Okiya Omtatah v Central Bank of Kenya & 7 others [2018] eKLR

Key Facts

Issues

• The petitioner alleged collusion between the CBK and De La Rue subsidiaries (4th/5th respondents) to rig the tender. The CBK denied these claims, asserting no evidence of collusion was provided.
• The court confirmed the petitioner's locus standi under Article 258(1) of the Constitution, emphasizing public interest in procurement compliance with constitutional principles.
• The petitioner argued the 2006 Regulations expired in 2016, rendering the 15% preference margin invalid. The CBK claimed the regulations remained valid under section 24 of the Interpretation Act and section 182(2) of PPADA.
• The court determined whether the petitioner's use of tender documents (CBK/64/2016-2017 and CBK/37/2017-2018) violated the Central Bank of Kenya's right to privacy under Article 31 of the Constitution and confidentiality provisions in the PPADA. Specific pages of the documents were expunged from the record.
• The court evaluated if the CBK improperly allowed subcontracting without formal approval. The CBK claimed consent was granted (17th November 2017), while the petitioner argued no valid approval existed.
• The court assessed the legality of applying the PPADA to a procurement process that commenced in 2014 under the 2005 Act, including transitional provisions in the PPADA and Treasury Circular No. 02/2016. The CBK argued the 2015 Act applied, while the petitioner claimed the 2005 Act was the correct framework.
• The petitioner contended the process lacked transparency due to midstream preference criteria and preferential treatment. The CBK maintained the process followed statutory and constitutional requirements.
• The court examined if the 15% preference margin for local production (under section 155(3)(a) of PPADA) was improperly applied. The petitioner argued De La Rue lacked local nexus, while the CBK claimed it qualified through Kenyan subsidiaries.

Holdings

• The court quashed the tender award and ordered the CBK to transparently re-evaluate all compliant tenderers' bids and award the tender strictly according to the law. This was necessitated by the CBK's failure to adhere to constitutional and statutory procurement requirements, including the misapplication of preference criteria and lack of transparency in the process.
• The court awarded the costs of the petition to the petitioner (Okiya Omtatah Okoiti) to be borne by the CBK, recognizing the petitioner's successful challenge to the flawed procurement process and the CBK's non-compliance with constitutional and statutory obligations.
• The court declared that the award of the tender by the Central Bank of Kenya (CBK) to De La Rue International Limited on 30th November 2017 for the Printing and Supply of New Design Kenya Currency Banknotes (Tender Reference No. CBK/37/2017-2018) was both unlawful and unconstitutional, rendering it invalid and null and void. The court found that the CBK applied the wrong legal framework (PPADA 2015 instead of the repealed 2005 Act) and granted an undeserved 15% preference margin to De La Rue International Limited, which violated Article 227(1) of the Constitution requiring fair, equitable, transparent, competitive, and cost-effective procurement.

Remedies

• The court awarded the costs of the petition to the petitioner, which are to be borne by the 1st respondent (Central Bank of Kenya), as the litigation was due to the CBK's improper procurement process.
• The court declared that the award on 30th November 2017 by the CBK to De La Rue International Limited of the Restricted Tender for Printing and Supply of New Design Kenya Currency Banknotes was both unlawful and unconstitutional, rendering it invalid and null.
• The court quashed the award on 30th November 2017 by the CBK to De La Rue International Limited of the Restricted Tender for Printing and Supply of New Design Kenya Currency Banknotes.
• The court ordered the 1st respondent (CBK) to transparently re-evaluate the bids of all compliant tenderers and to award the tender strictly according to the law.

Legal Principles

• The court emphasized that public procurement must comply with the Constitution and applicable laws, including the Public Procurement and Asset Disposal Act (PPADA). The CBK's failure to apply the correct statutory framework (repealed 2005 Act vs. PPADA) rendered its actions unlawful.
• The court addressed the admissibility of illegally obtained tender documents under Article 50(4) of the Constitution, distinguishing criminal proceedings from civil/constitutional cases. It also clarified the CBK's operational independence under Article 231(3) but stressed accountability to constitutional mandates.
• The court held that the CBK acted ultra vires by awarding the tender in violation of procurement laws and constitutional principles. The decision lacked transparency and fairness, breaching Article 227(1) of the Constitution.
• The petitioner was required to demonstrate that the CBK violated the Constitution. The court noted the petitioner's failure to prove conspiracy allegations, emphasizing the need for concrete evidence in such claims.
• The court acknowledged that certain issues (e.g., preference application, subcontracting) had been previously addressed by the Public Procurement Administrative Review Board (PPARB). However, it proceeded to adjudicate on the constitutional aspects not covered by the PPARB's jurisdiction.
• The court applied a higher standard of proof for conspiracy allegations, requiring precise evidentiary material to substantiate claims of collusion beyond mere statutory non-compliance.

Precedent Name

• Njonjo Mue and Another vs. Chairperson of Independent Electoral and Boundaries Commission and 3 Others
• Okiya Omtatah Okoiti vs. Attorney General and 3 others
• Republic vs. National Environment Tribunal and 2 Others ex-parte Athi Water Services Board
• Erick Okeyo vs. County Government of Kisumu and 2 others
• Timothy Otuya Afubwa and Another vs. County Government of Trans Nzoia and 3 others
• Vipul Kakad T/A Kavico Auto Spares and 328 Others vs. Kenya Bureau of Standards
• Kenya Pharmaceutical Distributors Association vs. Kenya Veterinary Board and 3 others
• Republic vs. Kenya National Examination Council, Miscellaneous Civil Application No. 328 of 2015
• PPRB vs. KRA Misc. Civil Application No. 540 of 2008
• Independent Electoral and Boundaries Commission (IEBC) vs. National Super Alliance (NASA) Kenya and 6 others

Cited Statute

• Statutory Instruments Act, 2013
• Constitution of Kenya, 2010
• Public Procurement and Asset Disposal Act, 2015
• Interpretation and General Provisions Act, Cap 2
• Central Bank of Kenya Act

Judge Name

• G V Odunga
• P Nyamweya

Passage Text

• 223. ... the subject procurement was to be guided by the provisions of the repealed Public Procurement and Disposal Act. ... the 1st Respondent applied the provisions of the PPADA which clearly was not the relevant law.
• 246. ... A declaration that The award on 30th November 2017 by the CBK to De La Rue International Limited ... was both unlawful and unconstitutional and, therefore, invalid, null and void.
• 244. ... the manner in which the 1st Respondent awarded the tender to the 3rd Respondent did not meet the constitutional threshold in Article 227 of the Constitution ... the 1st Respondent ended up granting to the 3rd Respondent an undeserved margin of preference. The 1st Respondent's decision was therefore not only unlawful but was also unfair, inequitable, lacked transparency and could not be said to have been competitive and cost effective.