NAIROBI: Auditor General Edward Ouko has queried the purchase of 32 Armoured Personnel Carriers (APCs) by the Kenya Defence Forces at Sh1.1 billion.
Mr Ouko says a final contract inspection report has not been made available for audit review, although the contract sum was fully paid.
In the absence of a final inspection report, says Ouko, it was not possible to confirm that the contract was executed to the satisfaction of the Ministry of Defence and that taxpayers got value for their money.
The purchase was done through restricted tendering, but the ministry has explained the firm won the tender competitively and that the contract was signed and executed to the ministry's satisfaction.
"Available records indicate that 32 APCs supplied in 2008 were deployed in Southern Sudan as part of the Kenyan contingent in United Nations Mission in South Sudan and are still there to date," says the report.
It further indicates that after the APCs were delivered, the United Nations discovered that their roofs had defects that allowed water to leak into the vehicles. Further, according to UN, the vehicles were fitted with tyres that could not withstand a puncture contrary to the requirement that the tryes be self-sealing.
"The recovery vehicle lacks a rear door for easy access during stationery working, an omission which could only be corrected through modification to have a rear door for efficient use during recovery duties. There are also faults in gear selection system and power source problems and rust of some of internal parts which require greasing and repainting," said the UN.
The AG's report also questioned the planned purchase of another 75 APCs at Euros 22.4 million.
"Although the ministry has now explained through article 19.2 of the agreement that the contract lapsed because it was not fulfilled within four months, the explanation contradicts an earlier one which indicated that the contract was terminated due to lack of funds," it says.
Ouko says it is not clear how the contract could be awarded without funds and mutually wound without damages.
On the procurement 76 APCs at Sh4 billion, the report says the ministry has failed to explain why the initial purchases were done through restricted tendering as required by Section 133 of the Public Procurement and Disposal Act, 2005, for procurement of security items, while the subsequent purchases were done through direct procurement method.
The report says an audit done showed the supplier had earlier supplied 32 APCs which had numerous defects, a confirmation that it was more logical to subject the contract to a competitive bidding process in accordance with the procurement law.
So far, the supplier has been paid Sh3.9 billion in accordance with Article 6 on payment terms, but the contract did not protect the interest of taxpayers as Sh3.1 billion was paid based on the receipt of documents relating to delivery and not actual delivery of contracted materials, the report says.
It further indicates that the Ministry of Defence did not undertake a market survey as required by Section 8 (3) Z of the Public Procurement and Disposal Regulations, 2006.
The regulations state that a procuring entity shall carry out periodic market survey to inform the placing of orders or adjudication by the relevant award committee.
"Instead, the contracted firm, also interested in winning the contract, purports to have established market prices for APCs," says the report.
In view of the foregoing, it is clear that the firm dictated prices of APCs and usurped the role and responsibilities of the ministry's staff, it concludes.