Chapter 1: Prepare public procurement plan

Procurement planning is a critical phase in public procurement management that ensures organizations acquire the right goods and services at the right time, price, and quality. In the Kenyan public sector, effective procurement planning aligns with legal frameworks such as the Public Procurement and Asset Disposal Act, 2015, and supports transparency and accountability. This chapter explores essential concepts related to the procurement of goods and the objectives that guide procurement activities, equipping procurement professionals with foundational knowledge to prepare robust procurement plans.

1.1 Procurement of Goods

Procurement of goods is the acquisition of tangible items that a public entity needs to carry out its mandate: stationery for its offices, spare parts for its vehicles, pipes for a water scheme or furniture for a new block. A procurement officer who plans the goods an entity will buy in a year must first speak the language of the work. The terms below (procurement, purchasing, planning, goods, services, works and budget) are used again in every other topic of this unit, so each is defined once here and applied later.

1.1.1 Definition of terms

Definitions fix what an officer means when a user department asks for "a purchase", "a supply" or "a job". The same need can be goods, services or works, and the classification decides the documents, the thresholds and the people involved. The terms in this topic fall into three groups:

• Process terms: procurement, purchasing and planning describe what the officer does.
• Object terms: goods, services and works describe what is acquired.
• Money term: budget describes the funds that make the acquisition possible.

An officer who mixes these terms, for example by calling a road repair "a supply of goods", will use the wrong specifications and the wrong contract form.

1.1.2 Procurement

Procurement is the whole process of acquiring goods, services or works from an outside source by purchase, hire, lease, licence or any other contractual means, from identifying the need to the point when the item is received, accepted and paid for. In a public entity it is carried out under the Public Procurement and Asset Disposal Act, 2015, which requires fairness, transparency, accountability and value for money.

The main stages of the process are:

1. Identifying the need and confirming that it is in the procurement plan.
2. Preparing the specification or terms of reference.
3. Choosing the method of procurement and the source of supply.
4. Inviting and evaluating offers.
5. Awarding the contract and notifying the bidders.
6. Receiving, inspecting and accepting what was supplied.
7. Paying the supplier and keeping the records.

Example: a roads depot that needs 40 tonnes of bitumen emulsion for patching works does not simply order it. The need is checked against the plan and the budget, specified, advertised or quoted for under the right method, awarded, delivered to the depot store, inspected and paid for.

1.1.3 Purchasing

Purchasing is the commercial act of buying: placing the order with the chosen supplier, agreeing quantity, price and delivery date, following up the delivery and approving the invoice for payment. It is one part of procurement, usually the part from order to payment, and it is mostly routine and repetitive.

The difference between the two terms is one of scope:

• Procurement: covers the whole cycle, including planning, specification, sourcing, evaluation, contract management and disposal.
• Purchasing: covers the transaction of buying once the supplier is chosen.
• Decision level: procurement involves policy and strategy decisions, while purchasing mostly follows decisions already made.
• Documents: purchasing is centred on the local purchase order or contract, the delivery note and the invoice.

A store clerk raising a local purchase order for cleaning materials from a supplier already on the entity's framework is purchasing. The officer who decided what to buy, how and from whom was procuring.

1.1.4 Planning

Planning is deciding in advance what will be bought, in what quantity, when it is needed, how it will be bought and how it will be paid for. In procurement, planning turns the needs of the user departments into one schedule for the financial year, which runs from 1 July to 30 June.

Good procurement planning does the following:

• Combines demand: the needs of several departments for the same item are added together so that the entity buys in bulk and gets a better price.
• Fits the budget: nothing is planned that the approved funds cannot pay for.
• Sets the timing: each procurement is given a start date that leaves enough time for the method chosen, so that goods arrive before they are needed.
• Reduces emergencies: items that can be foreseen are not bought in a rush at high prices.
• Supports monitoring: the plan is the yardstick against which progress is checked during the year.

Planning is the subject of this whole chapter. This topic only defines the term; the layout, content and process of a procurement plan are covered in Procurement plan.

1.1.5 Goods

Goods are the physical, tangible objects an entity buys: raw materials, products, equipment, and objects in solid, liquid or gaseous form. Where a supply includes incidental services such as delivery, installation or training, the supply is still treated as goods as long as the value of those services does not exceed the value of the goods themselves.

