Economy

State barred from halting Sh4 billion WB-backed tenders

AG

Attorney-General Paul Kihara. FILE PHOTO | NMG

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Summary

  • The High Court has barred the government from cancelling a Sh4 billion World Bank-funded tender for the construction of classrooms and toilets in 30 counties.
  • Justice James Makau held that three firms, which were part of the 26 construction companies that participated and won the tender last year, had made a case against the government, with chances of success.
  • The companies including Samaha Company Ltd, Columbia Developers and Pacific General Works Ltd, argued that the government refused to formally sign the contracts, nearly one year after they were submitted.

The High Court has barred the government from cancelling a Sh4 billion World Bank-funded tender for the construction of classrooms and toilets in 30 counties.

Justice James Makau held that three firms, which were part of the 26 construction companies that participated and won the tender last year, had made a case against the government, with chances of success.

The companies including Samaha Company Ltd, Columbia Developers and Pacific General Works Ltd, argued that the government refused to formally sign the contracts, nearly one year after they were submitted.

Through lawyer Gad Ouma, the companies argued that they won the Sh4 billion tender for the construction of classrooms, laboratories and toilets in selected secondary schools in marginalised areas.

“The respondents have perpetually decided to hold in abeyance and without communication conclusion of the contract process and discharge of their obligation as per the constitution, the Public Procurement and Assets Disposal Act,” said the judge.

He added that Mr Ouma had demonstrated that the companies participated in the tender process and emerged successful and were awarded various lots.

Justice Makau said the government’s refusal to formally sign the contracts constitutes a gross violation of the national principles under the Constitution and principles of public finance and public procurement.

Mr Ouma said the awards were grated between November and December 2020 but the government has allegedly declined to proceed and issue the companies with formal contracts, or issue instructions exposing them to commercial losses and risks of financial defaults, for loans taken to meet the contractual obligations.

He argued that the companies were being exposed to insolvency or debt attachments by various financial institutions that financed the contracts, through the provision of performance guarantees and advance payment guarantees, before they were granted rights to proceed with the contracts, with no justification.

According to Mr Ouma, the advertisement stated that the services, goods and works being contracted were public and the government would finance them through World Bank.

The Attorney-General on behalf of the Education ministry opposed the case, saying the firms rushed to court prematurely as the procurement is yet to be completed and contracts signed.

According to the AG, the signing would be done once World Bank provides the funds. But Justice Makau ruled that the firms were successful and there was a binding contract between them and the government.

“The petitioners have also demonstrated that they are exposed to imminent risk of insolvency and debt attachment by various financial institutions, which finance their contracts,” he said and restrained the government from terminating the contracts or entering into new contracts with others parties.