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Post Reply: Analysis of Specially Permitted Procurement Procedures in Kenya: Lessons from a Landmark Supreme Court Ruling

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	<p dir="ltr" data-pm-slice="0 0 []">Public procurement laws are designed to ensure fairness, transparency, and accountability in the allocation of government contracts. However, governments worldwide often invoke exceptions such as national security or emergencies to bypass these procedural safeguards. In Kenya, such practices have historically enabled opaque procurement decisions, limiting public scrutiny and institutional oversight. A significant shift occurred with a recent Supreme Court ruling in Petition No. E.1 of 2024, which scrutinized the use of Specially Permitted Procurement Procedures (SPPP) by the Kenya Ports Authority (KPA). This article explores the implications of this ruling, its impact on procurement practices, and the broader lessons for public finance and procurement professionals in Kenya.</p>
<h3 dir="ltr"><strong><em>Background: The Challenge of Opaque Procurement</em></strong></h3>
<p dir="ltr">Governments frequently justify bypassing procurement laws by citing exceptional circumstances. These exceptions, while sometimes necessary, can create opportunities for mismanagement or favoritism if not strictly regulated. In Kenya, the Public Procurement and Asset Disposal Act (PPAD Act) governs procurement processes, emphasizing principles of fairness, equity, transparency, competitiveness, and cost-effectiveness. However, the use of SPPP has historically allowed procuring entities to sidestep these requirements, often under the guise of urgency or administrative convenience.</p>
<p dir="ltr">The Supreme Court's ruling in Petition No. E.1 of 2024 addressed this issue head-on, examining whether KPA's use of SPPP complied with constitutional and statutory standards. The case centered on whether KPA adequately justified the use of SPPP, adhered to mandatory pre-qualification conditions, and aligned with constitutional principles of transparency and accountability. The ruling has set a precedent that reshapes how procurement exceptions are applied in Kenya.</p>
<h3 dir="ltr"><em><strong>Key Issues Addressed by the Supreme Court</strong></em></h3>
<p dir="ltr">The Supreme Court evaluated several critical aspects of KPA's procurement process:</p>
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<p dir="ltr"><strong>Justification of Exceptional Circumstances</strong>: The court assessed whether KPA provided sufficient evidence to warrant the use of SPPP. Section 114(2)(a) of the PPAD Act allows SPPP when open tendering is deemed impossible, impracticable, or uneconomical. KPA's rationale was found lacking, as the court determined that claims of urgency or convenience do not automatically override statutory safeguards.</p>
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<p dir="ltr"><strong>Compliance with Pre-Qualification Requirements</strong>: Section 93 of the PPAD Act mandates a transparent pre-qualification process for SPPP. The court interpreted the word "may" in this context as mandatory when viewed through the lens of Article 227 of the Constitution, which emphasizes transparency and accountability. KPA's failure to conduct a proper pre-qualification process rendered the procurement unlawful.</p>
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<p dir="ltr"><strong>Adherence to Constitutional Principles</strong>: The court examined whether KPA complied with Articles 10(2)(c), 201, and 227(1) of the Constitution, which mandate transparency, accountability, and openness in public procurement. The ruling underscored that these principles are non-negotiable, even under exceptional procurement methods.</p>
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<p dir="ltr"><strong>Compliance with Conditional Approvals</strong>: The Cabinet Secretary had authorized KPA's SPPP subject to specific conditions, such as amending tender documentation. KPA's failure to adhere to these conditions invalidated the procurement process, highlighting the enforceability of such approvals.</p>
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<p dir="ltr"><strong>Appropriateness of the Procurement Framework</strong>: The court found that the SPPP was misapplied, as the project’s scale and commercial implications were better suited to a Public-Private Partnership (PPP) model. Misclassifying the procurement method exposed KPA to legal and reputational risks.</p>
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<h3 dir="ltr"><em><strong>Key Takeaways for Procurement Professionals</strong></em></h3>
<p dir="ltr">The Supreme Court’s ruling offers critical lessons for procurement and public finance professionals:</p>
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<p dir="ltr"><strong>Constitutional Standards Are Mandatory</strong>: All procurement methods, including SPPP, must adhere to constitutional principles of fairness, equity, transparency, competitiveness, and cost-effectiveness. The court rejected the idea that SPPP could be used as a loophole to bypass these standards.</p>
