Termination of Procurement Proceedings in Kenya

Termination of Procurement Proceedings in Kenya

Procedure for termination of tender proceedings

Public procurement has a constitutional underpinning in Article 227 and requires that all processes must be lawful and transparent, including the right to sufficient information and reason for administrative decisions by an administrative body.

The Public Procurement and Asset Disposal Act under section 63 (1) (a) provides that an accounting officer of a procuring entity may terminate or cancel procurement or asset disposal proceedings before notification of tender award, without entering into a contract on the following grounds:

  1. the subject procurement has been overtaken by the operation of law; or substantial technological change;
  2. inadequate budgetary provision;
  3. no tender was received;
  4. there is evidence that the prices of the bids are above market prices;
  5. material governance issues have been detected;
  6. all evaluated tenders are non-responsive;
  7. force majeure;
  8. civil commotion, hostilities or an act of war; or
  9. upon receiving subsequent evidence of engagement in fraudulent or corrupt practices by the tenderer.

A notice of the termination must be given to all persons who submitted tenders within 14 days of termination and must contain the reason for termination.

Additionally, sections 63(2), (3) and (4) of the Act provide that a written report of the termination must be given to the Public Procurement Regulatory Authority on the termination within 14 days.

In addition, the procurement process must strictly conform to the constitutional dictates of transparency, openness, accountability, fairness and generally, the rule of law and such rights cannot be narrowly construed. The public body terminating the procurement bears the onus of establishing that the termination meets all these constitutional dictates.

The mere recitation of the statutory language for termination is not enough to establish the grounds or sufficient reasons. This was the position of the court in Republic v Public Procurement Administrative Review Board Exparte Nairobi City & Sewerage Company; Webtribe Limited t/a Jambo pay Limited (Interested Party) [2019] eKLR.

In this regard, there are two ways to seek redress for unlawful termination of proceedings under the Act:

  1. Review of the Termination by the Public Procurement Administrative Review Board

The Public Procurement Administrative Review Board (“Board”) is seized with the power to review, hear and determine tendering and asset disposal disputes.

The PPAD Act provides that a tenderer, who suffered loss or damage due to the breach by a procuring entity may seek administrative review with the Board within fourteen days of the date of occurrence of the alleged breach.

However, Section 167 (4) (b) provides that matters relating to the termination under section 63 (1)(a) are not subject to the review and therefore the jurisdiction of the board is limited.

Notwithstanding, courts have pronounced themselves on the matter of jurisdiction of the board.

In Republic v Public Procurement & Administrative Review Board & 2 others Ex parte Applicant Dar-Yuksel-Ama (A Consortium of Dar-Al-Handasah In Joint Venture With Yukelproje A.S & AMA Consulting Engineers Ltd and Korea Express Corporation (KEC) Korea Consultants International Company Limited (KIC) & Apec Consortium Limited & 2 others (Interested Parties) [2022] eKLR, the court held that section 63 of the Act, if left unchecked, is prone to abuse by rogue accounting officers or procurement entities leading to erosion of the long fought for  ethos of accountability in public procurement envisaged under Article 227 of the constitution.

Where it is disputed whether the termination was proper, the Board must rise to the occasion and resolve the question within its mandate under Section 167 of the Act. Anything to the contrary would be a carte blanche to procuring entities to seek refuge in section 63 even when not deservedly so.”

In a nutshell, based on practice, the decision of a procuring entity to terminate the procurement process can be challenged before the Board.  The procuring entity is under a duty to place sufficient reasons and evidence before the Board to justify and support the termination of the procurement process under challenge.

  1. b) Instituting Judicial Review Proceedings

Section 175 of the Act provides for the right to judicial review for parties aggrieved by a decision of the Review Board in the High Court within fourteen days from the date of the Review Board’s decision.

This option can be explored in the event that the jurisdiction of the review board is ousted by didn’t of section 167 of the Act.

Notwithstanding the above, the high court can be used as a forum of first instance without instituting a review by the board. There is an inherent right of audience for constitutional breaches by administrative bodies before the High Court.

Conclusion

Termination of procurement proceedings in Kenya must comply with the values of transparency, fairness, and accountability.

The onus is on the procuring entity to justify the termination with sufficient reasons and evidence. Any disputes regarding the propriety of the termination must be resolved within the legal framework established to uphold the principles of accountability and fairness in public procurement.

Written by:Ndinda Munyaka

Leave a Reply

Your email address will not be published. Required fields are marked *