[2017] KEHC 2140 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT AT NAIROBI

MISCELLANEOUS CIVIL APPLICATION NO. 551 OF 2017

IN THE MATTER OF AN APPLICATION FOR JUDICIAL REVIEW ORDERS OF CERTIORARI BY THE CONSORTIUM OF H.YOUNG & CO (E.A) LIMITED & YANTAI JEREH PETROLEUM EQUIPMENT AND TECHNOLOGIES COMPANY LIMITED

AND

IN THE MATTER OF ORDER 53 RULE 3 OF THE CIVIL PROCEDURE ACT

AND

IN THE MATTER OF CONSTITUTIONAL RIGHTS PURSUANT TO ARTICLES 20, 22, 23,27,47,48 AND 50 OF THE CONSTITUTION OF KENYA, 2010

AND

IN THE MATTER OF THE PUBLIC PROCUREMENT AND DISPOSAL ACT, SECTION 174 AND 175

BETWEEN

THE CONSORTIUM OF H.YOUNG & CO (E.A) LIMITED &

YANTAI JEREH PETROLEUM EQUIPMENT AND

TECHNOLOGIES COMPANY LIMITED….............................APPLICANT

VERSUS

THE PUBLIC PROCUREMENT ADMINISTRATIVE

REVIEW BOARD........................................................1ST RESPONDENT

THE CONSORTIUM OF SHANDONG KERUI

PETROLEUM EQUIPMENT COMPANY LIMITED &

TURBODEN s.r.l…………………..............................2ND RESPONDENT

AND

KENYA ELECTRICITY GENERATING CO.…..........INTERESTED PARTY

JUDGEMENT

Introduction

1. By a Motion on Notice dated 18th September, 2017, the ex parte applicant herein, The Consortium of H. Young & Co (E.A) Limited & Yantai Jereh Petroleum Equipment and Technologies Company Limited, seeks the following orders:

a. An order of Certiorari do issue to remove into the High Court for the purpose of its being quashed orders a, b, c, I, and d of the Ruling dated 22/8/2017 in Public Procurement Administrative Review Board Application No. 72 of 3rd August relating to Tender No. KGN-BDD-102016 for the supply of Engineering, Procurement Construction and Financing (EPC+F) of Modular Geothermal Power Plants Project at Olkaria whereby in annulled the award of Package 1 of the EPC+F Tender for Modular Geothermal Power Plant Project at Olkaria to the applicant herein and awarded it to the 2nd respondent

b. Costs and further incidents to this application be provided for.

c. Such further or other relief as this honourable court may deem just and expedient to grant.

Ex ParteApplicant’s Case

2. According to the applicant, on the 22nd day of August 2017, the 1st Respondent (hereinafter referred to as “the Board”) made a ruling in Public Procurement Administrative Review Board Application Number 72 of 3rd August 2017 relating to Tender No. KGN-BDD-10-2016 for the supply of Engineering, Procurement, Construction and Financing (EPC+F) of Modular Geothermal Power Plants Project at Olkaria(hereinafter referred to as “the Tender”) in which it ordered that the Interested Party herein Kenya Electricity Generating Company (hereinafter referred to as “the Company”) awards Package 1 of the EPC+F Tender for Modular Geothermal Power Plant to the consortium of Shangdong Kerui Petroleum & Turboden, the 2nd respondent herein, at the sum enumerated in the evaluation report and thereby annulled the award by the interested party to the applicant.

3. It was averred that the Board in so doing ordered the Company to disregard the recommendations arrived at as a result of the due diligence conducted to verify documents presented by the 2nd Respondent in support of its bid. In particular, the Company had sought to confirm the veracity of the Power of Attorney presented by the 2nd Respondent authorising the Kenyan representative of Shangdong Kerui to sign documents on behalf of ICBC Bank who were the financiers of both the Applicant and the 2nd Respondent herein.

4. According to the applicant, the need for the due diligence arose from the fact that the said financier had issued a Power of Attorney only to the 2nd Respondent and not the Applicant which was very strange that the same bank would follow different procedures in issuing documents in the same tender.

5. It was the applicant’s case that section 83 of the Public Procurement and Asset Disposal Act 2015(hereinafter referred to as “the Act”), authorises the Evaluation Committee after tender evaluation, but prior to the award of the tender to conduct due diligence and present the report in writing to confirm and verify the qualifications of the tenderer who submitted the lowest evaluated responsive tender to be awarded the contract. In this case however, the Board held that the due diligence conducted by the Company was not required given that the Company’s evaluation committee had waived the need for a Power of Attorney from all the tenderers after none save for the 2nd Respondent submitted one.

