Public Procurement and Finance — 2021

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

July 2021

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

Question 1(a) — 10 marks

Explain the ways in which lack of regulations to operationalise the Public Procurement and assets Disposal Act (2015) may hinder efficiency in the public procurement system in Kenya

Model answer

The question’s wording is retained. Kenya’s 2020 Procurement and Asset Disposal Regulations were already issued before this paper; the answer explains the hypothetical operational effects of missing regulations.

  1. Unclear procedures: officers may interpret broad statutory duties differently without operational detail.
  2. Inconsistent implementation: entities may apply different forms, thresholds or methods to similar requirements.
  3. Delayed decisions: uncertainty can cause repeated requests for guidance and approval.
  4. Weak oversight: missing practical reporting and control rules make compliance harder to assess.
  5. More disputes: ambiguity about procedure can increase complaints, errors and contested decisions.

Reference: National Treasury — 2020 Regulations.

Question 1(b) — 10 marks

Outline the factors that the National Assembly of Country X may consider when raising the debt ceiling of the country.

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 2(a) — 10 marks

Explain five measures that an accounting officer of a procuring entity may put in place to ensure adherence to public procurement rules and regulations.

Model answer

  1. Establish competent procurement staff and the required committees.
  2. Align the procurement plan with the approved budget and lawful methods.
  3. Provide current procedures, training and clear delegated responsibilities.
  4. Maintain complete records, separation of duties and effective approval controls.
  5. Monitor compliance, support audit and act promptly on identified breaches.

Question 2(b) — 10 marks

Outline the circumstances under which a public entity may use the Request For Proposal (RFD) method of procurement.

Model answer

  1. The requirement is for consultancy services whose technical approach and expertise must be evaluated.
  2. The entity needs a study, professional analysis or advisory assignment rather than simply buying a standard off-the-shelf item.
  3. A terms-of-reference document can define objectives and expected outputs while allowing consultants to propose their methodology.
  4. Technical quality must be assessed together with cost under an appropriate disclosed selection approach.
  5. The applicable legal conditions and approvals for consultancy procurement through proposals are satisfied.

Question 3(a) — 10 marks

Outline the factors that the National Treasury may consider when granting a request for funds by government ministries.

Model answer

  1. Approved appropriation and budget provision for the activity.
  2. Available cash and projected revenue or financing.
  3. The ministry’s cash-flow forecast and timing of lawful commitments.
  4. Priority and urgency of the service or project.
  5. Compliance, previous expenditure performance and completeness of supporting information.

Question 3(b) — 10 marks

Explain the ways in which public procurement officers may ensure that effective specifications for goods and services are prepared in a public entity.

Model answer

  1. Consult users and technical specialists to define the actual need.
  2. Use clear measurable performance, quality and quantity requirements.
  3. Refer to suitable standards without unnecessarily restricting competition.
  4. Check feasibility, market availability and compatibility with existing systems.
  5. Define inspection, testing and acceptance requirements and review the document for ambiguity.

Question 4(a) — 10 marks

Explain the measures that a state revenue collection agency may put in place to enhance its performance.

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 4(b) — 10 marks

A procurement officer in a state corporation has been asked to prepare minutes during a tender opening exercise. Outline the types of information that should be included in such minutes.

Model answer

  1. Tender reference, description, date, time and place of opening.
  2. Names and roles of opening officials and attending representatives.
  3. Names of tenderers whose submissions were opened.
  4. The prices, discounts and other particulars required to be read and recorded.
  5. Late or withdrawn submissions, relevant observations and signatures authenticating the record.

Question 5(a) — 10 marks

Explain the ways in which the adoption of Information Communication Technology (ICT) has impacted on Public Procurement in Kenya.

Model answer

  1. Faster processing: electronic documents and approvals reduce routine paperwork.
  2. Wider information access: online notices make opportunities and awards easier to find.
  3. Improved financial control: integrated records link procurement commitments with budgets and payments.
  4. Better traceability: user logs and electronic records support monitoring and audit.
  5. New implementation demands: entities must manage cyber risk, connectivity, digital skills and supplier access to avoid exclusion and disruption.

