TENDERING

Definition:

Tendering is the process by which a client or employer invites contractors to place a bid for work on
a project e.g., a construction project. Contractors’ bids are based on the tender documents issued by
the client. The successful tenderer becomes the ‘contractor’ and a ‘party’ to a contract with the
‘client’. The tender documents are legally binding and are signed by all parties involved. The
completed tender documents become part of the contract documents.

Bid: A formal proposal to deliver goods or services at a specified price, as well, describing that the
tender contract requirement will be met.

Basic requirements for eligibility to tender

The following are the general requirements for potential suppliers to public entities:
✓ Registration with Attorney General/incorporation certificate;
✓ Copy of PIN certificate and compliance with VAT (Electronic Tax Register), NSSF and NHIF
and valid tax compliance certificates;
✓ The necessary professional qualifications, capability, experience, resources, equipment and
facilities to provide what is being procured;
✓ Legal capacity to enter into contract;
✓ Not insolvent, in receivership, bankrupt or in the process of being wound up and not subject to
related legal proceedings;
✓ Not precluded from contracting by being an employee of the procuring entity or a member of its
board or committee or certain relatives of the same; and
✓ Not having been debarred by the Director-General (Public Procurement Oversight Authority)
PPOA from participating in procurement proceedings on account of an offence, breach of
contract or other valid reason.

Other requirements that may be specified for certain procurements:

✓ For building works, the potential bidder should be registered in either the Roads or Works
Registers maintained by the Ministry of Roads or the Ministry of Public Works;
✓ Business Permits;
✓ Energy Regulation Commission registration and classification if the works include electrical
installation;
✓ Evidence of completion of similar works in previous 2 years;
✓ Provision of bid security of a certain amount (maximum 2% of the contract price); and
✓ Audited accounts for 3 years.

Special Requirements
Registration procedures for building works
Qualifications for registration as a building works contractor
✓ Minimum technical qualifications and skills prescribed by the National Registration Committee
for the category, type and class of registration being sought. At least one of the shareholders or
partners must have the technical qualifications and skills set by the committee from time to time;
✓ Necessary experience as prescribed by the committee in the field of application;
✓ The applicant’s professional conduct to be such that, in the opinion of the Committee, he/she is a

[email protected]
 person fit and proper to be registered
✓ The necessary plant and equipment for execution of the intended works.
✓ The applicant must show proof of ownership or availability, such as vehicle logbooks, receipts
etc.

Electrical Installations

Electrical contractors include those undertaking contracts for electrical installation, electronics, lift and
escalators installation, generating plants and control panels, solar power generation and photovoltaic
installations.
For electrical installation, a potential bidder has to be registered with the Energy Regulatory Commission.
The regulations governing registration are contained in The Electric Power (Electrical Installation Work)
Rules 2006. The various classes of licenses are as follows:
✓ Class C-2-lowest class of the possible licenses. A holder of such license can handle single phase
supply restricted to up to 2 storey residential and commercial buildings not used as a factory or
public entertainment;
✓ Class C-1-carries out class C-2 work and connection to a 3phase supply at low voltage restricted
to four storey building in buildings not used as a factory or public entertainment;
✓ Class B- Carries out Class C-1work but without limitation to number of storey whether used as
factories or places of public entertainment and for connection to supply not exceeding medium
voltage;
✓ Class A-1-Can handle all kinds of electrical installations including very high voltage up to
132KVA; and
✓ Class A-2 for specialized electrical installations.

Qualifications of electrical contractor

For a contractor to be registered as an electrical contractor he/she must be:
✓ A licensed electrician; or
✓ Have in his/her employee, a licensed electrician.
✓ Tools and equipment for the class registering as prescribed with ERC

Advertisement of public procurement opportunities (tenders)

Bid opportunities are advertised in a wide range of media including the following:
✓ Notices may be placed on the various notice boards of Ministries, Parastatals, other procuring
entities and the provincial administration such as chiefs, Divisional Officers, District and
Provincial Commissioners;
✓ Electronic media such as radio and television; Newspapers and other print media (both local
and international);
✓ Individual Public Procuring entities’ websites;
✓ The special website for tender opportunities set up by the PPOA at www.tenders.go.ke.

