Here Is Why Greater Contract Clarity Offers Private Firms A Safer Path In Public Tenders

Article 201 of the Constitution of Kenya, 2010 requires that public finances be utilized prudently, in a manner that is fair, transparent and cost-effective. This is a fairly straightforward directive because in any institution where resources are produced as a function of shared effort, then it is expected that consumption should at the very least benefit most, if not all, that are involved in production. This is what the Cooperative Game Theory posits.

But it is never quite so.

Very often, we receive updates from the Office of the Auditor General pointing at improper use of budgetary allocations in public projects, leading to either no or substandard outcomes.  It is not unusual to hear, for instance, of infrastructure initiatives that were started, but stalled midway through because of insufficient resources. Sometimes, private contractors up and leave in frustration after spending hefty capital on public projects, only to realize that they cannot be compensated various reasons. At other times it is the private contractors who knowingly deploy substandard work, and somehow get paid for it, only for dire consequences to follow soon after, leaving the contracting authority in the mud. Anyone on social media must have seen the trending videos of poorly-built bridges collapsing under the weight of politicians during ceremonial ribbon cuttings. TV news also often presents exposés of massive county headquarters, governor residences, hospitals, processing plants, market facilities and other buildings that are now clad with moss, abandoned, after budgets were ‘exhausted’ along the way.

There are many more examples, but without belabouring the point, it is clear we have reached a moment of reawakening. Public initiatives are now subject to intense scrutiny, driven in part by the widespread availability of recording devices and highly engaged audiences. For private sector players seeking public contracts, it is increasingly important to rigorously review tender applications and awards to avoid unwelcome surprises at the end. The same applies to awarding institutions because the success or failure of any public contract is a shared outcome, shaped just as much by the conduct and preparedness of private sector participants as it is by government oversight.

One of the important facets of contracts in public procurement is that in all instances, the contract extends beyond the signed agreement. The tender document, any addenda, and letter of award together form the full contractual framework. In many cases, key performance obligations are embedded deep within these documents and overlooking them can lead to compliance failures or disputes over scope and delivery. Taking a holistic view helps ensure that both parties fully understand what is required.

Clarity in service definition is another area that cannot be overlooked. Services must be described in precise, measurable terms, with clear performance indicators and deliverables. Vague or generic descriptions not only hinder accountability but also complicate contract management and evaluation.

A further complexity arises in contract variations because unlike in private commercial arrangements, where parties often rely on general legal principles that require variations to be in writing and mutually agreed, public sector contracts are subject to stricter controls. Any variation must not only meet the threshold of written agreement between the parties but must also comply with the provisions of the Public Procurement and Asset Disposal Act, 2015. Failure to align contractual variations with the statutory framework can render them invalid, exposing both parties to audit queries, enforcement action and potential financial loss.

In certain procurements, such as for personal lines of insurance—such as medical covers—where personal and sensitive data is collected, data protection considerations come to the fore. Compliance with the Data Protection Act, 2019 and related regulations requires that parties clearly map how personal data moves across the various players involved. This includes putting in place appropriate safeguards, particularly where sensitive personal data is processed.

Termination provisions must also be approached with care, recognizing that public contracts operate within a broader fiscal and legal environment. Events such as withdrawal of exchequer funding or changes in the legal framework can render a contract untenable. These risks must be expressly provided for, with clear triggers and consequences. Both parties must understand that, in the public sector context, such events are not remote possibilities but practical considerations.

The question of data ownership, particularly after termination, is another area that benefits from early clarity. In most cases, the procuring entity remains the data controller, unless the contract provides otherwise. Setting out rights and obligations around access, use and retention of data helps avoid disputes at the end of the contract.

Finally, it goes without saying that agreements and related records should be well-maintained to ensure they can be relied upon in the event of an audit or dispute.

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By Rachel Mwenda, the Group General Counsel at Minet Kenya.