INTRODUCTI

ON
This provides an overview of the public procurement legal and institutional framework in
Uganda.

Definition of
Procurement
Section 3 of the Public Procurement and Disposal of Public Assets Act defines procurement to
mean the acquisition by purchase, rental, lease, hire purchase, licence, tenancy, franchise, or
any other contractual means, of any type of works, services or supplies or any combination.

Legal Framework for Public Procurement in

Uganda
Enactment of the Act:
2003
The Public Procurement and Disposal of Public Assets Act, Act No. 1 of 2003 which came
into force on the 21st day of February, 2003 (S.I. No. 10 of 2003) and guided Government
procurement in Uganda from 2003.

Evaluation of the Effectiveness of the PPDA Act of

2003
The CPAR1 report noted that despite the improvements in the procurement system,
Uganda’s public procurement system was still weak and needed to be strengthened
substantially to enable it to ensure that the procurement laws and institutions became effective
tools in the efficient and transparent management of public funds.

The CPAR identified four key areas the Government needed to focus on as a matter of priority
to ensure Uganda’s procurement system achieved maximum positive impact in promoting
economy, efficiency, transparency and accountability. The four areas included:

a) Weaknesses in local government

procurement;
The CPAR report stated that applicability and enforcement of the PPDA Act at the local
government level was one of the most critical issues in the procurement reform agenda.
Cleaning up procurement practices at the local level was one issue that required action at
the highest level of Government. Political interference was the most intractable
procurement issue at this level.

b) The weak compliance and enforcement quandary:

The CPAR report stated that the PPDA should enforce existing rules on advertising, pre-
qualification, submission and opening of bids, and the use of appropriate evaluation criteria

Lecture Notes by Grace Flavia Lamuno

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 through regular procurement audits and application of effective sanctions.

c) The weak capacity

dilemma:
The CPAR noted that the lack of capacity was the single most important issue in the sector.
This lack of capacity was specially acute at the local government level. Most importantly, a
general lack of understanding of key public procurement principles was manifest and posed
as a main impediment to sound public procurement.

1 Uganda Country Procurement Assessment Report (CPAR) Volume I, June 15, 2004

Lecture Notes by Grace Flavia Lamuno

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d) Apparent abdication by the Ministry of Finance of its policy making and coordination roles
in procurement.
The CPAR noted that the main area of improvement needed related to the role of the
Ministry
of Finance, Planning and Economic Development (MoFPED). The MoFPED had
seemingly abdicated its policy-making role in public procurement as laid down by the
PPDA Act. The policy making role of (MoFPED) is predicated on its constitutional role as
the custodian of all public resources and budget allocations.

In addition to the above weaknesses, the PPDA reports still showed additional weakness in
the law that that included the following;
a) Existence of Procurement Capacity Gaps:
There was a resources gap in the procurement sector especially for the Local Governments
in terms of human resource, experience, skills and tooling.

b) Persistent Cases of Abuse of the Procurement Law:

A number of PDEs in both Central and Local Governments were still weak in
implementing the law.

c) Limited Awareness of the Procurement law:

The Authority still faced an awareness gap amongst the general public which was more
evident in the Local Governments, where most members of the public were still unaware of
the PPDA Act, Regulations and the role of PPDA.

d) Failure to Implement PPDA’s Recommendations:

The audit reports issued regularly by PPDA contained numerous violations of the law by
managers in Procuring and Disposing Entities and although PPDA sent them to competent
authorities for legal and administrative action, nothing seemed to happen. So the impunity
continued.

e) Staffing:
The Authority’s mandate had increased over time especially following amendment of the
Local Governments Act in 2006 which harmonized the procurement systems to incorporate
public procurement regulations. The organization structure had however not been revised
to take cognizant of the growing mandate. This negatively affected the effectiveness of the
Authority on achieving its mandate.

f) Unethical Conduct:
PDEs did not adhere to the principle of confidentiality during the bidding process which
caused leakage of information to bidders and complaints.
Enactment of the Amendments to the PPDA Act:2014
Recognising the continuously changing public procurement environment and the challenges
created, there was growing need for amendment of the PPDA law. The Ministry of Finance,
Planning and Economic Development began the process of amendment of the PPDA law in
consultation with experts, users, the business community, local leaders and academics. The
Public Procurement and Disposal of Public Assets (Amendment) Act, Act No. 11 of 2011
came into force on the 3rd day of March, 2014 (S.I. No. 3 of 2014) and the Local
Governments (Amendment) Act, Act 2 of 2006 came into force on the 10th day of February,
2006 (S.I. No. 4 of 2006). The Public Procurement and Disposal of Public Assets
(Amendment) Act, Act No. 11 of 2011 came into force on the 3rd day of March, 2014 and is a
reprint of the Public Procurement and Disposal of Public Assets Act, Act No. 1 of 2003. The
reprint consolidates the Public Procurement and Disposal of Public Assets Act, Act No. 1 of
2003 and the Public Procurement and Disposal of Public Assets (Amendment) Act, Act No.
11 of 2011 and incorporates the amendment effected by section 4 of the Local Governments
(Amendment) Act, Act 2 of 2006. The amendments significantly changed the way public
procurement is managed in Uganda in terms of efficiency, transparency and accountability.

