How corrupt officials employ dirty tricks to rig State tenders

Halakhe Waqo, EACC Chief Executive. FILE PHOTO | NMG
Halakhe Waqo, EACC Chief Executive. FILE PHOTO | NMG 

Rogue State employees are manipulating the procurement law to inflate tender prices and line their pockets with huge sums of money in exchange for shady deals, legal documents supporting contested contract awards show.

The documents relating to tender disputes before the Public Procurement Administrative Review Board (PPARB) show that crooked government officials are colluding with a cabal of tenderers to funnel lucrative government contracts to a select group of connected individuals, leaving in their wake protracted legal battles.

The list of public agencies trapped in the procurement wars includes the Independent Electoral and Boundaries Commission (IEBC), the National Hospital Insurance Fund (NHIF), the Kenya Urban Roads Authority (Kura), and the Central Bank of Kenya (CBK).

The revelations were made during the hearing of the currency printing dispute pitting the CBK against losing bidders.

Tailored terms

Documents before the procurement review board show that rogue State employees are tailoring procurement terms to fit preferred bidders and lock out competitors at exceptionally high costs to the taxpayers.

Tender committees of the procuring entities are using every trick in the book, including past litigation histories, to blacklist bidders in a deliberate effort to rig tenders in favour of preferred suppliers.

Corrupt tender committees are also using restricted tendering, a procurement method that limits the request for tenders to a select number of suppliers, contractors or service providers, against the spirit of the relevant law that specifies circumstances for restricted bidding.

There is also cancellation of tenders mid-course to allow a fresh start in which the terms of contracts are changed to lock out strong rivals in favour preferred bidders.

The dirty tricks have caught the eye of the procurement watchdog, which has recently warned of the growing number of complaints before it regarding the manner in which mandatory requirements are tailored to lock out competitors and to narrow down the field of competitors.

“The board has, for instance, had to deal with complaints where litigation history with the procuring entity is made a mandatory requirement and if you have any pending or previous case against the procuring agency then you are disqualified at the preliminary evaluation stage or get black listed,” the review board said in a recent ruling.

The agency warned procuring entities that the right to seek legal redress is a constitutional right and that the power to stop a bidder from participating in any procurement process in Kenya is a function of the director-general of Public Procurement Regulatory Authority (PPRA).

“A conviction or a debarment may be made a criterion in the list of mandatory requirements but not that a bidder has filed a suit or complaint with any competent authority and in relation to which no determination has been made,” the PPARB said.

Theft, wastage

Kenya loses a third of its national budget — the equivalent of about Sh666 billion — to theft and wastage every year, the head of the Ethics and Anti-Corruption Commission (EACC) said in 2016.

Last year President Uhuru Kenyatta promised to save Sh1 trillion in five years by reducing wastage in public service, and resolving corruption cases in six months, if re-elected.

The procurements watchdog cited a December 28, 2017 ruling in which it terminated a multi-million shilling NHIF tender for the provision of air rescue services for civil servants, the National Police Service and the enhanced benefits scheme.

The tender was cancelled after Amref Flying Doctors complained of irregular dealings during its award.

The NHIF was ordered to tender afresh for procurement of the services in compliance with the principles of procurement.

The public health insurer was found to have fallen afoul of the law for having left out several mandatory requirements and for including new ones. The review panel ruled that the changes may have adversely affected some parties during the evaluation process in favour of one party.

“A procuring entity which adopts such an approach should not therefore be entirely surprised when it ends up with one non-responsive bidder such as happened in this case thereby exposing itself to a fresh but unnecessary tender process which is then rendered dead on arrival, thereby exposing the taxpayer to unnecessary expense,” the board said.

In another decision of October 11, PPARB faulted Kura’s decision to terminate the procurement for construction of a road bypass in Wajir County despite the letter of award to Baraki International.

“Where a procuring entity decides to terminate a procurement process then such termination cannot be a mere mechanical process…but the same must be based on the lawful grounds set out in Section 63 of the Public Procurement and Asset Disposal Act,” argued the watchdog.

New agency

Mr Kenyatta last year promised to create a new agency — the General Services Agency —that his party manifesto said will procure “all supplies and services, communications, transportation and office space.”

To counter claims that shadowy contractors are winning government tenders, the Jubilee government promised to publish annual details of all the procurement awards for major government projects, while promising to establish “an enhanced protection and reward framework for whistle-blowers.”

The government has long held that the revamped procurement law (the Public Procurement and Asset Disposal Act 2015) has sealed loopholes that rogue contractors and corrupt public officials exploit to inflate project costs.

While the repealed Act was silent on the value of the tender, it now specifies that the cost shall not exceed two per cent of the tender as valued by the procuring entity.