Public Procurement and Finance — 2022

KNEC Diploma in Supply Chain Management, Module II. Original theory examination questions with explained model answers for revision.

July 2022

Paper codes: 2903/202; 3309
Time: Not shown in supplied scan
Instructions: Not shown in supplied scan

Question 1(a) — 10 marks

Explain five reasons that may necessitate regular review of the legal and regulatory framework guiding the public procurement operations in Kenya.

Model answer

  1. Changing technology: electronic systems and new business methods may require updated procedures and controls.
  2. Emerging abuse: experience can reveal loopholes that permit waste, corruption or exclusion.
  3. Policy change: public procurement must remain aligned with relevant constitutional, fiscal and development objectives.
  4. Practical efficiency: unclear or unnecessarily costly procedures can be improved using implementation evidence.
  5. Market change: new supply structures, risks and international commitments may require suitable adjustments.

Question 1(b) — 10 marks

Outline five responsibilities of the user department in the public procurement process.

Model answer

  1. Identify and justify the operational need.
  2. Prepare or contribute accurate technical specifications and quantities.
  3. Provide required dates and information for procurement planning and budgeting.
  4. Supply technical expertise for evaluation where properly appointed.
  5. Inspect or test delivered requirements and confirm satisfactory performance through the authorised acceptance process.

Question 2(a) — 10 marks

Explain five challenges that a public organization may face in an effort to eradicate unethical practices in public procurement operations.

Model answer

  1. Concealed collusion: those involved may falsify records and hide evidence.
  2. Improper pressure: senior officials or outside interests may interfere with objective decisions.
  3. Weak controls: inadequate records, audit and separation of duties allow abuse to continue.
  4. Reporting barriers: fear of retaliation discourages staff and suppliers from raising concerns.
  5. Limited enforcement capacity: shortages of skilled investigators, funds and timely sanctions weaken deterrence.

Question 2(b) — 10 marks

The Budget and Appropriation Committee of parliament has proposed the raising of the country’s debt ceiling in its report. Explain five factors that the members of parliament may consider before approving the proposal.

Model answer

  1. Debt sustainability: assess whether projected revenue and growth can support the additional borrowing.
  2. Debt-service burden: interest and principal repayments must not crowd out essential public services.
  3. Purpose and returns: financing productive, justified projects is different from repeatedly covering avoidable recurrent deficits.
  4. Borrowing risks and terms: consider interest rates, currency exposure, maturity and refinancing needs.
  5. Alternatives and legal limits: evaluate revenue measures, expenditure savings, grants and compliance with the applicable fiscal framework.

Question 3(a) — 10 marks

Public entities are required to carry out pre-qualification of suppliers at the end of every financial year. Explain five factors that may be considered during the pre-qualification exercise.

Model answer

The wording of the supplied question is retained. Qualification checks must follow the applicable procurement framework and the published category requirements; this answer does not treat an annual exercise as a universal condition for every purchase.

  1. Legal eligibility: verify required registration, licensing and compliance documents.
  2. Technical capability: assess facilities, equipment and qualified personnel for the category.
  3. Financial capacity: determine whether the supplier can finance and sustain the work.
  4. Relevant experience: examine similar contracts and references.
  5. Integrity and performance: assess the supplier’s record, applicable debarment status and ability to meet quality and delivery requirements.

Question 3(b) — 10 marks

Outline five roles that the Public Accounts Committee (PAC) of Parliament should play in the control of public expenditure in Kenya.

Model answer

  1. Examine audited public accounts and relevant Auditor-General reports.
  2. Question accounting officers about unauthorised, wasteful or unsupported expenditure.
  3. Assess whether funds were used for the purposes approved by Parliament.
  4. Recommend corrective action, accountability or further investigation through the appropriate authorities.
  5. Follow up implementation of Parliament’s audit recommendations.

Question 4(a) — 10 marks

Explain five ways in which the Public Procurement Information Portal (PPIP) at the Public Procurement Regulatory Authority may enhance transparency in the public procurement operations.

