Board annuls duty-free shops tender award to swiss firm

The search for a new manager of duty-free shops at the Jomo Kenyatta International Airport is likely to take longer after the public tenders watchdog blocked the award of the contract to a swiss firm citing irregularities.

The Public Procurement Oversight Authority (PPOA) said the Kenya Airports Authority (KAA) did not strictly comply with the evaluation rules in awarding the contract for running the shops previously owned by controversial businessman Kamlesh Pattni to Nuance Group AG.

“The board notes that the criterion imposed by the procuring entity in the evaluation of the tender did not meet the threshold set by the Act (Public Procurement Act) and the Constitution,” the PPOA review board said in an assessment.

The KAA tender team had in November 2013 recommended that the concession contract be awarded to Nuance Group after it beat nine other bidders to the job of putting up the shops within terminal four of Jomo Kenyatta International Airport.

The firms had submitted bids following a tender call by the KAA last October but only Nuance Group made it past the evaluation stage leading to protests from its rivals.

“What this means is either the document was set in such a way that it was not clear to most of the bidders or extrinsic evaluation criteria not provided in the tender document was introduced at evaluation stage,” PPOA said.

An evaluation report seen by Business Daily showed that the nine firms were disqualified mainly due to errors and omissions in the documents submitted.

Nuance AG went for technical evaluation where it scored 91.75 per cent against a pass mark of 70 per cent.

The Swiss firm made a presentation to the KAA management on November 15, 2013 after which the evaluation committee recommended that the company be awarded the concession.

The firm offered a minimum annual guarantee (MAG) of $120,000 (Sh10.3 million) and 12.5 per cent of net sales.

Four of Nuance Group’s rivals — Dufry International, Unifree Duty Free and Suzan General Trading and Flemingo International — petitioned the PPOA for review.

The PPOA found that the KAA tender team failed to adhere to Article 227 of the Constitution which roots for fair competition, transparency and accountability in handling of public contracts.

The board also took issue with the fact that only one bidder made it past the evaluation stage, a situation that normally causes bids to be declared unresponsive.

The PPOA further faulted the KAA team for not using the standard tender document provided by the oversight body.

“This indeed was a missed opportunity by the people of Kenya when a public entity chose to accept a bid with a concession of 12.5 per cent when it was possible to get a higher concession of 33 per cent and above,” the board said.

The PPOA directed the KAA to re-tender the concession, to use the standard document and to make the specifications more inclusive.

KAA spokesman Dominic Ngige Thursday declined to discuss the details off the PPOA’s ruling but promised to do so on a later date.

“We are a law-abiding organisation and will always respect the rules,” he said without expounding.

The order by PPOA means the KAA is back to the drawing board in its search for a new operator of duty-free shops to replace Mr Pattni who gave up a legal battle to retain his tenancy at the airport.

Mr Pattni in September last year withdrew the court cases he had filed against the KAA, which had demolished some of his JKIA shops, saying he wanted to live in peace.

READ: Pattni withdraws court cases on duty-free shops

The ceding of the shops by Mr Pattni followed his earlier decision to return the Grand Regency Hotel to the Central Bank of Kenya. The hotel was later controversially sold to Libyan investors and renamed Laico Regency.

Projections by the KAA showed that targeted duty-free retail business at JKIA would inject about $2million (Sh172 million) into the economy and generate 100 direct jobs.

Besides a duty-free retail outlets, the KAA is also seeking global fast food chains to open shops at the airport’s Unit 4.

The airport’s manager in January issued a tender for the development and management of an international brand fast food outlet at JKIA’s new Unit 4, expected to be completed before March.

The unit will also host a mini-supermarket and other food outlets meeting global standards as the airport races to cement its status as a regional commercial hub.

Unit 4 is the extension of the exiting airport and is expected to handle 2.5 million passengers that will ease congestion at East Africa’s main aviation hub.

The airport was built in the 1970s to handle 2.5 million passengers annually but now handles more than six million people in a year.