Energy and Petroleum Regulatory Authority (Epra) is on the spot over irregular procurement of fuel marking, testing and monitoring services worth Ksh2.4 billion, a new report shows.
The report from Auditor-General Nancy Gathungu states that the entity awarded the contract to a sole bidder at a cost of Ksh2.4 billion which was higher than what had initially been quoted by two firms who had won the tender and quoted Ksh694 million.
The two firms which had initially met the set criteria were recommended for award being the lowest bidders in both technical and financial at a total price Ksh694 million.
However, their contracts were later terminated despite a professional opinion being issued by the Head of Procurement on December 20, 2021 recommending the award of the tender and the Director General approving the same three days later.
Procurement process
“Further, review of the procurement process leading to award of contract to the sole bidder revealed the following anomalies. That the professional opinion was approved on behalf of the Director General on 29 June, 2022. However, no documents were provided to indicate that the approving officer had delegated authority to the Accounting Officer,” the Auditor’s report reads in part.
It adds: “In the circumstances, validity of the tender award, contracting of the service provider could not be confirmed. In addition, the value for money for the services may not be realised.”
The report raises concerns that despite the tender being approved, it was later terminated on December 28 2021, yet the management did not provide a report to Public Procurement and Regulatory Authority (PPRA) indicating reasons for termination in line with Section 63(2) of the Public Procurement and Disposal Act, 2015.
In addition, the report notes that a letter from PPRA dated December 6, 2021 emerged directing the Management to rescind the procurement process in favor of a local service provider as well as seek authorization to use specifically permitted procurement method for the service provider.
Although the Management sought and obtained the approval from the National Treasury on May 9, 2022, and a new tender was issued, the report notes that no justification was provided to indicate that the request fulfilled the conditions listed in Regulation 107(1) of the Public Procurement and Asset Disposal Regulations 2020, which require the method to applied in instances of public interest or interest of National Security.
Reads the report: “The contract of the previous service provider expired on 31 December, 2021 and a three months extension was granted. However, the new provider was awarded a contract on 1 July, 2022. It was not clear how the services were provided in the remaining three months before a new contract was issued.”
The report raises concerns that arguments by the management that the new bidder was the only company with capacity to implement the intended Information Technology (IT) system, were not true as earlier successful procurement processes disproved the same.
According to the report the IT system component was introduced after the evaluation had been concluded, the award recommendation made by the Evaluation Committee, and the professional opinion submitted to the Accounting Officer as it was not part of the initial tender requirements.
Availability of budget
Further, the report notes that no evidence was provided to indicate that the system had been implemented as at the time of conclusion of the audit in March, 2024, which was over nine months later.
“The condition for approval of specially permitted procurement was availability of budget. However, management did not demonstrate how additional cost of Kshs1,661,385,718 (USD 11,829,019) under the new contract was to be funded since it had not been factored in the original budget,” reads the report.
