March 2, 2022

The Evaluation Committee should conduct a financial evaluation and comparison to determine the evaluated price of each bid and determine the highest evaluated bid, which is substantially responsive to the requirements of the bidding document. The evaluated price for each bid should be determined by: Taking the bid price, as read out at the bid opening; 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; Converting all bids to a single currency, using the currency and the source and date of exchange rate indicated in the bidding document; and Bids should be compared by ranking them according to their evaluated price and determining the bid with the highest evaluated price.

The methodology for the evaluation of bids should consist of: Eligibility of the bidder. Compliance with the conditions of sale; The bid price quoted Where appropriate, the Procuring Entity may include additional evaluation criteria in the bidding document, which should be taken into account in determining the evaluated price of each bid. The contracts shall be awarded to the highest evaluated bid price for each item or lot subject to the reserved price. Minimum Bidding Periods for the Public Tender Sale Method The bidding period should start on the date of the publication of the announcement and should end on the date of the bid submission deadline. In determining the appropriate bidding period for each requirement, the Procuring Entity should take into account, in addition to the minimum bidding period which shall be 21 days for national tenders and 30 days for international tenders: The time required for preparation of bids, taking into account the level of detail required and the complexity of bids; Any need for bidders to submit authenticated legal documents or similar documents as part of their bids and the time required to obtain such documents; The location of short-listed or potential bidders and the time required to obtain the bidding document and for the delivery and submission of bids to the Procuring Entity; Issue and Sale of Bidding Documents for the Public Tender Sale Method Bidding documents should be issued, as appropriate to all bidders responding to the invitation to tender notice. The Procuring Entity should maintain a record of all bidders to whom the documents are issued. The Procuring Entity may charge a fee for the bidding documents, but the price should be calculated to cover the costs related to printing, copying and distribution of the documents only and should not include any element of profit. Where bidding documents are sold, the Procuring Entity should: Issue signed receipts for the documents and bidders may be required to submit a copy of the receipt with their bid. Allow potential bidders to inspect the documents, prior to purchasing the document. Deposits for items on sale by open Tender A Procuring Entity may require deposits to deter irresponsible bids and encourage bidders to fulfill the conditions of their bids. The bidding documents should state any requirement for a bid security. The value of any required bid deposit should be expressed as a fixed amount and not as a percentage. The amount should not be more than two percent of the estimated value of the stores, assets or equipment. In determining the amount of bid deposit required, the Procuring Entity should take into account the cost to bidders of obtaining a bid deposit, the estimated value of the stores, assets or equipment and the risk of bidders failing to fulfill the conditions of their bids. The amount should be high enough to deter irresponsible bids, but not so high as to discourage competition. The bidding documents should state that bid deposits 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; an equivalent instrument, such as a stand-by letter of credit; an insurance company security; or any alternative form acceptable to the Procuring Entity, including any forms permitted under schemes issued by the PPOA to facilitate access to securities by small enterprises; and From an institution acceptable to the Procuring Entity in the case of instruments issued by financial institutions; The conditions for forfeiture of a bid deposit should be specified in the bidding document. The Procuring Entity should release bid deposits promptly to unsuccessful bidders upon expiry of the term of the deposit or it may form part of the winning bidders purchase price.