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<p dir="ltr"><strong>Exceptional Circumstances Require Robust Evidence</strong>: Procuring entities must provide clear, demonstrable evidence to justify SPPP. Mere assertions of urgency or impracticality are insufficient, and public bodies must substantiate their claims to avoid legal challenges.</p>
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<p dir="ltr"><strong>Pre-Qualification Is Non-Negotiable</strong>: The requirement for a transparent pre-qualification process under Section 93 is mandatory. Failure to conduct expressions of interest or follow a clear pre-qualification process can render the entire procurement unlawful.</p>
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<p dir="ltr"><strong>Conditional Approvals Must Be Strictly Followed</strong>: Approvals from oversight bodies, such as the Cabinet Secretary, come with binding conditions. Non-compliance with these terms can invalidate the procurement process and expose entities to legal consequences.</p>
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<p dir="ltr"><strong>Correct Legal Frameworks Are Essential</strong>: Mischaracterizing a procurement method, such as using SPPP instead of a PPP model, can lead to statutory errors, financial losses, and reputational damage. Procuring entities must carefully align projects with the appropriate legal framework.</p>
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<h3 dir="ltr"><em><strong>Implications for Public Procurement in Kenya</strong></em></h3>
<p dir="ltr">The ruling marks a turning point in Kenya’s procurement landscape. By curbing the misuse of SPPP, the Supreme Court has reinforced the primacy of constitutional principles in public procurement. This precedent discourages the manipulation of special procedures to award contracts without oversight, ensuring that public resources are allocated transparently and equitably. For government agencies, the ruling underscores the importance of rigorous compliance with procurement laws to avoid legal challenges, audit sanctions, and personal liability under statutes like the Public Finance Management Act and the Leadership and Integrity Act.</p>
<p dir="ltr">For private sector bidders and investors, the ruling emphasizes the need for strict adherence to procurement regulations. Contracts awarded in violation of the PPAD Act or constitutional requirements risk cancellation, injunctive orders, or refund obligations. Engaging experienced legal counsel can help navigate these complexities and mitigate risks.</p>
<h3 dir="ltr"><em><strong>The Role of Legal Expertise in Procurement</strong></em></h3>
<p dir="ltr">Firms like CM Advocates LLP play a vital role in supporting both public entities and private bidders in navigating Kenya’s procurement landscape. Their Public Procurement and PPP Legal Practice Group offers comprehensive services, including:</p>
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<p dir="ltr"><strong>Structuring and Negotiating PPPs</strong>: Ensuring projects align with the correct legal and commercial frameworks.</p>
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<p dir="ltr"><strong>Regulatory Compliance</strong>: Advising on adherence to the PPAD Act and constitutional requirements.</p>
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<p dir="ltr"><strong>Bid Preparation</strong>: Assisting with compliant and competitive bid submissions.</p>
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<p dir="ltr"><strong>Litigation and Dispute Resolution</strong>: Representing clients before the PPARB and courts in cases of non-compliance or disputes.</p>
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<p dir="ltr"><strong>Risk Mitigation</strong>: Conducting due diligence and audits to safeguard investments and ensure compliance.</p>
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<p dir="ltr">With expertise in high-value projects across East Africa, such firms provide strategic foresight and legal precision, helping clients avoid the pitfalls highlighted in the Supreme Court ruling.</p>
<h3 dir="ltr"><em><strong>Conclusion: Compliance as a Cornerstone of Procurement</strong></em></h3>
<p dir="ltr">The Supreme Court’s ruling in Petition No. E.1 of 2024 serves as a clarion call for transparency and accountability in public procurement. For government agencies, private bidders, and investors, compliance with procurement laws is not optional. It is a critical safeguard against legal, financial, and reputational risks. By aligning procurement practices with constitutional and statutory standards, stakeholders can foster trust, promote fairness, and ensure the efficient use of public resources.</p>
<p dir="ltr">For those engaging in Kenya’s public sector, whether through tenders, direct licensing, or PPPs, partnering with specialized legal advisors is essential. Firms like CM Advocates LLP offer end-to-end support, from pre-bid advisory to dispute resolution, ensuring that projects are executed compliantly and confidently. As Kenya continues to strengthen its procurement framework, this landmark ruling sets a high standard for integrity and transparency in public sector engagement.</p>
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