The form of advertisement will depend on the size and complexity of the goods, works or services being
procured.
Content of Advertisements
The content of an advertisement will vary according to what is being procured and the method of
procurement.
A typical advertisement for works will contain:

[email protected]
 ✓ Scope of works (a brief description of the works required);
✓ Basic requirements for qualification;
✓ Arrangements for collecting documents, including any payment required; and
✓ Time and place of submission of tender or quotation (this requirement must be fully observed, as
any late submission will be disqualified).

TYPES OF TENDERS

Open tendering - It is the Government of Kenya’s preferred method of procurement. However, alternative
procurement procedures may be used in certain circumstances. This is where an opportunity (including all
tender documents) is advertised inviting providers to bid directly for a contract.
All interested parties then submit a tender. Scoring takes place and the successful organization is
awarded the contract. Sometimes there is a selection stage first, which is then followed by the award
stage.

Restricted tendering- This involves the opportunity being advertised in the relevant places and
media. Organizations will then submit an expression of interest and fill in a pre-qualification
questionnaire. Successful organizations will go onto select list and be given an invitation to tender
with the tender documents. Tender documents are completed and submitted. From the submitted
tender documents scoring takes place and the successful organization is awarded the contract. The
select list may be used for a period of up to eight years. So it is always useful to check when lists are
coming to an end to see when your organization could be included. There must be a minimum of five
bidders. This procedure works best when a commissioning body is clear at the start of the process
what it wants to buy in terms of pricing and other award criteria.

Direct procurement (sole bid) - This method may be used where there is only one person or company
that can supply the goods, works or services being procured, where there is no reasonable alternative,
or in certain cases of urgent need

Negotiated procedure - This method can only be used in a limited number of carefully defined cases
(e.g. large capital projects where a range of solutions to deliver are possible). An opportunity is
advertised (the specification is not established at the start of the process) and organizations can submit
an expression of interest and fill in a pre-qualification questionnaire. Successful bidders are invited to
negotiate with the procuring body, which is called the dialogue phase. Once dialogue has generated
solutions to the agreed requirements, final tenders are submitted based on each bidder’s individual
solution. Scoring then takes place and the successful organization is awarded the contract. There must
be a minimum of three bidders

Competitive dialogue - This is a procedure only used in the case of particularly complex contracts.
An opportunity is advertised and organizations can submit an expression of interest and fill in a pre-
qualification questionnaire (the specification is not established at the start of the process). Successful
bidders discuss the form of the contract and technical specifications with the bidders before the tender
documents are issued. The discussion ends when the procuring body can identify a solution to meet its
needs. Bidders then submit a tender based on the solution resulting from the discussion. Scoring then
takes place and the successful organization is awarded the contract. There must be a minimum of three
bidders.

[email protected]
TENDERING PROCESS

i. Prequalification
Prequalification is a preliminary stage of the tendering process that is designed to produce
a short-list of companies that would be capable of meeting the technical standards of the
works or project, without regard to price considerations at this stage. Prequalification
should take into account:
✓ Experience and past performance on similar contracts;
✓ Capabilities with respect to construction and manufacturing facilities; and
✓ Financial position.
Tendering is then confined to companies that have been prequalified.

ii. Specifications
Requirements for an item, works or service to be procured will be specified in the tender document.
Specifications will normally be based upon Kenyan or international standards. Specifications form
part of the tender documents and are the basis on which the technical evaluation is conducted. It is
important that offers should adhere to all mandatory requirements; otherwise the offer may be rejected
as non-conforming.
Goods must be supplied or work done in accordance with the specifications. Items which do not
meet the specified quality or standards may be rejected by the procuring entity who may withhold
payment until items of the required quality are supplied. The time requirements for delivery of goods
or performance of services must also be met.

iii. Types of tender

Procuring entities may produce standing lists of registered tenderers for supply of their requirements
over the coming year. Those on a standing list may be offered an opportunity to tender or submit a
quotation for requirements that arise during the year.
Some tender opportunities will be for framework contracts. These are contracts entered over a
specified period, typically one to three years, and are used for goods and services that are required on a
regular basis, such as office stationery, medical supplies, road maintenance, cleaning, guarding
services etc. A framework contract may contain a Service Level Agreement, specifying the minimum
standards which will have to be met for delivery of the services.
Other tender opportunities will be for the one-off supply of an item or service. Some requirements,
particularly for high-value items or services, will be obtained through open tendering. All potential
bidders, not only those on the standing lists, may compete for open tenders, which are advertised by
the procuring entity. Open competitive bidding can be national or international depending on the
goods, works or services being procured. Potential bidders are allowed a minimum of 21 days to
prepare and submit their bids (30 days for international tendering).