Bids should be invited through the publication of an announcement of tendering proceedings. No pre-qualification should be conducted for disposing of stores, assets or equipment. Prequalification may only be resulted to with the prior approval of the PPOA. Contents of Announcement of Public Tender Sale Proceedings Where the Procuring Entity publishes an announcement of tendering proceedings, this should be published in the form of an invitation to tender notice, inviting all potential bidders to submit bids. Invitation to tender notices should include: The name, address and contact details of the Procuring Entity; The nature of the disposal requirement, including the quantity and / or dimensions of stores, assets and equipment and the location and timetable for disposing of the stores, assets and equipment to the selected bidder; A statement of any key technical requirements, qualification requirements and evaluation criteria, such as a evidence of qualification to dispose of the stores, assets or equipment in the context of public health and safety and environmental protection or the application of a margin of preference; Instructions on obtaining the bidding documents, including any price payable and the language of the documents; and Instructions on any pre-bid conference, site visits, access to stores, assets and equipment for potential bidders to assess the conditions, specifications and value of those; Instructions on the location and deadline for submission of bids. Publication of Announcement in Public Tender Sale Proceedings The invitation to tender notice should be: Published at least once in a daily newspaper, which must be of nation-wide circulation to reach sufficient bidders to ensure effective competition; and may in addition be: 1. Broadcast over the radio or television, on the stations and programmes and at a time most likely to target potential bidders; 2. To the extent feasible, published on the internet, including any website established by the PPOA. 3. Published on the notice board of the procuring entity. Where tendering is international, the notice should also be published in media of wide international circulation or on widely read internet sites, in the English language. In addition, where the Procuring Entity believes it is necessary to ensure wide competition, it may send the notice directly to potential bidders. The Procuring Entity should keep a record of any bidders to whom the notice is sent directly, which should form part of the disposal record. Contents of Bidding Documents for the Public Tender Sale Method Procuring Entities should use the appropriate standard disposal bidding document issued by the PPOA in preparing bidding documents. The bidding documents should provide bidders with all the information that they require in order to submit bids that are responsive to the needs of the Procuring Entity. In particular, the bidding documents should include: A clear description of the stores, assets or equipment; An indication of the reserve price where the Procuring Entity decides to use it; Instructions on the preparation of bids, including any standard forms to be submitted and the documentary evidence and information required from bidders; Instructions on the sealing, labeling and submission of bids, including the location and deadline for submission and procedures for the withdrawal, modification or replacement of bids; Instructions on participation to pre-bid conferences, site visits and on access to the stores, assets or equipment such a dates, time and conditions; Information on the methodology for the evaluation of bids, any evaluation criteria to be applied and the manner in which the criteria should be applied;; Information on the procedure for contract award, including the requirement for publication of a notice of proposed award and the bidders‘ right to appeal; The type of contract to be awarded; The terms and conditions of the proposed contract; and Information on the Bidder‘s right to appeal under the administrative review process and on the Government‘s policy on fraud and corruption, including the debarment of bidders. Eligibility Criteria for the Public Tender Sale Method The Procuring Entity should ensure that the compliance criteria does not discriminate any person or entity. The eligibility criteria may require evidence of the qualification or certification or registration of the potential bidders to prove their capability to dispose of stores, assets and equipment that may present a public health and safety threat, an environmental risk or any other cause that may require such evidence. The eligibility criteria should be detailed in the bidding documents and instructions to bidders

A Procuring Entity should undertake annual stocktaking of stores and valuation of assets and equipment and maintain an up to date inventory register. Procuring Entities should prepare a disposal plan for each fiscal year. Annual disposal planning should be integrated with applicable budget processes and based on indicative or approved budgets, as appropriate, for any disposal linked to replacement. The Disposal Planning shall be done at the same time as the Procurement Planning. Contents of Annual Disposal Plan The annual disposal plan shall be prepared by the disposal committee in consultation with the head of the procurement unit and the heads of user departments. Every procuring entity shall establish a disposal committee in accordance with Regulation 92 (1). Regulation 92 (3) provides that the disposal committee shall first meet within 14 days of its appointment and subsequently at least once in every quarter. It is here clarified that what is critical is not the meetings of the disposal committee but the tasks it shall undertake to ensure that the disposal plan is implemented. Procuring entities shall dispose off their stores and equipment at least once every year. The annual disposal plan for each Procuring Entity should include: A detailed breakdown of the stores, assets and equipments to be disposed of; A schedule of the disposal; An indication of the justification for disposal; An estimate of the value of each store, asset or equipment; A reference to the asset register or records of the stores; An indication of the method of disposal envisaged for each disposal requirement, including any need for pre-qualification, and the anticipated time for the complete disposal cycle, taking into account the applicable approval requirements; An indication of whether the disposal of the stores, assets or equipment will be managed by the Procuring Entity or any special agency designated or hired;  An indication of the resources available for managing the disposal workload.

