Fresh audit raises red flag over NYS tenders

A new audit has flagged irregularities in multi-million shilling tenders at the National Youth Service (NYS), putting the State agency previously tarnished by financial scams under fresh public scrutiny.

Auditor-General Nancy Gathungu said a review of procurement contracts by NYS through the State Department for Youth found massive anomalies, including rejection of discounts by suppliers, payments for goods without ascertaining delivery and placing of supply orders without approval.

The contracts were for supply of 20,000 woolen blankets, 126,000 metres of digital camouflage material, 10,000 pairs of high-ankle military boots, canned beef and pineapples, uniform materials, olive-green ribbed jerseys and gumboots to the NYS. The purchases also included textile materials for the manufacturer of uniforms for the Kenya Police Service.

The audit revealed that some suppliers made deliveries before approval contrary to the Public Finance Management (National Government) Regulations, 2015, which prohibit a public officer from spending or committing funds until he or she has been authorised by means of an authority to incur expenditure (AIE) to do so.

In one of the cases captured by the Auditor-General, a supplier received Sh31.73 million for the supply of canned beef and pineapples one month before approval of tender and confirmation of the availability of funds.

The AIE for the canned beef and pineapples supply was approved on January 11,2019—the same day an authority to procure the food rations was issued.

However, a local purchase order (LPO) was issued on December 4,2018.

This was contrary to the provisions of the Public Finance Management (National Government) Regulations, which prohibit such unauthorised payments.

The invoice to support payment was received on April 5,2019 yet the letter submitting the voucher for payment was issued on March 22,2019, which was long before the receipt of the invoice.

“Hence, it is not clear how the payment voucher processing was initiated without and invoice having been received,” Ms Gathungu noted.

In yet another case of irregular spending, the department paid a supplier Sh20.16 million for a consignment of uniform materials, days before delivery.

An audit of the department’s cash book shows the supplier was paid on June 27, 2019 while the AIE and authorisation to make the payment were granted on June 29, 2019 and June 30, 2019 respectively.

An invoice was raised on June 13, 2019, almost two weeks before the final delivery was made on June 26, 2019, indicating that billing was done before delivery.

“In the circumstance, it has not been possible to confirm the propriety of the expenditure amounting to Sh20,160,000 incurred to purchase the uniform materials,” Ms Gathungu said.

The department also effected a premature Sh49.5 million payment for an order of olive-green ribbed jerseys and at an exorbitant cost.

The supplier was paid the amount on June 27, 2019, two days before the goods were delivered but on the strength of an invoice that was issued on June 29, 2019.

“A further check on the payment voucher showed that the authority to incur expenditure (AIE) and to make this payment were granted on June 29, 2019 and June 30, 2019, respectively, after the payment had been made on June 27, 2019,” the audit report said.

Besides the irregular upfront payment, the supplier was awarded the contract at a higher price per unit of Sh1,750 compared to a lower offer of Sh1,500 by rivals.

“It is not clear why the department opted to contract at a higher price when there were firms that quoted a lower price by a margin of Sh250 a unit which could have resulted in savings of approximately Sh3,750,000,” Ms Gathungu said.

The audit revealed that an NYS official requisitioned olive-green ribbed jerseys and made the payments yet he sat on the tender committee that handled the contract.

The audit unearthed numerous other cases where the tenders were awarded without meeting the required threshold of participants.

A trader was paid Sh51.4 million for supply and delivery of 20,000 woolen blankets based on flawed contract where only six firms participated instead of seven as required by law.

“Examination of payment documents showed the following anomalies: The approved professional opinion shows that the procurement was based on a framework contract that was flawed as there were only six approved firms as opposed to a minimum of seven firms required under section 114(1) (C) of the Procurement and Asset Disposal Act, 2015,” said the Auditor-General.