A cash-strapped firm unable to settle a Sh1.8 million debt was in January handed a Sh2 billion affordable housing tender, raising questions over the evaluation of financial bids ahead of offering State contracts.
The State Department for Housing awarded the little-known Jasir Contractors the tender to construct affordable houses in Loitoktok, Kajiado County, triggering an uproar from other bidders.
Fresh details have emerged in separate court cases indicating that Jasir Contractors is broke.
This has prompted questions on the review of the firm’s finances and financial bids to establish its muscle to execute a Sh2 billion project that requires the contractor to raise part of the construction cash up front.
Jasir Contractors struggled with cash flow challenges ahead of securing the housing tender in January, two court cases show.
A director of the firm, Jasper Ireri Mbungu, told the High Court the firm was struggling and had no cash in a suit that followed the jailing of the board member for 30 days to January 5, 2024 for non-payment of a Sh1.8 million debt.
The firm was also last year locked in a legal fight with the KRA over a Sh4.2 million tax bill linked to undeclared supply deals in the four years to 2021, further high lighting its cash flow problems.
Now, the procurement review board, which has quasi-legal powers, has cancelled the tender award to Jasir Contractors and ordered the State Department for Housing to admit and review two other companies that had been disqualified from the Sh2 billion deal.
The Public Procurement and Administrative Review Board (PPARB) established that the housing department unfairly disqualified a rival bid that offered to handle the contract at a lower cost.
“The board established that while the applicant’s (Jijenge Precast and Construction Ltd) bid was disqualified for discrepancies in the bill of quantities, the successful bidder (Jasir Contractors) had multiple inconsistencies in rate uniformity and glaring alterations on its bid,” the PPARB said.
“Despite the discrepancies, the State Department for Housing found Jasir Contractors Ltd responsive while disqualifying the applicant for similar or lesser deviations.”
Five companies bid in the tender for the affordable housing deal and three qualified to have their financial bids reviewed. The housing department later disqualified two of the companies at the financial evaluation stage and awarded the tender to Jasir Contractors on January 24, 2025, in a deal worth Sh2.179 billion.
Jijenge Precast and Construction then filed a suit at the PPARB on claims it was disqualified unfairly despite quoting a tender price that was Sh63 million cheaper than Jasir Contractors’.
The state department told the Board it disqualified Jijenge Precast due to inconsistencies in its bid documents.
A PPARB scrutiny, however, established that Jasir Contractors’ bid documents also had “multiple discrepancies, including omission/alteration in its bill of quantities, and more specifically, rates for the same line item differ across pages,” which the state department ignored.
“Notably, the evaluation report did not justify as to why the successful bidder’s (Jasir Contractors) errors, alteration, omissions and commissions were overlooked while the applicant’s (Jijenge Precast and Construction) bid was deemed non-responsive for lesser discrepancies, the differential treatment resulted in an unfair advantage to one bidder,” the PPARB said while cancelling the award.
The board accused the housing department of failing to uphold the principles of fairness, transparency, and equal treatment.
Kenya faces an affordable housing deficit, estimated at over two million units. The government plans to build over 250,000 homes annually under the affordable housing scheme to bridge the deficit.
It began deducting 1.5 percent of the gross salaries of locals and foreigners last July to fund the construction of affordable houses for low-income earners.
Jasir Contractors is a civil engineering firm, which, while not publicly known to many, has been involved in a number of public contracts. Records at the company registry show that the company is equally owned by Mr Mbungu and Mr Felix Kamunde Njeru. It was registered in July 2014.
In the suit that saw Mr Mbungu committed to a 30-day civil jail between December 2023 and January last year, Jasir Contractors had failed to pay another company, Aakash Limited, Sh1.89 million following a 2020 court judgment.
Aakash Limited went back to court in 2023 to press for payments.
But the firm lacked cash and forced the court to jail Mr Mbungu for 30 days in his capacity as a director.
“The 1st defendant [Jasir Contractors], being the principal judgment debtor herein, has been having financial challenges which he [Mr Mbungu] adequately explained to the respondent [Aakash Ltd] to no avail,” court documents state.
After his release from jail, he struck an agreement with Aakash Limited to pay monthly installments of Sh75,000 until clearance of the debt.
Mr Mbungu failed to honour the instalment payment, prompting a magistrate court to issue an arrest warrant. He remains free on the protection of the High Court, where he sought an injunction against his arrest.
“He avers that mere sojourn of poverty upon his door or poor business prospects cannot be the basis for his committal to civil jail,” records from the High Court proceedings show.
In another matter, the Tax Appeals Tribunal in August last year allowed the KRA to demand from the company Sh4.2 million in unpaid taxes between 2017 and 2021.
The KRA accused the company of failing to pay taxes on Sh109.9 million supplies to Meru County Investment and Development Corporation.
Separately, a company linked to a controversial Turkish businessman close to President William Ruto also won a multi-billion shilling deal to build affordable houses amid cronyism claims.
MHOA Africa Limited, which is owned by Harun Aydin, was part of a joint venture expected to build at least 100,000 homes under the scheme, which is partially funded by the housing levy.
Mr Aydin was deported from Kenya in 2021. He was part of a team scheduled to accompany then Deputy President Ruto to Uganda for an aborted trip that was blocked by Immigration officials.
