to corrupt practices. If a Procuring Entity fails to ensure that the vendor or contractor delivers to the specification or quantities of the contract this can lead to substantial losses. If a Procuring Entity approves contract variations that lead to significant deviations from original agreed costs, this undermines effective competition since for example an increased volume of delivery addressed at the time of tender could have led to significantly lower per unit prices from the competing bidders. Poor documentation and records management, along with weak coordination between the Government‘s representative, the procuring unit and the accounting unit undermine payment controls and lead to payments in excess of contract ceilings, especially in multi-year contracts. It is imperative that the Accounting Unit maintain accurate and up to date ledgers that properly track all contract payments and record contract totals and approved contract variations to serve as payment ceilings. Several procurement reviews in Kenya and elsewhere around the world have identified weak contract administration as a major source of loss and a significant area of abuse and corruption.

After the technical evaluation, financial evaluation is conducted to determine the evaluated price of each bid and to determine the lowest evaluated bid, which is substantially responsive to the requirements of the bidding document. The evaluated price for each bid shall be determined by: Taking the bid price, as read out at the bid opening; Correcting any arithmetic errors, in accordance with the methodology stated in the bidding document; Applying any non-conditional discounts offered in the bid; Making adjustments for any non-material non-conformity, error or omission; Applying any additional evaluation criteria, through an increase or decrease to the bid price in accordance with the weighting system established in the bidding documents; Converting all bids to a single currency, using the currency and the source and date of exchange rate indicated in the bidding document; and Applying any margin of preference indicated in the bidding document. Bids must be compared by ranking them according to their evaluated price and determining the bid with the lowest evaluated price. Where the bidding documents included more than one lot and permitted bidders to offer discounts, which were conditional on the award of one or more lots, the Evaluation Committee has to conduct a further financial evaluation, to determine the lowest evaluated combination of bids. Bidders are permitted to offer discounts to their bids (and this should be clearly stated in the bidding documents). It must be clearly included in the bid and read out at the bid opening. No discount may be offered or taken into account after the deadline for submission of bids. Any non conditional discounts may be taken into account in the financial evaluation and comparison of bids. Bidders may also be permitted to offer discounts, which are conditional on the award of one or more lots. Conditional discounts shall be taken into account in a further financial evaluation. If the discount is based on prompt payment and included in a bid, it can become a term of the contract if that bid is accepted, and must be utilized by the Procuring Entity, if payment is made in accordance with the terms of the discount. However, prompt payment discounts cannot be considered in the evaluation and comparison of bids, unless such discount is taken into account through the application of any additional evaluation criteria.

The Evaluation Committee shall conduct a technical evaluation by comparing each bid to the technical requirements of the description of goods, works or services in the bidding document so as to determine the responsiveness of bids. The technical evaluation shall determine whether bids are, or are not, substantially responsive to the technical standard defined in the bidding document. The factors taken into account shall be those indicated in the bidding document only and may include: Conformity to specifications, standards, drawings or terms of reference, without material deviation or reservation; Satisfactory understanding of an assignment, as demonstrated by any methodology or design; or Suitable staffing, equipment and machinery capacity or arrangements for supervision or management of an assignment;  Any other criteria that has a direct relationship with the performance of the contract and the delivery of the procurement within a specified time frame. The evaluation shall not take into account any requirements which were not included in the bidding documents. Any material deviations should result in rejection of the bid and such bids should not be subject to financial evaluation and comparison. Non – material deviations may be allowed and corrected. Alternative bids shall not be permitted, except where specifically indicated in the bidding documents. The Procuring Entity may permit alternative bids, where it is anticipated that bidders may be able to offer goods, works or services which do not conform precisely to the description of requirements, but which meet the objectives of the procurement in an alternative manner. Alternative bids may be permitted in areas of rapidly changing technology or where a need could be satisfied in a number of different ways and the Procuring Entity wishes to encourage cost efficient and technically innovative approaches by bidders. Where alternative bids are permitted, the bidding documents should state that the alternative bid does not need to conform precisely to the description of requirements, but must: Meet the objectives or performance requirements prescribed in the description of requirements; Be substantially within any delivery or completion schedule, budget and other performance parameters stated in the bidding documents; and Clearly state the benefits of the alternative bid over any solution which conforms precisely to the description of requirements, in terms of technical performance, price, operating costs or any other benefit. Alternative bids should be evaluated in the same way as any other bids, except that the technical evaluation should only take into account the objectives or performance requirements prescribed in the description of requirements. Where a bid is substantially responsive, the Procuring Entity may waive, clarify or correct any non-conformity, error or omission, which does not constitute a material deviation. The nonconformity, error or omission shall be quantified in monetary terms to the extent possible and taken into account in the financial evaluation and comparison of bids. The Procuring Entity may seek clarification from a bidder of its bid. The request and the clarification should always be exchanged in writing. The request for clarification shall not seek and the bidder shall not be permitted to: Change the substance of the bid; or  Substantially alter anything which is a deciding factor in the evaluation. Any clarification received, which is not in response to a request from the Procuring Entity, cannot be taken into account. The failure of a bidder to reply to a request for clarification may result in the disqualification of its bid.