Model answer

  1. Public access: suppliers and citizens can obtain procurement information without relying on private contacts.
  2. Visibility of opportunities: published tender notices widen awareness and participation.
  3. Award disclosure: contract and successful-bidder information enables scrutiny of outcomes.
  4. Comparable records: standard reporting supports analysis across procuring entities and periods.
  5. Monitoring and accountability: an accessible information trail helps oversight bodies and the public identify omissions or unusual patterns.

Question 4(b) — 10 marks

Outline five factors that a procuring entity may consider when choosing a procurement method to adopt in its procurement operations.

Model answer

  1. Legal conditions: the selected method must satisfy the applicable statutory requirements.
  2. Nature and complexity: technical or specialised requirements may need different procedures from routine goods.
  3. Estimated value: use the relevant method thresholds and approval requirements.
  4. Market conditions: the number of capable suppliers and availability of substitutes affect feasible competition.
  5. Time and genuine urgency: the delivery need matters, but poor planning does not automatically justify avoiding competition.

Question 5(a) — 10 marks

Outline five advantages that a public entity may derive from preparing a procurement plan.

Model answer

  1. Aligns purchasing requirements with approved budgets and available funds.
  2. Consolidates similar needs to achieve economies of scale.
  3. Allows realistic sourcing, approval and delivery schedules.
  4. Reduces emergency buying, shortages and avoidable expediting.
  5. Provides a documented basis for coordination, monitoring and accountability.

Question 5(b) — 10 marks

Explain five ways in which value for money objective may be achieved in public procurement activities of a procuring entity.

Model answer

  1. Specify the real need: avoid unnecessary features and define measurable quality and performance requirements.
  2. Encourage suitable competition: compare credible offers using the published criteria.
  3. Evaluate total cost: include delivery, operation, maintenance and disposal rather than purchase price alone.
  4. Manage the contract: monitor milestones, inspect quality and enforce agreed remedies for non-performance.
  5. Prevent waste and abuse: use clear approvals, accurate records, audit and conflict-of-interest controls.

Question 6(a) — 10 marks

You have been appointed a contract administrator in a large project being undertaken by the government of Kenya. Explain five measures you would put in place to ensure successful completion of the project.

Model answer

  1. Establish a baseline: confirm scope, milestones, budget, responsibilities and acceptance criteria.
  2. Monitor progress: compare actual time, cost and quality against the contract and investigate deviations.
  3. Coordinate communication: hold documented reviews with the contractor, users and authorised decision-makers.
  4. Control changes and payments: approve variations lawfully and pay only against verified contractual entitlement.
  5. Manage risks and closure: track risks, enforce remedies when necessary and complete testing, handover and records.

Question 6(b) — 10 marks

Explain five security risks that a public entity may encounter when using the e-procurement system in its operations.

Model answer

  1. Unauthorised access may expose confidential bids and supplier information.
  2. Credential theft or phishing may let attackers act as legitimate users.
  3. Data manipulation may alter specifications, bids, evaluation or payment records.
  4. Malware and ransomware may damage systems or prevent access to procurement information.
  5. Service disruption or loss of records may interrupt deadlines and undermine the audit trail.

Question 7(a) — 10 marks

Public procurement officers are entrusted with the responsibility of management of procurement records at their disposal. Outline five principles that such officers should observe in the discharge of their duty.

Model answer

  1. Accuracy and completeness of the procurement record.
  2. Authenticity and integrity, including controlled amendments.
  3. Confidentiality and authorised access.
  4. Accessibility and orderly retrieval for legitimate operational and audit needs.
  5. Retention, preservation and lawful disposal according to the applicable records requirements.

Question 7(b) — 10 marks

The Public Procurement Authority (PPRA) has completed preparing its strategic plan. Explain five aspects of the authority that the plan should cover.

Model answer

  1. Mandate and direction: state the authority’s purpose, vision, mission and values.
  2. Situation analysis: assess performance, stakeholders, strengths, weaknesses and external risks.
  3. Strategic objectives: identify the outcomes and priorities to be achieved.
  4. Implementation arrangements: assign programmes, responsibilities, timelines and resources.
  5. Monitoring and risk management: define indicators, reporting, evaluation and responses to major implementation risks.

