Firms in trouble with KPA over multi billion shillings tender

Operations at the Kenya ports Authority Port in Mombasa on May 9, 2018 ongoing. [Maarufu Mohamed/Standard]

The High Court yesterday declined to reinstate over 106 contractors whose tenders were cancelled by the Kenya Ports Authority (KPA) over alleged bid-rigging and insider trading.

Justice Njoki Mwangi declined to issue temporary orders to stop KPA from awarding tenders to companies that were prequalified six years ago awaiting the new tendering process.

 "I decline to certify the application as urgent because the dispute herein arises from pre-qualification of tenders and not a specific tender awarded to the applicants," said Justice Njoki.

The judge gave these orders after the 106 companies filed an application under certificate of urgency, through lawyer Gideon Ragira, seeking orders to stop KPA from cancelling their tenders for the pre-qualification for building works in the port.

Last April 30, KPA Procurement and Supplies Manager Tony Nyamancha wrote a letter cancelling tenders of the companies which had pre-qualified for the jobs running to billions of shilling.

However the companies, angered by KPA's decision, yesterday rushed to the court to save their jobs but got a rude shock after the judge refused to give any order.

The judge instead ordered them to go to the Registry and get a hearing date for their application in the normal process, giving KPA leeway to proceed with placing a fresh advertisement for the pre-qualification exercise.

Melina Forwarders ,others and Sally Maks Enterprise  said they wanted the court to stop  KPA management from  issuing tenders to companies which were pre-qualified  tenders no KPA/036/2014-2015 2017/2018 biennial contract for building works.

They argued that awarding tenders to the old companies which were prequalified from 2013 and were extended to 2018 was unfair to them as they have been waiting for such opportunities which have not been forth coming.

Melina Forwarders Company Director Peninah Musila says KPA has no authority to cancel the applicants' tenders without any valid reason.

"I am one of the applicants and director of Melina Forwarders having the authority to swear this affidavit" says Musila.

Musila who has attached the names of companies KPA has canceled their tenders for the prequalification of civil works wants they be given permanent orders stopping cancellation until the court determines the suit in question.

"KPA's intention is to unfairly deny us jobs in the port and yet we have already qualified for the jobs," says Musila.

Meanwhile, The Standard can today exclusively reveal the firms that were de-listed by the KPA management.

Among companies listed in the case are; Essry Enterprise, Sibea Holdings Company, Samnix Enterprises, Yasimin Rangers, Marble Young, Haliki enterprise, Miradi Enterprise, Seaway logistics, Auto Bikes Enterprises, Kizungu Enterprise, Heros Company and Limitless trading.

KPA claims that some of the firms rigged the tendering process for the lucrative building works to position themselves for contracts worth billions of shillings set aside by the parastatal.

Letters terminating the procurement proceedings have been sent to all the 106 firms that had been prequalified for tender number-KPA/053/2017-18/CE biennial contract. All the bids were returned to these firms unopened in short letters sent to all of them which read in part:

 "Pursuant to Section (1) (e) of the Public Procurement and Asset Disposal Act 2015 you are hereby informed that the procurement proceedings have been terminated.

 "Attached herewith, kindly find your unopened financial bids for your records."

 An audit report by the KPA dated April 20 this year exposes these firms and documents what it claims to be anomalies in the bidding process leading to the cancellation of the entire bidding process.

 These firms are M/s Phelma Enterprises, M/s Vinyard Merchants & General Suppliers,Amsu Communication, Seedcol Maritime Services, Kasidula company, Reslink Agencies and Dafrik company.

 Others are Hapakul Investment and Dennim Enterprises which are accused of flouting tender mandatory requirement which allowed a tenderer to submit only one bid.

"From the analysis carried out of the 50 sampled firms, their documentation indicated a high inclination of relationship and similar ownership between the bidders that participated in the tender" says the report

 The 106 companies in question were pre-qualified for the year 2017/18 fiscal year after a grueling exercise.

