Court orders government to pay Sh40 million to contractor over cancelled KICC project
The court found that KICC was fully aware of the required timelines for executing the contract after awarding the tender but failed to update the contractor on the progress, leaving the firm in limbo.
The government has been ordered to compensate a contractor with Sh40 million after the cancellation of a multimillion-shilling deal for the construction of an exhibition centre at the Kenyatta International Convention Centre (KICC).
The High Court found that KICC unfairly handled the procurement process, leading to losses for Parbat Siyani Construction Ltd.
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High Court Judge Lawrence Mugambi ruled that the construction firm should be compensated after KICC dropped plans for the Sh799 million project, despite awarding the contract.
“In my very humble view, the Respondent’s (KICC) conduct in this whole process does not demonstrate transparency or accountability in the handling of the procurement,” Justice Mugambi said as quoted by Nation.
The court found that KICC was fully aware of the required timelines for executing the contract after awarding the tender but failed to update the contractor on the progress, leaving the firm in limbo.
The firm’s director, Mukesh Halai, told the court that the company first won the tender in 2018 after KICC announced it for bidding. The tender was later re-advertised, and the firm again emerged as the successful bidder, receiving a letter of award on January 31, 2019.
Following the award, the company was invited for contract negotiations and a design presentation on May 13, 2019. The contract was initially scheduled for signing on May 6, 2019, but was postponed for further negotiations.
On May 22, 2019, the company submitted a performance guarantee of Sh39.95 million from I&M Bank in line with Clause 3.28.4 of the request for proposal. However, shortly after, KICC cancelled the contract, citing “circumstances beyond our control.”
In response, KICC Chief Executive Officer James Mwaura argued that no formal contract had been signed and that a notification of award does not constitute a binding agreement. He further stated that the request for proposal required the contractor to submit the performance guarantee within 28 days of the notification of the award, but the company provided it outside the stipulated period.
Justice Mugambi, however, ruled that the government had employed deliberate delaying tactics, taking the company in circles until the tender validity period expired.
“It is my finding that the manner in which the respondent treated the Petitioner does not align with the principles of procurement as set out in Article 227 (1) as such conduct cannot be described as transparent or fair,” the judge said.
He further warned that public institutions must not be allowed to abuse their powers to the detriment of private entities.
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