Public Procurement Contract (Kenya)
PUBLIC PROCUREMENT CONTRACT
PUBLIC PROCUREMENT CONTRACT Made under the Public Procurement and Asset Disposal Act No. 33 of 2015 (PPADA), Section 136, and the Public Procurement and Asset Disposal Regulations 2020 Contract Reference: [Tender Reference Number] Date of Contract: [Contract Date]
1. Parties
This Public Procurement Contract (the "Contract") is entered into on [Contract Date] between: PROCURING ENTITY: [Procuring Entity Name], a government entity established under the laws of Kenya, having its principal offices at [Procuring Entity Address], represented in this Contract by [Authorised Officer Name], [Authorised Officer Title] (the "Procuring Entity"); and CONTRACTOR/SUPPLIER: [Contractor Name], a company registered under the laws of Kenya with BRS Registration Number [Contractor BRS Number], having its registered office at [Contractor Address], represented by [Contractor Representative Name], [Contractor Representative Title] (the "Contractor"). The Procuring Entity and the Contractor are together referred to as the "Parties".
2. Background and Tender Award
2.1 The Procuring Entity issued an Invitation to Tender under Tender Reference Number [Tender Reference Number] for the [Tender Description] (the "Tender") in accordance with the Public Procurement and Asset Disposal Act No. 33 of 2015 and the Public Procurement and Asset Disposal Regulations 2020. 2.2 The Tender was evaluated by the Procuring Entity's evaluation team in accordance with the evaluation criteria specified in the Invitation to Tender. 2.3 By Notification of Award dated [Award Date], the Procuring Entity notified the Contractor that it had been selected as the successful tenderer following expiry of the standstill period under Section 137 of PPADA. 2.4 The Parties now enter into this Contract to formally document the terms and conditions applicable to the Contractor's performance of the Contract.
3. Scope of Contract
3.1 The Contractor shall supply goods, render services, or execute works as follows: [Scope Description] 3.2 The scope of this Contract is limited to what is described in Clause 3.1 and the Schedules annexed hereto. Any addition to, reduction from, or alteration of the scope shall be effected only by a written Variation Order issued under Clause 8 of this Contract. 3.3 The Contractor shall perform the Contract in accordance with all applicable Kenya laws and regulations, including but not limited to the Employment Act No. 11 of 2007, the Occupational Safety and Health Act No. 15 of 2007 (OSHA), and any sector-specific legislation applicable to the subject matter of this Contract.
4. Contract Sum and Payment
4.1 The total Contract Sum payable by the Procuring Entity to the Contractor for full performance of this Contract is [Contract Sum]. The VAT treatment of the Contract Sum is as follows: [VAT Status]. 4.2 The Contract Sum is subject to adjustment only in accordance with the terms of this Contract, including approved Variation Orders under Clause 8. 4.3 Payment shall be made in accordance with the following terms: [Payment Terms] 4.4 The Contractor shall submit invoices or payment certificates in the form required by the Procuring Entity. All invoices must quote the Tender Reference Number [Tender Reference Number] and the Contract Reference. 4.5 Withholding tax on applicable payments shall be deducted by the Procuring Entity and remitted to the Kenya Revenue Authority (KRA) through the iTax portal in accordance with the Income Tax Act (Cap. 470). The Procuring Entity shall issue the Contractor with a withholding tax certificate (P16) for all amounts deducted. 4.6 Payments shall be made by the Procuring Entity through the Integrated Financial Management Information System (IFMIS) or such other payment method as the National Treasury may prescribe, into the Contractor's bank account notified to the Procuring Entity in writing.
5. Commencement, Delivery, and Completion
5.1 The Contractor shall commence performance of this Contract on [Commencement Date]. 5.2 The Contractor shall complete delivery of all goods, completion of all services, or practical completion of all works by [Completion Date] (the "Completion Date"). 5.3 Time is of the essence in this Contract. If the Contractor fails to deliver or complete by the Completion Date, the Procuring Entity shall be entitled to deduct liquidated damages from the amounts due to the Contractor at the rate of [Liquidated Damages Rate]. 5.4 Liquidated damages shall be the Procuring Entity's sole remedy for delay, unless delay is caused by the wilful misconduct or gross negligence of the Contractor, in which case the Procuring Entity may also claim additional damages before the High Court of Kenya or in arbitration. 5.5 The Contractor may apply for an extension of the Completion Date where delay is caused by: (a) a Variation Order issued under Clause 8; (b) a force majeure event under Clause 10; or (c) an act or omission of the Procuring Entity. Applications for extension of time must be submitted in writing within 14 days of the event causing delay.
