Kimunya to face House over airport tender halt

Transport minister Amos Kimunya is expected to face Parliament on Thursday over the decision to cancel a Sh56 billion tender for a new airport.

Mr Kimunya will tell MPs why the tender to Chinese contractor Anhui Construction by the Kenya Airports Authority was cancelled and how much money the taxpayer is going to lose if the cancellation proceeds.

The proposed airport is known in government circles as the Greenfield Project. When asked about the Greenfield Project on Tuesday, Mr Kimunya went on a tangent and in a thinly veiled attempt, accused the Nation of corruption.

“Madam temporary Deputy Speaker, let members disregard what appeared in the media by some interested and compromised journalists,” he told MPs.

Contradicted evidence

The minister told Parliament that the tender had not been issued, a statement that is directly contradicted by documentary evidence in the public domain at the Public Procurement Oversight Authority.

“The issue that we are talking about here is that no tender has been awarded. A tender that has not been awarded cannot therefore be cancelled,” he told MPs.

The minister said he would be ready to respond on Thursday if the Speaker so directs. The documents show that the tender had indeed been issued on December 16 and a cancellation ordered by the minister on January 10.

Documents also show that the minister directed his permanent secretary to cancel the contract, sparking a flurry of questions in the high echelons of government that have now spilled into Parliament.

Transport permanent secretary Cyrus Njiru is a KAA board member. The matter was first broken by the Sunday Nation and taken to Parliament on Tuesday by Belgut MP Charles Keter. (READ: Kimunya on the spot over Sh55bn airport)

Mr Keter wanted to know whether the minister ordered the tender cancelled, what his reasons were and how much it would cost the taxpayer to reverse the process.

Already, Attorney-General Githu Muigai has twice advised KAA against cancelling the tender award since, he said, the procurement process was in order, and cancellation would expose the taxpayer to legal liability from the winning company.

The lengthy planning, master plan design and procurement process has cost the taxpayer an estimated Sh160 million and restarting the process may cost the same or more before arriving at a tender award.

The tender was awarded to Anhui Construction company, a Chinese firm which has partnered with British firm Pascall and Watson. The tender was awarded on December 16, last year, and the wining bidder duly informed.

The contractor wrote a letter of acceptance that was received at KAA on December 19. None of the other competing firms appealed the decision.

But it was not until January 10, that PS Njiru wrote, citing a directive from Mr Kimunya, ordering that the tender be cancelled.

Anhui has gone to the Public Procurement Oversight Authority asking the quasi-judicial body to stop the government from cancelling the contract.

It was the directive to KAA to cancel a tender that sparked back-and-forth letters and a controversy at the KAA board of directors and invited the attention of the Cabinet, the Office of the President, the Office of the Prime Minister, the Public Procurement Oversight Board and now Parliament.

On Tuesday last week, acting head of civil service and secretary to the Cabinet Francis Kimemia wrote to Dr Njiru and KAA managing director Stephen Gichuki asking them to place in motion a plan to ensure that the ground is broken by November 30.

Last week, Mr Kimunya told the Nation that he wanted the tender cancelled because Kenya Airways was not involved.

But a board paper in the Nation’s possession shows that a master-plan conducted by American consultants Louis Berger Group in conjunction with a local engineering firm, Runji and Partners, had to be revised to incorporate input from Kenya Airways, other airlines and the Transport ministry.

Documents seen by the Nation show that on October 3, 2011, the Dr Njiru wrote to KAA asking them to continue with the tendering process.

On November 18, last year, a day after contractors submitted their bids, the Office of the Prime Minister wrote to KAA requesting a brief on the status of the project and to seek Cabinet approval.

The KAA board followed up a response with a visit to Prime Minister Raila Odinga who gave the okay, and a Cabinet paper subsequently prepared and forwarded to the Ministry of Transport.

The tender award was arrived at on December 16 and Anhui notified. On January 11, 2012, China Development Bank forwarded their formal terms to KAA on financing the project.

Tender cancelled

But the previous day, the Transport ministry started an earnest effort to have the tender cancelled. Dr Njiru wrote to Mr Gichuki directing that the tendering process be restarted, touching off high-level intrigues in top government circles as officials wrote letters back and forth over the project.

Dr Njiru said he had been instructed to order a re-tendering process by Mr Kimunya because there was an “unacceptable number” of technical and financial proposals to be considered, the bidders did not provide finance and that bidders should not have competed on the financial aspect of the project.

KAA wrote back, explaining the process and that contrary to the Njiru letter, the bidders were not supposed to finance the project, but to identify a capable financier whom KAA would then negotiate with directly. Mr Gichuki said that procedure had been followed to the letter.

But a month later, on February 10, Dr Njiru responded with new instructions to cancel the tender. Three days later, Mr Kimunya and Dr Njiru summoned the KAA board and management over the tender and asked the board to cancel the tender and restart the process.

After the meeting, KAA wrote to Attorney-General Muigai and external lawyers, seeking a legal opinion on terminating the contract.

Prof Muigai advised against cancellation and said that in his opinion, due process had been followed, and cancelling the contract would “undermine the integrity and fairness of the procurement process”.

Even before they had received the AG’s advice, the board, ostensibly acting on the instructions from the minister through Dr Njiru, resolved to cancel the tender in a meeting on February 21. The next day came the AG’s letter advising against cancellation.

In the meantime, the Ethics and Anti-Corruption Commission had received a complaint that the tendering process was flawed.

They dispatched their officers on January 20 to collect the documents pertaining to the tender. A month later, they wrote back and said the project was in the clear and could proceed.

The Office of the Prime Minister waded into the now raging dispute on March 6, and directed KAA to withhold any action while awaiting Cabinet direction.

The following day, KAA forwarded a Cabinet paper and appeared before the Cabinet Committee on Infrastructure to present the details. In relation to this, Prof Muigai again advised against cancellation of the tender and said:

“We are of the considered opinion that termination of the procurement proceedings after award is tantamount to termination of the contract in the sense that a binding legal relationship already exists between the parties.

“Such termination will prompt the successful bidder to enforce its rights under the contract in the form of claim for damages and specific performance,” the AG warned.