Saturday, December 27, 2014

Legal battles dog public procurement for major projects

Politics and policy


Mombasa Town Clerk Tubman Otieno inspects a transparent tender box installed at Town Hall. PHOTO | FILE 
By BRIAN WASUNA
In Summary
  • Government awarded Sh174bn coal plant project to joint bidders Centum Investments and Chinese firm Gulf Energy.

Public procurement has featured prominently in the High Court this year, following dissatisfaction over the award of some of Kenya’s biggest deals to some firms.
The government, following the need for cheaper energy to grow the industrial sector, floated a tender to construct the first ever coal plant in the region.
The Sh174 billion project was awarded to a joint bid by Centum Investments and Chinese firm Gulf Energy, a move that saw some bidders protest. The High Court stopped the signing of the deal on November 27, following a suit filed by Liketh Investments challenging the award of the deal to the consortium.
Liketh Investments, which had partnered with Chinese firm HCIG, claimed that both Centum and Gulf Energy had been kicked out of the evaluation stage then sneaked back in the later stages, a move the firm claims was engineered to ensure Centum got the deal. After stopping the deal, Lady Justice Mumbi Ngugi referred the suit to the petition committee arguing that the High Court could not hear the matter before all tender appellate mechanisms had been exhausted.
“Pending the hearing and determination of the matter before the petition committee, the respondents (government and Centum-Gulf Energy) are restrained from entering into any agreement regarding the coal power plant,” she said.
A court also cancelled a Sh24 billion tender awarded to Indian firm Olive Telecommunications to supply laptops to Standard One pupils. The project was part of the Jubilee Government’s pre-election promises.
Olive moved to court challenging the tender after the Public Procurement Oversight Authority opted to apply brakes on the deal to investigate the alleged irregularities during the evaluation.
Justices George Odunga, Francis Gikonyo and Weldon Korir, however, ordered that the entire process be quashed and done afresh as there were too many irregularities prior to Olive’s win.
“By awarding the tender to any of the bidders, the court would have abetted an illegality. It is our view that in order to promote equity and cost effectiveness, the tendering process is null and void and set aside in its entirety,” they ruled.
An additional Sh1.4 billion Olive quoted midway through evaluation and its plan to sub-contract third parties in the supply of the machines were the leading reasons the judges opted to order for a fresh tendering of the multi-billion shilling deal.
Central Bank Governor Njuguna Ndung’u found himself at the centre of controversy after two conflicting rulings surrounding a decision by the financial institutions regulator to award a British firm a deal to install a new security system to help it fight banking fraud and ease operations.

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