6. Performance Security
6.1 Within 14 days of signing this Contract, the Contractor shall provide the Procuring Entity with performance security in the amount of [Performance Security Amount] in the form of a [Performance Security Form]. 6.2 The performance security shall be valid for the full duration of the Contract plus 28 days after the Completion Date or the date of issuance of the Completion Certificate, whichever is later. 6.3 The Procuring Entity may call the performance security in full or in part if the Contractor: (a) fails to complete the Contract by the Completion Date and the Procuring Entity has exhausted the liquidated damages cap; (b) abandons the Contract; (c) becomes insolvent; or (d) commits a fundamental breach of the Contract. 6.4 The Procuring Entity shall return the performance security to the Contractor within 21 days of: (a) issuance of the Completion Certificate; or (b) resolution of all outstanding claims and disputes under this Contract. 6.5 The performance security shall be issued by a commercial bank licensed by the Central Bank of Kenya (CBK) under the Banking Act Cap. 488, or by an insurance company licensed by the Insurance Regulatory Authority (IRA) under the Insurance Act Cap. 487.
7. Variations
7.1 The Procuring Entity may, from time to time during the performance of this Contract, instruct the Contractor to vary the scope, price, or schedule of the Contract by issuing a written Variation Order. 7.2 No Variation Order shall be effective unless it is in writing, signed by the authorised officer of the Procuring Entity, and accepted in writing by the Contractor. 7.3 Each Variation Order shall specify: (a) the nature of the variation; (b) the adjustment to the Contract Sum (if any); and (c) the adjustment to the Completion Date (if any). 7.4 The cumulative value of all Variation Orders shall not exceed 25% of the original Contract Sum without prior written approval from the Public Procurement Regulatory Authority (PPRA) under Regulation 148 of the Public Procurement and Asset Disposal Regulations 2020. 7.5 The Procuring Entity's accounting officer shall certify that sufficient funds are available to meet the cost of each Variation Order before it is issued.
8. Anti-Corruption and Integrity
8.1 Each Party represents and warrants that it has not offered, given, received, or agreed to give any bribe, inducement, gratification, or benefit of any kind to or from any officer, employee, or agent of the other Party in connection with the award or performance of this Contract. 8.2 The Contractor warrants that it holds: (a) a valid Tax Compliance Certificate (TCC) issued by the Kenya Revenue Authority (KRA); (b) a current business permit from the relevant county government; and (c) all sector-specific licences and registrations required by applicable law for the performance of this Contract. 8.3 Any breach of this Clause shall entitle the Procuring Entity to terminate this Contract immediately for cause, call the performance security, and report the breach to the Ethics and Anti-Corruption Commission (EACC) under the Anti-Corruption and Economic Crimes Act No. 3 of 2003 and the Public Procurement Regulatory Authority (PPRA) for debarment proceedings under Section 115 of PPADA. 8.4 The Contractor acknowledges that public procurement contracts in Kenya are subject to oversight by the Auditor-General under Article 229 of the Constitution of Kenya 2010 and the Controller of Budget under Article 228, and agrees to provide such access to its records as may be required for audit purposes.
9. Dispute Resolution and Governing Law
9.1 This Contract is governed by and construed in accordance with the laws of Kenya. 9.2 Any dispute arising out of or in connection with this Contract shall be resolved as follows: [Dispute Resolution]. 9.3 Nothing in this Clause prevents either Party from seeking urgent injunctive or declaratory relief from the High Court of Kenya under the Civil Procedure Act Cap. 21. 9.4 Disputes regarding the procurement process — as distinct from contract performance disputes — shall be subject to review by the Public Procurement Administrative Review Board (PPARB) under Section 167 of PPADA.