Question 5(b) — 10 marks

Outline the reasons that make it necessary for a public entity to prepare a procurement plan in public procurement operations.

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 6(a) — 10 marks

Explain the limitations of using e-tendering in public 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 6(b) — 10 marks

A party dissatisfied with a procurement proceeding in a public entity has requested for a review by the Public Procurement Administration Review Board(PPARB). Explain the aspects that are not subject to such a review.

Model answer

The question does not ask for five exclusions. The three categories in section 167(4) are explained instead of inventing additional statutory exclusions. Jurisdiction depends on the facts and compliance with the Act.

  1. Choice of procurement method: section 167(4) excludes this category from the specified administrative review.
  2. Lawfully terminated proceedings: the statutory exclusion depends on termination being in accordance with the Act.
  3. A lawfully signed procurement contract: the exclusion applies where signing complies with the statutory contract-formation requirements. An alleged signature does not itself establish compliance.

Reference: Public Procurement and Asset Disposal Act, section 167(4).

Question 7(a) — 10 marks

Outline five roles played by of the Public Procurement Administration Review Board (PPARB) in public procurement operations in Kenya.

Model answer

  1. Annul an unlawful procurement decision or the proceedings where appropriate.
  2. Direct the accounting officer to take or repeat a specified procurement step.
  3. Substitute the Board’s lawful decision for the decision under review.
  4. Determine an appropriate costs order between parties.
  5. Order termination and commencement of a fresh procurement process where the statutory circumstances justify it.

Reference: Public Procurement and Asset Disposal Act, section 173.

Question 7(b) — 10 marks

A report by the Auditor General on public procurement activities in a certain public entity has revealed disregard for applicable principles in public procurement. Outline five such applicable principles in public procurement.

Model answer

  1. Fairness in the treatment of participants.
  2. Equity, including lawful consideration of participation and access.
  3. Transparency of requirements, decisions and records.
  4. Competition through the appropriate lawful procurement process.
  5. Cost effectiveness and value for money in meeting the public need.

November 2021

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

Question 1(a) — 10 marks

It is necessary to have a close liaison between the procurement and finance departments in the public procurement system. Explain five reasons for such a liaison.

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 finances disbursed to counties in Kenya are governed by the Division of Revenue Bill. Outline the factors that parliament may consider in passing the bill.

Model answer

  1. National interest and the needs of the national government.
  2. Public debt and other national obligations.
  3. The resources needed for county governments to perform their assigned functions.
  4. County fiscal capacity, efficiency and efforts to optimise their own revenue.
  5. Development needs, economic disparities and the need for stable, predictable and equitable allocations.

Reference: Constitution of Kenya, Article 203.

Question 2(a) — 10 marks

Outline five roles of the Inspection and Acceptance committee in the public procurement process.

Model answer

  1. Inspect delivered goods, works or services against the contract requirements.
  2. Verify quantity, quality, condition and completion.
  3. Arrange relevant tests or technical assessment where required.
  4. Accept conforming supplies or reject non-conforming performance through the proper process.
  5. Record findings and issue the required inspection and acceptance evidence for contract administration and payment.

Question 2(b) — 10 marks

Explain five factors that a public entity should consider when selecting a procurement method to adopt.

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 3(a) — 10 marks

Explain five challenges that may be faced by the Controller of budget in discharging his duties in the country.

Model answer

  1. Incomplete information: late or inaccurate expenditure reports obstruct timely oversight.
  2. Resource constraints: limited staff, specialist skills and funds restrict coverage.
  3. Coordination difficulties: many entities and systems complicate consistent monitoring.
  4. Improper pressure or resistance: unwillingness to provide records or follow controls undermines independent oversight.
  5. Budget and cash-flow weaknesses: unrealistic plans, delayed funding and unsupported requests make assessment and reporting harder.