iv. Tender Document

A tender document is a set of documents which may include the following:
✓ Invitation to Tenders;
✓ Instruction to Tenderers/Bidders;
✓ Bid Data Sheet;
✓ General Conditions of Contract;
✓ Special Conditions of Contract;
✓ Schedule of Requirements;

[email protected]
 ✓ Technical Specifications;
✓ Forms-Bid/Tender;
✓ Forms-Security;
✓ Integrity Declaration

v. Completing Tender Documents - When completing a tender document, a potential bidder

should read the Instructions for Bidders, which will contain all the information on how to
complete and return the tender document. Specific requirements of the tender or the bid, for
example, where to place attachments or whether an omission would invalidate the bid, will be
highlighted in the Bid Data Sheet.
vi. Filling Quotation Forms - PPOA (Public procurement oversight authority) has produced a
Standard Request for Quotation (RFQ) form for use by procuring entities. Potential bidders
should read the instructions carefully. The RFQ form has in the first part the item descriptions,
the unit of measure and the quantity required, which will have been completed by the
procuring entity. The bidder will be required to fill in the unit price, any discounts offered, the
brand and country of origin of the goods quoted for, and to compute the price for each item,
adding tax, shipping and miscellaneous costs to arrive at the total quoted price.
vii. Submission of offers - The time and place for submission of offers will be specified in the
tender documents. Bidders must submit their offers by the bid deadline: failure to submit your
bid on time, even by only a few minutes, will lead to your bid not being considered. Some
tender documents will specify that the technical and financial proposals be submitted in
separate inner envelopes within an outer envelope. For these tenders, the technical envelope
will be opened first and the technical evaluation carried out before the financial envelope is
opened. If a technical proposal does not meet requirements, the financial envelope will not be
opened and will be returned to the bidder.
viii. Standard Bidding Documents - PPOA has produced and published a number of Standard
Bidding Documents which will be used with suitable modifications for the procurement of
different requirements
ix. Validity of Bids and Bid Security - Potential bidders are required to submit bids that are
valid for a period specified in the bidding documents. Procuring entities have the option to
demand bid security which can be a fixed sum or a percentage of the estimated value of the
contract. This is specified in the bidding documents and can be up to 2% of the contract price.
Bid securities should be from a reputable bank (local or international), insurance company
(approved by PPOA) or in the form of cash or letter of credit, in the amount specified in the
bid document. A receipt is attached to the returned tender as proof of payment. Bid security is
only valid if it extends at least thirty days after the expiry of the tender validity period. Bid
security is released to unsuccessful tenderers once the contract is awarded to the successful
bidder.
x. Payment for documents - Procuring entities may charge a fee not exceeding KSh 5,000 for a
set of tender or prequalification documents. This payment covers costs for printing,
copying and distribution or for converting documents into electronic format. This fee is
normally paid in cash or bankers’ cheque
xi. Pricing and bid validity - Pricing should be inclusive of all duties, taxes and other levies.
Most entities will require that the bid price be valid for up to 120 days after tender opening to
cater for the evaluation, post tender negotiations and wider consultations when necessary.
xii. Evaluation of tenders -A preliminary evaluation is undertaken by an evaluation committee
soon after opening tenders to ascertain that the tender has been submitted in the correct format,
has been signed, and that the correct number of copies, tender security, validity and any

[email protected]
 required samples have been provided. Any tender that does not meet the requirements is
rejected. Tenders are then evaluated more rigorously for technical conformity, followed by the
financial evaluation which considers prices read out at tender opening, corrections for
arithmetic errors, currency, discounts etc. The lowest priced conforming tender is usually
awarded the contract. However, for some tenders, particularly those based on Requests for
Proposals, a marking scheme may be used. Tender documents contain the evaluation criteria
by which the tenders will be evaluated. The recommendation for contract award by the
evaluation committee will be submitted to the tender committee for approval (procurement
committee for lower-value tenders). The procuring entity has the right to reject all tenders
received and to terminate the procurement proceedings at any time without entering into a
contract.
xiii. Variations and Price Adjustment -The bidding documents shall clearly indicate whether
price adjustment during the period of the contract will be allowed in the event of price changes
occurring in major cost components such as labor, equipment and materials. Variation of
contracts is only allowed if:
✓ The price variation is based on the prevailing Consumer Price Index obtained from the
Central Bureau of Statistics or the monthly inflation rate issued by the Central Bank of
Kenya;
✓ The quantity variation for goods and services does not exceed 10% of the original contract (or
15% in the case of works); The price or quantity variation is to be executed within the period
of the contract; and
✓ The variation has been approved by the procuring entity’s tender committee in
writing.