10. Additional Terms and Special Conditions
10.1 Additional terms and special conditions applicable to this Contract: [Additional Terms] 10.2 Force Majeure: Neither Party shall be in breach of this Contract by reason of any delay in performance caused by a force majeure event — including acts of God, war, civil unrest, natural disasters, or government-imposed restrictions beyond the affected Party's control — provided the affected Party gives written notice to the other Party within 7 days of the force majeure event occurring. 10.3 The PPRA standard conditions of contract for the applicable procurement category are incorporated into this Contract by reference. In the event of conflict between the PPRA standard conditions and the specific terms of this Contract, the specific terms of this Contract shall prevail.
11. Execution
IN WITNESS WHEREOF the Parties have executed this Public Procurement Contract on the date first written above. SIGNED for and on behalf of [Procuring Entity Name] Signature: _______________________________ Name: [Authorised Officer Name] Title: [Authorised Officer Title] Date: [Contract Date] Official Stamp: SIGNED for and on behalf of [Contractor Name] Signature: _______________________________ Name: [Contractor Representative Name] Title: [Contractor Representative Title] Date: [Contract Date] Official Stamp:
Authorised Officer
________________
Signature
Authorised Representative
________________
Signature
What Is a Public Procurement Contract (Kenya)?
A Public Procurement Contract in Kenya governs the relationship between the parties by fixing what each must do.
The Public Procurement and Asset Disposal Act No. 33 of 2015 replaced the Public Procurement and Disposal Act No. 3 of 2005 and represents the primary legislative framework governing public procurement in Kenya. PPADA is administered by the Public Procurement Regulatory Authority (PPRA), an independent regulatory authority established under Section 9 of the Act. The PPRA develops and publishes standard tender documents (STDs) and standard contract conditions used by procuring entities across all procurement categories. All procuring entities are required under Section 136(3) of PPADA to use the PPRA standard conditions of contract or obtain prior PPRA approval before using non-standard conditions.
The Public Procurement and Asset Disposal Regulations 2020 (the 2020 Regulations), gazetted as Legal Notice No. 69 of 2020, supplement PPADA and provide detailed procedural rules for the formation, execution, and management of public procurement contracts. Regulation 142 of the 2020 Regulations prescribes the mandatory minimum content of a public procurement contract, including: the identity of the parties, the contract sum, the delivery or completion schedule, performance security requirements, payment terms, variation procedures, and dispute resolution mechanisms.
A Public Procurement Contract in Kenya differs fundamentally from a private sector commercial contract in several respects. First, the procuring entity's authority to contract is strictly circumscribed by PPADA — a contract entered into in contravention of PPADA is voidable at the instance of the PPRA or the Public Procurement Administrative Review Board (PPARB) under Section 167 of the Act. Second, public funds are involved, making the contract subject to oversight by the National Treasury, the Controller of Budget under Article 228 of the Constitution of Kenya 2010, and the Auditor-General under Article 229 of the Constitution. Third, the contract is subject to the freedom of information principles under Article 35 of the Constitution and the Access to Information Act No. 31 of 2016, meaning that members of the public may request disclosure of the contract terms.
The contract must be signed by an authorised officer of the procuring entity — typically the head of the procuring entity or a duly delegated officer under Section 45 of PPADA — and by an authorised representative of the contractor or supplier. For corporate contractors, this means a director or authorised signatory evidenced by a board resolution. The contract comes into force on the date of signing by both parties and remains effective until the contractor has fully performed all obligations and the procuring entity has discharged all payment obligations.
Public procurement contracts in Kenya are subject to monitoring and evaluation by the PPRA under Section 9(1)(g) of PPADA. The PPRA may request copies of executed contracts from procuring entities, conduct compliance audits, and refer suspected irregularities to the Ethics and Anti-Corruption Commission (EACC) under the Anti-Corruption and Economic Crimes Act No. 3 of 2003, the Director of Public Prosecutions (DPP), or the Directorate of Criminal Investigations (DCI). Procuring entities are required to maintain a contracts register and publish contract award notices on the PPRA electronic procurement system (GeM-KE) under Section 68 of PPADA.
When Do You Need a Public Procurement Contract (Kenya)?