Question 3(b) — 10 marks

Outline five reasons that may necessitate the revision of classification of procuring entities by the Public Procurement Regulatory Authority (PPRA).

Model answer

  1. Changes in the entity’s legal status or mandate.
  2. Increased or reduced procurement volume and budget.
  3. Changes in staffing, systems and procurement-management capacity.
  4. Altered complexity or risk of the goods, works and services procured.
  5. Organisational restructuring or changes in the applicable regulatory classification framework.

Question 4(a) — 10 marks

One of the sources of Public Finance is fines and forfeitures. Explain five ways in which the government may increase finances collected through this source.

Model answer

Penalties and forfeitures require lawful grounds and due process. Revenue targets do not justify arbitrary punishment or unlawful seizure.

  1. Improve lawful enforcement: detect proven violations consistently rather than leaving enforceable offences unaddressed.
  2. Strengthen collection systems: record court-ordered or otherwise lawful penalties accurately and reconcile payments.
  3. Reduce leakage: use traceable payment channels, receipts and independent checks.
  4. Pursue authorised forfeiture and recovery: follow due process to identify and realise assets legally subject to forfeiture.
  5. Improve case coordination: agencies and courts should share reliable information and follow up outstanding lawful orders.

Question 4(b) — 10 marks

Explain the circumstances under which a public organisation may use the restricted tendering method in their procurement operations.

Model answer

Convenience or a small budget alone does not authorise restricted tendering. The applicable conditions and prescribed procedure must be met.

  1. Complex or specialised requirements: competition can be limited to appropriately prequalified tenderers under the prescribed process.
  2. Disproportionate evaluation burden: examining a very large number of bids would cost too much relative to the procurement’s value.
  3. A genuinely limited market: evidence establishes that only a few known suppliers can provide the requirement, and the prescribed invitation and publicity procedures are followed.

Question 5(a) — 10 marks

A certain county, intends to automate its procurement operations. Explain the challenges that the authority may face when carrying out the exercise.

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 5(b) — 10 marks

Explain five ways in which value for money in public procurement operations may be achieved.

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

Outline five types of e-sourcing tools that may be used in the procurement function.

Model answer

  1. Electronic supplier-discovery and registration tools.
  2. Electronic requests for information (e-RFI).
  3. Electronic requests for quotations (e-RFQ).
  4. Electronic tender or proposal systems (e-RFT/e-RFP).
  5. Electronic reverse-auction tools for suitable competitive requirements.

Question 6(b) — 10 marks

Explain five factors that may lead to debarment of a contractor by the Public Procurement Regulatory Authority (PPRA).

Model answer

Debarment follows the statutory grounds and prescribed process. An allegation alone is not a completed debarment decision.

  1. Committing a procurement-related offence.
  2. Breaching a public procurement contract, including poor performance.
  3. Giving false information about qualifications during procurement.
  4. Defaulting on tax obligations.
  5. Engaging in corrupt or fraudulent conduct or a relevant serious ethical breach.

Question 7(a) — 10 marks

Explain five challenges that may be faced by the Public Procurement Regulatory Authority (PPRA) in carrying out its mandate.

Model answer

  1. Large oversight scope: numerous entities and contracts make comprehensive monitoring difficult.
  2. Limited resources: specialist staff, technology and funding may be insufficient.
  3. Poor reporting: incomplete records and late returns weaken compliance assessment.
  4. Resistance and improper influence: unwillingness to cooperate can obstruct investigation and corrective action.
  5. Evolving risks: complex contracts, electronic systems and new forms of collusion require continual skills and control improvements.

Question 7(b) — 10 marks

Outline five measures that a government may put in place to bridge the deficit in the National Budget.

Model answer

  1. Improve lawful revenue collection and reduce tax leakage.
  2. Prioritise expenditure and remove avoidable waste.
  3. Obtain sustainable domestic borrowing within the applicable framework.
  4. Obtain suitable external concessional finance or grants.
  5. Raise lawful non-tax revenue, including appropriate asset disposal or better returns from public assets, without undermining essential services.
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