Disposal is a critical element of the stores, equipment and other assets management of a Procuring Entity. When any equipment is obsolete, its keeping, through maintenance costs, storage, parking, insurance, etc., may well exceed the returns that can be derived from that piece of equipment and the investment of additional monies. When stores are perishable, keeping them run risks of misuse, using shelf space unduly and not signaling requirements for what may be life savings products. Disposal is thus one of the elements of managing procurement and supply and distribution. It focuses on safeguarding assets and on sending information for decision making. Disposing is thus a function that is necessary to guarantee that public monies are not applied to useless or obsolete equipment and assets and that when stores are disposed of, they are sold at the best achievable value in the market. Disposal may be considered as the third life of any items acquired by a Procuring Entity; First, it is procured and accepted (the procurement cycle); Second it is utilized by the Procuring Entity in the discharge of its duties (the usage life cycle, often referred to as life cycle); Third and finally, it has then to be disposed off (the disposal cycle).Because disposal involves residual values that may be received and can contribute to the cost of renewal, it involves deciding when to dispose of a certain item and may involve health and safety standards issues. It has to be regulated and managed as provided for by the Act and the Regulations. ITEMS FOR DISPOSAL Regulations define ―Asset‖ as movable and immovable property, tangible and intangible, including immovable property stores, equipment, shares, intellectual rights vested in the state or proprietary rights. It is here therefore clarified that disposal of assets which are not stores or equipment shall not be disposed of under this part although the disposal procedure or method provided in the part may be adopted. For greater clarity where fixed assets like buildings are condemned and are to be disposed of, they shall be disposed of under this part but the land on which they stand is not to be disposed off. For further clarification, land, shares and rights are not to be disposed of under this part. Where a procuring entity has a problem in deciding whether any of its asset or property is disposable under this part, the PPOA shall be consulted. It also here clarified that items which are sold by a procuring entity in its normal business should not be treated as disposal e.g. sale of meat by the Kenya Meat Commission or furniture and farm produce by the Kenya Prisons Services.

Size of the Buying organization and consumption rates This may sound glib, but it is true. Take retail for example – if you have thousands of shops and significant buying power suppliers may be able to justify the management cost against the potential reward where the customer is considerably smaller suppliers may be less willing to risk the financial cost against the likely payback. Trust Is Hard To Earn When everything goes well within the supply chain, there is no problem with vendor managed inventory systems, but to establish a really trusting relationship takes time. Switching over to VMI does require a certain level of trust on behalf of all parties for example Will the supplier deliver as appropriate Will the customer consume as expected Have the right products been selected Many organizations start small, with only a certain range of products, this builds trust, which means that in the early days of the VMI, rewards maybe smaller but the process is de-risked. allowing VMI time to ‗bed in‘ and to work out. It‘s important that you consider this upfront in order that your implementation doesn‘t take overly long!!

A means of optimizing Supply Chain performance in which the manufacturer is responsible for maintaining the distributor‘s inventory levels. The manufacturer has access to the distributor‘s inventory data and is responsible for generating purchase orders. Vendor-managed inventory (VMI) is a family of business models in which the buyer of a product (business) provides certain information to a vendor (supply chain) supplier of that product and the supplier takes full responsibility for maintaining an agreed inventory of the material, usually at the buyer’s consumption location (usually a store). A third-party logistics provider can also be involved to make sure that the buyer has the required level of inventory by adjusting the demand and supply gaps. As a symbiotic relationship, VMI makes it less likely that a business will unintentionally become out of stock of a good and reduces inventory in the supply chain. Furthermore, vendor (supplier) representatives in a store benefit the vendor by ensuring the product is properly displayed and store staff are familiar with the features of the product line, all the while helping to clean and organize their product lines for the store. One of the keys to making VMI work is shared risk. In some cases, if the inventory does not sell, the vendor (supplier) will repurchase the product from the buyer (retailer). In other cases, the product may be in the possession of the retailer but is not owned by the retailer until the sale takes place, meaning that the retailer simply houses (and assists with the sale of) the product in exchange for a predetermined commission or profit (sometimes referred to as consignment stock). Vendors benefit from more control of displays and more customer contact for their employees; retailers benefit from reduced risk, better store staff knowledge (which builds brand loyalty for both the vendor and the retailer), and reduced display maintenance outlays. Consumers benefit from knowledgeable store staff who are in frequent and familiar contact with manufacturer (vendor) representatives when parts or service are required. Store staff have good knowledge of most product lines offered by the entire range of vendors. They can help the consumer choose from competing products for items most suited to them and offer service support being offered by the store. Vendor managed inventory (VMI): three steps in making it work 1. Clarify expectations. There needs to be thorough discussion about how the system will benefit both organizations in the long term or one of the parties, particularly the supplier, is prone to disappointment with some of the short-term results. If these items are not addressed the program will likely be terminated quickly with neither side gaining any of the benefits expected from the program. The objective is clear and constant communication between the supplier and customer. When the two parties work in conjunction they can be assured that the planning function, for both sides, will begin to smooth over time. 2. Agree on how to share information. If the supplier and customer can agree to share information vital to restocking in a timely manner, then the odds of a synchronized system will dramatically improve. Proprietary information would not have to be shared between the supplier and customer, but enough information to maintain a steady flow of goods is necessary. The customer should be willing to share production schedules and/or forecasts to provide some visibility for the supplier. 3. Keep communication channels open. When the two parties set out to implement a VMI program, they need to meet and discuss their goals and how they need to proceed in order to realize those goals. Once a VMI program has been activated, each side needs to understand that there are going to be some miscues. These miscues need to be studied as opportunities for learning and then used to avoid repetitive problems in the future.

