Crooked government officials awarded tenders for the supply of new-generation number plates at nearly three times the value of the bids initially tabled.
The officials also tampered with bid documents submitted by rivals, in one case adjusting the price of equipment and services by 3,584 times, in a bid to knock out competition and engineer the award of tenders to favoured companies.
The rot was unearthed by the Public Procurement Administrative Review Board two weeks ago, during investigations into award of tenders worth nearly Sh3 billion for new generation vehicle number plates.
Investigations showed that one of the companies seeking to supply hot stamping foils had offered to sell them at $4,856.2 for each unit, which is approximately Sh500,000.
But unbeknown to the bidder, the $4,856.2 figure was adjusted to a whopping $17,406,350 (Sh1,775,477,700) in a move which appeared to have been designed to knock the bidder out of contention.
The revelations have put officers at the Kenya Prisons Services Enterprises who handled the bid in the spotlight for what appears to be a shocking case of tender rigging.
The winning company was awarded the tender for $20,797,500 – a decision that has now been reversed.
Then there is the separate tender for blank plates which was awarded to two companies.
Inquiries by procurement authorities established that the bid for tender plates was priced a staggering three times higher than the companies had offered to sell at.
Officials evaluating the tender documents inflated the bids and procurement authorities have now urged state investigative agencies to move in to establish whether crimes were committed and to nail the culprits.
The roll-out for the new hi-tech number plates was scheduled for last month but it has dragged on as the fraudulent intrigues continued in the background, and it now seems unlikely the smart plates will be issued this year.
The new plates are supposed to put Kenya at par with many countries in the developed world and are meant to assist police track down car thieves, terrorists and other criminals in real time.
By simply screening over a number plate with a hand-held machine, police would instantly obtain the name of the owner of the vehicle, the registration number, engine and chassis numbers and a history of previous owners.
The smart plates are thus expected to give the police an advantage in tracking down stolen vehicles, as well as those used to commit other crimes like carjacking and hit-and-run accidents.
The first phase targeted six million vehicles.
Following the investigation, the Board revoked two contracts that had been awarded by the Kenya Prisons Enterprises, which falls under the Interior ministry.
“The procuring entity is directed to issue letters of award to the applicant (complainant) in respect to the two tenders and complete the entire procurement process in accordance with the law within a period of 15 days from the date of this decision,” the Board ruled.
It also said: “One further factor that has influenced the Board’s decision is that it relates to the rolling out of the new generation number plates, a process that is long overdue.
The Board is, therefore, of the view that time has come to bring this process to an end in order to enable the public to enjoy the benefits that accrue with the introduction of the new generation plates and other related services.”
Tenders were floated in January, one for the supply and delivery of “blank vehicle number plates” and the other for “number plate hot stamping foils,” which are the main components in new generation plates.
Thirteen local and international companies competed for the lucrative awards.
Eventually EHA Hoffman International GmbH of Germany was awarded the contract to supply the blanks over three years at a cost of $6,953,700 (Sh709,277,400).
The contract for the hot stamping foils was split between EHA Hoffman at a cost of $20,797,500 (Sh2,121,345,000) and MIG International Ltd at $1,418,842 (Sh144,721,884).
After the contracts were awarded in June, Tropical Technology Limited, a Kenyan company representing a German manufacturer, complained to the Public Procurement Oversight Authority.
The move prompted a thorough investigation at the Review Board, which ended on October 8 after the massive rot was unearthed.
Initially, the Board asked the government to stop award of contracts and instead re-evaluate the tenders.
But the matter returned to the Board after the complainants were unsatisfied with the re-evaluation.
Lawyer Alex Thangei, who represented the complainants, demanded original copies of the bids during the hearings, a demand the government officials were hesitant to comply with.
The reports says: “When this matter came up for hearing there was concerted effort by procuring entity to keep away the financial proposals submitted by successful bidders and when these documents were finally submitted, it became obvious that there were glaring errors some of which bordered on fraud.”
After original documents were tabled, Mr Thangei highlighted the glaring anomalies after realising that his clients had bid for supply of hot stamping foils at $4,856.2 (Sh495,332), but the figures forwarded to evaluation committee at the ministry had been altered to $17, 406,350 (Sh1,775,477,700).
Besides, Mr Thangei also informed the Board that in the case of blank plates, the companies which won the tender were awarded at a cost three times higher than what they bid, suggesting that the difference would end up in pockets of individuals.
The Board ruled: “Counsel (Mr Thangei) for the applicant said during opening of financial bids, the price which was read out openly offered by EHA Hoffman International GMBH was $2,317,900 (Sh236,425,800) while that of MIG International Ltd was $363,437.50 (Sh41,795,255) .
However, the tenders awarded to EHA Hoffman and MIG International were at $6,953,700 (Sh709,277,400) and Euros 1,269,089 (Sh145, 945,235).
The report thus noted: “Counsel of the applicant finally submitted that those alterations were made unilaterally without regard to procedure under tender document for correction of errors. What happened in this case could not be described as a correction but unilateral alteration of prices that would cost the taxpayers billions of shillings if allowed to stand.”
At this point, Mr Thangei urged the board to demand the “soft copy,” a PDF file and the original compact disc (CD) that were submitted as a mandatory requirement at the preliminary stage.
“If the Board finds the figures were different from the ones in the eventual award, then the Board should declare the successful bidders’ tenders non responsive and award the tenders to the applicant (complainant),” the report said.
Mr Patrick Kariri, a director at Prisons Services, responded to these claims during the hearing.
The document says: “Mr Kariri admitted that under tender provisions the procuring entity’s role was limited to correcting arithmetical errors and where this was done, and the procuring entity was bound to notify the bidder who in turn is bound to signify acceptance.”
In these particular cases, Mr Kariri admitted, the applicant was not notified and was not, therefore, asked to accept or reject the correction.
In regard to the contract awards whose costs were multiplied three times, Mr Kariri said that the bidders had provided figures for one year while the contract period was three years, an explanation that was trashed by the review Board.
The Board declared: “It is not permissible to alter the substance of a tender after deadline for submissions or to unilaterally fill in gaps or change the prices indicated by bidders.”
The Board expressed dismay with the Prisons enterprises authorities terming their actions as a clear case of fraud and invited investigations that would result in prosecution of top officials.
It said: “The Board recommends to the Director of Public Procurement Oversight Authority and the investigative agencies of the government (EACC and DCI) to carry out an investigation to establish whether there was any impropriety in the procuring entity’s decision to alter prices submitted by parties in their tenders and/or in adopting prices and awarding the subject tenders to bidders at prices not set out in the forms.”
The spotlight now turns to the Prisons Enterprise chief Josephat Ituka and three senior Prisons officers as well as Co-ordination of National Government Principal Secretary Josephta Mukobe.
When the reviews were ongoing, the PS had written to the Review Board on July 7 stating: “The entire process of the tender was transparent and followed the due procedures laid down in the Public Procurement and Disposal Act. The appellant’s request (to annul) should be ignored and the process allowed to proceed to its logical conclusion.”
Earlier, there was another tender for supply and installation of a machine that will produce the finished smart plates.
The machines were installed at Kamiti Maximum Prison by Tropical Technologies Ltd after yet another drawn-out contest.
The Prison officials together with directors of a supplier firm had visited South Africa, where such machines are manufactured even before the tenders were announced, raising eyebrows.
The machines that were finally delivered by Tropical Kenya Ltd were tested and endorsed by the Public Works department.