MPs want EACC to probe Treasury cash management bid to Oracle

Parliament now wants the anti-corruption watchdog to investigate the National Treasury over a tender awarded to software giant Oracle for a cash management solution.

In its latest report, the Public Accounts Committee (PAC) recommends that the Ethics and Anti Corruption Commission (EACC) should within three months after the adoption of its findings, initiate a forensic investigation into the procurement process for the services.

The report says if found culpable, the Public Procurement Regulatory Authority (PPRA) should bar the Texas-based American multinational from doing any business in Kenya for a decade.

"If found culpable for bid rigging, Oracle and any of its associates should be debarred by PPRA from doing any business with national and county governments and any public institution for at least 10 years as per provisions of Section 41 of the PPAD Act 2015," the report which could put software firm in the eye of a storm reads.

The report says the National Treasury through restricted tender contracted and paid a supplier to implement a cash management solution for both national and county governments as well as train and support.

This was contracted at the sum of Sh35.1 million with an implementation period of 12 months to October 31, 2016.

Sh157.7 million

Three firms recommended as accredited Oracle cash management solution suppliers had been invited to bid for the tender.

However, the price bid submitted by the winning supplier was significantly lower than those of the other two bidders, which stood at Sh157.7 million and Sh181.4 million.

"It is not clear as to why there was such a significant disparity. Upon award, the contracted supplier was unable to complete within the stipulated timeline resulting into implementation a no cost extension of the contract for a period of 11 months with a one-year post support contract ending 30 September 2017," the report says.

It adds that available information indicates that the contract was subsequently re-extended for a further period of 12 months to December 31, 2018 at an additional cost of Sh2 million, which is contrary to Section 75 of the Public Procurement and Asset Disposal Act, 2015.

"A review of the contract implementation status as of date of finalising this audit indicated that the project was incomplete. In the circumstances, it has not been possible to confirm whether The National Treasury got value from the above procurement," the report adds.

But in its defence, the National Treasury submits that it awarded the tender to the lowest evaluated price bidder.

Treasury says that initially the Cash Management Business Process Flow was developed without the Controller of Budget but was later included and this caused delay in completion that led to extending the implementation period at an additional Sh2 million.

It says the project was completed in 2018 and the National Treasury got value for money because the final cost of the project came to Sh37.2 million, which is much lower than the second quoted figure of Sh157.7 million.

Cover bidding

But PAC wondered how a critical stakeholder such as the Office of the Controller of Budget was omitted from the initial process flow of the project.

"There was a red flag for cover bidding. The price quoted by the winning supplier was significantly lower than those quoted by the other two suppliers. The supplier quoted a significantly low bid compared to the other bidders who are oracle-accredited firms," the report notes.

It argued that the accounting officer also failed to provide an explanation on what informed the use of restricted tendering for a cash management solution, a service that is neither complex nor specialised service as contemplated in the procurement law.

The report covers the year ended 2017/2018. Parliament is always two years behind in its oversight role, which makes implementation of some of its recommendations impossible since they would have been overtaken by events.

Support payments

The report also wants the Treasury Cabinet Secretary Ukur Yatani to reprimand to all the accounting officers of the 16 ministries, departments and agencies who submitted unsupported expenditures that add up to Sh16.6 billion.

"The failure by the MDAs to fully support payments casts doubt on the authenticity of the expenditure reported as incurred," the report tabled notes.

It also wants the CS to issue a written reprimand to all the accounting officers whose entities either failed to produce or restricted officers of the Auditor-General from accessing books, records, returns, reports, electronic or otherwise and other supporting documents at the time of audit.

"This contravened the provisions of Section 9 (1) (e) of the Public Audit Act, 2015," the report adds.

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