A performance security is a guarantee that the successful bidder will: 1. Not default on its offer, and 2. Enter into contract with the Procuring Entity within specified calendar days, from receipt of the Notice of Award, and furnish the performance security provided for in 142 of the PPDAA (2015) A performance security must be submitted with every bid. It must be operative on the date of bid opening, and payable to the Procuring Entity. The amount of any tender security under section 142 (1) of the Act shall be expressed either as a fixed amount or as a percentage of the estimated value of the contract and shall not in either case exceed Ten per cent (10%) of the estimated value of the contract. In determining the amount of tender security, a procuring entity shall take into account) The cost to tenderers of obtaining a tender security; The estimated value of the contract; and The risk of tenderers failing to fulfill the conditions of their tenders. The tender security to be provided under section 142 of the Act shall be in any of the following forms only- Cash; A bank guarantee; Such insurance company guarantee as may be approved by the Authority; A letter of credit. No tender security shall be accepted under the Act unless such security is valid for a period of at least thirty days after the expiry of the tender validity period. The procuring entity shall, where it extends the tender validity period, request the tenderers‘ to extend the period of validity of their tender securities. A procuring entity may, where it deems necessary, verify the authenticity of any tender security. Inquiries relating to tender documents Where a tenderer makes an inquiry relating to the tender documents the procuring entity shall promptly reply in writing. The procuring entity shall not be bound to reply to inquiries received after the deadline for submitting inquiries stipulated in the tender documents. Form of tender box A procuring entity shall, for purposes of the Act, ensure that) A tender box has one lock; the key for the lock is kept by an appointed person from procurement department ; and the tender box remains locked until the time for tender opening. Opening of tenders The Accounting Officer of a procuring entity shall appoint a tender opening committee specifically for the procurement in accordance with the following requirements and such other requirements as may be prescribed: The committee shall have at least three members; and At least one of the members shall not be directly involved in the process or evaluation of the tenders Any bid withdrawn in writing shall not be eligible for evaluation or consideration in the tender process. Immediately after the deadline for submitting tenders, the tender opening committee shall open all tender received before the deadline. Those submitting tenders or their representatives may attend the opening of tenders. The tender opening committee shall an identification number to each tender and record the number of pages received. As each tender is opened, the following shall be read out loud and recorded in a document to be called the tender opening register:- The name of the person submitting the tender; The total price, where applicable including any modifications or discounts received before the deadline for submitting tenders; If applicable, what has been given as tender security. No tender shall be disqualified by the procuring entity during opening of tenders The Accounting Officer of a procuring entity shall on request, provide a copy of the tender opening register to a person submitting tender. Each member of the member of the tender opening shall:- Sign each tender on one page or more pages as determined by the tender opening committee; and Initial, in each tender, against the quotation of the price and any modifications or discounts, where applicable. The tender opening committee shall prepare tender opening minutes which shall set out:- A record of the procedure followed in opening the tenders The particulars of those persons submitting tenders or their representatives, who attended the opening of the tenders. To acknowledge that the minutes are true reflection of the proceedings held, each member of the tender opening shall:- Initial each page of the minutes; Append his or her signature as well as initial to the final page of the minutes indicating their full name and designation A tender is responsive if it conforms to all the eligibility and other mandatory requirements in the tender documents.

