It is government policy that funds budgeted and approved by parliament for the purpose of procurement are spent on the intended purposes. This applies both to development and recurrent expenditures. It is also government policy to allow open competition for procurement without discrimination in a transparent, fair and accountable manner to ensure achievement of value for money in all procurement. Government also expects public procurement to contribute to the national economic growth and poverty reduction in line with the national development goals.
Public procurement plays an important role in the Kenyan economy. The total volume of public procurement in 2003-2004 was established at 3.64 billion USD or 9% of the GDP (Independent procurement review Kenya May 2005). Although the exact figure is not known 9% of the GDP is a very significant amount and can make a big impact to development if well used. Procurement Planning directly links the procurement function to the Budget Preparation. Budget Execution is affected by procurement. Unless procurement has been planned adequately, with realistic times taken into account for the preparation of procurement requirements and allotment
of budget, the budget execution will be hampered.
Therefore, on planning its activities to implement a programme, a Procuring Entity needs to understand how each activity will be translated into individual procurement requirements and to determine the method and duration of these procurement requirement to ensure that the activities are carried out during the financial period. It is the responsibility of the Procurement Unit to assist each End-User Department in preparation of departmental procurement plans. Planning the procurement requirements helps forecasting when a tender may be launched and proceedings are likely to result in a contract. Given this information and the likely type of contract, the Finance/Accounts Department is now in a position to forecast cash flow requirements and make projections.
A procurement plan is also a critical internal control tool. Each procurement requirement should be planned as part of the budget preparation process and should be reflected in a Procurement Plan that has been prepared and is maintained and updated by the Procurement Unit on the basis of End-User Department information. Procurement initiation requires existence of a procurement plan. This is the first level of commitment control. Commitment control helps ensuring cash availability to meet the cost of procurement contracts.
Poor procurement management without well managed links to the budget can totally undermine the budget process. What is the point of a well thought out budget plan, where at implementation the Procuring Entity procures pretty much what it pleases without due regard to a procurement plan which in turn is directly tied to the budget process?
Procurement forms an integral part of the Budget Execution process. Procurement Planning forms a crucial input to Budget Preparation and the management of Budget Releases. The effectiveness of Audit is duly dependent on how effectively procurement is managed, documented and reported upon.