Inside IEBC’s Sh5.4b audit hole Auditor General wants explained

The Independent Electoral and Boundaries Commission (IEBC) failed to account for Sh5.41 billion in its 2015/16 expenditure, the latest Auditor General report shows.

In his 2015/16 report, Auditor General Edward Ouko has queried why the electoral agency irregularly changed the specifications relating to supply, delivery, installation, training, testing and commissioning of 30,000 Electronic Voter Identification Devices (EVIDs) at Sh1.6 billion.

Ouko says this irregularity resulted in the change of prices and value of goods and services. He also says value for money was not obtained and the equipment was not effectively used during the 2016 by-elections. The matter is in court.

Also questioned is the alteration of the contract on the procurement of Biometric Voter Registration (BVR) system vendor support and maintenance services, which the Auditor General says was inflated by Sh93 million.

Ouko cites irregular procurement, excess payments, interests awarded to suppliers for breach of contracts, inflation of general expenses and irregular payments contrary to various sections of the law.

The report indicates that the rates submitted by the vendor in separate contracts varied: with the 2012 contract, the vendor support was pegged at Sh31.7 million per annum.

IEBC later cancelled the tender of 2013 valued at Sh39.4 million per annum while the final contract for the vendor support was awarded at Sh93.1 million per annum.

According to the report, the examination of the tender and the minutes of the tender committee meeting held on June 11, 2014 reveals that the commission approved direct procurement of BVR system vendor support and maintenance services.

The tender committee, which was mandated to negotiate terms of reference, engaged the vendor and recommended award of the contract at Sh157.2 million.

The report further revealed that the tender committee minutes of the meeting held on October 7, 2015 indicate that the recommended award contract was cancelled due to lack of funds and that the commission wanted to revise the scope of service. The same tender was re-introduced before tender committee on October 8, 2015 under a separate tender number.

Altered contracts

Subsequently, the tender committee approved direct procurement for BVR vendor support and maintenance services while another tender processing committee appointed in November 2015 recommended that the deal be awarded to the same company at Sh513.5 million spread over a period of five years.

“Although the commission has explained that vendor support is important in realising the benefits of the huge investment in the BVR system, the basis upon which these rates were determined has not been explained,” reads the report.

“In view of the matters disclosed above, it is evident that the contract contents were altered contrary to the requirements of Article 227 (1) of the Constitution of Kenya on fairness, equity, transparency, competitiveness and cost effectiveness. Consequently, it is not possible to confirm the adequacy of the procurement procedures and controls in relation to this tender award.”

The report further faults IEBC for making procurement and payments of private legal services without the prior approval or concurrence of the Attorney General contrary to the Office of the Attorney Act and Article 156 of the Constitution.

In addition, the audit also established that letters of instructions were signed and owned by the director of legal services and not on behalf of the commission. According to the report, this was in contravention of the external communication as specified in the commission’s human resources and administration policies and procedures manual.

The report further adds that as at June 30, 2013 the commission had outstanding pending bills relating to legal fees totaling Sh1 billion. However, a sample test of 68 advocates that the commission instructed to represent them reveals that they have been paid Sh2.1 billion as part of the pending bills since June 30, 2013.

“The commission has not provided documentary evidence of cases represented and payments thereof to justify and support payments in excess of recorded pending bills. The commission paid Sh17.7 million to five law firms that were not pre-qualified and were single sourced contrary to the provisions of the Public Procurement and Disposal Act,” reads the report.

Delayed payments

Although the commission explains that there were cases of misfiling of documents, documentary evidence availed indicates that 30 law firms were paid Sh328 million during the year under review with no lawful contracts as required by Public Finance Management Act.

“It is not possible to confirm validity of Sh328 million paid to the law firms and in addition, the procurement of the services was not fair, equitable, transparent, competitive and cost effective as required under Article 227 (1) of the constitution,” reads part of the report.

As reported in the previous year, the commission paid Sh220.4 million for supply of 290 printers instead of 337 contracted and that the information availed in the year under review indicates that due to the delay in payment, the supplier sued the commission and an interest of Sh54.2 million was awarded for payment.

The commission procured air tickets for foreign travel totaling Sh9.2 million through direct procurement while two firms, which were not pre-qualified to supply air tickets, were paid Sh5.1million, the auditor says.

A company was irregularly paid Sh50.4 million for transportation of election materials. However, according to the auditor, the company had not been contracted and was registered later after the general election and the award of contract. In addition, the total number of vehicles purported to have been contracted were less than what was actually paid for.