Enterprise resource planning (ERP) is business management software—usually a suite of integrated applications—that a company can use to store and manage data from every stage of business, including: Product planning, cost and development Manufacturing Marketing and sales Inventory management Shipping and payment ERP provides an integrated real-time view of core business processes, using common databases maintained by a database management system. ERP systems track business resources—cash, raw materials, production capacity—and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across the various departments (manufacturing, purchasing, sales, accounting, etc.) that entered the data. ERP facilitates information flow between all business functions, and manages connections to outside stakeholders. Enterprise system software is a multi-billion dollar industry that produces components that support a variety of business functions. IT investments have become the largest category of capital expenditure in United States-based businesses over the past decade. Though early ERP systems focused on large enterprises, smaller enterprises increasingly use ERP systems. Organizations consider the ERP system a vital organizational tool because it integrates varied organizational systems and facilitates error-free transactions and production. However, ERP system development is different from traditional systems development. ERP systems run on a variety of computer hardware and network configurations, typically using a databaseas an information repository. Advantages The fundamental advantage of ERP is that integrating myriad businesses processes saves time and expense. Management can make decisions faster and with fewer errors. Data becomes visible across the organization. Tasks that benefit from this integration include: Sales forecasting, which allows inventory optimization (used in the best possible way). Chronological history of every transaction through relevant data compilation in every area of operation. Order tracking, from acceptance through fulfillment Revenue tracking, from invoice through cash receipt Matching purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced) ERP systems centralize business data, which: Eliminates the need to synchronize changes between multiple systems—consolidation of finance, marketing, sales, human resource, and manufacturing applications Brings legitimacy and transparency to each bit of statistical data Facilitates standard product naming/coding Provides a comprehensive enterprise view (no “islands of information”), making real–time information available to management anywhere, any time to make proper decisions Protects sensitive data by consolidating multiple security systems into a single structure Benefits ERP can greatly improve quality and efficiency of the business. By keeping a company’s internal business process running smoothly, ERP can lead to better outputs that benefit the company, such as customer service and manufacturing. ERP supports upper level management, providing critical decision making information. This decision support lets upper management make managerial choices that enhance the business. ERP creates a more agile company that better adapts to change. ERP makes a company more flexible and less rigidly structured so organization components operate more cohesively, enhancing the business—internally and externally. ERP can improve data security. A common control system, such as the kind offered by ERP systems, allows organizations the ability to more easily ensure key company data is not compromised. ERP provides increased opportunities for collaboration. Data takes many forms in the modern enterprise. Documents, files, forms, audio and video, emails. Often, each data medium has its own mechanism for allowing collaboration. ERP provides a collaborative platform that lets employees spend more time collaborating on content rather than mastering the learning curve of communicating in various formats across distributed systems. Disadvantages Customization is problematic. Re-engineering business processes to fit the ERP system may damage competitiveness or divert focus from other critical activities. ERP can cost more than less integrated or less comprehensive solutions. High ERP switching costs can increase the ERP vendor’s negotiating power, which can increase support, maintenance, and upgrade expenses. Overcoming resistance to sharing sensitive information between departments can divert management attention. Integration of truly independent businesses can create unnecessary dependencies. Extensive training requirements take resources from daily operations. Due to ERP’s architecture (OLTP, On-Line Transaction Processing) ERP systems are not well suited for production planning and supply chain management (SCM). Harmonization of ERP systems can be a mammoth task (especially for big companies) and requires a lot of time, planning, and money. Recognized ERP limitations have sparked new trends in ERP application development. Development is taking place in four significant areas: more flexible ERP, Web-enabled ERP, inter-enterprise ERP, and e-business suites.