A Public Procurement Contract in Kenya under the Public Procurement and Asset Disposal Act No. 33 of 2015 is required in every procurement above the micro-procurement threshold prescribed under the Public Procurement and Asset Disposal Regulations 2020, and several specific circumstances make immediate execution of a formal contract essential.
A Public Procurement Contract is required immediately upon issuance of a tender award notification under Section 84 of PPADA. The successful tenderer receives a notification of award, and the procuring entity must execute the written contract within 30 days of the award notice expiry of the standstill period — typically 14 days — under Section 137 of PPADA. Failure to execute the contract within this window may expose the procuring entity to a challenge before the Public Procurement Administrative Review Board (PPARB) by an aggrieved tenderer.
A Public Procurement Contract is needed for all government works contracts — including road construction, building construction, and infrastructure works — awarded by the Kenya National Highways Authority (KeNHA), the Kenya Urban Roads Authority (KURA), county governments, or any other public body. The contract must comply with PPRA standard conditions for works contracts and incorporate the performance security requirements under Regulation 142.
A Public Procurement Contract is required for all government supply and service contracts above the open tendering threshold, including supply of goods to ministries and state corporations, provision of ICT services, consultancy engagements, and facility management services. County governments contracting under the County Governments Act No. 17 of 2012 and the Public Finance Management Act No. 18 of 2012 must use PPRA-compliant contracts approved by the Council of Governors.
A Public Procurement Contract is needed whenever a contractor or supplier requires performance security — a performance bond or bank guarantee — from a financial institution regulated by the Central Bank of Kenya (CBK) under the Banking Act Cap. 488. The contract document is the primary instrument against which the performance bond is called.
A Public Procurement Contract is required when a procuring entity uses framework agreements under Section 130 of PPADA, where individual call-off contracts must be executed against the framework for each specific delivery or service. The framework agreement itself constitutes a public procurement contract for the purposes of PPADA.
What to Include in Your Public Procurement Contract (Kenya)
A valid and enforceable Public Procurement Contract in Kenya under the Public Procurement and Asset Disposal Act No. 33 of 2015 and the Public Procurement and Asset Disposal Regulations 2020 must contain the following essential elements.
Parties and Authority: Full legal name and designation of the procuring entity, the name and title of the authorised signatory under Section 45 of PPADA, and the full legal name, registration number (from the Business Registration Service or relevant professional register), and authorised signatory of the contractor or supplier. The procuring entity's authorisation to enter the contract must be evidenced by an approved procurement plan and an allocation of funds confirmed by the head of finance or accounting officer under the Public Finance Management Act No. 18 of 2012.
Tender Reference and Award: The unique tender reference number from the PPRA GeM-KE electronic procurement system, the date of tender opening, the evaluation methodology used (price-only or merit point system under PPRA Regulations), the contract award date, and the standstill period expiry date under Section 137 of PPADA. Any pre-contract clarifications or negotiations authorised under Section 135 of PPADA must be documented in the contract or appended as an annex.
Scope of Supply, Services, or Works: A precise description of the goods, services, or works to be provided, referencing the tender specifications, bill of quantities (BOQ), or terms of reference (TOR) as a schedule to the contract. The scope must correspond exactly to what was tendered and awarded — variations beyond the original scope require a formal contract variation under Section 139 of PPADA.
Contract Price and Payment Terms: The total contract sum in Kenya Shillings (KES), inclusive of all applicable taxes — VAT at 16% under the Value Added Tax Act No. 35 of 2013, withholding tax under the Income Tax Act (Cap. 470) as administered by the Kenya Revenue Authority (KRA), and any advance payment arrangements. Payment terms must comply with Regulation 142(2)(g) of the 2020 Regulations, including milestone or interim payment procedures, the payment certificate process for works contracts, and the time within which the procuring entity must pay a valid invoice — typically 30 days under government payment policy.
Delivery or Completion Schedule: A binding schedule of delivery dates, project milestones, or completion dates, with liquidated damages provisions for delay expressed as a daily or weekly rate not exceeding 0.1% of the contract sum per day under PPRA standard conditions. The completion schedule should account for excusable delay events — force majeure and variations — consistent with PPRA standard conditions of contract.
