State officers on the spot over ‘faulty’ procurement rules

Over the past three weeks, a number of prominent government officials have been thrown into the limelight over accusations of failing to enforce procurement rules.

Officials from the Kenya National Bureau of Statistics, the National Oil Corporation of Kenya, the Ministry of Information and Communication, and the Independent Electoral and Boundaries Commission (IEBC) have had questions to answer. They have all pleaded innocent and blamed bureaucracy for their woes.

They are not alone. Top government officials, led by Prime Minister Raila Odinga, have called for a review of the law, which they blame for the non-use of over Sh101 billion allocated to various ministries over the 2010/11 financial year.

However those who enforce the law see this as an excuse for officials’ lack of planning and love for shortcuts. To the Public Procurement Oversight Authority, the current law is the best the country can have if it hopes to curb corruption and inefficiency.

“Most of the cases we are currently handling are as a result of poor planning and failure of procuring entities to adhere to set procedures,” said a PPOA official who requested not to be named for fear of backlash from senior government officials who have taken a different position.

The authority singles out failure on the part of the purchasing entity to conduct a technical evaluation on all the firms that tender for services or goods provision and presentation of fake minutes as some of the key areas of concern.

The authority dismisses claims that government procurement procedures are bureaucratic, saying that the process only becomes long when due process is not followed.

They also question why government cannot issue tenders and award contracts in advance for projects to be done in two to three years and issue funds as and when the money becomes available. This, they say, would give them ample time to fight claims of bias in the courts.

Vision 2030 director general Mugo Kibati has criticised the current procurement law, saying it is more of an inhibitor to development than a facilitator. “The law is badly crafted, with loopholes that allow frivolous suits which stall even the most arterial projects, eventually slowing down our economic development,” said Mr Kibati.

He said the country had suffered many economic losses because of stalled projects that would otherwise have been completed if they were not interrupted by court injunctions that usually come when a project is just about to begin.

Last month, Mr Odinga said the procurement law must be emended to suit Kenya’s needs. The current one, he added, is of no use as it was forced on Kenya by the Bretton Woods institutions.

Here are some of the prominent cases that have made headlines in recent times.

Scandal that puts the future of the country at risk

The government was last week forced to step in to save the image the Independent Electoral and Boundaries Commission, which bounced into negative limelight over irregularities in the purchase of the Sh3.9 billion biometric voter registration kit.

In a procurement that was handled by two different teams back to back, the commission was unable to buy the equipment and had to finally cancel the tender over what was described as boardroom wars dividing the commissioners and the secretariat.

In an interview with Smart Company, the commission’s chairman, Mr Isaack Hassan, said the process was frustrated by cumbersome procurement laws and procedures, politics and bidders’ rivalry.

The tender cancellation and decision by the IEBC to revert to the manual voting system raised alarm in the international community and the government, which ordered that the commission adopt the electronic system to avoid manipulation that could compromise an open, free, and fair election.

After a crisis meeting chaired by the President, the government announced that would help acquire the kits from Canada in a government-to-government deal in an effort to protect the credibility of the elections and build public confidence. The commission has now said it would not accept the government’s decision to allow the Canadian government to pick the supplier, particularly Code Inc.

A decade with no currency printing contract

Among controversial tenders is the one for printing new notes that has reportedly cost taxpayers Sh1.8 billion. The Budget Committee has recommended that Central Bank governor Njuguna Ndung’u and Transport minister Amos Kimunya be sacked.

The tender has dragged since 2003 and Central Bank has, as a result, been procuring bank notes from De La Rue on interim orders without subjecting them to competitive procurement. The problem about the tender dates back to 2006, after cancellation of competitive international bidding for printing 1.71 billion pieces of notes.

The tender had been awarded to De La Rue Company, which was to print the notes from its plant in Malta and ship them to Kenya. Mr Kimunya is reported to have directed CBK to cancel the contract in 2007 saying the government intended to go into a joint venture with De La Rue, where it would acquire shares.

Huge allocations of funds, but no roads

Citing lengthy procurement procedures, the Kenya Roads Board (KRB) says its agencies are only able to implement less than seven of every 10 projects planned in any financial year.

Last year, the Kenya National Highways Authority (KENHA) and the Kenya Urban Roads Authority (KURA) delivered only 30 per cent and 31 per cent of planned road constructions respectively. “These tendering processes usually take months or sometimes up to a year. In roads construction, there are a lot of supply details that we have to evaluate before awarding tenders. And even then, they are often challenged,” said Kura chairperson Benjamin Cheboi.

The Kenya Wildlife Service (KWS), responsible for management of roads in national parks and game reserves, did not carry out any of the projects planned for 2010/2011. Instead, KWS directed its efforts to implementing projects carried over from the 2009/2010 period due to procurement delays and backlog maintenance. Even so, by June 2011, only 39 per cent of the 2009/2010 projects had been completed.

Eight years, and wait for third generation IDs still on

Last week, the Kenya Public Procurement Administration Review Board ordered the tender for procurement of the Sh8 billion third generation identity cards processing equipment be conducted afresh.

The Ministry of Immigration and Registration of Persons was accused of providing two sets of minutes, one a forgery, during the opening of the tenders to conceal its failure to disclose the technical scores of the bidders.

The contract to procure the Kenya National and Identification Systems has dragged on since 2005, when the government first announced it would issue new identification cards. One of the seven companies went to court and successfully petitioned the manner in which the ministry carried out the exercise.

The latest setback means that it is unlikely that the cards will be issued before the next General Election. The other tender floated in 2009 failed after the National Database and Registration Authority of Pakistan took the ministry to court for breaching the law.

