Public
procurements and disposals in Kenya are governed principally by Public Procurement
and Disposals Act, Chapter 412C, of the Laws of Kenya.
In
view of the fact that parties involved in procurement process may be aggrieved
by the manner of conduct if the process, the law permits any of the party to
ventilate any grievance arising from a procurement by way of request to the
Public Procurement Administrative Review Board (hereinafter called “the Board”).
The Public Procurement and Disposal Act mandate the Public Procurement
Administrative and Review Board to consider and determine disputes arising from
procurement proceedings. In discharge of its mandate, section 98 of the Public Procurement
and Disposal Act gives the Board the discretion to:
- annul a decision of the Procurement Entity;
- give directions on what it to be done or redone;
- substitute the decision of the procuring entity; or
- make an order of payment.
However,
there have been occasions where parties who appear before the Board decline to comply
with orders and directions of the Board, for instance, orders prohibiting or
directing the undertaking of an action related to procurement proceedings.
When,
for instance, the Board has directed a Procuring Entity to re-evaluate a tender
of the Applicant (complainant before the Board), the Procuring Entity cannot
purport to instead unilaterally decide to terminate the tender or even to
retender.
Should
a Procurement Entity disregard the express orders of the Review Board, such action by the Procuring
Entity violates the mandatory provisions of the Procurement Act and any
retender of the same project done by the Procuring Entity and subsequent
actions will be null and void.
So what are the remedies available to
cure such a breach?
It
is important to state at the outset that
after the Board’s ruling on any request
for review involving procurement proceedings, the Review Board becomes functus
officio and any aggrieved party can
only have recourse to the High Court either
on Appeal or through Judicial review.
Indeed
a cursory look at Section 100(1) of the
Act reveals that the decision of the Review Board is final
and can only be challenged in the High Court. This provision does not
therefore leave it open for any party to disobey the order of the Review Board
as it is only the High Court that can issue an order stopping the
implementation of the Board’s decision.
Does the filing of a Request for
Review inoperationalize section 36 of the Act?
Section
36 of the Public Procurement and Disposal Act does provide that a
Procuring Entity may terminate the procurement proceedings at any time without
entering into a contract. The question that begs an answer is: beyond
what point can’t a procurement entity decide to terminate the procumbent
proceedings? A logical interpretation would indicate that the option of termination is
only available to the procurement entity when no review regarding the
procurement has been filed before the Review Board.
This
position is applicable in circumstances where the procurement proceedings have
not been completed and a final successful bidder selected by the Procuring Entity.
Its import may include, for example, where there are errors in the procuring
process that the Procuring Entity needs to correct to bring the procurement
proceedings within the required needs of the Procuring Entity or correct an
illegality in the process before the procurement process is finalized.
It
is worth noting that once the tender process has reached the Public Procurement
Review and Administrative Board, parties are expected to abide by the orders
given by the Board. Accordingly, the filing of review against a decision taken by the
procurement entity automatically ousts the operation of section 36(1) of the
Procurement Act, and a procuring entity cannot purport to terminate the
procurement (including a review before the Board) by invoking the provisions of
Section 36 of the Act.
So
when should the termination occur?
According
to section 93(2) of the Act, whereas the Board has power to hear and determine
the administrative reviews filed before
it by a Party, such powers cannot be exercised where a Procuring Entity has terminated
the proceedings under section 36 of the Act. Essentially therefore, the Board’s
decision cannot be obtained where the proceedings were terminated earlier by the
Procuring Entity.
What
happens after the Board’s hearing?
As
indicated hereinabove, the powers of the Review Board are clearly set out in section
98 of the Act. Where the Board nullifies an award of a tender and order for
re-evaluation, an applicant would be entitled to participate in the financial
evaluation.
The
object of the Procurement Act is to ensure that public bodies procure goods and
services in an open and transparent manner.
These entities are therefore supposed to adhere to the principles set in
the Act.
The
objectives of the Act are contained in Section 2 and enumerated thus:
1. to maximize economy and efficiency;
2. to promote competition and ensure
that competitors are treated fairly;
3. to promote the integrity and
fairness of those procedures;
4. to increase transparency and
accountability in those procedures;
5. to increase public confidence in
those procedures; and
6. to facilitate the promotion of local
industry and economic development.
Accordingly, all the participants in
procurement proceedings are expected to promote these principles.
When a Procuring Entity therefore
unilaterally decides to, for instance, re-tender instead of re-evaluating
tenders as per the direction of the Board, it breaches these principles.
