Auditor-General Edward Ouko said the lowest bidder submitted a Sh629 million bid but the contract was awarded to another bidder — Ms Pioneer Assurance Limited — at a cost of Sh1.7 billion.
The Interior ministry irregularly awarded a Sh3.5 billion tender for the provision of comprehensive group life insurance cover for National Police Service and the Kenya Prison Services, Auditor-General Edward Ouko has said.
Mr Ouko said the lowest bidder submitted a Sh629 million bid but the contract was awarded to another bidder — Ms Pioneer Assurance Limited — at a cost of Sh1.7 billion.
Records of payments to Ms Pioneer Assurance, Mr Ouko said, “shows that the purported winner has been paid Sh3,494,419,400 in two consecutive years”.
“In an effort to defeat audit trail, unsigned bank guarantee amounting to Sh3 billion was issued by another bank on May 28, 2014 to cover the shortfall amounting to Sh2 billion. No reason has been given for the omission,” Mr Ouko said in audit of the State department for Interior.
Mr Ouko said the lowest bidder was disqualified on grounds that the form of tender was not dully completed and that the format of the form had been violated by not stating the capacity of the signatory. The lowest bidder was not named.
The lowest bidder was also disqualified on grounds that the bid documents required that the person signing the form of tender indicates his/her capacity in the organisation.
However, the form of tender for the firm was signed on behalf of sales manager group life and pension and did not indicate his or her name and capacity in the organisation.
Mr Ouko said although section 64(2)(b) of the Public Procurement and Disposal Act, 2005 allows for corrections of errors or oversights that do not affect the substance of the tender, the lowest bidder was disqualified without being given a chance to correct the error.
He said the basis upon which the bidder was disqualified is not among mandatory requirements in the preliminary evaluation contrary to section 66(2) of the procurement Act which prohibits introduction of a new criterion during the evaluation and comparison of tenders.
The auditor also established that it was mandatory that two per cent of tender security on the quoted tender amount was supposed to be guaranteed.
“However, this guarantee was waived in respect of the awarded firm as a guarantee of Sh32.9 million issued by a bank on May 26, 2014 was accepted instead of Sh34.9 million,” Mr Ouko said.
He said although the awarded company purported to have been issued in referenced letter of acceptance dated June 7, 2014, its validity and legality cannot be confirmed as it is referring to notification of award letter dated June 30,2014.
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