Kshs 8,000 for a Thermos flask is a good bargain

What’s in a thermos flask? Media reports that Kisii County Assembly purchased thermos flasks at more than Kshs 8,000 have generated a harsh reaction from members of the public, citing wanton misuse of taxpayer’s money as the items were said to have been purchased at prices much higher than the prevailing market rates.

Section 54(2) of the Public Procurement and Asset Disposal (PPAD) Act 2015 prohibits the procurement of goods and services at inflated prices requiring those who do so to refund losses resulting from their actions. There is, however, no single known incident where this law has been applied despite the EACC and Auditor General raising queries.

This puts to question the effectiveness of public procurement procedures and whether they have achieved their goal of ensuring that national and local governments are getting supplied goods, works and services in a timely and cost effective manner and by qualified contractors, suppliers and service providers.

The PPAD Act by design emphasizes more on process than the result. Procurement officials can, therefore, take advantage of existing loopholes and manipulate the results while following procedure. It becomes impossible to prosecute such fraud. Even in the rare cases where there may be no fraud, the process in itself makes the pricing of goods and services expensive.

Taking the purchase of flasks by Kisii County Assembly as a case in point, there is usually a raft of requirements even when bidding to supply simple items meaning that suppliers who could have made the process competitive are locked out. The tender process is also tedious with excessive paperwork which is at times unnecessary.

The bidders could have been required to provide bid bonds and performance bonds to protect the procurement entity in case they underperform. This is necessary for large complex projects but unnecessary for small everyday items. Additionally, the ‘market price’ always mentioned does not consider delivery and other associated costs. The government also takes too long to pay suppliers and to cushion themselves, they would hike prices as a form of ‘interest’ to this unofficial financing they advance to the government.

The above, if critically interrogated, will lead to the realization that from a ‘market price’ of Kshs 2,000 per thermos flask, a supplier charging Kshs 8,000 per flask is actually quite competitive. I would personally not supply the flasks at less than Kshs 10,000 each and I would be shocked if someone is able to supply them at a price lower than Kshs 8,000.

Such complex procurement procedures and requirements are only useful in the provision of specialized goods and services whose price ranges are high and where there is a high risk especially if mistakes are made. They protect the procuring entity from losses and ensures that they get value for money.

There is no reason why we should not purchase flasks for the government just the same way we do for our private offices and homes. Withdraw funds and send someone to the supermarket. Of course, this would be an illegality, a breach of procurement laws.

Machakos governor Dr. Alfred Mutua has an ongoing case where he is accused of personally sourcing used Subaru Outback vehicles for his executive committee members. The matter at hand has nothing to do with whether the county government lost funds in any way through the transaction. It is about the process which he flouted, never mind the money saved.

Granted that we must have systems and processes to ensure that we have order as people, if left to handle matters whichever way they deem fit, would also abuse such opportunities, it is important to ensure that such are meant to add value and not be bureaucratic hurdles with loopholes that officials use to swindle the taxpayers off huge sums of money.

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