Public Private Partnerships Act

This Act may be cited as the Public Private Partnerships Act.

A section designated within the existing budget of the contracting authority for its function for which the agreement relates.

Prescribes procedures for private sector participation in financing, construction, development, operation or maintenance of infrastructure or development projects through public private partnerships.

The Act applies to every project agreement for public private partnerships; the Public Procurement and Asset Disposal Act (Cap. 412C) does not apply to a public private partnership, but Section 4(3) sets out exceptions depending on funding.

If this Act conflicts with any other written law, the provisions of this Act prevail.

The Committee may create subcommittees it considers necessary to perform its functions and exercise its powers under the Act.

The Committee may, by resolution, delegate any of its powers or functions to a subcommittee or to specified officers or agents of the Directorate.

The Committee's business must follow the First Schedule; it may set its own procedure except where the Act provides otherwise; and it must keep proper records of meetings including minutes.

The Cabinet Secretary may make regulations that prescribe a code of conduct for the Committee’s members and for officers, employees and agents of the Directorate.

Members of the Committee are to be paid remuneration or allowances as determined by the Cabinet Secretary in consultation with the Salaries and Remuneration Commission.

Establishes the Directorate of Public Private Partnerships and provides that the Directorate shall be headed by the Director-General.

The Director-General is to be competitively recruited and appointed by the Public Service Commission; holds office for four years and may be re-appointed once for an additional four years subject to appointment terms.

The Cabinet Secretary must appoint the staff of the Directorate, subject to section 31 and 37 of the Public Service Commission Act and in consultation with the Director-General.

The Directorate may request seconded staff from contracting authorities, county governments, county corporations or development/strategic partners; staff seconded to the Directorate are treated as Directorate staff and under its authority for the duration of the secondment.

The Directorate must perform a range of functions relating to originating, guiding, coordinating, supporting, overseeing, advising and managing public private partnership projects, and must issue standard bidding documents and prepare financial accounts.

Section 6 establishes the Public Private Partnership Committee membership, assigns the finance Principal Secretary as chairperson and the Director-General as secretary, allows the Committee to co-opt specified Principal Secretaries and others, restricts co-opted members from voting and limits their membership to not exceeding one year, and requires certain members to attend meetings in person while allowing them to designate representatives in sub-committees.

Persons with at least ten years’ relevant professional experience qualify for appointment to the Committee; appointed members hold office for three years and may be re-appointed once; appointments are staggered so expiry dates differ.

The Committee is responsible for formulating PPP policies, overseeing PPP contract implementation, approving various PPP documents and proposals, monitoring implementation and contingent liabilities, and exercising powers necessary to discharge its functions.

Lists the events that cause a member of the Committee to vacate office and provides procedural rights for removal and appeal.

A contracting authority may enter into project agreements with qualified private parties and may designate property for a project; contracting authorities must follow the Directorate's directions at every stage, and the Directorate must designate a lead contracting authority where multiple contracting authorities are involved.

A contracting authority may enter into a public private partnership with a private party following the Second Schedule, but shall not do so for a period exceeding thirty years.

Contracting authorities must perform a list of duties related to PPP projects, including identifying and prioritizing projects, preparing and appraising projects, running tenders, providing technical expertise, monitoring and overseeing implementation, reporting, record-keeping, ensuring public participation, and ensuring asset transfer terms are followed; they must also implement Directorate recommendations and comply with its guidelines.

The Directorate may issue guidelines on determining PPP agreement duration and may extend a project agreement's tenure with Committee and Attorney-General approval, provided the extension does not impose additional fiscal or statutory burdens on the contracting authority or the Government.

A person must not enter into a project agreement on behalf of a contracting authority for a public private partnership, unless that person is the accounting officer of the contracting authority.

Contracting authorities (except county governments or county corporations) must prepare and submit prioritized project lists, supported by concept notes, to the Directorate for approval; the Directorate may reject projects, must state reasons in writing, must notify Committee/Cabinet Secretary/Cabinet bi‑annually of approvals, and must provide guidance when rejecting.

The Directorate must create and keep an up-to-date national list of approved projects, publish it on its and the contracting authority’s websites (subject to subsection (1)), maintain it in a publicly accessible database, and prepare a priority list of those projects.

Prequalification procedures: assess the financial capacity to undertake the project.

