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State agencies ignored AG’s counsel on railway contract, MPs told

Updated Tuesday, January 21st 2014 at 00:00 GMT +3
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Public Investments Committee chairman Adan Keynan at Continental House in Nairobi Monday during the House team’s probe on the Sh1.2 trillion railway tender. [PHOTO: Boniface Okendo/STANDARD]


NAIROBI, KENYA: The only body with oversight over Government contracts brushed aside warnings by the State’s chief legal advisor over the Sh327 billion contract for the Standard Gauge Railway (SGR).

Attorney General Githu Muigai had advised that the process used to award the China Roads and Bridges Corporation (CRBC) the contract to build the railway is not backed by Kenyan law, documents tabled before the National Assembly’s Public Investment Committee (PIC) show.

But despite Muigai’s misgivings, the Public Procurement Oversight Authority (PPOA) approved the project even after seeking the AG’s legal opinion. The PIC heard that PPOA did not receive any documentary evidence showing that the deal was a “government-to-government” contract before ‘looking away’ and accepting that it was not in its purview. 

In a letter to the procurement watchdog, Prof Muigai noted that there is no method for selecting suppliers known as “government-to-government” contract.

This emerged Monday as the PIC, chaired by Eldas MP Adan Keynan, received details on how the cost of the SGR was inflated, and how the Government chose a procurement method not recognised by law.

PPOA Director General Maurice Juma, who was the first before the PIC panel, was hard pressed to explain why the authority sought the opinion of the AG only to disregard it later. The committee also heard that the Chinese firm initiated the tender by writing to Kenya Railways and offering to do the feasibility study for ‘free’. PPOA also ignored advice from Muigai on whether the tender satisfied the Public Procurement and Disposal Act 2005, the law that guides State procurement.

According to correspondence tabled before the PIC, Mr Juma had requested a legal opinion on the controversial tender from Muigai on April 5 last year. 

The AG responded three weeks later in a strongly worded letter in which he noted “it is worrying that a procuring entity can pick and choose alternate procurement methodologies as alleged over the same subject matter”.


He went on to note in the letter addressed to Juma: “In adopting initially a procedure… and awarding a contract on that basis, only to subsequently cancel it, and purport to re-award it under alternative arrangements, raises doubt about the integrity of the statute’s authority.”

Prof Muigai further noted that the procurement law was enacted to promote fair competition, transparency and accountability as well as local participation.

In his opinion, Prof Muigai noted that Kenya’s procurement law remains in force in cases where the Government is contributing some resources.

“In cases where the Government contributes from her own resources, and in any form, to any procurement process under such agreement or treaty, the Act applies,” the AG’s letter dated April 30, 2013, reads in part.

“It is not good practice to read one portion of the law in isolation and with disregard to other parts of the same law,” the letter adds.

“More worrying, however, is the increasing phenomenon of government ministries, departments and agencies employing the G-to-G tool to circumvent the requirements of the Public Procurement and Disposal Act 2005,” the AG notes in the letter.

In Muigai’s opinion, the so-called “government-to-government” agreement is not a method for selecting suppliers so as to support the awarding of a contract.

“That is to say, public agencies are expected to implement procurement methods that are fair, equitable, transparent, competitive and cost effective,” Muigai added.

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