CIC loses in tender row with KAA

Patrick Nyaga-cic

CIC Insurance Group chief executive Patrick Nyaga. PHOTO | POOL

CIC General Insurance has lost a bid to compel Kenya Airports Authority (KAA) to remove some requirements it termed as discriminatory in a multi-billion tender for provision of medical insurance to airport staff.

The underwriter had argued that the requirement for bidders to have a portfolio balance between motor and non-motor business, with gross underwritten premium for motor business not exceeding an average of 30 percent of the total general business for each of the last three years, was discriminatory.

The request was rejected by the Public Procurement Administrative Review Board saying the underwriter had failed to show that there was discrimination in the requirement.

The board however granted the insurer a request to have KAA extend the deadline for submission by a minimum of seven days from the date of the ruling.

“It must be clear to all those who move to court alleging discrimination, that it is not every differentiation that amounts to discrimination,” the Board said.

The board chaired by Faith Waigwa said the law does not prohibit discrimination but rather unfair discrimination. They further said the demand for bidders to have an underwritten premium turnover of at least Sh3 billion in the medical business for each year, in the last three years cannot be said to be unfair because it applied to all bidders.

The decision stated that KAA’s cautionary measure cannot be said to be irrational because there are instances where medical insurance policies have failed to be honoured by an insurer.

KAA opposed the case saying the board was being asked to remove the only safeguard put in place to ensure the availability of funds at all times to meet the medical needs of its members.

“In light of the above and bearing in mind that a procuring entity is better paced to know the needs of its specific user department, the Board finds that the specific requirements of a tender document are within the preserve of the procuring entity,” the board said.

CIC General Insurance general manager McDonald Kang’e had said in an affidavit the provision targeted and directly discriminates against bidders who may carry out a considerable amount of business in motor insurance.

KAA defended the requirement and said the tender documents were prepared in accordance with the provisions of the Procurement Act and regulations, clearly indicating evaluation criteria which was objective and in line with the constitution.

According to KAA, the requirement does not in any way lock out CIC as it applies to all bidders interested in providing the services sought.

The provision will also ensure that the successful bidder has sound financial standing whose portfolio is skewed to non-motor or medical underwriting business and would thus not commit funds to the settlement of motor business to the disadvantage of medical business when required.

KAA added that since CIC General has vast experience in medical insurance, the insurer should not have difficulty complying with the requirement.

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