Responsiveness of a bid is determined by the content of the bid itself and the specifications in the bidding documents. Clarifications received or requested for are also considered. A substantially responsive bid is one which conforms to all the instructions, requirements, terms and conditions of the bidding documents, without material deviation, reservation or omission. The Evaluation Committee has to conduct an examination to determine whether bids are complete and are responsive to the instructions and requirements of the bidding document. This preliminary examination shall determine whether: The bid has been submitted in the correct format; Any required bid security has been submitted, in the correct form and amount and valid for at least the period required; The bid has been submitted without material reservations or deviations from the terms and conditions of the bidding document; The bid has been correctly signed and authorized; The correct number of copies of the bid have been submitted; The bid is valid for at least the period required; All key documents and information have been submitted; Any required samples have been submitted; and The bid meets any other key requirements of the bidding document. A material deviation, reservation or omission shall result in rejection of the bid at this stage: this means that the bid shall not be subject to any further evaluation. Non material deviations, reservations or omissions shall not result in rejection of the bid. Material deviations, reservations or omissions mean: A deviation that affects in any substantial way the scope, the quality or the performance of the works, services or supplies specified in the bidding documents. A reservation that would limit in any substantial way, inconsistent with the bidding documents, the Procuring Entity‘s rights or the bidder‘s obligations under any resulting Contract; or An omission that when corrected would unfairly affect the competitive position of other bidders presenting substantially responsive and compliant bids. Any bid which contains a material deviation, reservation or omission is automatically declared rejected and may not subsequently be made responsive by the bidder or the Procuring Entity. The classification of a deviation, reservation or omission as material or non-material must be determined in the light of the objectives of the procurement requirement and in comparison to the specified requirements as stated in the bidding document. It has to take into account the impact on key factors, cost or risk. Consistency in examination has to be ensured. In case of a deviation, it needs to be quantified to the extent possible in order to be qualified as minor or as a source of no responsiveness and it should be taken into account in the evaluation and comparison of tenders. Where examination for responsiveness determines that none of the submitted tenders is responsive, the Procuring Entity shall notify each person who submitted a tender that the bidding was not responsive. Responsiveness should not be solely regarded as an administrative verification but also a technical one. Further, it should be clearly understood that non responsiveness may lead to appeal and reviews. Therefore the reason for non-responsive declaration must be clearly stated and factual. Where none of the bids is responsive and financial bids have been submitted in a separate envelope, all the financial bids shall be returned to the bidders unopened.

Keeping costs down is justified by the need to maintain transaction costs at an acceptable level to avoid bidders applying costs loaders that affect the financial of the project. The objective of Bid Securities is to avoid frivolous bids where many bidders exist as this would create undue work and might bias competition. Fixed imposed percentage is not acceptable as it permits inferring the bid price and this can bias the technical evaluation and thus create undue influences Clarifications and information to bidders The Procuring Entity may organise: A pre-bid conference in order to brief potential bidders or to offer the opportunity for them to seek clarifications; and/or A site visit, to enable bidders to gain access to the site for delivery of any proposed works, goods or services. Details of pre-bid conferences and site visits, including the date, time and location, must be included in the bidding document and, where possible, in the invitation to tender. The date of any pre-bid conference or site visit should be sufficiently early in the bidding period, to enable bidders to take the information into account in preparing their bids. The Procuring Entity has to prepare minutes of any pre-bid conference and promptly send them to all bidders to whom the bidding documents have been issued. The minute must include: All information provided as part of any briefing; Details of any clarifications requested, but without identifying the source of the inquiry; and The details of responses provided as clarifications. Following any pre-bid conference or site visit, the Procuring Entity has to ensure that clarifications or amendments to the bidding documents are issued to all candidates within a reasonable time. In addition to the pre-bid conference, the bidding documents must state that a Bidder may seek clarification of the bidding document and the final date after which such clarification may not be sought. Such date has to allow adequate time for potential bidders, including foreign bidders, to receive and apply the clarifications. Where a request for clarification is received, the Procuring Entity must promptly provide a clarification in writing, copied to all bidders and including a description of the inquiry, but without identifying the source. At any time prior to the deadline for submission of bids, the Procuring Entity may, either at its own initiative or in response to a request for clarification from a Bidder, amend the bidding document by issuing an addendum. As for clarifications, any addendum shall be issued in writing and the same information shall be provided to all bidders at the same time. All addenda must be numbered sequentially and bearthe procurement requirement unique sequential number. All clarifications and addenda to the bidding documents are binding to bidders and to the Procuring Entity.

