Balancing Economic and Social Objectives in Public Procurement in Kenya-a Review of the Law, the Policy and the Practice

Abstract

The coexistence of economic and social objectives in a system of public procurement regulation often results in conflict and dilemma. The conflict and dilemma occur when government bureaucrats make economically efficient but socially undesirable decisions, or socially desirable but economically inefficient decisions. Moreover, and closely related to the uneasy coexistence of economic and social objectives, Kenyan public procurement laws often give government bureaucrats discretion to decide the extent and the ends for which they can use procurement as a tool of economic or social policy. Although discretion is inevitable in any system of public procurement regulation, and public administration in general, it is also highly amenable to abuse. The objectives of this study are twofold. The first is to establish whether the Kenyan policy and regulatory frameworks for public procurement facilitate the resolution of conflicts between economic and social objectives. Secondly, this study seeks to establish the link between the discretion that Kenyan public procurement laws confer on government bureaucrats and the country’s unusually high incidence of corruption, favouritism and other forms of malfeasance in public procurement decision making. This study seeks, therefore, to answer two questions. The first is whether the regulatory framework for public procurement in Kenya facilitates the resolution of conflicts between economic and social objectives. The second is whether the discretion that Kenyan public procurement laws confer on government bureaucrats creates incentives for corruption, favouritism and other forms of malfeasance. This study makes four main findings. First, although the objectives of public procurement regulation transcend multiple disciplinary and theoretical boundaries, the underlying concerns generally revolve around resolving five main problems, namely: (i) market failure, (ii) discretion, (iii) agency, (iv) public choice and (v) wealth (re)distribution. xxxiv Secondly, the dilemma created by the uneasy and often conflictual coexistence of economic and social policy objectives in a system of public procurement regulation does not necessarily require a choice between good and bad, or superior and inferior. Instead, the dilemma requires judicious trade-offs between the two species of objectives, through a holistic approach to public procurement decision making that is not unduly encumbered by doctrinaire or inflexible commitment to either markets (that is, economics) or social policy. Thirdly, compared to Kenya, the United States and South Africa have more effective regulatory responses to the problems of (i) conflictual coexistence of economic and social objectives, (ii) discretion, and (iii) the incidence of corruption, favouritism and other forms of malfeasance in public procurement decision-making. Lastly, the Kenyan public procurement system is characterised by stakeholder indifference to the issue of interplay of economic and social objectives and an unusually high incidence of corruption, favouritism and other forms of malfeasance. The central thesis of this study may be summarised into five propositions. First, the regulatory framework for public procurement in Kenya does not facilitate the resolution of conflicts between economic and social objectives. Secondly, the regulatory framework for public procurement in Kenya is structurally flawed to the extent that it confers broad and poorly circumscribed discretion on government bureaucrats. Thirdly, Kenya’s structurally flawed public procurement regulatory framework creates strong incentives for corruption, favouritism and other forms of malfeasance. Fourthly, this situation (of a structurally flawed regulatory framework and a high incidence of corruption, favouritism and other forms of malfeasance) is inimical to the achievement of both economic and social objectives. Lastly, the disciplines of administrative law and law and economics offer useful conceptual tools which, if creatively harnessed by policymakers and legislative drafters, can result in a public procurement regulatory framework that resolves: (i) xxxv conflicts between economic and social objectives and (ii) the problem of discretion and its correlation to the incidence of corruption, favouritism and other forms of malfeasance. In view of the foregoing, this study recommends a rule-based approach to public procurement in Kenya, characterised by controlled discretion and commitment to the values of competition, transparency and accountability. The study also recommends an urgent review and redesign of Kenya’s regulatory framework for public procurement. The review and redesign should focus on: (i) the interplay of economic and social objectives; (ii) the problem of discretion; and (iii) establishment of strong and effective safeguards against corruption, favouritism and other forms of malfeasance.