The High Court in Nairobi has stopped the purchase of an electronic Customs clearance software by the Kenya Revenue Authority in a landmark case experts say will guide public agencies in outsourcing contracts to third parties who fund projects.
In its July 28 ruling, the court ordered KRA and its procuring agent TradeMark East Africa not to install the $8.2 million Integrated Customs Management System (iCMS) until a dispute filed by the losing bidder, Webb Fontaine Group, is determined. The tender was won by Bulls Ms.
ICMS was to replace the Simba System, which cannot be interfaced with those of other revenue bodies in East Africa.
Kenya’s Public Procurement Oversight Authority (PPOA) recently dismissed an appeal by Webb Fontaine for review of the TMEA tendering on a technicality even though it said there were tendering flaws.
“Kenya’s public private partnership (PPP) Act arrangement is being challenged by the multiple laws on implementing key government projects funded and procured by private companies,” said PPOA board chairman Enock Kirungi.
He said that the board could not stop the procurement process, as that was beyond its mandate.
“The main issue was that KRA did not transfer the procurement mandate to TMEA as its procuring agent as required by the PPP Act.”
The PPP Act requires that for a private entity to conduct a tendering/procurement process for a public entity, the public institution has to transfer such a mandate to the private entity in agreement form.
“In this case, the board could not have questioned TMEA’s mandate if KRA entered into such an agreement with it,” noted Mr Kirungi.
Julius Musyoki, KRA Commissioner for Customs and Border Controls said the taxman would appeal the ruling.
Besides the PPP Act 2013, there are several other statutes that regulate PPPs including Public Procurement and Disposal Act, 2005, the Privatisation Act, 2005, the Constitution of Kenya 2010, the County Government Act, Government Contracts Act, Public Finance Management Act and the Transition to Devolved Governments Act.
“There is a need to review, rationalise and harmonise these laws in favour of a consolidated and comprehensive statute for PPP arrangements,” said Mr Kirungi.
A PPP is a partnership between the public sector and the private sector for the purpose of delivering a project or a service traditionally provided by the public sector. It is especially utilised in the transport, energy, roads, telecommunication and water sectors globally. The concept is relatively new in Kenya.
Kenya has been engaging the private sector to fill this funding gap and improve public services under the PPP framework.
The PPP framework is provided under the Public Private Partnerships Act, 2013. The Act applies to every contract that deals with financing, construction, operation, equipping and maintenance of a project. It also regulates the provision of public services delivered through a public private partnership.
However, the private party undertaking to perform a public function or provide a service on behalf of the contracting party, receives a benefit for performing a public function either in compensation from a public fund or fees/charges to consumers or both and is liable for risks arising from the performance of the function in the agreement.
The East African
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