How to ensure value for money in government project contracts – Business Daily
Transparency and accountability in managing large and complex contracts will go a long way in ensuring value for money. PHOTO | SHUTTERSTOCK
The Kenya Vision 2030 development blueprint recognises that a well-functioning public procurement system is critical to achieving the national development goals. Making up between 15 percent and 20 percent of GDP, public procurement contributes to greater competitiveness by stimulating trade and fostering foreign direct investment.
Transparency and accountability in the management of large and complex contracts in Kenya is wanting. Lack of frameworks for compliance monitoring and guidelines for managing such contracts, poor contract planning is creating avenues for fraudulent deals.
Procuring entities disregard value for money in their key procurement stages: acquisition planning, supplier selection and contract management. Sufficient funds are also not made available to meet the procurement cost and payments, leading to huge number of pending bills.
Research shows that most State contracts of valued at Sh50 million and above are usually not delivered to specification within six months of original completion date, leading to a huge number of stalled projects.
In 2021, the National Assembly Budget Committee disclosed that projects, including roads, office blocks, dams and irrigation, worth Sh9 trillion started during the Mwai Kibaki and Uhuru Kenyatta administrations stalled due to poor project planning and lack of adherence to guidelines that require secure funding.
Value for money in public procurement can be achieved through the prevention of waste and fostering competition, transparency and accountability during the tendering process. According to the World Bank, value for money ensures commitment to ensuring the best results possible are obtained from the money spent.
Failure to ensure a working public procurement system leads to, among others, corruption, ineffective implementation, lack of transparency in the award of contracts, and lack of accountability on the part of national and county governments.
The nature of public procurement is such that discretionary decisions are made on behalf of government at all levels. Transparency and accountability in spending public funds will go a long way in ensuring value for money.
The writer is a senior research fellow African Institute for Supply Chain Research (AISCR), South Africa.