 Out of 500 bidders only 106 companies which were pre-qualified had their tenders revoked on claims they had rigged the tendering process.

 The report claims there was an aspect of bid rigging as was evident in the tender because associated firms competed against themselves.

 "This in effect implies that the aspect of bid-rigging is evident in the tender as associated firms competed against themselves," says the report.

The report says action by bidders leading to bid rigging through submission of more than one tender by one bidder either by association or a joint venture was illegal.

 But the affected firms dismiss the assertion by KPA that they flouted the procurement rules saying that there was no law that bars them to present more than one firm or KPA relatives to bid for the jobs.

 The Standard established that the two companies in question share company secretariat and the principle banker as indicated in the audit report presented which has same orientation in the presentation.

They share postal address and location as evidenced in the PIN application and single business permit, log book number 20070607854 for motor vehicle number KAW 994X, cash sale receipt No 000986 presented as evidence of ownership of powermax-XP vibrator.

 The other companies in the list are African Memsap Technology and Ngunah Enterprise which has shared same accountant auditors as indicated in the audited report.

 It was established that the two companies have the same foreman bearing the same certificate number 884452 showing they are owned by one person against the mandatory requirement of only one bidder.

 Others are Ndamboi Agencies and Hamothamark Enterprise which have identical organisation structure. Sharing same log book number, sharing same audit report, same site manager for both companies.

 During the analysis the investigation revealed that seven companies had similar characteristics in their documentation.

 The report says Phelma Enterprise, Vineyard Merchants and General Suplliers, Amu Communication, Seedcol Maritime Services, Kasadula Company, Reslink Agencies and Dafrik company shows ownership of equipment presented bear the same number, dates and are from the same vendor.

 Among the documents which made KPA believe that these seven companies are owned by one vendor include evidence of concrete mixer invoices no 124263 of October 29 2016 from Heavy and Plant Suppliers Company

 The identical shared documents which appear interchangeably in the firms' documents as indicated per company. Other identical documents are vibrator no 1512 of October 12 2016 from Meridan Equipment

 Other documents shared by the same companies include Hand Hel drillers receipt number 9846 for Sh 12,000 from New Edge Civil & Buildings

Also named in the list are Edebo International and Fonexa Company whose director appears in both companies which was against mandarory requirement that a bider was required to only submit one bid.

 The report says the companies are located at Mwabundu road in Mombasa and sharing one log book presented by both firms as evidence of transport equipment.

 The name of one person appears in both firms as site manager. Among the companies suspected to be owned by a relative of a procurement officer are Smartpo Digital Solutions and Homes &Houses Kenya Company.

 The report says although proving allegations of conflict of interest required more time like going to the bank there was evidence that some staff are engaged in the vice.

 Other companies directors are accused of multiple submission include Neema Mwambo Enterprise and Glarine Investment where the name of one person appears in both companies as director

 Jayamba Investment and Glarine shares tile cutter receipt no 87652 for sh.24, 600 from Coast Electrical Hardware and General Suppliers as evidence of ownership

 Meanwhile Jayamba Enterprise and Vineyard Merchants share the same PRR joining Machine receipts from Tausi Hardware as a proof of same ownership.

 The report says these two companies shared postal address and location leading to the cancellation their tenders are listed below.

 An official confirmed KPA acted on the report prepared by Acting Head of Ethics and Integrity Joseph Okhako that the authority   cancels the tender to allow KPA to initiate a fresh process after amending tender documents to instill integrity in process from the beginning to the end.

 "The authority considers the foregoing and if it deems fit, cancel the tender and initiate a fresh process after doing amendments to the tender document to instill integrity in the process from the beginning to the end" says the report.

 "The report recommends that firms suspected to be owned by KPA staff and associates be barred from participating in tendering process in the future,"says the report.

 No multiple submission should be allowed in future tenders as this would lead to bid –rigging which is not allowed in a competent public procurement process.

It also recommends that disciplinary measures be commenced against as part of measures geared towards dealing with issues of conflict of interest allegation in the authority.