6. Based on legal advice, the applicant believed that the Board failed to appreciate that section 176(1) of the Act specifically prohibits any person from knowingly lying or misleading a person carrying out a duty or function or exercising a power under the Act. In view of the foregoing provision, it was incumbent upon the Company to verify the Power of Attorney presented to it by the 2nd Respondent having established that financial institutions generally provide letters of intent as a commitment and confirmation that the tender is duly issued. The applicant found it strange that the Board decided to turn a blind eye to the fact that the person who supposedly signed the Power of Attorney presented by the 2nd Respondent was not listed as the President or Chairman of ICBC Bank on its website as had been indicated in the submitted documents leading to only one conclusion that the documents were not authentic.

7. Based on legal advice it was the applicant’s belief that section 176(4) of the Act authorises the procuring entity to invalidate any contract already entered into or disqualify any person from entering into a contract for procurement if the said person contravenes the provisions of the Act including section 176(1) which prohibits presentation of fraudulent documents like the 2nd Respondent did. To the applicant, by annulling the award of Package 1 of the EPC+ F Tender for Modular Geothermal Power Plant Project at Olkaria to the Applicant herein and awarding it to the 2nd Respondent, the Board was not only condoning and encouraging an illegality, it was acting in a most unjust manner not in keeping with its mandate to among other things ensure that justice is served to all.

8. Based on similar advice the applicant believed that when they appeared before the Board, there was an expectation that they would be subjected to fair administrative action and that a tender which had been awarded to them would not be annulled in favour of another bidder on the strength of forged documents. It was revealed that the Applicant’s consortium constitutes a partnership between H. Young & CO (E.A) Ltd & Yantai Jereh Petroleum Equipment & Technologies Company Limited and that H. Young & Co. (E.A) Ltd is the majority shareholder in the consortium, holding 51% of the joint venture. H. Young & Co. (E.A) Ltd, it was averred is a local Company incorporated in the Republic of Kenya under Company Number C.2424 and that its shareholders H.Young Holding Limited, the majority shareholder with 12,447,917 shares (99. 6) and Waston Anderson Murigo who holds 52,083 shares (0. 4%). Additionally, the shareholders of H. Young Holdings Limited are Joseph Schwartzman and Hannah Schwartzman, who are also the Directors of H. Young & Co (E.A) Limited and are Citizens of the Republic of Kenya.

9. It was the applicant’s case that the margin of preference pursuant to section 86(1) as read together with section 86(2) of the Act should be applied in light of the fact that H. Young & Co. (E.A) Ltdis indeed a local company. Furthermore, during the submission of the tender document to the Company, discloser as to the shareholding ofH. Young & Co. (E.A) Ltdwas made, specifically highlighting that H. Young Holding Limited’s ultimate shareholders are Engineer Joseph Schwartzman and Hannah Schwartzman, who are both citizens of the Republic of Kenya. According to the applicant, Part XII of the Act provide the requirements for preferences and reservations. Specifically, section 155(3)(b) Provides that preferential procurement shall be given to firms where Kenyans are shareholders. Additionally, section 157(8)(b) provides for a prescribed margin of preference to be given for works, goods and services where a preference may be applied depending on the percentage of shareholding of the local on a graduating scale as prescribed.

10. It was the applicant’s contention that if the decision of the Board is not quashed, the applicant stood to be greatly prejudiced these proceedings. On the other hand the Respondents will suffer no prejudice should this Application for leave be allowed.

11. It was submitted on behalf of the applicant that section 83 of the Public Procurement and Asset Disposal Act 2015 authorises the Evaluation Committee after tender evaluation, but prior to the award of the tender to conduct due diligence and present the report in writing to confirm and verify the qualifications of the tenderer who submitted the lowest evaluated responsive tender to be awarded the contract. Section 176(1) of the said Act on the other hand specifically prohibits any person from knowingly lying or misleading a person carrying out a duty or function or exercising a power under the Act. Section 176(4) thereof authorises the procuring entity to invalidate any contract already entered into or disqualify any person from entering into a contract for procurement if the said person contravenes the provisions of the Act including section 176(1) which prohibits presentation of fraudulent documents like the 2nd Respondent did.

12. From the records of the proceedings before the Board and the impugned ruling, it is evident that based on the material before it, the Board had sufficient evidence before it to establish that;

i) Financial institutions do not, as a matter of practice, issue Powers of Attorney to third parties to act on its behalf. They only issue letters of intent.

ii) ICBC Bank who supposedly issued the Power of Attorney to the 2nd Respondent, confirmed the authenticity of the letters of intent issued to both the Applicant and the 2nd Respondent but failed to comment on the authenticity or otherwise of the Power of Attorney .

iii) The Company was within its mandate to conduct the due diligence under section 83 of the Act.

iv) Once the results of the due diligence confirmed that the 2nd Respondent had presented a forged document in support of its bid, the Applicant was obligated to invalidate any award to the 2nd Respondent in line with section 176(1) and (4) of the Act which is precisely what they did.

