Taxpayers have been spared losing Sh905 million in a contested tender deal involving the Kenya Ports Authority (KPA) and a private firm.
This is after the High Court ruled Wilfak Engineering Ltd cannot lay claim to the money after KPA suspended the tender for various works awarded to the firm for various works Mombasa port, citing lack of funds.
Wilfak had been awarded the tender for the removal of asbestos, reroofing and installing a water harvesting system and a solar back system at the port in July last year.
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The company, which was the lowest bidder at Sh1.2 billion, claimed to have accepted the terms of notification of the award and proceeded to secure an advanced payment of Sh243 million and performance bond of Sh121.7 million as guarantees for the works under the tender in October last year.
This was in line with the tender requirement that the company provides a performance security bond amounting to 10 per cent of the total contract price from a reputable company in the country.
The company had told the court it proceeded to secure land, machinery and employed workers to undertake the repair works at the port in anticipation of signing the contract.
When this was not forthcoming, Wilfak wrote to KPA seeking an explanation on the delay after which it received a response that the parastatal had suspended the project due to lack of funds and would commence when they become available.
This saw the company move to court seeking Sh905 million, being the amount for securing the advance payment guarantee and performance bond.
It also sought to stop KPA from rewarding the tender and compelling it to release the contract papers for signing and execution of the said works. KPA, however, opposed the application, saying the company had no case in the absence of a signed contract, adding that no enforceable legal contract was created.
It further argued that the Public Procurement and Disposal Act section 135(1) provides that the existence of a contract shall be confirmed through the signature of a contract document incorporating all agreements between the parties.
The agency further argued that the law provides that such a contract shall be signed by the accounting or authorised officer of the procuring entity and the successful tenderer in writing.