The East African Community (EAC) has said all its contracts of at least Sh10 million ($100,000) will henceforth be reviewed by experts as frequent violation of procurement rules threatens relations with key financiers.
Secretary-general Liberat Mfumukeko said the bloc’s procurement committee will either hire or co-opt experts to review all its high-profile contracts.
He made the pledge after the East African Legislative Assembly (EALA) adopted a report that accuses him of influencing the extension of a contract with the Kenya-headquartered Liberty Assurance.
The report shows that Mr Mfumukeko overruled the tender committee and verbally instructed secretariat officials to award Liberty Assurance the contract to provide personal accident and group life cover to the bloc’s 342 staff and legislators.
The committee had awarded Britam Life Assurance Company the tender after it passed technical evaluation with the lowest bid of Sh48 million ( $480,008) against Liberty’s offer of Sh74.6 million.
“I could not endorse the report of the procurement committee to give the contract to Britam, but it was necessary to have consultations with executives in the station to come up with a way forward,” Mr Mfumukeko is quoted as having told the EALA committee.
He is reported to have added, “We had to be covered and so decided to extend the contract to M/S Liberty until such time as the final decision is made”.
A number of external financiers have criticised the EAC for poor implementation of its procurement rules.
Last year, the bloc passed the EU’s fiduciary risk assessment rules but failed on the procurement and internal control parameters.
In its report, EALA’s legal rules and privileges committee observed that extending the contract to M/S Liberty, which expired on June 30, 2016, for six months at a cost of Sh30.9 million did not provide value for money.
The extension was granted despite a strong warning from the bloc’s acting deputy secretary general in charge of finance and administration, Enos Bukuku.
“The committee observed that the whole process of extension of the contract was irregular because the management did not obtain approval from the procurement committee, it extended an expired contract, ignored the procurement process which was complete and rejected the legal opinion,” the EALA committee states.
Seven bidders who responded to the tender notice met preliminary requirements for life insurance services.
They included SunLamp Life Insurance (Tanzania), Alliance Life Insurance (Tanzania), Britam Life Assurance Company (Kenya) and Liberty Life Assurance (Kenya).
Others were ICEA Lion Assurance (Kenya), Metropolitan Cannon Assurance (Kenya) and Jubilee Insurance (Kenya).
Of these, four firms sailed through the technical evaluation and their documents were forwarded to the procurement committee.
The four included Britam, Liberty Life Assurance, ICEA Lion Assurance and Jubilee Insurance.
A notice of award of the life and personal accident cover contract to the Britam Group, the lowest bidder, was initially uploaded on the EAC website before it was revoked.
The EALA report observed that the revocation created confusion.