Performance Security: The type, amount (typically 10% of the contract sum), and form of performance security required from the contractor under Regulation 142(2)(h) of the 2020 Regulations. The performance security must be in the form of an unconditional bank guarantee from a CBK-licensed commercial bank or a performance bond from a registered insurance company under the Insurance Act Cap. 487, and must remain valid for the full contract period plus a demand period.
Variation Procedure: The procedure for authorised variations to the scope, price, or schedule under Section 139 of PPADA. Variations above the prescribed threshold — 25% of the original contract sum under Regulation 148 of the 2020 Regulations — require PPRA approval before the procuring entity may issue the variation order. Unauthorised or excessive variations are a primary source of public procurement irregularities flagged by the Auditor-General and the EACC.
Dispute Resolution: The mandatory dispute resolution mechanism for public procurement contract disputes. Under Section 167 of PPADA, aggrieved tenderers may challenge award decisions before the Public Procurement Administrative Review Board (PPARB). Post-award contract disputes between the procuring entity and the contractor are typically resolved by arbitration under the PPRA standard conditions or by the High Court of Kenya under the Civil Procedure Act Cap. 21.
Anti-Corruption and Integrity: A mandatory anti-corruption clause confirming that neither party has offered or received a bribe or inducement in connection with the award of the contract, as required under the Anti-Corruption and Economic Crimes Act No. 3 of 2003 and PPRA standard conditions. The contractor must hold a valid tax compliance certificate from the Kenya Revenue Authority (KRA) and a clean certificate of compliance from the EACC where required for the applicable procurement category.
Forms-legal.com provides this Kenya Public Procurement Contract template as a reference document for procuring entities and contractors. All public procurement contracts must comply with current PPRA standard conditions and should be reviewed by an advocate admitted to the Roll of Advocates maintained by the Law Society of Kenya (LSK) and familiar with PPADA compliance requirements.
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Frequently Asked Questions
Public procurement contracts in Kenya are governed primarily by the Public Procurement and Asset Disposal Act No. 33 of 2015 (PPADA), which came into force on 7 January 2016 and replaced the Public Procurement and Disposal Act No. 3 of 2005. Section 136 of PPADA requires every procuring entity to enter into a written contract with the successful tenderer before the commencement of any supply, service, or works. The Act is supplemented by the Public Procurement and Asset Disposal Regulations 2020 (Legal Notice No. 69 of 2020), which provide detailed procedural rules for contract formation, execution, and management. The Public Procurement Regulatory Authority (PPRA) — established under Section 9 of PPADA — develops and publishes standard tender documents and standard conditions of contract that all procuring entities are required to use. In addition to PPADA, public procurement contracts are subject to the Constitution of Kenya 2010 (Articles 227 and 201 on fair procurement and public finance), the Public Finance Management Act No. 18 of 2012, the Anti-Corruption and Economic Crimes Act No. 3 of 2003, and the Law of Contract Act Cap. 23, which governs the general principles of contract formation and enforceability applicable to all Kenyan contracts.
The standstill period under Section 137 of the Public Procurement and Asset Disposal Act No. 33 of 2015 is a mandatory waiting period — typically 14 days — between the issuance of notification of award to the successful tenderer and the actual execution of the procurement contract. During the standstill period, unsuccessful tenderers have the right to request a debriefing from the procuring entity and, if dissatisfied, to lodge a complaint or application for review with the Public Procurement Administrative Review Board (PPARB) under Section 167 of PPADA. A procuring entity that executes a contract before the standstill period expires, or during a review proceedings before PPARB, commits a breach of PPADA that can render the contract voidable. The PPARB has power under Section 172 of PPADA to annul a procurement process, set aside a contract entered into in contravention of PPADA, and order corrective measures. Contractors and suppliers should therefore verify that the standstill period has fully expired and that no PPARB review application is pending before signing a public procurement contract, as a PPARB annulment order after signing creates significant commercial and legal uncertainty.
