The Kenya Electricity Generating Company (KenGen) has suffered a blow after the court quashed a Sh1.13 billion tender for the connection of three make-up wells to its Olkaria geothermal power plant in Naivasha.
The Court of Appeal nullified the tender stating that the Public Procurement Administrative Review Board and the High Court erred by failing to appreciate that the tender evaluation committee violated the procurement laws by awarding the contract, yet the winning bidder failed to comply with a mandatory bid term.
Justices Mumbi Ngugi, Francis Tuiyott, and John Mativo said the award of the tender a joint venture between Lex Oil Field Solutions Limited and EPCM Consultants SA (PTY) Ltd was founded on an illegality.
“We are clear in our minds that the Evaluation Committee erred by failing to declare the 4th respondent’s tender as non-responsive. This was a breach of section 79, an issue of law, which this court cannot ignore. In fact, the review board and the High Court erred by overlooking such a glaring breach of the law,” the judges said.
KenGen invited bids on March 21, 2023, on its website and at the e-procurement portal inviting qualified and interested tenderers to submit bids for the tender for connection of Makeup Wells OW-50A, OW-50B & OW-50C to Olkaria LAU Power Plant, using an open international competitive tendering method.
Three bids- Lex Oilfield Solutions Ltd, Sinopec International Petroleum Service, and H Young & Co (EA) Ltd- were submitted and opened in the presence of tenderers’ representatives.
The tender was awarded to Lex Oilfield Solutions Ltd and EPCM Consultants (PTY) Ltd, having quoted the lowest price.
Sinopec International Petroleum Service Corporation challenged the outcome before the review board, but it was dismissed because it was filed out of time, a decision that was upheld by High Court judge John Chigiti in January.
The firm moved to the Court of Appeal arguing that the Review Board issued draconian orders in dismissing its request, effectively shutting the doors of justice to it.
The company further submitted that the board took into account irrelevant considerations and that the decision violated its rights to a legitimate expectation that a tender cannot be rejected before determining its responsiveness.
In the judgement, appellate court judges said the bid documents contained clear instructions to bidders, some couched in mandatory terms.
“By declaring the 4th respondent’s bid to be responsive, the procuring entity out-rightly disregarded its own bid conditions and violated section 79 of the act. A procuring entity is bound by its bid documents,” said the judges adding that mandatory conditions cannot be waived.
The court said the evaluation committee had no choice but to evaluate the bids by the eligibility and mandatory requirements of the tender documents by examining the documents before it.
“For the reasons discussed above, we find merit in this appeal to the extent that both the Review Board and the High Court failed to appreciate the proper meaning of section 167(1) of the Act, in that there was no breach by the procuring entity at the Tender Opening Stage,” said the judges.