November 2022

Paper codes: 2903/202; 3309
Time: Not shown in supplied scan
Instructions: Not shown in supplied scan

Question 1(a) — 10 marks

The public procurement officers are expected to establish close liaison between public procurement and finance operations in an entity. Explain five ways in which such liaison would improve efficiency in the public procurement operations.

Model answer

  1. Budget alignment: finance confirms that planned purchases are affordable and properly funded.
  2. Timely payment: coordinated invoice checks and payment schedules support reliable supplier relationships.
  3. Accurate costing: shared price, tax and commitment data improve evaluation and expenditure control.
  4. Cash-flow planning: procurement schedules help finance arrange funds when contract payments fall due.
  5. Accountability: matching orders, receipt evidence and invoices reduces errors, duplicate payments and unauthorised expenditure.

Question 1(b) — 10 marks

The Public Procurement and Assets Disposal Act, 2015 recommends that formation of Adhoc committees at various stages of the procurement cycle. Explain five factors that may be considered when selecting members to such committees.

Model answer

  1. Relevant expertise: members need skills appropriate to the technical and commercial requirement.
  2. Independence: disclose and manage conflicts of interest.
  3. Integrity: select people who can protect confidentiality and apply criteria impartially.
  4. Availability: members must have time to complete the work within the required period.
  5. Proper composition: follow statutory appointment, membership and separation-of-duty requirements rather than appointing an arbitrary group.

Question 2(a) — 10 marks

Outline five details that a procurement officer should include in the Terms of Reference Section of a Request For Proposal (RFP).

Model answer

  1. Background, purpose and objectives of the assignment.
  2. Scope of services and the tasks to be performed.
  3. Expected outputs, deliverables and reporting arrangements.
  4. Required expertise and qualifications.
  5. Duration, milestones and the inputs or facilities to be provided by the client.

Question 2(b) — 10 marks

A proposed Finance Bill (Amendment) with regard to enhancing revenue collection in a country is before parliament for consideration. Outline five proposals that may be included in such a bill.

Model answer

  1. Changes to tax rates, bands or thresholds.
  2. Extension or clarification of the tax base.
  3. Revision of exemptions, reliefs or incentives.
  4. Changes to excise, customs or other statutory levies.
  5. Improved tax administration, reporting, collection and enforcement provisions.

Question 3(a) — 10 marks

The public procurement officers are required to use the public procurement and assets disposal general manual when performing their duties. Explain five advantages of using the manual.

Model answer

  1. Consistency: standard guidance helps officers follow the same approved procedures.
  2. Staff training: a practical reference supports induction and development.
  3. Clear responsibilities: documented roles reduce omissions and overlapping work.
  4. Better records: standard forms and checklists improve evidence and audit readiness.
  5. Compliance and efficiency: step-by-step guidance reduces avoidable mistakes, delay and arbitrary decisions.

Question 3(b) — 10 marks

The exchequer in some instances makes late disbursement of funds to procuring entities in the public sector. Outline five measures that the exchequer may put in place to minimize such incidents.

Model answer

  1. Prepare realistic cash-flow and revenue forecasts.
  2. Publish and follow clear release schedules and requirements.
  3. Improve coordination between revenue collection, budget and spending entities.
  4. Process complete requests through efficient, controlled financial systems.
  5. Monitor release delays and address recurrent documentation, approval and liquidity bottlenecks.

Question 4(a) — 10 marks

Outline five challenges that a procuring entity may face in the adoption of e-procurement system in its procurement operations.

Model answer

  1. High implementation cost: software, equipment, integration and ongoing support require funds.
  2. Infrastructure limitations: unreliable power and connectivity disrupt use.
  3. Skills gaps: buyers and suppliers may struggle without training and support.
  4. Resistance to change: staff may retain manual workarounds or oppose new controls.
  5. Security and integration risks: poor access management or incompatible systems can compromise records and operations.

