Public Procurement and Finance — 2023

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

March/April 2023

Paper codes: 2903/202; 3309
Time: 3 hours
Instructions: Answer any FIVE questions. All questions carry equal marks. Answer the questions in English.

Question 1(a) — 10 marks

The National Treasury in the recent past released a circular on centralisation of procurement of Information Communication Technology equipment. Explain five reasons that may have influenced such a move.

Model answer

  1. Economies of scale: combined demand can improve prices and reduce repeated sourcing costs.
  2. Standardisation: common technical specifications improve compatibility and maintenance.
  3. Specialist expertise: a central team can assess complex technology and commercial risks.
  4. Stronger control: coordinated records and approvals reduce fragmented or unauthorised buying.
  5. Better planning: consolidated requirements support predictable deliveries, support arrangements and lifecycle management.

Question 1(b) — 10 marks

The National Treasury in Kenya is mandated to develop a policy on procurement of common user items. Explain five benefits that procuring entities would derive from such a policy.

Model answer

  1. Consistent specifications and quality for widely used items.
  2. Lower prices and transaction costs through aggregated demand.
  3. Faster routine sourcing through approved arrangements.
  4. Improved compatibility, maintenance and inventory management.
  5. Clearer accountability and less duplicated procurement effort across entities.

Question 2(a) — 10 marks

Explain five advantages of using procurement agents in a procuring entity.

Model answer

  1. Specialist expertise: an agent may provide skills unavailable within the entity.
  2. Additional capacity: the agent can handle a workload that exceeds existing resources.
  3. Market knowledge: experienced agents may identify suitable suppliers and commercial alternatives.
  4. Faster execution: established procedures and contacts may reduce avoidable delay.
  5. Focused internal management: the entity can concentrate staff on oversight and core functions while retaining its legal responsibilities.

Question 2(b) — 10 marks

As a secretary to the evaluation committee for procurement of a capital item, outline five roles that you would play in such a capacity.

Model answer

  1. Arrange authorised meetings and circulate the relevant documents.
  2. Record attendance, declarations and proceedings accurately.
  3. Keep evaluation forms, correspondence and supporting evidence organised and secure.
  4. Compile the committee’s agreed evaluation report and recommendations.
  5. Coordinate communication and submission of the signed report through the required authorised channels.

Question 3(a) — 10 marks

As a procurement manager, outline five types of information you would include the invitation of registration of supplier document.

Model answer

  1. Name, address and contact details of the procuring entity.
  2. Categories of goods, works or services for which registration is sought.
  3. Eligibility and qualification requirements with supporting documents.
  4. Application instructions, submission address or platform and closing date.
  5. Period of registration and the basis for assessing applications.

Question 3(b) — 10 marks

A certain parastatal has opted to use the direct procurement method in obtaining its materials. Explain five reasons that may justify the use of such method.

Model answer

Direct procurement must satisfy the legal conditions; convenience or a wish to avoid competition is not sufficient.

  1. Only one suitable source exists and no reasonable substitute is available.
  2. Genuine unforeseeable urgency makes a competitive process impracticable.
  3. A catastrophic event creates an immediate requirement that cannot wait for normal procedures.
  4. Limited additional supplies require compatibility or standardisation with an existing purchase, subject to the statutory conditions.
  5. The requirement can lawfully be obtained from another public entity at a fair and reasonable price.

Reference: Public Procurement and Asset Disposal Act, section 103.

Question 4(a) — 10 marks

The Government of Kenya recently advertised for a new E-procurement tool to be adopted in the country. Explain five reasons which may have influenced such a decision.

Model answer

  1. Process efficiency: electronic workflows can reduce repeated paperwork and processing time.
  2. Transparency: traceable actions and accessible procurement information improve visibility.
  3. Expenditure control: integrated approvals and commitments help keep purchases within budget.
  4. Better information: consolidated supplier, price and contract data support planning and monitoring.
  5. Wider participation: suitable online access can make procurement opportunities easier for eligible suppliers to find and respond to.