This is because:
a) firstly, re-tendering would not
promote the integrity and fairness of the process as the Board has already
ordered a re-evaluation; and
b) secondly, it would be costly and
this would be tantamount to misuse of public funds.
c) thirdly and most crucially, it would
not promote completion. This comes about in the sense that should there be a
re-tendering, a party who challenged the initial award and thus occasioned the
Procuring Entity to be ordered to re-evaluate is likely to be treated unfairly
or prejudiced against.
Moreover, the process of retendering
would highly prejudice the bidder whose bid ought to be admitted for
re-evaluation. This flies in the face of the cardinal principle of legitimate
expectation.
Indeed, anybody aggrieved by the
decisions of the Review Board in these proceedings ought to challenge that
decision in the High Court as per the provisions of section 100(3) of the
Procurement Act.
What
are the duties of the Procuring Entity upon order of re-evaluation?
Under section 98 of the Act, the
Review Board may order a re-evaluation of a tender by the Procuring Entity. Once
the Procuring Entity has been ordered to re-evaluate a bidder, it has to
strictly abide by the order of the Board and any act that it does contrary to the
order will be null and void as per the clear provisions of section 100(3) of the
Procurement Act.
At this point, therefore, actions
such as retendering and any purported termination under section 36 are null and void.
In fact, the Procuring Entity at
this stage cannot legally enter into another procurement process relating to
the same supply without first executing the order of the Board.
Section 45 of the Act expects the Procuring
Entity to keep all the materials related to tender process for up to 6 years
after the resultant contract has been entered into. It is therefore
unfathomable that the Procurement Entity could argue that it is unable to
implement the Board’s order because it lacks the tender documents needed for
re-evaluation!
Tender security
Tender security should also not be
released where a Procurement Entity has been ordered to re-evaluate the tender.
Therefore, the provisions of section 57
of the Act cannot be invoked by a Procuring Entity at the stage of complying
with a Court Order.
As the law stand today, any attempt
by the Procurement Entity to terminate procurement and to retender, where the
Board has ordered for a re-evaluation, would be unfair, invalid, and null and
void and a gross abuse of office.
What
are the available
remedies
Where a Procuring Entity Declines to follow the Order of the Review Board?
The Public Procurement Administrative
and Review Board is the body empowered to consider reviews that relate the
procurement undertaken by public institutions. These institutions are therefore
under an obligation to ensure that they follow the provisions of the Procurement
Act and to generally ensure the interest of the public are protected and the
objects of the Act (as contained in Section 2 of the Act) in these proceedings
are realized.
Moreover, Bidders have legitimate
expectation that procuring entities will, in the public interest and in the spirit
of the objectives of the Act, faithfully follow the directives of the Board
issued pursuant to section 98 of the Public Procurement and Disposal Act.
Failure by a public entity to act in
accordance with the Board’s decision would therefore attract judicial review
remedies such as prohibition, mandamus and or certiorari.
It
is therefore our advice that a party who successfully appealed against an
awarded of a tender could move the High Court under Judicial review and seeks
orders of mandamus and prohibition.
The mandamus orders will be to
compel a Procuring entity to implement the order and direction of the Review
Board. By so doing the procuring entity will have to, for instance, re-evaluate
the tender, if that is the order of the Board.
According to Admistrative Law 8th
Edition HWR & C.F FORSYTH page 604-5
“ the
commonest employment of mandamus is as a weapon in the hands of the ordinary citizen, when a public
authority fails to do its duty by him…mandamus deals with the wrongful inaction...
Disobedience to a mandamus is a
contempt of court, punishable by fine or imprisonment. A mandamus is therefore very
like a mandatory injunction: both are commands from the Court that some legal duty
be performed. But the two remedies have different spheres.
The injunction is an equitable remedy,
and it is rare to find mandatory injunctions outside private law. Mandamus is a
common law remedy, based on royal authority, which is used only in public law”
An order of prohibition would prohibit
the Procuring Entity from, for instance, re-tendering, and thereby preventing
the invitation of other bidders to participate in a fresh tender. In Administrative
Law, prohibition prevents a public body from proceeding in any matter outside their
jurisdiction. An aggrieved party in a procurement process can therefore
consider Judicial Review as way of addressing this issue.
CONCLUSION
We trust that the above legal advice
will be useful to you in your decisions regarding public procurement. However,
should you have any further queries regarding public procurement law, practice
and related issues in Kenya, please do not hesitate to contact us at ceo@stralexgroup.co.ke
for clarification. You may also call us on + 254 715 310 677.
Yours
faithfully,
For: Strategic Legal Solutions Group
LLP
Patrick, Teddy & Partners
Advocates – a participating Law Firm in the SLS Group
of consultancies.
