High court nullifies KRA’s track-and-trace system tender over illegal, flawed procurement
According to the court, the tendering exercise was opaque from the very beginning, with glaring gaps in how the preferred supplier was chosen and how the contract was later operationalised.
The High Court has thrown out the entire procurement process for the multi-billion-shilling Excisable Goods Management System (EGMS), finding that the State flouted constitutional requirements in the way the tender was issued, awarded and executed.
The EGMS is a track-and-trace system implemented by the Kenya Revenue Authority (KRA) to manage and account for excisable goods. It requires these goods to be marked with a secure excise stamp (either paper or digital) to prevent tax evasion and counterfeiting by providing proof of duty payment and allowing for traceability from production to sale.
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Justice Bahati Mwamuye, in a detailed judgment, declared that the government's decision to procure and maintain the system was tainted by irregularities so grave that the contract could not stand.
The judge faulted the authorities for conducting a process that fell far short of the transparency, accountability and fairness demanded in public procurement.
According to the court, the tendering exercise was opaque from the very beginning, with glaring gaps in how the preferred supplier was chosen and how the contract was later operationalised.
Justice Mwamuye noted that the evidence presented painted a picture of a procurement riddled with procedural defects and missing safeguards, despite its far-reaching impact on all excisable goods in the country.
"The manner in which this procurement was handled does not meet constitutional standards and cannot be upheld," the judge ruled, emphasising that the State's actions were irrational and legally indefensible.
Consequently, the court annulled the government's approval of the system's supply, installation and maintenance.
Nonetheless, mindful of the possible disruption to revenue collection and industries dependent on the system, the judge temporarily suspended the decision for 30 days.
This grace period is intended to give the State and affected stakeholders time to prepare for the implications of the judgment.
The ruling deals a major blow to agencies that have relied on EGMS to track the production and flow of excisable goods.
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