Population census and non-existing companies

The director-general of the Kenya Bureau of Statistics (KNBS) is currently embroiled in a court case in which he is accused of paying Sh7.39 million to a non-existent firm. According to investigations by the Ethics and Anti-Corruption Commission, Mr Anthony Kyalo Kilele and his procurement officer, Mr Fred Oyiera, contravened tendering rules and paid for services not rendered. The saga began in 2009 when KNBS engaged several companies to transport census materials from different regions in the country, only to realise that they did not have storage space for the materials.

KNBS then engaged one of the transport companies to provide warehousing services. EACC further claims that one of the agents of the company, later identified as businessman Samuel Ogot Baker, purported to register a warehousing company and presented KNBS with fake documents.

Mr Baker was subsequently issued with a payment voucher worth Sh1.46 million in September 2009 before a further Sh5.9 million was delivered in October 2009. Mr Kilele and Mr Oyiera were questioned by authorities on 10 July and the case was first mentioned in court on 24 July.

Attorney General’s office gave us green light on Sh1 billion Konza City

Information permanent secretary Bitange Ndemo was on the spot last week as investigations into the ministry’s procurement became public. In 2010, the government purchased the Sh1 billion property in the Athi River Basin from Malili Ranching Company to construct Kenya’s first technopolis, expected to create 200,000 jobs in business process outsourcing.

An Ethics and Anti-corruption Commission (EACC) report recommends that the PS and his chief procurement officer be charged with failing to comply with the law. The Ministry of Information used direct procurement instead of open tendering to acquire land for the planned Sh1 billion Konza ICT Park at Malili.

On Thursday last week, Dr Ndemo took to an online forum to defend the procedures followed by the ministry. He claimed that he was in consultation with the Attorney General’s office and EACC throughout the process.

He faulted Kenya’s procurement laws, saying they are vague. “We still have grey areas in the procurement law,” said Dr Ndemo on the online Kenya ICT Network (Kictanet). The DPP has since returned the file to the EACC, requesting further investigation. 

The ‘ghost’ companies of Mui Coal Basin

Although the Ethics and Anti-Corruption Commission has not yet been involved in this case, it could soon be headed there. The award of a tender for mining coal in Mui Basin’s Blocks C and D to Chinese Company, Fenxi Industry Mining Group, has been openly criticised by some community leaders. According to Mutito MP Kiema Kilonzo, the said company does not exist.

He further alleges that the deal includes another local company, Great Lakes Limited, whose identity is not clear and was not disclosed at the award of the tender. These allegations have sparked a war of words between the legislator, Energy permanent secretary Patrick Nyoike, and other senior ministry officials as well as the Chinese firm.

As a result, mining of more than 400 million tonnes of coal has not started as the prevailing issues are yet to be resolved and concession agreement signed between the government and the Chinese company.

The tender was advertised in the local press and closed on 14 October, 2010, having attracted bids from 16 companies. Notification of award was made to the Chinese firm on 24 August, 2011.

NOCK fighting allegations of single sourcing

National Oil Corporation of Kenya managing director Sumayya Hassan-Athman and her supply manager, Ms Maimuna Kassim, could face charges of abuse of office if the Director of Public Prosecutions takes up recommendations by the Ethics and Anti-Corruption Commission.

The anti-graft body alleges that Ms Hassan and Ms Kassim breached the procurement law while sourcing for 132,000 metric tonnes of automotive gas oil in a tender awarded to the company by the Ministry of Energy.

According to EACC, the pair directly approached a petroleum company to deliver the cargo without calling for tenders. The company failed to deliver, forcing Nock to approach another firm, which quoted a higher price, to supply the product.

The file was forwarded to the DPP on 22 June, 2012 with recommendations that they be charged with the offence of wilful failure to comply with the law and applicable procedures relating to procurement, contrary to section 45(2) as read with section 48(1) of the Anti-Corruption and Economic Crimes Act, 2003. Further, it was recommended that Ms Hassan be charged with abuse of office, contrary to section 46 of the Anti-Corruption and Economic Crimes Act, 2003. The deal is alleged to have cost $127,580, which the EACC says should be recovered. 

The scandal that threw Kimunya out of the Cabinet

The scandal erupted in mid-2008, raising concerns over procurement flaws in the sale of the Grand Regency Hotel (now Laico Regency) by the Central Bank to a group of Libyan investors trading by the name Libya Arab African Investment Company.

The controversy in the sale of the Nairobi five-star hotel was the no-bid nature of the transaction, which is inconsistent with the provisions of the procurement laws, the secrecy under which the deal was negotiated, the identity of the buyers, and the price of the luxury hotel, which was reportedly sold for Sh2.9 billion.

Previous appraisals of the property had valued it at about Sh7 billion. Lands minister James Orengo is the man who blew the whistle, accusing his colleague Amos Kimunya in the Ministry of Finance of impropriety.

Having directed the sale, Mr Kimunya was cornered by Parliament, culminating in the passage of a censure motion against him. He succumbed and resigned to give way for investigation. However, in a report that was never made public, the commission inquiring into the sale cleared Mr Kimunya and he was subsequently reinstated to the Cabinet as minister for Trade the following year. 

Digital signal: Conflict of law and national security

In June last year, the Communications Commission of Kenya (CCK) raised a furore in Kenya’s broadcasting sector after it awarded a digital signal distribution licence to a Chinese firm.

Pan African Network Group was one of four companies that had bid for a tender advertised by the regulator in March 2011. It was the only foreign firm among the applicants. All the other three were disqualified on technicalities.

Broadcasters argued that awarding Kenya’s second media licence to a foreign firm was detrimental to media freedom in the country and national security. Local media owners appealed to the High Court to have the decision reversed. The Appeals Tribunal decided in favour of CCK.

The parliamentary committee on Energy and Communication threatened to block the process. Under pressure, the ministry ordered media owners to form a consortium and apply for a third licence.