Accounting officers and procurement chiefs in counties now face sanctions for delaying payments to contractors and suppliers as the government moves to end the pending bills crisis.
The Public Procurement Regulatory Authority (PPRA) says that the officers would be surcharged for any extra costs the government would incur on delayed payments.
The procurement regulator says it is analyzing court decisions on procurement cases to check for lapses.
“Where it is established that public resources have had to be used to pay costs unrelated to planned and budgeted contractual obligations, such costs will be borne by the responsible officers,” PPRA Director General Patrick Wanjuki said.
The move comes as pending bills in both counties and the national government continue to pile.
The latest data from the Controller of Budget (COB) indicated that counties and national governments owed Sh706 billion as of December 31, 2024.
The national government’s accounted for the largest share at over Sh520 billion while counties owed close to Sh185 billion.
The agonizing situation has left suppliers and contractors unable to service bank loans while others have lost their assets to auctioneers.
It remains unclear if a similar circular would also be directed to finance chiefs at the national level who are the biggest casualties.
The authority has also warned finance chiefs for failing to honour contractual payments committed during a transition in the county leadership.
“This is mainly where incoming leadership declines to honour payments of lawfully performed contracts executed by the outgoing administration,” PPRA said.
The order has been issued in a circular to county secretaries, clerks of county assemblies, Finance CECs, accounting officers at county departments, CEOs of county corporations, public water companies’ managers, and managers of city boards.
“The responsible officers will be surcharged by the procuring entity for the loss resulting from their actions or inaction,” Wanjuki said, reporting that some officers have given the government a bad name by daring suppliers and contractors to go to court.
The authority, he said, is concerned that some counties have failed to pay suppliers and contractors even after receiving their disbursements from the National Treasury.
“The authority is concerned by instances where Treasury disburses funds but no payments are made to clear the amounts due for legitimately contracted, supplied, and received goods and services,” PPRA said.
The directive has come a time when there are concerns about counties and national governments pending bills hitting the roof with no immediate reliefs in sight for the contractors and suppliers.
COB Margaret Nyakang’o said the consequences were severe and asked counties to avoid accumulating pending bills, despite the challenges they go through.
“They can achieve this by entering into agreements or contracts based on their cash flow availability and budget allocations,” she said.
To mitigate, PPRA has opened an online complaint reporting portal for all contractors, suppliers, service providers and bidders to report complaints including on overdue payments.
“It is an offence to delay without justifiable cause, payment of contractors beyond the contractual period and contractual performance obligations,” the authority said, stating that it would take “measures on non-compliance without further reference to the procuring entities.”
The authority has further directed state agencies to make prompt and timely payments to contractors.
“The law provides clear sanctions on any delay in the payment of contractors beyond the contractual period and delay in contractual obligations...without any justifiable cause.”
Going forward, PPRA wants all procuring entities to align their payment policy to ensure payments to contractors are done on a first come first served basis.
“Where a procurement proceeding is initiated and progresses into a contract, the funds committed to the contract should not be used for any other purpose,” the circular reads.
The authority wants entities to prioritize settling their pending bills before engaging in other new contractual commitments.
“Accounting officers implementing contracts with
financial obligations extending beyond one financial year should ensure that
such contracts are adequately budgeted for within the expenditure framework to
avoid stalling of projects and delay in payments,” Wanjuki said.
The circular has been copied to the Head of Public Service Felix Koskei, Auditor General Nancy Gathungu, Controller of Budget Margaret Nyakang’o, Treasury PS Chris Kiptoo, and Council of Governors CEO Mary Mwiti.