Some key changes introduced in the

Law
1) Procurement procedures under bilateral tied loans
2) Compliance with the Public finance and accountability
Act
3) Accreditation of alternative
systems
4) Preference schemes
5) Reservation
schemes
6) Procurement of consultancy
services
7) Types of contracts
8) Review of decisions of the authority: establishment of the Public Procurement and Disposal
of public assets Tribunal
9) Limitation on contracts with members of procuring and disposing
entities.
10) Force account
mechanism.
11) the special regulations for the procurement of medicines and medical
supplies

Enactment of Further
Amendments:2021
Additional amendments have been introduced under the new law which is the Public
Procurement
And Disposal Of Public Assets (Amendment) Act, 2021. The specific amendments relate
to:
a) to provide for the functions of the Authority and of the Board of Directors of the
Authority;
b) to provide for electronic records and communication;
c) to provide for the aggregation of procurement requirements; d)
to provide for marginalised groups under reservation schemes; e)
to remove the Authority from the administrative review process;
f) to provide for the appointment of a registrar of a Tribunal;
g) to provide for the powers of the High Court in procurement proceedings;
h) to amend the Kampala Capital City Act and the Local Governments Act with respect
to procurement and for related purposes.
To whom does the Act
Apply?
Section 2 (1) of this Act provides that the Act shall apply to all public procurement and
disposal activities and in particular shall apply to—
(a) all public finances
—
(i) originating from the Consolidated Fund and related special finances expended
through the capital or recurrent budgets, whatever form these may take;
(ii) that may be earmarked for external obligation purposes, except those resources that
may be earmarked for payments of membership subscriptions and contributions; and
(iii) of a procuring and disposing entity;
(b) Resources in the form of counterpart transfers or co-financing, pre contract financing or
any finances of a similar nature within the context of development co-operation agreements
for the implementation of national programmes;
(c) procurement and disposal by a procuring and disposing entity, within or outside
Uganda;
(d) procurement financed from specific public finances specified in paragraph (a), in the case
of an entity not being of Government, except where the Authority confirms in writing, that the
procurement system of the entity is satisfactory;
(e) procurement and disposal by a company registered under the Companies Act, in which
a
procuring and disposing entity has majority
interest.

The implication is that Procurements that require pre-contract financing shall be subject to
the
PPDA Act,
2003.

Exemption
s
Section 2 (1a) For the avoidance of doubt, the following activities by a procuring and
disposing entity are not procurements to which this Act applies—
(a) the acquisition of an asset or of equipment, where the asset or equipment is being disposed
of by another procuring and disposing entity in accordance with section
87;
(b) the acquisition of a service provided by another procuring and disposing entity, except a
service normally offered by that procuring and disposing entity for a fee; and
(c) the recruitment of the services of an individual as an employee of a procuring and
disposing entity in accordance with the administrative policies of the procuring and disposing
entity.
Thus every entity that is governed by this Act must ensure that every public procurement and
disposal of assets process is in line with the PPDA Act and regulations and failure to abide by
them leads to an illegality. Thus in Attorney General and Hon. Nyombi Peter v Uganda Law
Society, were one of the issues was, “Whether the Attorney General can retain and instruct
Kampala Associated Advocates, a private legal firm to represent him and perform legal
services without complying with the public procurement laws and regulations.” The court held
that anything contrary to the PPDA Act and regulations is an illegality and thus renders the
whole procurement process void.

To whom doesn’t the Act

Apply?
Section 2 (1b) of the Act provides that subject to subsection (1c), this Act shall not apply to
the Auditor General in the selection of private audit firms to undertake any assignment under
the mandate of the Auditor General.
(1c) The Auditor General shall in exercise of his or her mandate in subsection (1b) apply the
principles of transparency and competition in order to ensure value for money.

International
obligations.
Section 4 (1) provides that where this Act conflicts with an obligation of the Republic of
Uganda arising out of an agreement with one or more states, or with an international
organization, the provisions of the agreement shall prevail over this Act.
Section 4 (2) provides that where an agreement referred to in this section contains a preference
or preferences in favour of national and resident providers, a procuring and disposing entity
shall ensure that the applicable preference or preferences are clearly stated in the bidding
documents.

The gravity of this exception need to be understood in the context of many agreements that
developing countries signed that ended up not benefiting them or under delivered. The second
part relating to full disclosure of preferences that apply, based on previously signed agreement,
increases the administrative burden of government procurement but may also create a legal
loophole that can be exploited by some potential suppliers to the disadvantage of a national
government2.

Procurement procedures under bi-lateral tied

loans.
Section 4A (1) provides that where a bilateral loan or negotiated grant contains a condition
that the provider shall originate from the country of the donor, procurement of the provider
shall be in accordance with this Act.
Section 4A (2) Notwithstanding subsection (1), where there is a conflict between this Act,
regulations made under this Act or guidelines issued by the Authority and a condition imposed
by the donor of the funds, the conditions of the donor shall prevail with respect to the
procurement that uses the funds.

Role of the
Ministry
Worthy to note is the addition of the role of the Ministry in procurement and disposal
activities. A New section 4B has been included in the new law which provides that for the
role of the Ministry and states that-
(1) The Ministry shall advise Government on all public procurement and disposal
policies, principles and practices.
(2) The Minister may in writing give directions to the Authority, on policy related matters
and
5 Lecture Notes by Grace Flavia Lamuno
 the Authority shall give effect to those directions.”

This was previously the mandate of the Authority but it has now been taken over by the
Ministry.

2SEATINI (Southern and East African Trade, Information and Negotiation Institute). 2016. ‘Government Procurement Policies at
National,
Bilateral and Multilateral level: Implications to Uganda’s Sustainable Development’. Research Report.

5 Lecture Notes by Grace Flavia Lamuno