How Mbadi has clipped governors’ wings on chaotic procurement

The National Treasury has moved to rein in governors, who have long been accused of presiding over chaotic and corruption-ridden procurement processes in their administrations.

Treasury CS John Mbadi has insisted on rolling out the new electronic procurement system (eGP), despite protests from governors, MPs and even a High Court order suspending its mandatory use.

The system requires all state agencies, including counties, to upload bids electronically, making them publicly accessible.

President William Ruto has championed the shift, saying it will “enhance transparency and accountability”.

Controller of Budget Margaret Nyakang’o confirmed the Integrated Financial Management Information System (Ifmis) has been reconfigured to automatically block manual procurement uploads.

Since eGP is tied to Ifmis, counties are effectively locked out of manual processes.

“No LPOs (Local Purchase Orders) or LSOs (Local Supply Orders) are being processed because the system is locked. It is not accepting manual orders,” she said.

Revelations of chaotic procurement driven by favours, bribery and proxy companies have characterised the awarded tenders across the counties.

Often, genuine bidders are dropped on flimsy grounds to pave the way for proxy and friendly companies that continuously win tenders.

While the governors are not directly involved in procurement according to the law, they are accused of instructing officers who should be responsible for awarding tenders.

Top county officers responsible for procurement, such as the chief officers and the head of supply chains, are appointed either by the governors or their appointments are influenced by them.

In the past, governors have been convicted of influencing the awarding of tenders to companies owned by their family members and proxies.

Former governors Ferdinand Waititu (Kiambu) and Moses Lenolkulal (Samburu) have been convicted of graft cases involving conflict of interest.

“We are aware that counties are autonomous, but e-procurement is not about taking away their powers. It is about ensuring resources are used effectively,” Mbadi said last week.

This lockout has paralysed county operations, with devolved units unable to procure even essential goods such as medicines since the start of the financial year.

Bungoma Governor Kenneth Lusaka confirmed the crisis, “Yes, things are paralysed.”

Nyakang’o said county officers are only allowed to handle petty cash transactions of up to Sh100,000.

“They can only deal with small values, up to Sh100,000. Beyond that, no commitments are possible,” she said.

Governors argue the rollout has crippled service delivery, particularly in healthcare.

“I can’t procure medical commodities. Suppliers have stopped delivering and we’ve been relying on their goodwill,” a governor from Northeastern Kenya said.

On Tuesday, Nyakang’o approved the disbursement of Sh33.2 billion to counties for August, but the funds cannot be used for procurement. Currently, counties are only paying salaries and pending bills.

This came barely a month after the Treasury released a similar amount to the devolved units for July.

“Many of them are doing salaries and payables in the meantime, but no new commitments can be made until the stalemate is resolved,” she explained, noting national government ministries are also affected.

The Council of Governors has demanded Treasury suspend the rollout of the system, warning that only three of the 47 counties participated in the pilot phase—and all reported major failures.

“If it is not working, it is not working. Don’t push it down our throats,” Mandera Governor Mohamed Abdullahi said.

Nyeri Governor Mutahi Kahiga added, “We have no issue with e-procurement, but we cannot be forced to use a clearly dysfunctional system.”

Mbadi has defended the rollout, arguing that manual procurement—used for decades—has been a hotbed for corruption, favouritism and proxy companies.

“We are aware that counties are autonomous, but e-procurement is not about taking away their powers. It is about ensuring resources are used effectively,” he said.

Mbadi cited Treasury and Head of Public Service circulars as the legal basis for the transition.

“We are not ignoring court orders or resolutions of the National Assembly. We are implementing e-procurement. The manual system can wait,” he said.

The CS noted that the E-procurement system, already in use by several government departments, including State House, has proven effective in tackling challenges such as pending bills.

President Ruto has backed Mbadi, saying procurement corruption drains more than 40 per cent of public funds.

“We will correct the teething challenges, but the ultimate goal is to ensure Kenyans get value for every shilling spent,” he said.

“Many people are used to getting corrupt tenders, something worth Sh2, we buy for Sh10 as a government because of corrupt procurement there with quotations and so on.”

“We have said we are putting this e-procurement in place, so that everybody can know how much an item was bought for and who sold it to the government. And why did the person with Sh2 not get that tender, but the person with Sh10 did? That is what we want to do,” the President added.

For now, however, counties remain in limbo—restricted to paying salaries and pending bills while waiting for a breakthrough in the procurement standoff.

INSTANT ANALYSIS

The government argued that the implementation and use of the eGP system will result in reduced cost of goods, works and services. Others are increased transparency in procurement processes and practices, improved efficiency in procurement by minimising the procurement cycle time, maximisation of value for money and accountability. There will also be improved confidentiality and authentication of transactions between procuring entities and suppliers, streamlined procurement procedures across through the standardisation of processes and practices and enhanced procurement information management that will facilitate procurement planning, monitoring, evaluation and reporting.