Characteristics of goods

• Tangibility: goods are physical items that can be inspected, measured and tested before they are accepted.
• Standardisation: many goods have standard specifications, which allows uniform quality checks and easy comparison of offers.
• Storage and handling: goods need suitable storage and handling to keep their quality until they are issued.
• Quantifiable: the quantity needed can be counted, weighed or measured and so can be planned precisely.
• Life cycle: goods have a useful life, which affects when they are bought and how their cost is budgeted.

Types of goods

• Consumables: items used up quickly, such as stationery, fuel and cleaning materials, which are bought again and again.
• Durable goods: items that serve for several years, such as computers, vehicles and generators.
• Capital goods: large assets used to produce a product or deliver a service, such as a borehole pump set, a grader or workshop machinery.
• Specialised goods: items that need exact technical specifications, such as laboratory reagents or calibrated instruments.
• Standard goods: common items with well-known specifications and market prices, such as cement, paper and office chairs.

Factors to consider when procuring goods

• Budget availability: funds must be available and sufficient for the planned quantity.
• Quality specification: clear, measurable standards prevent the purchase of substandard goods.
• Supplier capacity: the supplier must be able to deliver on time and to the required quality.
• Market conditions: price changes, seasonal supply and availability affect when and how an item is bought.
• Legal compliance: the procurement law and the entity's own policies must be followed so that the purchase can be defended at audit.

1.1.6 Services

Services are activities performed for the entity by an outside provider, where what is bought is the work, skill or advice and not a physical product. Under the procurement law, services are the objects of procurement that are neither goods nor works, and they fall into two kinds.

Non-consultancy services

These are routine or technical services that do not depend on advice or professional judgement: cleaning, security guarding, catering, vehicle hire, equipment maintenance, courier delivery and printing. They are bought mainly on price and the ability to perform, and the output is measured against a service level.

Consultancy services

These are services of an intellectual and advisory nature supplied by professionals using their skills: engineering design, supervision of construction, legal advice, audit, valuation and feasibility studies. They are bought mainly on the quality of the consultant's proposal and experience, so the evaluation differs from that of goods.

Example: hiring a firm to guard the entity's stores is a non-consultancy service. Hiring a firm of engineers to design a new store building is a consultancy service.

1.1.7 Works

Works are construction-related activities: the construction, reconstruction, demolition, repair or renovation of a building, road, bridge, water supply or other civil engineering structure, together with site preparation, excavation, installation of plant and finishing. Services that are incidental to the works, such as drilling, surveying or soil testing, belong to the works if their value does not exceed the value of the works.

Works differ from goods in several ways:

• Site-bound: the output is built on the client's site and cannot be inspected at a supplier's premises.
• Long duration: works take weeks or months, so payment is made in stages against certified progress.
• Supervision: an engineer or architect supervises the work and certifies completion.
• Securities: contracts for works normally require guarantees such as a performance security, and the entity holds a retention until defects are corrected.

Example: building a new fuel store for a depot is works. Buying the fuel tanks to be fitted is goods.

1.1.8 Budget

A budget is a financial plan that states the income expected and the expenditure approved for a period, usually one financial year. A public entity may only spend what has been approved, so the budget limits every procurement it plans.

The link between budget and procurement works as follows:

1. The user department states its needs, with estimated costs, when the budget is prepared.
2. The approved budget gives each department a vote for the year.
3. The procurement plan lists only the items the approved funds can pay for, with the estimated cost of each.
4. Before an award is made, the officer confirms that funds are available under the right budget line.
5. Commitments are recorded so that the same money is not spent twice.

A procurement that is not in the budget and the plan cannot be started. A shortage of funds during the year is dealt with through an approved reallocation or supplementary budget, and not by splitting a purchase into smaller parts to avoid a threshold, which is not allowed.

Chapter Summary

This chapter explored the procurement of goods by first clarifying key terms such as procurement, purchasing, planning, goods, services, works, and budget to establish a solid foundation. It then examined the objectives of procurement, highlighting its role in achieving value for money, transparency, and efficiency. The principles guiding procurement were discussed, emphasizing fairness, accountability, and competitiveness. The chapter also detailed how the procurement function interacts with other departments to ensure smooth operations and coordination. The specific roles of the procurement officer were outlined, showing their responsibilities in managing procurement activities. Additionally, the overall role of the procurement function was explained as central to organizational success. Finally, the chapter focused on procurement planning by defining what a procurement plan is, its importance, the different types, the steps involved in the planning process, and the typical layout and content of a comprehensive procurement plan.