Why it is now a costly affair to challenge tender outcome

Seeking a review of a procurement outcome can now be very costly with the enactment of the Public Procurement and Asset Disposal Act 2015.

The new law requires one to pay at least 10 per cent of contract value before the case is heard. According to the Public Procurement and Asset Disposal Act 2015 that was signed by President Uhuru Kenyatta last December, a 15-member Review Board cannot initiate any review process until such amount is paid.

“A request for review shall be accompanied by such refundable deposit as may be prescribed in the regulations, and such deposit shall not be less than 10 per cent of the cost of the contract,” states the Act. This means that for a contract of Sh2 million, a person who loses and wishes to appeal will have to deposit at least Sh200,000 with the board first.

This is expensive by about 233 per cent per cent when compared to the previous cost that required one to pay Sh60,000 being 1 per cent of the value of contract (Sh20,000) and Sh40,000 to file the review. Challenging a tender of Sh50 million will now see the bidder part with Sh5 million as opposed to just Sh72,000 in the previous Act whose operation ended on January 7.

The Act stipulates that any bidder who claims to have lost unfairly will have up to 14 days after the award of tender to launch an appeal. Before, it used to take 21 days. But even with the hefty costs, the Review Board may dismiss the request if it is of the opinion that it was made just to delay the procurement process. In that case, the applicant shall forfeit the deposit paid. In what appears to make the path to justice more costly, appealing the decision of the board also attracts another fee.

“The application for a judicial review [by the High Court] shall be accepted only after the aggrieved party pays a percentage of the contract value as security fee as shall be prescribed in regulations,” states clause 175 (2) of the Act. Prior to becoming an Act, the procurement law had attracted criticism with some terming it as just a ‘copy and paste document’ from the 2005 Act. However, most clauses in the Bill still made it to the Act.

Muthomi Thiankolu, a law lecturer at University of Nairobi and also a partner at Muthomi & Karanja Advocates said that the clause defeats the purpose for which the Act was reviewed. “This Act was passed without a policy statement. Enforcing the clause on paying 10 per cent of the contract value in its current form is problematic. I see it being reviewed in Parliament because it is unconstitutional,” said Mr Muthomi.

He added that public procurement often involves huge amounts of money and therefore, requiring aggrieved bidder to pay a percentage of the value of contract could easily block his or her access to justice.

Inconsistent

According to Institute of Certified Accountants (ICPAK), the establishment of a Review Board as another autonomous institution to the Public Procurement Oversight Authority is a duplication of functions and a strain to the already overstretched wage bill. “We proposed an amendment to the entire section on the
Public Procurement Administrative Review Board, to make it a committee within the Public Procurement Regulatory Board,” indicated the body in its analysis.

Other controversial provisions in the Act include conditions set out by donors. For instance, the Act provides that if there is a conflict between the Act and a condition imposed by a donor of funds, the condition shall prevail with regard to a procurement that uses those funds.

Experts feel the provision is arguably an aberration, resulting from a donor dependency syndrome. The idea that a donor could compel Kenyan public agencies to conduct procurement in a manner that is inconsistent with the country’s laws is arguably inconsistent with the constitutional provisions on sovereignty.

Experts also argue the Act concentrates too much powers on the accounting officers and an overbearing national Treasury. Other concerns include leaving too many important matters to be prescribed.