Local firm gets share of Sh10b deal on back of new law

A new law empowering local contractors began to bite with H. Young Company wrestling a lucrative tender from China Wu Yi.

H. Young successfully invoked a new clause in the amended Public Procurement and Disposal of Assets Act that guarantees local companies 20 per cent of all tenders to win back a slice in the lucrative roads deal.

The firm challenged a Sh10 billion award to upgrade the Garsen-Witu-Lamu road to bitumen standards given to a Chinese company. The decision to overturn the award was that H Young is a local contractor while China Wu Yi is not.

China Wu Yi was in July awarded the tender for the project but the Public Procurement Administrative and Review Board (PPARB) later overturned the decision and instead issued it to H Young.

The precedent will be welcomed by local firms who for years have complained after losing Government contracts floated as international tenders to larger firms, especially in the construction industry, where China firms have been winning lucrative tenders.

Sections 86 (1) and 86 (2) of the amended procurement laws provide an incentive to local companies competing in any international tender, giving them a margin of preference of 20 per cent of the tender sum.

Armed with the new clause, H. Young, who had bid for the job in a joint venture with Gibb Africa Ltd appealed against the award given to China Wu Yi. The local firm argued that the Kenya National Highways Authority (KenHA) failed to consider the new requirements in its evaluation, hence denying them the benefit.

“The failure and disregard by the respondents to evaluate the tender in accordance with the provisions of the law is erroneous and in clear contravention of the laws,” argued H. Young, through their lawyers Wagiko Njoroge and Samuel Gitonga of Wagiko and Gitonga Advocates.

“Unless the said error is rectified, the integrity and legality of the entire tender evaluation process stands to be prejudiced,” argued the lawyers.

The review board concurred with the local company and annulled the award, in a ruling that will be warmly welcomed by local companies.
“The board finds and holds that the applicant’s joint venture is entitled to a preference of 20 per cent on its tender sum for the purposes of evaluation and award of the subject tender,” ruled the Review Board as it annulled and set aside the previous award that had been made by KenHA.