NAIROBI — The National Treasury is tightening the screws on State corporations, announcing plans to bar them from bidding for sensitive security contracts in a move expected to rattle the multibillion-shilling government procurement landscape.
The directive, which will be anchored in updated public procurement regulations, targets parastatals that have increasingly ventured into supplying goods such as military-grade uniforms, arms, ammunition, and surveillance equipment — areas traditionally reserved for specialized security agencies and vetted private firms.
This policy shift, according to insiders at the Treasury, is driven by rising concerns over procurement overlaps, accountability risks, and the creeping commercialization of parastatals beyond their core mandates. Some parastatals have been accused of acting as procurement proxies, creating a shadow market within government-to-government deals and circumventing competitive bidding.
“The government cannot continue allowing civilian parastatals to dabble in defense procurement under the guise of ‘state-to-state’ contracts. It blurs lines and undermines national security,” a senior official privy to the discussions told Business Daily.
Among parastatals likely to be affected are the Numerical Machining Complex (NMC), Kenya Prisons Enterprises, and government-run research and logistics outfits that have previously secured defense-related contracts without clear competitive processes.
Billions at Stake
The security procurement sector is estimated to be worth over Sh30 billion annually — with deals covering everything from advanced ICT systems for intelligence gathering to basic uniforms and boots for police recruits. Some of these contracts have come under sharp public scrutiny over allegations of inflated pricing, dubious suppliers, and questionable quality control.
By freezing out parastatals, the Treasury is signaling a return to procurement orthodoxy — where security agencies either handle their own purchases or outsource strictly through competitive, private-sector channels. The Kenya Defence Forces, for instance, has in recent years expanded its own internal production capacity through the Defence Forces Constabulary Unit (DFCU), potentially making the involvement of civilian parastatals redundant.
Implications
This development is likely to re-open opportunities for vetted private firms, including local manufacturers and ICT contractors, who had been sidelined in favor of parastatal intermediaries. However, it also sets a new bar for transparency and national security vetting — raising the stakes for private bidders in this high-risk, high-value sector.
Analysts say the move is part of a broader push by the Treasury to seal procurement loopholes across government, following pressure from Parliament and watchdog agencies over misuse of direct procurement clauses and the bloating of project costs through parastatal-driven deals.
Bottom Line
The Treasury’s plan could redefine who gets a slice of Kenya’s lucrative security procurement pie. Parastatals may be out, but with private players under greater scrutiny, only those with capacity, credibility, and compliance muscle will survive this procurement reset