Terms of payment
a) Goods - Processing of payment for goods commences after their receipt in store, verification that they
meet specifications and signing of the delivery note. The standard terms of payment are 30 days from the
date of invoice. The procuring entity is obliged by law to pay interest on overdue amounts, unless the
contract provides otherwise.
b) Services - Payment for services is also due 30 days from the date of invoice after the user has confirmed
that services meet the Service Level Agreement which forms part of the service contract.
c) Works - In major contracts for equipment and plant which may take some considerable time to complete,
provision is normally made for progress payments on milestone achievements. Contracts for works provide
in appropriate cases for mobilization advances, advances on contractors equipment and materials, regular
progress payments and reasonable retention amounts to be paid after full compliance with the contractor’s
obligations under the contract
RIGHTS OF BIDDERS
Notification of acceptance of tender - The procuring entity will notify the successful bidder that his tender
has been accepted, while at the same time notifying other bidders that their tenders were not successful.
However, at least 14 days must elapse before a written contract may be entered into, to allow time for an
application to be made for administrative review. If the successful bidder refuses to enter into a written
contract, the entity may award the contract to the next best evaluated bidder.

[email protected]
Unsuccessful Bidders A bidder has the right to request the reasons why his bid was unsuccessful.
Regulation 66(2) is clear that the Procuring Entity shall, within 14 days after a request provide written
reasons on why the tender, proposal or application to be prequalified was unsuccessful. Bidders may also
request a summary of the evaluation report pursuant to Section 44(3) of the Act.
Request for Review An independent Administrative Review Board is in place and any aggrieved bidder
can request for review of a decision by a procuring entity. The minimum requirements for lodging a request
for review include: -
✓ The complainant must be a candidate in the procurement process he/she seeks to be reviewed. A
candidate is a person who has submitted a tender to the procuring entity;
✓ The request should be made within fourteen days of the occurrence of the breach complained of or
notification of award;
✓ The applicant seeking a review must specify the breach of duty which has or may result in the
applicant suffering loss or damage;
✓ The Request for Review shall be presented in the manner of Form RB 1, which can be downloaded
from the PPOA website (www.ppoa.go.ke) and is also found in the fourth schedule of the
Regulations 2006;
✓ The request for review should be accompanied by such statements as the complainant considers
necessary to support its request;
✓ The complaint must be accompanied by the requisite fee. The fees for reviews are found in Part II of
the Fourth Schedule to the Regulations. The fee payable upon filing a request for review depends on
the value of the tender quoted by the complainant. In addition, there is an administrative fee of KSh
2,000; a
✓ The request should be submitted to the Board Secretary in 15 bound copies and a soft copy, pages of
which should be consecutively numbered.

The following matters are not subject to review:

✓ The choice of a procurement procedure;
✓ A decision by the procuring entity to reject all tenders, proposals or quotations under Section 36 of
the Act;
✓ Where a contract is already signed in accordance with Section 68 of the Act; and
✓ Where an appeal is considered by the Review Board to be frivolous.
Where an appeal is lodged, procurement proceedings will be suspended. The Review Board will complete
its review within 30 days. A decision made by the Review Board is final and binding on the parties, unless
an aggrieved party appeals to the High Court
Health & Safety - Potential bidders should be aware that importance is attached to health and safety
requirements and these may be specified in tenders.
Environment - Potential bidders should be aware that Kenya is a signatory of the Kyoto Protocol and
environmental factors may be built into the tender and evaluation of bids. Examples of such factors include
but are not limited to carbon footprint, level of forest degradation, emission and spillage of toxic chemicals,
crude oil spills on land or offshore, level of non-biodegradable waste, threats to biodiversity and levels of
radioactive material

[email protected]