Court allows KRA to acquire new Sh1.2bn clearance system

The Kenya Revenue Authority (KRA) is now free to continue rolling out the controversial Sh1.2 billion electronic customs clearance system after a five-year delay due to a legal battle over procurement.

In a judgment issued by the Court of Appeal Nairobi, a three-Judge bench has upheld decisions made by the High Court and the public procurement oversight agency in dismissing a dispute involving the award of the technology advancement tender.

The tender was for the supply, installation and commissioning of an integrated customs management system (ICMS).

MODERNISE PROCESSES

The development, which was meant to modernise customs processes and increase surveillance, was awarded to Bull Sas Limited in 2015.

It was also aimed at rejuvenating the customs revenue collection system in Kenya by increasing its efficiency with a view to substantially increasing revenue collection.

Switzerland-based Webb Fontaine Group FZ LLC, disputed the procurement process and challenged the same at the Public Procurement and Administrative Review Board and subsequently at the High Court where its claims were dismissed.

RULINGS UPHELD

While upholding the rulings, justices Wanjiru Karanja, Hannah Okwengu and Fatuma Sichale said there was no illegality, procedural impropriety or irrationality in the manner the Board handled the Swiss firm's request for review.

"The appellant’s request for review was filed out of time and there being no provision for extension of time, the board was right in declining to entertain it on grounds of want of jurisdiction," said the judges after perusing the rulings rendered by the board and the High Court.

The tendering was done on behalf of KRA by Trade Mark East Africa (TMEA) which advertised a request for proposals.

The Swiss firm’s bid was found responsive hence its invitation, along with Bull Sas Limited to the opening of the financial bids.

CURB TAX EVASION

The project, financed by TMEA, aims to curb tax evasion and provide customs with a more versatile capability to address tax collection challenges.

It replaced the Simba System, which cannot be interfaced with those of other revenue bodies in East Africa.

The court heard that on November 24, 2010, the government of Kenya, through the Ministry of East African Community and the Ministry of Finance, entered into a memorandum of understanding with TMEA with the aim of growing prosperity in East Africa.

TMEA is an autonomous non-profit organisation funded by a range of development agencies including DFID, UKAID, DANIDA, CIDA and World Bank among others.

EAC PARTNER STATES

The said MoU was aimed at offering financial, technical, capacity building and logistical support to EAC partner states individually in the integration process.

The arrangement for the development was formalised through a financing agreement dated September 19, 2013 between the Kenyan government and TMEA.

The court heard the financier (TMEA) required the procurement to be carried out using their procedures, a practice that is supported by the Public Procurement Act.

The installation of the new system is said to have been agreed upon by Kenya, Uganda and Rwanda.

The system will allow all countries to monitor movement of cargo from the Mombasa port to its final destination.