Senators are headed for a clash with governors over failure by counties to pay contractors millions of shillings owed to them.
The lawmakers have accused county governments of failing to release the retention money as stipulated in law, resulting in pending bills.
Retention money is a percentage of the total amount certified as due to a contractor that is retained by the client to ensure the contractor properly completes a project as is required of them under the contract.
Half of the amount retained is released on certification of practical completion of a project while the remainder is released upon certification of making good defects at the end of the defects liability period, usually 12 months.
Wajir Senator Mohamed Abass expressed concern that county governments sit on the money and rarely release the same to contractors. He pointed out that it is 10 per cent of the initial price of a project and is supposed to be retained for only one year at most to cushion counties in cases where work is not well done.
However, the counties never pay the money to the contractors and so the money ends up sitting for many years in the books of the devolved units, with some contractors ending up forfeiting the amount, eating into their profit margin in the end.
“Half of this money is not actually paid back to them and most of the money is forfeited. At times it sits for some years in the books and it becomes automatically forfeited,” said Mr Abass.
“This money must be paid on time, at least for the year that it is going to be retained. If work is well done and completed, then it must be paid,” he added.
The matter came up following a request for a statement by Marsabit Senator Mohamed Chute who wanted the Senate to compel counties to provide details of contractors engaged by Garissa, Wajir, Mandera, Marsabit, Isiolo, Turkana, Samburu and West Pokot counties and the respective amounts paid by the devolved units as retention money from the year 2017 to date.
He also wanted to know the total amount currently held by the county governments as retention money, with reasons for discrepancies, if any, between the amounts paid and released by the contractors and measures put in place to ensure timely release of the money.
“Indicate the status of the release of retention money by the county governments’ respective of a contractor within the same period, providing reasons for any releases that have not been effected,” said the senator.
Kiambu Senator Karungo wa Thang’wa said the issue is not only in the northern counties. He said it is high time Senate looks at how much the national and county governments owe contractors in various parts of the country so that they can get their monies back.
Nandi Senator Samson Cherargei said retention funds, especially for flagship projects, no longer exist.
“If there is anybody who has taken away retention money from these northern frontier counties, they must face the full force of the law,” he said. “This is illegal. It is against financial law and the Public Finance Management (PFM) Act. We will be looking forward to this issue not only in the northern frontier counties but even in my county,” he added.