The port of Mombasa is a crucial facility for the East African region as it serves at least six countries.
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Revealed: The Sh1.5bn Kenya Ports Authority dispute
An overhaul of companies providing key services at the Kenya Ports Authority (KPA) has sparked fierce legal battles pitying the cash-rich parastatal against some of the dropped firms, at stake being a three-year tender worth Sh1.5 billion.
Those edged out in the tenders issued just before Managing Director William Ruto was appointed in March have taken on KPA before the Public Procurement Administrative Review Board (PPARB), accusing it of “corruption and favouritism”.
The disputed tender relates to provision of house-keeping/cleaning services. Some 21 companies that were awarded the tenders should already have started providing the services but the legal battles have blocked their entry. Of the 21, only five were retained, with 16 newcomers. At stake is a total of Sh1,553,729,112 as per the quoted bids, for three years.
In a case filed by Space Contractors and Supplies Investments Limited, the firm accuses KPA of delaying the process “with the intention of doctoring documents in favour of some companies”. It also accuses the parastatal of awarding tenders to “unqualified bidders, advertising in a portal that was not accessible to the public and awarding deals to bidders who quoted higher prices”. “If a contractor is to be replaced with a new contractor through bidding, the incoming contractors bid price ought not to shoot as is the case in respect of Zone 17 which was awarded to M/S Maeji Kaiho at Sh2,182,621, replacing M/S Chenda Investments Limited, whose contract was awarded Sh813,000. Such an astronomical increment clearly raises suspicions,” the company states in its application before the board.
“The applicant’s bid was rejected as she apparently was not the lowest evaluated bidder yet M/S Mara Supply Enterprises (Nairobi) Limited, M/S Norgen Enterprises Limited and M/S Riley Falcon should have been rejected for not meeting the primary conditions namely compliance with the requirements to have a valid tender security bond and also for failure to have complied with the NSSF requirements,” Space Contractors and Supplies Investments director, Mercy Musera, further states in an affidavit. Musera further alleges in the affidavit that an action by KPA to postpone the tender deadline from the initial date of February 22 to March 1, then to March 8, wasn’t called for and resulted in the picking of favoured bidders who were awarded tenders.
“The issuance of these many addenda is in itself evidence of a procuring entity that was deliberately targeting to favour some of the bidders in that a well-run state organ desirous of tendering for services or goods is expected to act from a position of decisiveness, readiness and preparedness whereby many such addenda as the case here demonstrates either lack of preparedness or deliberate doctoring of the subject tender,” she states. During a hearing on Wednesday, the company urged the board to recommend criminal investigations, with regards to the disputed tender.
It alleged that some of the companies lacked basic qualifications, including National Social Security Fund (NSSF) Compliance Certificate and a tender security valid for 310 days from the closing day.
In a response, KPA denies allegations that the process was flawed and questions the PPARB’s jurisdiction to handle some of the issues raised, but admits it postponed tender deadlines, albeit not with ulterior motives. “Save for the fact that four addenda were issued in respect of the tender, all allegations listed in paragraphs four and five are denied.
The respondents (KPA) aver that the addenda were issued strictly in accordance with procuring entity’s own motion to enable all interested bidders to complete on equal footing. The extension of submission deadline was specifically meant to afford all bidders an opportunity to prepare and submit their bids following the clarifications issued vide addenda,” KPA states in a memorandum of response.
KPA further says it has proof that Mara Enterprises, one of the companies cited in the case for having not qualified but was awarded a Sh66 million tender through the three years, has NSSF Compliance Certificate “valid for six months from July 16, 2022”. The parastatal further denies that it advertised the tender in a portal that could not be accessed by the public and questions that the Board has powers to nullify the disputed tendering process.
While the board is expected to issue a ruling on the matter on Monday, KPA will remain on the spotlight over how it manages its current and upcoming tenders. The port of Mombasa is a crucial facility for the East African region as it serves at least six countries. Landlocked states such as Uganda, Rwanda, Burundi, South Sudan and the Democratic Republic of Congo rely on Kenya for their imports. Last year, at least 33,880,000 metric tonnes of cargo passed through the port.
“The volume of export traffic increased by 3.4 per cent from 4,612,000 metric tonnes in 2021 to 4,771,000 metric tonnes in 2022,” the Kenya National Bureau of Statistics (KNBS) show. The dispute is likely to derail procurement processes at the port should it spread across other tenders KPA has floated, a move that could risk paralysing operations at East Africa’s largest cargo facility. A hindrance with port operations has huge economic ramifications for the country, due to huge imports that pass through the facility on a daily basis, and revenues it generates for the government.
Lucrative public tenders have become a source for battles by businesses as big parastatals are accused of flouting the laws to award favoured parties, with the public almost often suffering delayed or poor services as court battles hinder service delivery. Kenya Power is perhaps the most frequent State firm to be affected by legal battles whenever it advertises its tenders.
The latest is a High Court decision to stop a Sh22 billion meter supply tender by the utility firm, after a party sued it arguing that the tender’s eligibility criteria was watered down to include local assemblers of meters and not manufacturers as earlier advertised.
A year ago, some local companies were also in court to block Kenya Power from a Sh2 billion tender for supply of meters. In 2016, the Kenya Electricity Generating Company (KenGen) was faced with one of the largest tenders to go under legal contest, involving Sh52 billion, when the High Court found that RentCo, a company that won the bid had used fraudulent documents.
In the roads sector, which perhaps accounts for the largest share of public contracts by value, a report early this year revealed that taxpayers had lost at least Sh10 billion, resulting from contract breaches between public procurement institutions and international firms.
Procurement and construction of the Standard Gauge Railway (SGR), Kenya’s largest public infrastructural project by value, was also challenged in court for nearly a decade, with the final decision delivered by the Supreme Court this year.
