Chinese contractor face sanctions over KPC's confidential documents

Procurement Review Board ruling shows the firm that constructed the Thika superhighway could face criminal charges for accessing unauthorised documents. [PHOTO: JAMES MWANGI]

NAIROBI, KENYA: Chinese firm China Wu Yi is in trouble and could face criminal charges for accessing confidential documents belonging to the Kenya Pipeline Company (KPC).

The firm, which played a key role in the construction of the Thika superhighway, may face prosecution which would make it difficult for it to secure more State contracts.

This is after the Public Procurement Administrative Review Board, in a ruling early this week, questioned the manner in which the Chinese firm allegedly obtained confidential documents detailing how KPC awarded Lebanese firm, Zakhem International Construction Ltd the Sh43 billion contract to build the new pipeline between Mombasa and Nairobi.

EVALUATION RESULTS

China Wu Yi had presented the documents to the board as evidence for an application it lodged challenging KPC’s award of the contract to Zakhem, arguing that it was irregular.

“The exhibit contains information on the scores and evaluation results of all the other bidders. When challenged to declare how the applicant came to be in possession of the said document’s, counsel for the applicant merely asserted that the applicant was entitled to these documents under the provisions of section 45 of the Act,” said the board in its ruling.

“Section 44 of the Act requires any procuring entity or employee of the procuring entity not to disclose any confidential information save for the specific terms of disclosure… the Act requires a procuring entity to keep records for each procurement for at least six years after the resulting contract was entered into, or if not, contract results after the procurement proceedings were terminated.” “The Act makes it an offence to disclose confidential information and any person who contravenes the provisions of the said Act may face criminal sanctions.”

In addition to accessing confidential documents, the Public Procurement Administrative Review Board also alleged that the firm falsified information on its competence as it sought the pipeline contract to build the new pipeline. The Board notes that the Chinese contractor may have supplied KPC with misleading information in the bid documents, giving profile of employees that the board now says may not even exist. The firm also said it has experience in oil and gas, which the board doubts.

In the bid documents, China Wu Yi had given KPC the names of several Chinese nationals it said had 10 to 15 years’ experience in the oil and gas industry. It had also alluded to having been an oil and gas industry player.

“The applicant, however, admitted at the hearing of this Request for Review that it has never performed a single contract in the oil and gas industry.  The applicant did not therefore have any expertise in that filed and the curriculum vitae produced did not have any basis,” said the Review Board in its ruling.

“Section 31(5) of the Public Procurement and Disposal Act criminalises the production of false, inaccurate and or misleading information about qualification with the intention of influencing the outcome of Procurement.” KPC has been searching for a company to construct the pipeline and after an initial selection, it shortlisted seven firms that were told to send in their bids.

TECHNICAL EVALUATION

Zakhem had the highest technical and financial score of 95.5 per cent and was awarded the contract to build the new pipeline. It had bid to do the job for Sh42 billion ($484.5 million). China Wu Yi had made a financial bid of Sh39 billion ($456.8 billion), the lowest but was beaten at the technical evaluation level and got a combined technical and financial – score of 83.1 per cent.

China Wu Yi was dissatisfied with KPC’s decision and made an application to the Procurement Review Board where it argued that the successful bidder (Zakhem) did not meet some of the requirements set out by KPC at the beginning of the tender process. It also noted that using a formula provided by KPC, it should have had a technical and financial score of 96.6 per cent and hence the overall winner. KPC has already procured the services of Chinese firm Shengli Engineering that will oversee the construction that is set for completion 2016.

The Board has now cleared KPC to go ahead with the project. KPC yesterday signed the contract with Zakhem International for the construction of the 20 inch multi-product oil pipeline from Mombasa to Nairobi at a cost of Sh43 billion.