Question 4(b) — 10 marks

Explain five challenges that the Government of Kenya may face in the management of public finance in the country.

Model answer

  1. Revenue shortfalls: collections may fall below the spending plan.
  2. Expenditure pressure: essential services, emergencies and development needs compete for limited resources.
  3. Debt burden: servicing obligations reduces room for other priorities.
  4. Leakage and weak controls: fraud, waste and poor records undermine accountability.
  5. Planning and implementation weaknesses: unrealistic budgets, delayed releases and incomplete projects reduce the effectiveness of public spending.

Question 5(a) — 10 marks

Some county governments in Kenya have been experiencing delayed of funds release from the exchequer releases. Explain five measures that such governments should take to manage the situation.

Model answer

  1. Prioritise essential commitments: sequence spending around critical services and unavoidable obligations.
  2. Update cash-flow forecasts: align approved activities with realistic receipts and payment dates.
  3. Strengthen lawful own-source revenue collection: reduce leakage and improve collection efficiency.
  4. Control new commitments: avoid entering unfunded obligations and seek lawful budget adjustments where needed.
  5. Coordinate with responsible authorities: provide complete release information, follow up delays and communicate realistic payment schedules to affected parties.

Question 5(b) — 10 marks

The Kenya Institute of Supplies Management has been encouraging procurement officers to become members of the professional body in the country. Explain five advantages of such membership.

Model answer

  1. Professional development: access training and continuing learning opportunities.
  2. Standards and guidance: obtain support on competent and ethical practice.
  3. Recognition: membership demonstrates engagement with the profession and its standards.
  4. Networking: exchange experience and build contacts with other practitioners.
  5. Professional representation: participate in forums, research and discussions affecting supplies management.

Question 6(a) — 10 marks

Explain five ways in which the user departments may assist in developing technical specifications for goods during the procurement process.

Model answer

  1. Define intended use: explain the operational problem the goods must solve.
  2. State performance needs: identify measurable capacity, quality and output requirements.
  3. Provide technical details: supply relevant dimensions, compatibility and environmental conditions.
  4. Review practicality: check that requirements are realistic, testable and do not unnecessarily restrict competition.
  5. Develop acceptance criteria: identify the tests, samples or evidence needed to confirm satisfactory delivery.

Question 6(b) — 10 marks

A certain procuring entity is in the process of conducting due diligence on a supplier during the tendering process. Explain five measures that the entity should take to ensure a successful process.

Model answer

  1. Define the checks: use disclosed qualification requirements and a documented verification plan.
  2. Verify original evidence: confirm registration, licences, tax and other relevant records with reliable sources.
  3. Assess actual capacity: inspect facilities or verify resources and personnel where proportionate.
  4. Check performance references: confirm relevant experience and delivery history with previous clients.
  5. Record findings fairly: maintain confidentiality, avoid undisclosed criteria and document the evidence supporting the conclusion.

Question 7(a) — 10 marks

Explain five circumstances under which an organisation may find it necessary to use design competition in the procurement of its requirements.

Model answer

  1. An architectural scheme is needed and alternative concepts should be compared.
  2. A physical-planning requirement calls for competing layouts or spatial solutions.
  3. An engineering design requires selection of the most suitable technical scheme.
  4. A graphic or visual-design requirement benefits from comparison of creative proposals.
  5. Another design-based requirement has clear functional needs but several possible solutions that can be assessed against published criteria.

Reference: the design categories under section 100 of the Public Procurement and Asset Disposal Act. Use the required competition and assessment procedure.

Question 7(b) — 10 marks

Explain five ways of mitigating risks associated with the E-procurement system in an organisation.

Model answer

  1. Access control: use appropriate user permissions and strong authentication to restrict sensitive actions.
  2. Protect information: encrypt relevant data and protect confidential bids and credentials.
  3. Maintain systems: patch software, monitor activity and test security controls.
  4. Prepare recovery: maintain tested backups and continuity arrangements for disruption.
  5. Train users: recognise phishing, protect accounts and report incidents promptly.
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