Question 4(b) — 10 marks

Explain five benefits to a public entity of using the open tender method in the public procurement process.

Model answer

  1. Wider participation: public invitation reaches more eligible suppliers.
  2. Competitive value: comparable offers improve opportunities for favourable total cost and quality.
  3. Transparency: disclosed requirements and criteria make the process open to scrutiny.
  4. Fair opportunity: suppliers can compete without unjustified selective invitation.
  5. Accountability: documented tender, evaluation and award stages support review and audit.

Question 5(a) — 10 marks

The agency mandated with revenue collection in the country has in the recent past come up with measures to improve its performance. Outline five such measures.

Model answer

  1. Improve registration: identify liable taxpayers and maintain accurate records.
  2. Simplify compliance: clear guidance, accessible filing and convenient payment reduce avoidable non-compliance.
  3. Use suitable technology: integrated records and electronic systems improve processing and detection of discrepancies.
  4. Apply risk-based enforcement: focus audits, debt collection and investigation on material non-compliance.
  5. Strengthen integrity and staff capability: training, supervision and reliable controls reduce errors, leakage and collusion.

Question 5(b) — 10 marks

Outline five differences between the public sector procurement practices and the private sector procurement practices.

Model answer

  1. Public procurement uses public funds and serves public-service objectives; private procurement principally serves the owner’s business objectives.
  2. Public entities must follow the applicable statutory procurement procedures; private firms generally have more discretion under their internal policies and other applicable law.
  3. Public procurement normally requires broader public disclosure and formal oversight; private firms may keep more commercial details confidential.
  4. Public tender decisions may be subject to statutory administrative review; private disputes generally follow contractual and other legal remedies.
  5. Public budgets, approvals and preference obligations constrain decisions; private firms typically have greater flexibility to negotiate and adapt sourcing within their governance framework.

Question 6(a) — 10 marks

Explain five ways in which procuring entities may enhance efficiency of auditing activity as a tool for controlling public expenditure in a country.

Model answer

  1. Maintain complete, accurate and accessible procurement records.
  2. Provide auditors with timely information, explanations and access to relevant staff.
  3. Establish competent and adequately resourced internal audit arrangements.
  4. Protect auditor independence and use a risk-based audit plan.
  5. Act on findings, assign corrective responsibilities and follow up implementation.

Question 6(b) — 10 marks

Public entities in Kenya are increasingly adopting the Integrated Financial Management System (IFMIS) in their procurement operations. Explain five benefits that may accrue to the entities from such a system.

Model answer

  1. Budget control: commitments can be checked against approved resources before spending.
  2. Integrated records: procurement and finance use connected order, receipt and payment information.
  3. Faster processing: suitable electronic approvals reduce repeated manual work.
  4. Better reporting: timely expenditure and commitment data support management decisions.
  5. Auditability: user actions and transaction records improve traceability and accountability when access is properly controlled.

Question 7(a) — 10 marks

Outline five reasons that make it necessary for a public organisation to maintain a tender opening register in its procurement operations.

Model answer

  1. Records the bids received and opened.
  2. Provides evidence of the opening date, time and responsible officials.
  3. Captures the tender particulars and announced information.
  4. Supports accountability, audit and resolution of later disputes.
  5. Helps protect the integrity of the process against substitution or unsupported claims about submissions.

Question 7(b) — 10 marks

A procurement award decision arrived at by a public entity has been referred to the Public Procurement Administrative Review Board (PPARB) by a disgruntled supplier. Outline five grounds that the supplier may rely upon in seeking for the review.

Model answer

A review concerns an alleged breach of a procurement duty and resulting or threatened loss, rather than mere disappointment at losing. Standing, time limits and statutory exclusions also apply.

  1. Undisclosed evaluation criteria were introduced or published criteria were not applied.
  2. The applicant was treated unequally or subjected to discriminatory requirements.
  3. A non-responsive or unqualified bidder was improperly preferred.
  4. Required notices, reasons or procedural safeguards were not provided.
  5. Conflicts of interest, unlawful influence or other breaches of procurement duties affected the applicant or created a risk of loss.
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