A Procuring Entity may require bid securities, in order to deter irresponsible bids and encourage bidders to fulfill the conditions of their bids. The bidding documents shall clearly state any requirement for a bid security and specify the acceptable forms of the bid security. The value of any required bid security shall be expressed as a fixed amount or as a percentage of the bid price. In determining the amount of bid security required, the Procuring Entity should then take into account the cost to bidders of obtaining a bid security, the estimated value of the contract and the risk of bidders being deterred to bid or to fulfill the conditions of their bids. The amount shall be high enough to deter irresponsible bids, but not so high as to discourage competition. The bidding documents shall state that bid securities must be: In accordance with the format and wording provided in the bidding document; In a form acceptable to the Procuring Entity, which may be: Cash; A bank guarantee; A letter of credit; An Insurance Company Bond where approved by PPOA or Period of validity of tenders The period of validity of a tender shall be stated in calendar days from the date of opening of the tender. For purposes of this regulation, a calendar day includes any day of the week including Saturday, Sunday and a public holiday. Bid securities issued by the insurance companies shall be on demand terms. The Procuring Entity has to release bid securities promptly to unsuccessful bidders before expiry of the term of the security on formation of a contract with successful bidder and submission of any required performance security. The bid security of the successful bidder shall not be released, until the contract or any required performance security has been received (where such a performance security is required). The conditions for forfeiture of a bid security shall be specified in the bidding documents. The bidding documents shall state that bidders may withdraw, substitute or modify their bids at any time prior to the deadline for submission of bids, without forfeiting the bid security. The bidding documents shall state the procedures to be followed for withdrawal, substitution or modification. In exceptional circumstances, the procuring entity may solicit the tenderer‘s consent to an extension of the period of tender validity. The request and responses thereto shall be made shall in writing. The tender security shall also be suitably extended. A tenderer may refuse the request without forfeiting its tender security. Modifications to Tenders Before the deadline for submitting tenders, a bidder who has already submitted his bid may change or withdraw it. The change or the withdrawal must be submitted in writing before the deadline for submitting tenders and following the instruction to bidders for submitting tenders. After the deadline for submitting tenders, a bidder who submitted a bid cannot change it and any attempt or offer to change the substance of the tender maybe considered as a cause for debarment. Reciprocally, it is strictly forbidden for the Procuring Entity or any officer to attempt to have the substance of a tender changed. Should modifications to the tenders be necessary, the Procuring Entity has to provide copies of the tender documents to all persons who have received or purchased the Bidding Documents and should consider extending the deadline for submission to TIP: Modifications to the Bidding Documents should be advertised on the PPOA and Procuring Entity’s Websites

The minimum bidding period shall be 21 days for national tenders and 30 days for international tenders. Pre-qualified bidders shall be given not less than 14 days. The days referred to here are calendar days. Bidders are allowed to ask for clarifications. The Bidding Document have to specify the period after which no questions nor request for clarifications will be responded to. Should questions raised by the bidders induce a need for change or should the bidders require changes acceptable to the procuring entity, the bidding documents should be amended and all the bidders should be informed simultaneously. Importantly, because such changes may have ramifications, the time remaining before the deadline for submitting tenders when informing the bidders should be not less than one third of the time allowed for the preparation of tenders. If this is not the case, the Procuring Entity has to extend the deadline to allow the amendment to the tender documents to be taken into account in the preparation or amendment of the bids. Submission and Receipt of Tenders Bidders shall submit their tenders in accordance with the instructions given in the tender documents. The submission and receipt of tenders is strictly regulated in order to ensure fairness and equal treatment of all the bidders as well as securing the bids to avoid any collusion. The following criteria must be verified when receiving a tender:\ A tender must be in writing, it must be signed by an authorized officer of the bidder and it must be sealed in an envelope; A tender and the envelope it is sealed in must bear the tender number assigned by the procuring Entity and any other reference as specified in the bidding documents;  A tender must be submitted before the deadline for submitting tenders and any tender received after that deadline shall be returned unopened or marked ―late‖ and stored unopened. It will be important for the tender documents to state how late tenders shall be treated but whatever the case they shall be rejected. If a tender delivered by post is inadvertently opened, the fact of that accidental opening must be recorded on the envelope by the person who opened the tender and then the tender has to be resealed and placed in the tender box immediately.