Chapter 2: Submit disposal recommendations

Disposal of organizational assets is a critical function in procurement management, ensuring that redundant, obsolete, or damaged assets are removed efficiently, legally, and transparently. This chapter focuses on the process of submitting disposal recommendations, a stage that demands careful coordination and documentation. In Kenya, public and private institutions must adhere to established procedures to uphold accountability and maximize value recovery. Procurement professionals play a pivotal role in forming disposal committees and preparing technical reports that justify and guide asset disposal decisions.

2.1 Disposal committee

A disposal committee is the group of officers that an accounting officer appoints to examine the assets an entity wants to dispose of and to recommend how, and at what price, each should be disposed of. Disposing of public assets is a high-risk activity, because items can be undervalued, sold to insiders or simply disappear, so the law does not leave the decision to one officer. A committee with mixed skills, working under written appointment and recorded procedures, makes the disposal fair, transparent and defensible at audit. The committee recommends; the approval of the disposal belongs to the accounting officer.

2.1.1 Appointment of asset disposal committee

The accounting officer of the public entity appoints the asset disposal committee in writing, normally on the proposal of the head of the procurement unit, who suggests the members from the departments concerned. The appointment letter names each member, states the committee's task, such as disposing of the assets in the entity's disposal plan, and the period for which it serves. A committee that is not properly appointed has no authority, and its recommendations can be challenged.

The committee is usually made up of officers who bring different knowledge:

• Procurement or stores officer: knows the disposal procedures and keeps the process and the records in order.
• Finance officer: knows the book value of the assets and the financial effect of disposing of them.
• Technical officer: an engineer, ICT officer, mechanic or other specialist who can judge the condition and the remaining use of the assets.
• Representative of the user department: knows how the asset was used and why it is no longer needed.
• Legal or compliance officer: advises on the requirements of the law and the entity's rules.

Internal audit staff normally review the disposal process and do not sit as members, so that their independence is kept.

Example: a state corporation that wants to dispose of obsolete computers, damaged office furniture and a worn-out lorry appoints a committee made up of the head of procurement, the finance manager, the ICT manager, the transport officer and a legal officer.

2.1.2 Factors to consider when appointing a disposal committee

The quality of a disposal depends on the people who recommend it, so the accounting officer weighs several matters before naming members.

• Technical competence: the members must together understand the kinds of asset to be disposed of, for example vehicles, electronics or heavy plant, and may need a specialist for unusual items.
• Integrity and absence of conflict of interest: a member who has a personal interest in the assets or in a likely buyer must declare it and must not serve.
• Independence: members should not be people who would benefit from the disposal, and no one should serve on the committee and also bid for the assets.
• Knowledge of the law and procedures: at least some members must know the disposal requirements of the procurement law and the entity's own rules.
• Representation: the main departments affected, such as stores, finance and the users, should be represented so that every interest is considered.
• Size and quorum: the committee should be small enough to meet quickly and large enough to make decisions properly.
• Availability and seniority: members must have the time to inspect assets and attend meetings and enough standing to give their views freely.
• Confidentiality: members must be trusted to keep reserve prices and recommendations confidential until the disposal is concluded.

2.1.3 Functions of a disposal committee

The functions of the committee run from examining the assets to submitting its recommendations. Each is carried out in writing, and the details are covered in the topics of this chapter that follow.

• Inspect and verify the assets: the committee examines the items listed for disposal, confirms that they exist and checks their condition and category.
• Obtain technical advice: it arranges for a technical report on the condition and value of assets that need expert judgement.
• Review the assets: it checks that each item meets the conditions for disposal and that nothing useful is being disposed of by mistake.
• Determine the reserve price: it sets the lowest acceptable price for assets that are to be sold.
• Choose the method of disposal: it recommends the method that gives the best value and is allowed by the law, such as public auction, public tender, trade-in, donation or destruction.
• Prepare and submit recommendations: it records its findings and recommendations and submits them to the accounting officer for approval.
• Keep records: it keeps minutes, inspection lists, reports and other evidence of its work for audit.

Legal and ethical considerations for the committee

• Compliance with the Act: the committee follows the Public Procurement and Asset Disposal Act, 2015 and the regulations made under it, so that the disposal is lawful.
• Transparency: an open and recorded process builds public trust.
• Avoidance of conflict of interest: members who have an interest in an asset or a buyer stay out of the decision, which prevents favouritism and corruption.
• Fair valuation: proper valuation and competitive methods prevent undervaluation and loss of public funds.
• Documentation: every step is recorded, which gives an audit trail.

Challenges facing disposal committees and how to meet them

• Lack of technical expertise: members may not be able to judge the condition of specialised assets, so training is provided and outside experts are called in.
• Resistance from departments: departments may be reluctant to release assets, so they are involved early and the reasons for disposal are explained.
• Pressure to dispose improperly: managers or outside parties may press for a quick or favoured disposal, so clear policy and the rule that all recommendations are written down protect the members.
• Limited resources: inspection and valuation need time and money, so the disposal plan must provide for them.
• Slow approvals: long chains of approval delay disposal, so the process is streamlined without weakening control.

Chapter Summary

This chapter explored the critical role of the disposal committee in managing organizational asset disposal, including the appointment process, factors influencing committee selection, and their key functions. It detailed the preparation of a technical report, emphasizing the necessary content and the importance of technical expertise for accurate assessment. The review of disposal assets was examined, highlighting the conditions under which such reviews should occur. The concept of reserve price was defined, alongside its purpose, the factors influencing its determination, and the processes for setting and adjusting it. Various methods of asset disposal were discussed, ranging from trade-in and donation to public auction, tender, burying, burning, and dumping, with attention to considerations guiding the choice of method. Finally, the chapter covered how the asset disposal committee submits its recommendations, including the appropriate methods and essential content required for these submissions. Together, these topics provide a comprehensive framework for effective and compliant asset disposal within organizations.