Lists government support measures (a–f) and gives the Cabinet Secretary powers to determine instruments and to prescribe guidelines, with certain conditions for support.

The Directorate must impose a success fee (up to one per cent of total project cost) payable by the private party that achieves financial close; costs the Directorate or a contracting authority incurs for transaction advisory and other recoverable project development costs are recoverable in full from the private party; the Directorate may issue guidelines on allocation of such costs.

Contracting authorities must identify, prioritize and appraise PPP projects and carry out preparatory and tendering processes; the Cabinet Secretary must make regulations (in consultation with the Directorate).

A project implementation team must carry out feasibility studies, prepare the project for procurement, run the tender stage, negotiate project agreements, and must include a Directorate representative plus technical, financial and legal experts from the contracting authority.

A contracting authority must, under the direction of the Directorate, undertake a feasibility study of the project it intends to implement under this Act to determine project viability.

Contracting authorities must submit feasibility reports to the Directorate; the Directorate must submit an evaluation and recommendations to the Committee; the Committee must consider the feasibility report within twenty-one days of receiving the evaluation.

The Directorate must assess contracting authorities' technical expertise; if a contracting authority lacks expertise the authority must appoint a transaction advisor in consultation with the Directorate; the Directorate may procure transaction advisors sectorally.

The Cabinet Secretary must, on the recommendation of the Directorate, prescribe standards and procedures for identifying, selecting, studying, approving, tendering, negotiating, monitoring and evaluating projects under the Act.

Requires the Cabinet Secretary to approve a limit for contingent liabilities; requires the Committee to assign contingent liabilities within that limit; permits the Cabinet Secretary to approve increased contingent liability headroom on recommendation; requires the Directorate to submit an annual report on assigned contingent liabilities.

Section 83(2) requires The Committee, on the advice of the Directorate, to issue guidelines, standards and practice notes on local content based on the priority requirements of the Kenyan economy.

Section 84 lists offences (84(1)(a)–(j)) such as obstructing or misleading officials, tender irregularities, undue influence, divulging confidential information, prohibited tender acts, contravening agreements, wilful violations and fraud; prescribes fines and imprisonment for natural persons and fines for bodies corporate; and provides disciplinary, debarment, disqualification and contract-voidability consequences. The Directorate may lodge complaints with professional bodies.

State officers and public officers must not directly or indirectly participate in any tender under this Act; using relatives, associates or companies controlled by the officer to participate is also covered; breach is an offence punishable by up to a two million shilling fine or up to five years imprisonment, or both.

A private party must, when requested by a contracting authority or the Directorate, allow an agent or employee of that authority or Directorate access to project premises, site, storage facilities and records to conduct an inspection under the project agreement.

Offences in Part V and the compensation/recovery provisions in Part VI of the Anti-Corruption and Economic Crimes Act (Cap. 65) apply to this Act, with necessary modifications.

The Directorate must prepare and submit an annual report on public private partnerships to the Committee no more than three months after 30th June each year; the Cabinet Secretary must send a copy of that report to Parliament.

The Cabinet Secretary may make regulations to better carry out this Act, subject to limits and applicable standards.

Public-private partnership procurements may be conducted by direct procurement, privately‑initiated proposals, competitive bidding, or restricted bidding; contracting authorities must follow principles of transparency, cost‑effectiveness and equal opportunity; must use Directorate standard bidding documents; and the Cabinet Secretary must prescribe procurement guidelines for PPPs.

Direct procurement applies when the private party possesses the intellectual property rights to the key approaches or technologies required for the project.

Sets out the procedure for direct procurement.

Private parties may submit privately-initiated proposals to contracting authorities, which must be assessed by the Directorate; such proposals must include specified documentation and a non-refundable review fee is payable on submission.

The section states that it has not been debarred by any country or any international organization from participating in public private partnerships or similar arrangements.

The section sets evaluation steps for privately-initiated PPP proposals: the Directorate must set evaluation criteria (with the contracting authority); private parties are not required to submit additional proposals; private parties must provide clarifications if requested; the Directorate and contracting authority must evaluate within 90 days; the Directorate must report within 5 working days; the Committee must decide within 14 working days; approval does not create an obligation on government entities.

