1. ADVANTAGES OF REGISTERING WITH AGPO
Since the Kibaki Government reserved atleast 10% of government procurement to Youth, Women and People with disabilities, a lot of companies with majority shareholding of people in these categories have benefitted immensely. Some institutions have waived a huge chunk of requirements to allow preference groups, such as the one you belong to, the chance to compete in tendering for government general supply contracts.
For example, many institutions will not require the standard two to three years’ audited accounts or even the experience/personnel requirements relegated to applicants of the general categories.
However, to enjoy these advantages, you must acquire an Access to Government Procurement Opportunities (AGPO) certificate. To qualify for this certificate under the preference and reservations schemes, an enterprise owned by youth, women or people with disabilities should be a legal entity that:
a) Is registered with the relevant government body;
b) Has a proprietorship or directorship of at least 70 per cent of the preference group they wish to apply for, for instance made up of 70 per cent women to qualify for the women’s category.
The above is assuming you have already registered the company and have:
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- A certificate of incorporation
- A CR12 Form – Do not let the name confuse you; it is just a form indicating where the majority shareholding lies.
- A Tax Compliance certificate – Audited accounts may not be necessary, but KRA needs to validate that your company does not in fact owe the government money.
All the necessary licenses, for instance a National Construction Authority (NCA) clearance certificate for contractors.
2 . PRE-QUALIFICATION
Now that you have your documentation in order and your shiny door opening Access to Government Procurement Opportunities (AGPO) certificate, you can register for pre-qualification.
Pre-qualification is the process of registering your company to supply goods, works, services and consultancies to whichever institution sends out a Notice for Pre-Qualification. If you are successful at pre-qualification and your company is shortlisted as a supplier, then you are half-way there.
Pre-qualification is beneficial, as institutions will call upon pre-qualified suppliers directly to bid for a tender in their field, as opposed to putting out EOIs (Expression of Interest) or RFPs (Request For Proposal) notices, that is, selective tendering. Granted, some institutions announce open EOIs but even then, pre-qualified suppliers have an added advantage.
3. FILLING IN THE TENDER APPLICATION DOCUMENTS
Tender Notices are circulated nationally, for instance in newspapers, and lately, on the Treasury website, (http://supplier.treasury.go.ke ). Be sure to keep checking here to know when tenders that you are prequalified are being advertised.
Bidders are then given a period to purchase or download the tender document from their website. The bids that ultimately comply with the eligibility criteria of the notice and the bidding document are evaluated after tender opening. The tender is then awarded after an exhaustive evaluation.
If reading exhausts you, then tendering is not for you because the bidding process is made of mounds upon mounds of paperwork – tender documents have been known to venture into hundreds of pages.
Filling out the document requires complete presence of mind. You have to be meticulous, as a single attachment or supporting document could disqualify you. Instructions are not only there to guide, they are there to streamline and safeguard the process.
4. HOW TO MAKE A TENDER FINANCIAL QUOTATION
The technical proposal may get you through the first round of elimination, but your financial proposal will define whether or not the man hours and resources put into the project are worth it.
To successfully win a tender, your financial proposal needs to be the most competitive. Many think this means your bid needs to be the lowest, but this is not always true.
The institution’s procurement committee will not only compare your quote to what is readily available in the market, they will also consider your volumes and specifications. In a case where your cost is higher, but your specifications better, you may win over a lower cost with poor or average specs.
When doing your financial proposal, it is important to factor in undocumented resources that may go towards the successful completion of the contact.
This is paramount because once you have submitted your quotation, you cannot amend it thereafter. Besides a contingency amount to cater for possible emergencies, other factors include;
a) Out of town services you may have to perform, such as reconnaissance visits or scouting missions prior to beginning the contract. Factor in transport, accommodation and man power costs, which if not included in the quotation will be an out-of-pocket cost.
b) Material that has recently gone out of stock and has to be sourced abroad, thus increasing operational costs.
/cause you have had to re-route all funds towards the contract’s execution.
Be careful with your quantities! A seasoned contractor will tell you how impactful a decimal in the wrong place or the difference of a quarter inch/cubic centimetre can be. It could very well cost you millions of shillings in a large scale project.
Lastly don’t be afraid to propose extras outside the requirements. You are the professional and know what best works for the scope of work provided.
5. HOW TO GET BANK CREDIT WITH LPOS
Tender documents will ask you to specify your credit period because even with a Local Purchase Order (LPO), institutions can take up to 90 days to honour an invoice; sometimes more. You are, however, contractually obligated to continue supplying the goods, works or services for the duration of the contract.
So what do you do? Start fostering a relationship with your bank. Unfortunately, most banks will not provide a tender guarantee or bid bond for even those that do have high bid premiums that are not sustainable for SMEs.
However, a bank that holds your company account can extend you the credit you require until payment is received. This, for SMEs, may be quite a challenge if you have not had the chance to build your credit history.
As if that is not already enough to deter you, a sprinkle of public entities may require the guarantee to be executed by an insurance company. Obviously, the best options on how to fund a contract for preference groups still poses a challenge.
6. MEETING TENDER DOCUMENTS SUBMISSION DATES
You have done everything you needed to do, including sourcing for impossible samples, untimely supplier quotes and attaining thoroughly coerced for recommendation letters – now you just need to deliver the documents.
Sounds easy enough, yes? Except more often than not, even after weeks of prior planning and doing your best to put everything together, there is almost always that one thing you have to wait for and it almost always comes at the last minute.
7. CHECKING IN ON YOUR SUPPLIERS
Successfully winning a bid is just part of the journey; there is still delivery and execution. Everything is running on an accelerated schedule and you need to have the proper team to get you through the contract.
Suppliers will either be your bane or your salvation, so choose them with care. As a first-timer, your instinct may be to work within your circles and provide opportunities to those around you. The pros of this are you will have more input and can push for quality and professionalism.
The cons are you may end up taking on their responsibilities to ensure everything is running smoothly, which defeats the purpose of delegation.
Seasoned suppliers work best under pressure, but tend to be expensive and may be tempted to fleece newbies, which manifests in sub-standard goods and services. A firm hand and unflinching refusal to accept this treatment will however remedy that.
8. OTHER BENEFICIAL POINTERS
- Attend the sensitisation workshops hosted by institutions. Not only are they insightful on the institutions’ best practices, they also take your contacts or register your company for updates on smaller tender notices. More importantly, some institutions only allow those companies that attend the workshops to submit bids.
- Be patient. Pre-qualification is likely to take up to a year or more as public entities pre-qualify annually or even bi-annually.
- Expect to spend a considerable amount of money on the process.
- You may encounter corruption. However, thanks to the Public Procurement Oversight Authority (PPOA) and other government regulations, it is less rampant in public procurement than it was in previous years, since institutions are now forced to meet certain quotas and criterion to pass their audits.
- Bureaucracy is part of any process, and more so, one that involves the government. Prepare for red tape, rules, regulations and endless protocol