Verdict: High Court overrules Energy Regulatory Commission on Sh270m fuel testing tender

NAIROBI, KENYA: The High Court has ordered the Energy Regulatory Commission (ERC) to reinstate a Sh270 million controversial tender for checking fuel adulteration and substandard gas awarded to a Swiss firm.

Judge John Mativo in an order dated September 22 ruled that the decision by the regulator to terminate the initial tender advertised on April 18 this year and call for a fresh tender on grounds of a change in technology was illegal.

Justice Mativo instead ordered ERC to conform with the recommendation of the evaluation committee, awarding the tender to SGS Kenya Ltd.

SGS Kenya, whose parent company is Swiss, had defeated SICPA Security Solutions SA and Intertek Testing Services (East Africa) Ltd after satisfying the tender committee but had the tenderwithdrawn on July 7.

Public Procurement Administrative Review Board had argued that before awarding the tender, it was made aware that there was actually existing technology for easily detecting the presence of jet A1 in motor fuels.

Tangible evidence

But SGS moved to court arguing that the grounds for changing the tender ought to have been accompanied by evidence or a technical report.

The firm further argued that the new tender documents changed critical provisions and introduced new issues to favour a specific bidder.

In his judgement, Justice Mativo quashed the ruling delivered by the Review Board in August and stopped ERC from continuing with issuing a fresh tender.

According to the judge, the board ought to have provided a technical report to demonstrate that there had indeed been such a technological change to warrant cancellation of the tender.

“The absence of such crucial evidence raises a valid question on the reasonableness or fairness of the decision. It is my view that there must be clear and cogent evidence in support of the technological change. The evidence must be substantial, real, and tangible and significant or large and having substance,” ruled Justice Mativo.

SGS had told the court that the removal of technical scores in the fresh tender had created doubts on the transparency of the process.

Further, allowable variations had been changed from 10 per cent to 25 per cent. There was also drastic reduction of the scoring for staffing.

This, SGS argued, was meant to allow bidders with less qualified staff to succeed and that the doubling of the scoring experience was meant to favour a specific bidder.

Further, the mandatory requirement for a bidder to own or have access to an accredited petroleum testing laboratory that was in the initial tender had been dropped, hence lowering the bar.

The Evaluation Committee had recommended the award to be granted to the SGS before the cancellation was done.

The judge said even though the law allows a procuring entity to cancel a tender prior to awarding it, the proper procedure to justify the decision must be given by providing evidence. “To me, that was the intention of the draftsman and the scheme and architecture of the Act so as to prevent or protect innocent bidders from being unfairly disadvantaged or deprived of the tender on flimsy grounds,” he said.

SGS is expected to continue supplying oil marketing companies with test kits to detect sale of unauthorised fuel among their retail stations as well as monitor the quality of fuel sold to motorists.