Rules for privately-initiated PPP proposals: project development follows Committee approval; the development phase must be completed within six months (subject to written extension approved by the Directorate); required studies and documentation are listed; contracting authorities may enter agreements and hire advisors; Directorate and Committee have timed decision and recommendation duties; contracting authority must publish documentation after Committee determination.

Section 44 allows contracting authorities to use direct negotiations in specific circumstances, requires them to set realistic timelines (including finalising negotiations within six months), permits restricted tendering for competing private proposals, requires timelines for open tenders, and requires equal bidding conditions subject to subsection (4).

A contracting authority may use restricted bidding; the section lists circumstances when restricted bidding is appropriate.

A contracting authority must, after a feasibility report is approved, invite requests for qualifications and set bidder eligibility; the Directorate prescribes related standards, may determine the section does not apply to a PPP project (notify contracting authority) and must issue guidelines.

Private parties responding to a request for qualification may respond as part of a consortium and must meet specified eligibility criteria including technical, financial and legal capacity, and must not be insolvent or otherwise precluded by the contracting authority.

The contracting authority must, upon issuing a notice under section 44, constitute a pre-qualification committee to pre-qualify bidders; the contracting authority may instead appoint the project appraisal team to act as that committee where it considers it appropriate.

The pre-qualification committee must review qualification requests and prepare a shortlist; a disqualified bidder may petition the Petition Committee within 14 days; the Petition Committee must decide within 28 days.

A contracting authority must, in consultation with the Directorate and after preparing a shortlist of prequalified bidders, prepare tender documents for inviting bids and include specified project information and procedures.

Bidders must complete and submit separate technical and financial bids; the bids must be placed in separate sealed envelopes and submitted in the manner prescribed by the contracting authority.

Contracting authorities may hold competitive dialogues (with Directorate approval) and may require non-binding technical and financial proposals; parties to the discussions must not disclose those discussions; if prequalification is reopened the contracting authority must invite bidders from the dialogue to submit best and final offers.

Rules for consortium bids: a consortium may submit a bid in its name; consortium bids must be accompanied by a notarised binding agreement; the consortium must appoint and notify a lead member; consortium members cannot submit separate competing bids; the contracting authority must disqualify contravening consortiums and those losing their lead member unless replaced appropriately; members are jointly liable under the project agreement.

A contracting authority must, in consultation with the Directorate, constitute a proposal evaluation team to evaluate bids submitted under this Act.

The proposal evaluation team must submit its evaluation report and recommendations to the accounting officer; the accounting officer may return the report for review if not satisfied; the contracting authority must submit the evaluation report to the Directorate for no objection within seven days of conclusion.

Proposal evaluation teams must reject bids that fail to meet tender conditions; they may reject all submissions if bidders generally fail to comply. When a bid is rejected the team must report reasons to the accounting officer; the accounting officer must notify the bidder within fourteen days. Rejected bidders are not entitled to compensation. If all bids are rejected the tender is deemed terminated and the contracting authority shall decide, with the Directorate, whether to restart the process.

Negotiations must follow prescribed procedures: if talks with the first-ranked bidder fail the negotiating committee must negotiate with the second-ranked bidder; negotiating parties must not amend evaluated bid terms; the negotiating committee must follow Directorate guidelines when conducting negotiations.

The negotiating committee must submit a project and financial risk assessment report after concluding negotiations; if the contracting authority accepts it must send it to the Directorate for approval; if the Directorate is not satisfied it must notify the contracting authority in writing, and the contracting authority must refer the report back to the negotiating committee for review; subsections (1) and (2) apply to that review.

The Directorate must submit the project and financial risk assessment report and recommendations to the Committee; the Committee must consider the report and, if satisfied, approve execution of a project agreement within twenty-eight days after receiving the report.

The Committee must notify the contracting authority in writing of project approval and the financial risk assessment within thirty days; after that notification the contracting authority must prepare and submit a final draft project agreement to the Attorney-General and, if cleared, present it to the bidder for execution.

The contracting authority must execute the project agreement with the successful bidder; a private party that executes the contract must commence the project within twelve months of execution; if the private party fails to commence the project, the contracting authority shall terminate the contract and no liability attaches to the contracting authority or the Government.

Contracting authorities may cancel tenders before project agreement execution if in the public interest, but they must obtain Committee and Attorney-General approval; cancellations must be notified in writing with reasons; bidders in cancelled tenders are not entitled to compensation.

