Among the tendering methods allowable under the Public Procurement and Asset Disposal Act 2015 and Public Private Partnerships Act 2021, four have a history of controversy and queries from auditors, MPs, Public Procurement Regulatory Authority, Ethics and Anti-Corruption Commission, civil societies and other stakeholders.
These are direct procurement, single sourcing, specially permitted procurement procedure (SPPP) and privately initiated proposals (PIPs).
The overarching traits of the four methods are they lack or have limited competition, accountability and transparency.
In some cases, procuring entities have applied valid and acceptable justifications for their use and in others, they are perceived or found to have misapplied or abused the said methods.
Among these four methods, PIPs under the Public-Private Partnerships Act and SPPP under the Public Procurement and Asset Disposal Act have delivered the least competed projects.
On PIPs, a few projects have been completed, including Nairobi Expressway and Lamu Port. Galana Kulalu’s food security project is at commercial close. Sabaki Water Carrier project is in the contract negotiation phase, while others are in the feasibility study phase.
Following the storm that arose from the controversial leasing of Jomo Kenyatta International Airport by Adani Group, the High Court was moved by the Law Society of Kenya and Kenya Human Rights Commission to halt the progression of this project, alongside Kenya Electricity Transmission Company’s transmission lines project, which was to be financed by Africa50 and a subsidiary of Adani Group.
Petitioners quoted a lack of adequate public participation, competition, transparency, prudent and responsible use of public money and parliamentary approval in these projects.
The government later cancelled both deals, after the US indicted Gautam Adani, founder of Adani Group, on charges of bribery and fraud.
These adverse developments have tainted this procurement method and it’s doubtful if the above PIP projects will proceed.
On SPPP, most of the requests made by procuring entities to apply this method have been declined by the Treasury. Why? The latter has ruled that some justifications, despite them appearing under Section 114A (2) of the Public Procurement and Asset Disposal Act and their proposed procedures, are in fact, varied modes of direct procurement or single sourcing methods or where Public-Private Partnerships Act should be applied and not Public Procurement and Asset Disposal Act.
With all these challenges surrounding these methods, most procurement entities are likely to play it safe and avoid them, even when they are legally justified and there is evident value for money in using them. Few others will be confident enough to apply them, but with enhanced vigilance and diligence, hoping that similar queries and controversies will not follow.
The above cases’ laws and audit findings make a case for improving current laws and regulations governing these methods to remove ambiguities, confusion and insufficiencies therein.
In her 2023-24 report, the Auditor General says despite the Ministry of Health applying the SPPP as allowable in Sec.114A(2)(d) of PPADA to procure Healthcare digitization system for Social Health Authority(SHA), the ministry actually “single sourced” a strategic partner and therefore the process went against Article 227(1) of the Constitution, which requires equity, transparency, fairness, cost-effectiveness and competition in public procurement.
However, Auditor General did not state whether reasons given by the ministry and approved by NT were valid and reasonable as per the above quoted section of the law and whether the procedure used by the ministry adhered to Regulation 107(2), keeping in mind that it may not be possible to apply all the above five constitutional procurement principles in a single procurement procedure.
The extent of their application is varied, depending on the procurement method and market approach being applied.
The Auditor General has also said that because this project was based on PPADA, then contract should have stated that contractual disputes shall be handled by Public Procurement Administrative Review Board (PPARB), but the contract instead provided that disputes shall be settled under rules of London Court of International Arbitration (LCIA).
However, it’s a matter of Law and fact that PPARB legal mandate is to handle tendering disputes but not post-award and contractual disputes. These are handled through other Legislations including: Arbitration Act, 2012, Mediation Act, 2022 and Kenya International Arbitration Centre Act, 2023.
For international bidding however, a local procuring entity cannot impose local laws or mechanism on foreign contractors and therefore international rules and mechanisms like LCIA are validly applicable, if they were stated in special conditions of this contract.
Currently, there is a petition No. E010 of 2024, pending in the Supreme Court, challenging procurement for development of a grain handling facility and an island berth for KPA, where the court is expected to rule whether SPPP applied by KPA met the minimum threshold of a procurement as contemplated under provisions of Articles 10, 201 and 227 of the Constitution and various provisions of PPDA.
The high court had earlier ruled that KPA misapplied SPPP to avoid competition and to favour one contractor. The court quashed the SPPP and ordered KPA to start a fresh and competitive procedure.
This high court decision was later abrogated by the Court of Appeal, which ruled that KPA validly applied SPPP, considering that the investor had committed to shoulder 100 percent financing of the project and to utilize their private land and thus qualifies to be a strategic partnership sourcing.
With all these challenges surrounding these methods, it's likely that most procurement entities are likely to play safe and avoid them, even when they are legally justified and there is evident value for money in using them.
Few others will be confident enough to apply them, but with enhanced vigilance and diligence, hoping that similar queries and controversies will not follow.
The above cases laws and audit findings makes a case for improvement of current Laws and Regulations governing these methods, so as to remove ambiguities, confusions and insufficiencies therein.
CPSP Joshua Wamithi Maina is a regional procurement Practitioner and Consultant
