Supplies Branch was initially established as a department of public works through Treasury Circular Ref.No.2012/57/02 of 19 January 1960. Its main objective was to procure common user items (CUIs) for the colonial government with an initial capital fund of Kshs.15 million. The fund was managed by the Permanent Secretary Ministry of Works for the purposes of procuring common stores, sourcing of term contracts, custody of furniture, and sourcing of fuel for government departments. Since inception, the Supplies Branch has been moved severally between three ministries; i.e. office of the President, Ministry of Finance and Ministry responsible for Public Works. Currently, the entity as spelt out in the executive order is domiciled in the Ministry of Transport, Infrastructure, Housing and Urban Development, under State Department of Public Works. The mandate and core functions include: –
(a) Bulk procurement and storage of CUIs
(b) Sourcing of Term Contracts
(c) Storage of furniture for VIP and State functions and
(d) Sourcing and supply of fuel to all Government bodies.
Through Treasury circular Ref.No.CFN.12/18/01 of 9th May, 1961, the Supplies Branch then under the Ministry of Public Works was given mandate to buy and hold CUIs for all government departments. The circular mandated the ministry with “investigation of prices and the quality and sources of supply”.
However, Treasury circular Ref.No.BFN.12/18/01 of January, 1971 noted that the process of splitting order to avoid tender committee approvals was increasing. It therefore directed that procurement requirements be packaged and consolidated to halt splitting of orders. The same directive was emphasized on Treasury circular Ref.No.AFN.226/02/075/of 30th July, 1974 on stationery and office equipment. During that time supplies branch was relatively able to discharge its mandate effectively with government support.
From around 1984, the emergence of District Focus for Rural Development and subsequent economic liberalization altered the monopoly status of Supplies Branch and conflicts of interest distorted its operations. The impact of this was overstocking and weak stock control systems which resulted into frequent stock outs, dead stocks, poor storage, damages, pilferages, debts and other associated risks. Additionally, Supplies Branch has over the years faced communication challenges viz. telephone, internet, facsimile, telex, among others. In the last 25 years, these challenges have contributed to ineffectiveness and inefficiency of the entity’s operations. Its importance and use to government bodies had diminished over the period, leading to inadequate financing and inability to fulfil its mandate.
Previous attempts have been made by various Taskforces to streamline the function of Supplies Branch as to meet customers’ (MDAs) demands of attaining economies of scale and value for money. This is evidenced by the various reports of Taskforces and studies made on the department i.e. the Taskforce report of 2004 and 2012
These efforts resulted in multifarious findings and recommendations, which were all advocating that the department be restructured to be able to fulfil its mandate on procurement of CUIs effectively. However, the various reports have not been implemented to date, and therefore the need to review and harmonize the findings and recommendations there in, and chart a common way forward.
It also worth noting that there is a paradigm shift in field of procurement that will necessitate Supplies Branch to comply with international best practices, by moving from past stock holding regime to the Just-In-Time (JIT) system, and adopt framework agreements and contracts with suppliers for efficient supply of goods and services as and when required. In the later system the risk of obsolete stocks and cost of transport to the clients is transferred from the procuring entity to the suppliers.
Reforming the Supplies Branch
Procurement of common user items is a critical function of the Government, which was initially conducted within a model that entailed centralized procurement domiciled in Supplies Branch. However, with the onset of economic liberalization, the role of Supplies Branch in procurement was largely taken up by individual MDAs. These has led to emergence of two key issues i.e. lack of standardization in procurement of goods, works and services for MDAs and lack of economies of scales enjoyed previously under the centralized system. Consequently, reforms in the public procurement and disposal were inevitable and accordingly Supplies Branch is to be reformed in line with current procurement regulations, new constitutional dispensation and current realities.
As part of the efforts to revamp it, the Taskforce to Transform the Supplies Branch into a Government Supermarket was commissioned in 2004. Moreover, a consultancy study commissioned by the Public Procurement Oversight Advisory Board in 2008 resulted in the “Position Paper on Reforming Supplies Branch”. Similarly, a study commissioned by PPOA under the sponsorship of USAID- Kenya resulted into “Findings and Recommendations on Supplies Branch” Report. Another Taskforce was commissioned in 2012 to explore and report on the modalities of restructuring of Supplies Branch. In 2015 the PPAD Act was enacted, which envisaged under sec 7(1)(3) that the National Treasury may prescribe an institutional framework to provide for the procurement, administration and management of CUIs for the national government. Consequent to the PPAD Act provision, the draft regulations developed in 2016 proposed Page – 3 –
establishment of Public Procurement and Asset Disposal Agency to manage the procurement of CUIs across MDAs.