The Cabinet Secretary responsible for a contracting authority that enters into a project agreement with a private party in respect of exploiting natural resources must submit the project to Parliament for approval.

County governments may enter into public–private partnership agreements and must manage project development, carry out feasibility studies, liaise with the Directorate during project phases, and submit feasibility studies to the Directorate.

County governments must obtain county assembly approval before undertaking a public private partnership project; if the project requires a government support measure, the county government must not undertake the project or enter into a project agreement before getting the written approval of the Cabinet Secretary.

County governments or county corporations that intend to implement PPP projects must submit a list of those projects to the Directorate for inclusion in the national list (section 26); they must not submit a project list unless the projects are part of the County Integrated Development Plan.

Part V applies, with necessary modifications, to public private partnership projects by county governments.

On executing a project agreement, the contracting authority and successful bidder must create a project company; directors, majority shareholders and shareholders face restrictions on winding up, share transfers, dilution and pledging; the Cabinet Secretary must make Regulations and, acting on the Committee’s recommendation, may grant or decline approvals.

Contracting authorities must publish the information listed in subsection (1); the Directorate may prescribe how it is published; the Cabinet Secretary must make regulations in consultation with the Directorate.

Parties to a project agreement must specify the minimum obligations in the Third Schedule; every project agreement must provide revenue-sharing mechanisms and thresholds when revenue performance exceeds the negotiated target return; the Cabinet Secretary may make Regulations on how project agreements are drawn.

Project agreements under this Act must be subject to the Laws of Kenya; parties to a project agreement may agree to resolve disputes by arbitration or other non-judicial means in accordance with paragraph 18 of the Third Schedule.

Parties to a project agreement may negotiate amendments, variations or waivers, but any such amendment, variation or waiver does not take effect unless approved by the Committee and the Attorney‑General; approvals under subsection (2) must be in writing and subsection (2) sets conditions for approval (value for money; affordability as verified by the Directorate where financial implications; transfer of appropriate risks to the private party; continued provision of efficient and effective public services; protection and preservation of the environment).

Requires project parties to appoint an independent expert (in coordination with the Directorate) to manage implementation; the private party must bear that expert's cost; the Directorate must monitor projects and provide guidance and, if it finds an imbalance in benefits, initiate amendments to project agreements in consultation with contracting authorities.

Contracting authorities may second employees to project companies on request; seconded employees are treated as company employees and must have the same or improved terms during secondment.

Establishes a Petition Committee to hear and determine petitions about decisions by the Committee, Directorate or contracting authorities; sets composition, terms, filing requirements, and timelines for petitions, reviews, and appeals.

The Cabinet Secretary must designate a public officer to serve as the Secretary to the Committee; the person so designated must be an Advocate of the High Court of Kenya with at least seven years standing.

Members of the Committee are entitled to be paid salaries and allowances; the Cabinet Secretary must determine those salaries and allowances in consultation with the Salaries and Remuneration Committee.

A member of the Committee who has a direct or indirect interest must declare the interest and must not participate in proceedings of the Committee on that matter.

A person who contravenes subsection (1) commits an offence and, on conviction, is liable to a fine not exceeding five hundred thousand shillings or to imprisonment for a term not exceeding one year, or to both.

The Committee must issue a decree setting out its decision in a particular matter.

Establishes the Public Private Partnership Project Facilitation Fund as a financing mechanism and lists permitted sources of its money; gives the Cabinet Secretary roles regarding approval of sources and management via Regulations.

Project companies and private parties must keep proper project accounts, allow scrutiny on reasonable notice, have accounts audited (by Auditor General when public counterpart funding exists; by a reputable firm annually if fully privately funded), submit audited accounts within six months after each financial year, and submit performance reports at least annually or as specified in the project agreement.

"repealed Act" is defined to mean the Public Private Partnerships Act, 2013 repealed under section 93.

Persons who immediately before commencement were members of the former Committee or the former Petition Committee are deemed appointed under this Act for the remainder of their terms; persons who immediately before commencement were public officers of the former Unit are deemed officers of the Directorate on the same contract terms.

Certain prior regulations, petitions, project lists and project agreements made under former bodies or the repealed Act are treated as if made, lodged, approved or entered into under this Act; petitions challenging project agreements made under the repealed Act are to be heard under the repealed Act.