Police insurance cost up 170pc after lowest bidder rejected, says Ouko
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Mr Ouko said the Interior ministry dismissed the Sh629 million bid by an unnamed provider because the tender form had not been duly completed and the signatory did not indicate their designation.
Mr Ouko said the bid document required that the person signing the form of tender indicates his or her capacity in the organisation.
The National Police Service paid almost three times more for life insurance policy for two financial years up to June after the Interior ministry rejected the lowest bid on flimsy grounds, Auditor-General Edward Ouko says in a qualified report.
The two-year contract for provision of the life insurance scheme was awarded to Pioneer Assurance at an annual cost of Sh1.7 billion beginning June 2014.
Mr Ouko said the Interior ministry dismissed the Sh629 million bid by an unnamed provider because the tender form had not been duly completed and the signatory did not indicate their designation.
“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 in his 2014/15 report dated July 15, 2016.
“In addition, the basis upon which the lowest bidder was disqualified is not among mandatory requirements in the preliminary evaluation contrary to Section 66 (2) of Public Procurement and Disposal Act, 2005 which prohibits introduction of a new criterion during evaluation and comparison of tenders.”
Mr Ouko said the bid document required that the person signing the form of tender indicates his or her capacity in the organisation.
The form of tender for the disqualified firm was, however, signed on behalf of the sales manager group life and pension and did not indicate the name of the signatory or capacity in the organisation.
Mr Ouko further punched holes in the execution of the contract saying that the winning bidder did not provide enough tender security of two per cent despite this being mandatory.
Audit trail
The Auditor-General said the requirement that the company issues a guarantee of Sh34.9 million was waived with the Interior ministry accepting a guarantee of Sh32.9 million on May 26, 2014.
“In an effort to defeat audit trail, an unsigned bank guarantee amounting to Sh3 million was issued by another bank on May 28, 2014 to cover the shortfall amounting to Sh2,003,942. No reason has been given for the omission,” the audit report adds.
The life insurance cover provides compensation for police and prison officers who are killed or suffer disability and also covers funeral expenses. “The policy has no exclusion whatsoever in respect of any cause of death,” Mr Ouko said.
Insurance companies usually put exclusions in life policies including deaths from suicide and deaths related to drug use.
In another case, Mr Ouko said the National Police Service Commission awarded a Sh26 million contract for medical insurance cover through direct procurement contrary to the law.