Performance security for public procurement contracts in Kenya is governed by Regulation 142 of the Public Procurement and Asset Disposal Regulations 2020 and the applicable PPRA standard conditions of contract. The performance security is typically set at 10% of the contract sum and must be in one of the following acceptable forms: an unconditional bank guarantee issued by a commercial bank licensed by the Central Bank of Kenya (CBK) under the Banking Act Cap. 488; or a performance bond issued by an insurance company licensed by the Insurance Regulatory Authority (IRA) under the Insurance Act Cap. 487. The performance security must be valid for the full contract period plus an additional demand period — usually 28 days after contract completion — to allow the procuring entity sufficient time to call the security if defects or failures are discovered at completion. The procuring entity may call the performance security if the contractor fails to complete the works or supply the goods or services in accordance with the contract, abandons the contract, or becomes insolvent. The security must be returned to the contractor promptly upon satisfactory performance and issuance of the completion or defects liability certificate under PPRA standard conditions.
Variations to public procurement contracts in Kenya are regulated under Section 139 of the Public Procurement and Asset Disposal Act No. 33 of 2015 and Regulations 146 to 149 of the Public Procurement and Asset Disposal Regulations 2020. A procuring entity may issue a variation order to change the scope, price, or schedule of a contract where the variation is necessary and in the public interest — for example, to address unforeseen site conditions, changes in specifications, or additional quantities required. Regulation 148 of the 2020 Regulations imposes a cap on the cumulative value of variations: a single variation may not exceed 10% of the original contract sum, and the cumulative value of all variations may not exceed 25% of the original contract sum, without prior written approval from the Public Procurement Regulatory Authority (PPRA). Any variation that exceeds these thresholds requires PPRA approval before the variation order is issued. The procuring entity's accounting officer must also certify that funds are available to meet the additional cost of the variation before it is authorised. Variations must be evidenced in writing by a formal variation order signed by the authorised officer of the procuring entity and accepted in writing by the contractor. Verbal or informal variations are not enforceable under PPRA standard conditions, and claims for additional payment based on undocumented instructions are routinely rejected by Kenyan arbitral tribunals and courts.
Where a contractor fails to perform a public procurement contract in Kenya — through delay, defective work, non-delivery, or abandonment — the procuring entity has several remedies available under the Public Procurement and Asset Disposal Act No. 33 of 2015, the PPRA standard conditions of contract, and general Kenyan contract law under the Law of Contract Act Cap. 23. The procuring entity may deduct liquidated damages from payments due to the contractor at the daily rate prescribed in the contract — typically 0.1% of the contract sum per day of delay under PPRA standard conditions — up to the maximum cap (usually 10% of the contract sum). If the contractor's performance is fundamentally deficient, the procuring entity may issue a formal notice of default requiring the contractor to remedy the breach within a specified period (usually 14 to 28 days). If the contractor fails to remedy the default, the procuring entity may terminate the contract for cause under PPRA standard conditions, call the performance security, and engage another supplier or contractor. The PPRA maintains a register of debarred contractors under Section 115 of PPADA — a contractor found guilty of fraud, corruption, or serious breach may be debarred from all public procurement in Kenya for a period of up to five years. Contract disputes may be referred to arbitration under PPRA standard conditions or to the High Court of Kenya under the Civil Procedure Act Cap. 21.
Yes, public procurement contracts in Kenya are subject to significant transparency and disclosure obligations under the Constitution of Kenya 2010, the Public Procurement and Asset Disposal Act No. 33 of 2015, and related legislation. Article 35 of the Constitution guarantees every citizen the right to access information held by the state, and Article 227 of the Constitution requires that public procurement be fair, equitable, transparent, competitive, and cost-effective. Section 68 of PPADA requires procuring entities to publish contract award notices on the PPRA GeM-KE electronic government procurement portal, including the name of the successful tenderer, the contract sum, and the contract description. The Access to Information Act No. 31 of 2016, administered by the Commission on Administrative Justice (CAJ), entitles any person to request access to public procurement contracts held by a procuring entity. The Auditor-General under Article 229 of the Constitution and the Controller of Budget under Article 228 have unfettered access to all public procurement contracts and related financial records for audit purposes. The Ethics and Anti-Corruption Commission (EACC) and the Director of Public Prosecutions (DPP) may also obtain access to public procurement contracts in the course of investigations under the Anti-Corruption and Economic Crimes Act No. 3 of 2003.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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