The East African Portland Cement (EAPC) has been ordered to hand a Sh573 million solar generation contract to a company it had denied since last year, forcing the Public Procurement Administrative Review Board (PPARB) to supervise the process.
The order to award Spenomatic Kenya Ltd the bid followed at least four legal battles before the board and the High Court, as the cement maker sought to award the tender to Central Electricals International Ltd.
In September last year, EAPC awarded the contract to Central Electricals, sparking an objection from Spenomatic which filed a request for review before the PPARB on account that it had been unfairly locked out.
The board ordered EAPC to re-evaluate the tender and the company still awarded it to Central Electricals, causing Spenomatic to return to the PPARB on November 10, 2023.
The case has been before the PPARB three times and once before the High Court, and the board decided to supervise the tender process starting March this year.
“The board took note of the fact that this subject tender had come before it severally and deemed it necessary to supervise the procurement process in the subject tender and ordered the respondent (EAPC) to report to it on the progress of evaluation of the subject tender including issuance of an award to the successful tenderer,” the PPARB notes in the decision released this month.
The solar generation contract is key for the EAPC to cut down on power costs. After the board started supervising the bid, Spenomatic emerged the winner but EAPC, in a surprising twist, attempted to terminate the tender on account of having used funds budgeted for it on plant upgrade.
Spenomatic had scored 88.76 percent at the technical stage and EAPC’s evaluation committee recommended award to it, at Sh572.79 million.
It was at this stage that EAPC’s acting head of supply chain, Camilla Sielei, recommended termination of the tender, on the basis of inadequate budget and bidders were informed of the cancellation on June 24.
“Initially this procurement was placed under plant upgrade budget in the financial year 2023-24 procurement plan. The plant upgrade budget was utilized in the plant upgrade shutdown of March/April 2024.
Consequently, the secretariat recommends termination of the procurement proceedings in line with section 63(1) of the PP&ADA, 2015 due to inadequate budgetary provision,” Ms Sielei said.
Spenomatic returned to the PPARB terming EAPC’s claim of lack of budget “a hoax”.
Defending itself before the Board, the EAPC admitted that Spenomatic deserved to be awarded the tender, but there were no funds as the budget had been utilized for plant upgrade shutdown in March and April.
“When asked by the Board to expound on when the Respondent realized that the budget was not sufficient to sustain further contract, Mr. Muchiri (EAPC’s advocate) submitted that according to the Respondent (EAPC), the plant upgrade shutdown was around April and the same consumed a lot of funds and without a budget for the subject tender, a notification of award letter cannot be issued,” the PPARB notes.
The Board refuses to take this explanation, noting that after starting to supervise the tender process, EAPC on April 8 requested for an extension of the tender period to the end of May, and at no time did the company indicate to have used the money meant for the contract.
“The Respondent informed the Board that it was at an advanced stage in the procurement process and what was remaining was for the Evaluation Committee to conduct financial evaluation coupled with due diligence so as to proceed and issue an award in the subject tender to the successful bidder,” the Board notes.
“In our considered view, if a plant upgrade shutdown was carried out in March/April 2024 as alleged by the respondent herein (EAPC), then the respondent ought to have brought this to the Board’s attention as of March/April and sough for different orders in its Notice of Motion Application of 8th April 2024,” it adds.
The PPARB notes that on May 8, 2024, EAPC told it that it would award the tender by May 20, but in a surprise, move terminated it on May 24, on account of lack of budget to implement it.
“We hereby deem it just and fair to order the respondent (EAPC) to issue the applicant (Spenomatic) with an appropriate letter of notification of award of the subject tender within 7 days from the date hereof and to complete the procurement process in favour of the Applicant taking into consideration the Board’s findings herein and the provisions of the Act, the Constitution and Regulations 2020,” the Board ordered in the decision dated July 29.
The PPARB nullified EAPC’s termination of the tender process and ordered the company to pay Sh250,000 costs to Spenomatic within 21 days.
