Decision In Application No.61 Of 2024-Spenomatic Kenya Limited Vs.East African Portland Cement Plc

Key Facts

Issues

• The Board determined the necessary corrective actions, including annulling the termination notice, directing issuance of award letters, extending tender validity, and awarding costs to the Applicant due to the Respondent's non-compliance with legal and procedural obligations.
• The Board evaluated whether the termination of the subject tender by the Procuring Entity met both substantive and procedural requirements under Section 63 of the PPADA, including whether the termination was due to 'inadequate budgetary provision' and whether proper notifications and reports were issued as mandated by the Act.
• The Board assessed if the Procuring Entity adhered to its prior orders requiring completion of the procurement process and reporting on progress, noting the Respondent's termination decision as a contravention of explicit directives under Order (K) of the 24th April 2024 decision.

Holdings

• The Respondent failed to comply with the Board's orders dated 24th April 2024, which required completion of the procurement process and issuance of an award to the successful tenderer. This non-compliance led to the annulment of the termination notice and directions to proceed with the procurement.
• The Board ordered the cancellation of the tender termination notice dated 24th June 2024, mandated issuance of a notification of award to the Applicant within 7 days, extended the tender validity period for 30 days, and directed the Respondent to pay the Applicant's costs of Kshs. 250,000/-.
• The Board found that the procurement proceedings in the subject tender were not terminated in accordance with Section 63 of the Public Procurement and Asset Disposal Act (PPADA), 2015, thereby not ousting its jurisdiction. The termination was based on inadequate budgetary provision but lacked sufficient evidence of budgetary reallocation or compliance with procedural requirements under the Act.

Remedies

• The Respondent is ordered to complete the procurement process in favor of the Applicant taking into consideration the Board's findings and the provisions of the Public Procurement and Asset Disposal Act, the Constitution, and Regulations 2020.
• The Respondent is hereby ordered to issue the Applicant with a letter of Notification of Intention to Award RFP No. EAPCPLC/RFP/009/2023 for Design, Supply, Installation and Commissioning of a Grid tied Solar PV Plant within 7 days from the date hereof.
• The Procuring Entity is ordered to pay the Applicant costs of this Request for Review assessed at Kshs. 250,000/- (Kenya Shillings Two Hundred and Fifty Thousand) within 21 days of the date of this decision.
• The Board cancels and sets aside the Tender Termination Notice dated 24th June 2024 issued by the Respondent with respect to RFP No. EAPCPLC/RFP/009/2023 for Design, Supply, Installation and Commissioning of a Grid tied Solar PV Plant.
• The tender validity period of RFP No. EAPCPLC/RFP/009/2023 is extended for a further 30 days from 29th July 2024 to enable the Procuring Entity to complete the procurement process as directed.

Monetary Damages

Legal Principles

• The Board adopted a purposive interpretation of the Public Procurement and Asset Disposal Act, aligning its decisions with the constitutional principles of fairness, transparency, and accountability in public procurement under Article 227 of the Kenyan Constitution. This approach guided the Board to scrutinize the Respondent’s termination of the tender not merely on technicalities but on its adherence to the Act’s objectives, including ensuring that procurement processes remain open to review where statutory thresholds are not met.
• The Board applied judicial review principles to determine that the procurement termination by the Respondent was invalid as it failed to meet both substantive and procedural requirements under Section 63 of the Public Procurement and Asset Disposal Act. The Board emphasized the need to scrutinize whether statutory pre-conditions for termination were satisfied, referencing precedents like Republic v. Public Procurement Administrative Review Board & Another Ex parte Selex Sistemi Integrati (2008) eKLR and JR No. 142 of 2018. This reinforced the Board's jurisdiction to review procurement decisions and ensure compliance with constitutional and statutory mandates.
• The Board highlighted that the Respondent's termination of the tender without furnishing sufficient reasons or evidence violated the principles of natural justice. It referenced the importance of transparency and fairness in procurement, noting that the failure to communicate budget reallocations and justify the termination on statutory grounds rendered the decision amenable to review. The Board emphasized that public bodies must adhere to procedural fairness, as demonstrated in the Selex Sistemi Integrati case.

Precedent Name

• PPARB Application No. 5 of 2024 Seluk Investments Limited v Accounting Officer/Chief Officer Department of Urban Development County Government of Machakos & Another
• Republic v. Public Procurement and Administrative Review Board & Another ex parte Kenya Veterinary Vaccines Production Institute
• Republic v. Public Procurement Administrative Review Board & Another Ex parte Selex Sistemi Integrati
• PPARB Application No. 5 of 2021 Daniel Outlet Limited v Accounting Officer Numeric Machines Complex Limited
• Kamotho-vs-KCB (2003) 1 EA 108
• PPARB Application No. 29 of 2023 Craft Silicon Limited v Accounting Officer Kilifi County Government & Another
• PPARB Application No. 119 of 2020
• Civil Appeal No. 510 of 2022 Chief Executive Officer, Public Service Superannuation Fund Board of Trustees v CPF Financial Services Limited & Others

Cited Statute

• Public Procurement and Asset Disposal Act
• Public Finance Management Act
• Evidence Act
• Constitution of Kenya

Judge Name

• Ms. Alice Oeri
• Mr. Alexander Musau
• Dr. Susan Mambo
• Mr. Joshua Kiptoo

Passage Text

• 129. In the Rentco case, Justice Ndungu then proceeded to hold as follows '56. From the material presented before the Board, it is quite clear that the 2nd Respondent herein acted mala fides in the subject procurement process... Any conduct that tends to defeat a fair, equitable, transparent, competitive and cost effective public procurement process is an attempt to overthrow the constitutional order espoused in Article 227 (1) of the Constitution.'
• 125. In the circumstances, we find that the Respondent failed to comply with the orders of the Board issued on 24th April 2024 in the Notice of Motion application in Request for Review No. 94 of 2023 filed on 8th April 2024 and deem it fair and just to annul any action undertaken by the Respondent in contravention of the Board's orders with respect to the subject tender.
• 134. In exercise of the powers conferred upon it by Section 173 of the Public Procurement and Asset Disposal Act, No. 33 of 2015, the Board makes the following orders in the Request for Review dated 8th July 2024 and filed on even date: a) The Tender Termination Notice dated 24th June 2024 issued by the Respondent with respect to RFP No. EAPCPLC/RFP/009/2023 for Design, Supply, Installation and Commissioning of a Grid tied Solar PV Plant to tenderers including the Applicant herein be and is hereby cancelled and set aside. b) The Respondent is hereby ordered to issue the Applicant with a letter of Notification of Intention to Award RFP No. EAPCPLC/RFP/009/2023 for Design, Supply, Installation and Commissioning of a Grid tied Solar PV Plant within 7 days from the date hereof. c) Further to Order (b) above, the Respondent be and is hereby ordered 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 d) The tender validity period of RFP No. EAPCPLC/RFP/009/2023 for Design, Supply, Installation and Commissioning of a Grid tied Solar PV Plant be and is hereby extended for a further 30 days from 29th July 2024 to enable the Procuring Entity complete the procurement process as directed herein. e) In view of the Board's findings and orders above, we order that the Procuring Entity shall pay to the Applicant costs of this Request for Review assessed by the Board at Kshs. 250,000/- (Kenya Shillings Two Hundred and Fifty Thousand) only within 21 days of the date of this decision.