The Unethical Practice of Charging Fees for Tender Applications: Why It Shouldn’t Happen
Tenders are a formal process used by organizations—both private and public—to invite businesses to bid for the supply of goods, services, or works. In essence, it’s an open competition aimed at finding the best offer in terms of price, quality, and reliability. Tenders should promote fairness, transparency, and accountability. However, in recent years, the practice of charging fees to apply for tenders has surfaced in various regions, including Kenya, creating unnecessary hurdles for businesses and undermining the integrity of the process.
What Are Tenders?
A tender is an invitation to businesses to submit bids for a project, contract, or service. Companies or government agencies that issue tenders are looking for the most competitive bidder who can deliver quality services or products. The tendering process usually includes the submission of documents like business registration, tax compliance, and evidence of past work, all of which are evaluated against the requirements of the issuing organization.
The goal of tendering is to ensure a competitive and fair procurement process, where all qualified businesses have an equal chance to secure contracts. This method not only encourages innovation and efficiency but also ensures that public funds are spent wisely.
The Growing Concern: Paying to Be Considered for Tenders
Despite the intent of promoting fairness, an alarming trend has emerged where some organizations charge fees for tender applications. This could be labeled as an “application fee” or “processing fee,” but it boils down to businesses having to pay to even be considered for the job. This practice is problematic for several reasons:
- Contrary to the Principles of Fair Competition
The tendering process is supposed to be based on merit, not on who can afford to pay an application fee. Charging a fee to apply excludes smaller businesses and startups that may not have the financial capacity to pay for multiple applications. This goes against the spirit of fair competition, which should provide an equal opportunity for all, irrespective of the size of their business. - Wasting Time and Resources
Many applicants are required to gather and submit a vast amount of documentation, including certified copies, bank guarantees, and compliance certificates. This process is time-consuming and costly, especially for businesses that operate on tight budgets. The frustration is compounded when, even after paying the fee and submitting all required documents, applicants never hear back from the procuring entity. In Kenya, and many other countries, it is not uncommon for businesses to waste valuable time and resources, only to be met with silence after the submission. - Corruption and Lack of Transparency
In some cases, the requirement for application fees could be masking corrupt practices. Unscrupulous officials may request these payments as a form of kickback, especially in environments where accountability is lacking. Without proper regulation and oversight, the system becomes opaque, making it easy for those in power to exploit the process for personal gain. The practice of collecting fees without offering any clarity on the selection process can create room for favoritism and underhanded dealings. - Bureaucratic Inefficiencies
Even in regions where the fees are legitimate, they often highlight deeper bureaucratic inefficiencies. The tender process can be unnecessarily complex, involving numerous layers of approval and paperwork. This convoluted structure gives rise to added costs that applicants are forced to bear, even though such fees should be absorbed by the issuing body as part of its operational budget. In many cases, businesses pay the fees, submit their bids, and then hear nothing further—leaving them in limbo.
Why Should Tenders Not Apply with Fees?
- Encourages Broad Participation
When fees are not required, more businesses can participate in the tendering process. This drives up competition and ensures that the contracting authority has a larger pool of bids to choose from, increasing the likelihood of securing the best possible deal. - Protects Small and Medium Enterprises (SMEs)
SMEs often operate on limited budgets and cannot afford to waste money on fees with no guaranteed return. By removing unnecessary application fees, the tendering process becomes more inclusive and provides equal opportunities for smaller businesses to thrive. - Reduces Corruption
Eliminating fees reduces the risk of corrupt practices. It ensures that procurement processes are based on the merit of the bid rather than on hidden or illegal payments. Transparency and accountability are crucial in public procurement, and removing the need for fees supports these principles. - Promotes Efficiency
Without the added layer of financial burden, the tendering process can be streamlined. Procurement bodies will be encouraged to make the process more transparent and efficient, ensuring that companies are not unfairly penalized or left waiting indefinitely for feedback.
Recognizing Excellence in Tendering: CESRA’s Role
The Center for Social Responsibility and Accountability (CESRA) plays a pivotal role in promoting transparency, fairness, and ethical practices in the procurement and tendering space. As part of its mission to encourage accountability in all sectors, CESRA recognizes and celebrates organizations that are excelling in tendering processes by maintaining high standards of integrity, fairness, and efficiency. This recognition serves as an incentive for both public and private entities to prioritize transparent tendering practices, ensuring that no company is unfairly excluded from procurement opportunities.
CESRA provides an online application platform that allows organizations to be reviewed based on their tendering performance. This platform offers companies the opportunity to showcase their tendering success stories, efficiency in handling procurement processes, and commitment to transparency. It also gives other organizations, especially those new to the tendering system, a chance to learn from best practices and improve their tender submissions.
Leading Organizations Excelling in Tendering
Some notable organizations that have demonstrated excellence in the tendering process include:
- KCB Group: As one of the leading banks in Kenya, KCB has established a strong track record in handling procurement through open and transparent tendering systems. They have implemented digital tendering systems, ensuring that all applicants are fairly considered. Their process includes robust evaluation criteria that prioritize quality, value for money, and fairness.
- CFAO International: With a presence across multiple countries, CFAO has gained recognition for adhering to best practices in procurement. Their tendering processes, especially for large-scale projects and goods supply, are known for being competitive, efficient, and transparent. They ensure equal access to opportunities for all suppliers, large or small, with a strong emphasis on promoting local participation.
- Safaricom: As Kenya’s largest telecommunications company, Safaricom has a well-established, transparent procurement system. Safaricom promotes local suppliers and SMEs through its tenders, ensuring diversity and inclusivity. Their online procurement portal is user-friendly and emphasizes accountability and fairness in contract awards.
- Kenya Power: Another public sector player with a commendable tendering process is Kenya Power. The organization has developed a procurement portal that allows companies to submit bids and track the status of their applications in real-time. Kenya Power’s process stands out for being transparent, providing clear criteria for tender awards, and ensuring adherence to ethical procurement standards.
- National Construction Authority (NCA): NCA’s procurement practices emphasize openness and provide a platform where qualified contractors can bid for construction-related tenders. Their evaluation process is highly structured, ensuring that the tenders go to qualified, capable firms that meet strict criteria for quality and performance.
How CESRA’s Platform Supports Excellence in Tendering
CESRA remains dedicated to fostering excellence in CSR and tendering practices. By supporting companies that prioritize transparency, inclusivity, and fairness, we help create a sustainable business environment that benefits both society and the economy. Together, we can build a future where ethical practices lead the way in procurement and corporate responsibility. Learn about CSR Accreditation
Author: cesra
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