Distributions Requirements Planning is the method used by supply chain entities to plan orders in the whole supply chain taking into accounts the inventories to be kept along with buffer or safety stock, placing the orders with the manufacturer to replenish inventories to meet customer orders, etc. It is similar to materials requirements planning (MRP) except that MRP is used in manufacturing companies and DRP is used in logistics companies. DRP tries to efficiently carry out the whole process of completing customer orders by minimizing shortages and reducing the overall costs comprising of ordering, transporting and inventory holding costs. Distribution resource planning (DRP) is a method used in administration for planning orders within a supply chain. DRP enables the user to set certain inventory control parameters (like a safety stock) and calculate the time-phased inventory requirements. This process is also commonly referred to as distribution requirements planning. Distribution requirements planning (DRP) is designed to optimize the movement of inventory in a multi-warehouse environment so that demands can be met effectively and efficiently without relying on excessive stock holdings. Companies that would typically use DRP include those in the wholesale or manufacturing sectors which have regional demand fed by one or more supply warehouses or manufacturing plants. DRP provides the drivers that enable the Requirements Planning module to suggest Supply Chain Transfers from one warehouse to another rather than a purchase order on an external supplier or a job on production. Suggestions are based on the closest warehouse in a chain of supplying warehouses, resulting in stock being supplied from oversupplied warehouses to those with a demand. DRP uses several variables: the required quantity of product needed at the beginning of a period the constrained quantity of product available at the beginning of a period the recommended order quantity at the beginning of a period the backordered demand at the end of a period the on-hand inventory at the end of a period DRP needs the following information: the demand in a future period the scheduled receipts at the beginning of a period the on-hand inventory at the beginning of a period the safety stock requirement for a period

First problem with MRP systems – the integrity of the data. If there are any errors in the inventory data, the bill of materials (commonly referred to as ‘BOM’) data, or the master production schedule, then the output data will also be incorrect (“GIGO”: Garbage In, Garbage Out). Data integrity is also affected by inaccurate cycle count adjustments, mistakes in receiving input and shipping output, scrap not reported, waste, damage, box count errors, supplier container count errors, production reporting errors, and system issues. Many of these types of errors can be minimized by implementing using bar code scanning. Most vendors in this type of system recommend at least 99% data integrity for the system to give useful results. Second problem – systems is the requirement that the user specify how long it will take for a factory to make a product from its component parts (assuming they are all available). Additionally, the system design also assumes that this “lead time” in manufacturing will be the same each time the item is made, without regard to quantity being made, or other items being made simultaneously in the factory.

The basic functions of an MRP system include: inventory control, bill of material processing, and elementary scheduling. MRP helps organizations to maintain low inventory levels. It is used to plan manufacturing, purchasing and delivering activities. “Manufacturing organizations, whatever their products, face the same daily practical problem – that customers want products to be available in a shorter time than it takes to make them. This means that some level of planning is required.” Companies need to control the types and quantities of materials they purchase, plan which products are to be produced and in what quantities and ensure that they are able to meet current and future customer demand, all at the lowest possible cost. Making a bad decision in any of these areas will make the company lose money. A few examples are given below: If a company purchases insufficient quantities of an item used in manufacturing (or the wrong item) it may be unable to meet contract obligations to supply products on time. If a company purchases excessive quantities of an item, money is wasted – the excess quantity ties up cash while it remains as stock and may never even be used at all. Beginning production of an order at the wrong time can cause customer deadlines to be missed. MRP is a tool to deal with these problems. It provides answers for several questions:  What items are required? How many are required? When are they required? MRP can be applied both to items that are purchased from outside suppliers and to subassemblies, produced internally, that are components of more complex items. The data that must be considered include: The end item (or items) being created. This is sometimes called Independent Demand. How much is required at a time. When the quantities are required to meet demand. Shelf life of stored materials. Inventory status records – Records of net materials available for use already in stock (on hand) and materials on order from suppliers. Bills of materials – Details of the materials, components and sub-assemblies required to make each product. Planning data – This includes all the restraints and directions to produce the end items. This includes such items as: Routing, Labor and Machine Standards, Quality and Testing Standards, Lot sizing techniques, Scrap Percentages, and other inputs.

Material Requirement planning (MRP) is a technique used to determine the quantity and timing requirements of ―depended demand‖ materials used in the manufacturing operation. The materials can be purchased externally or produced in-house. The important characteristic is that their use is directly dependent on the scheduled production of a larger component or finished product, hence the term ―dependent demand‖. For example, a refrigerator door is dependent demand item in the production of a refrigerator. Material Requirements Planning (MRP) is a production planning and inventory control system used to manage manufacturing processes. Most MRP systems are software-based, while it is possible to conduct MRP by hand as well. An MRP system is intended to simultaneously meet three objectives: Ensure materials are available for production and products are available for delivery to customers. Maintain the lowest possible material and product levels in store Plan manufacturing activities, delivery schedules and purchasing activities. Most versions of MRP act as information processing systems which seek to develop and maintain a set of orders that support the plan, while simultaneously maintaining inventories within the production system at reasonably low levels. Orders within MRP system fall into two categories: (1) open orders which have been released but have not yet arrived and (2) planned orders which are developed in anticipation of future releases.