13. The Applicant directs the court to pages 49 to 54 of the impugned decision where the issue of the Power of Attorney is addressed. According to the applicant, a plain reading of the impugned decision a pages 49 to 54 reveals that the Board was informed that the financial institutions only issue Letters of intent and not Power of Attorney but it was evident that the Board either refused or was not willing to address its mind on the issue of the origin of the Power of Attorney presented by the 2nd Respondent in support of its bid. Instead the Board misdirected its mind to the fact that the Applicant did not have a Power of Attorney which was one of the requirements notwithstanding the fact that the reasons for not having one had been adequately addressed.

14. It was submitted that the Board seems to have totally misunderstood what necessitated the due diligence in the first place which was that the 2nd Respondent was the only one able to get a Power of Attorney notwithstanding the fact that financial institutions, and indeed ICBC Bank does not issue one to third parties. This would lead any inquiring mind to query the source of the Power of Attorney presented by the 2nd Respondent. That due diligence confirmed that the Power of Attorney did not originate from ICBC Bank leading to only one conclusion that the document was not authentic.

15. It was contended that both the Respondents also seemed to dwell at length on the fact that the confirmation that financial institutions do not issue Power of attorney to 3rd parties came from Stanbic Bank which is a separate and distinct entity from ICBC Bank who supposedly issued the same. However from the last paragraph of page 49 through to page 53 of the ruling by the Board it clearly showed that the confirmation of the Letters of intent issued by ICBC Bank to both the Applicant herein and the 2nd Respondent was done by Stanbic Bank in their capacity as the local subsidiary of ICBC Bank. Curiously, it was submitted, the confirmation by Stanbic Bank of the Letters of Intent is acceptable to the 1st and 2nd Respondents, but when the same Stanbic Bank confirms that ICBC Bank does not issue Power of Attorneys to third parties, then they become a separate and distinct entity without the authority to confirm the authenticity or otherwise of the disputed document. It was the applicant’s assertion that if the Company was at liberty to rely on the verification done by Stanbic Bank on documents originating from ICBC Bank, then they could not be selective on which ones to accept and which ones not to accept.

16. It was contended that the Board further failed to appreciate that the provisions of section 176(1) of the Act specifically prohibits any person from knowingly lying or misleading a person carrying out a duty or function or exercising a power under the Act. The same Act at subsection (4) section 176 authorises the procuring entity to invalidate any contract already entered into or disqualify any person from entering into a contract for procurement if the said person contravenes the provisions of the Act. It was however submitted that the Ruling of the Board had the effect of sanitising criminal acts of the 2nd Respondent whose actions strictly speaking should be the subject of investigations by The Ethics and Anti Corruption Commission or the Directorate of Criminal Investigations and if found culpable should be prosecuted.

17. It was the applicant’s contention that the Company directed itself well in carrying out the due diligence it did under section 83 of the Act which unearthed the criminal activities of the 2nd Respondent leading to the subsequent refusal to award the tender for Package 1 Tender No. KGN-BDD-10-2016 for the supply of Engineering, Procurement, Construction and Financing (EPC+F) of Modular Geothermal Power Plants Project at Olkaria and the Court was urged to quash the decision of the Board and to order that the award to the Applicant by the Company of both package 1 and 2 Tender No. KGN-BDD-10-2016 for the supply of Engineering, Procurement, Construction and Financing (EPC+F) of Modular Geothermal Power Plants Project at Olkaria be upheld.

18. It was further urged to order that The Ethics and Anti Corruption Commission or the Directorate of Criminal Investigations carry out investigations to establish the authenticity or otherwise of the Power of Attorney in contention and if anyone is found culpable should be prosecuted. The Applicant also prayed for costs of this application.

1st Respondent’s Case

19. The 1st Respondent, the Board, opposed the application.

20. According to the Board, on 22nd August, 2017, it made a ruling in Public Procurement Administrative Review Board application No. 72 of 2017 relating to Tender No. KGN-BDD-10-2016 for the supply of Engineering, Procurement, Construction and Financing (EPC+F) of Modular Geothermal Power Plants Projects at Olkaria. In making its decision, the board considered all documents of evidentiary value placed before it by the parties and the submissions of the parties on each of the issues raised in the request for review.

21. According to the Board, its decision was a decision made within its mandate, and the specific sections of the Public Procurement and Disposal Act 2015, on which the decision was pegged have been expressly pronounced in the board’s decision.

22. To the Board therefore, the applicant has not demonstrated in any way that the decision of the board was outside the scope of the law governing the board. Instead the applicant herein seeks to validate the process of review by the board as it seeks to quash not the decision of the board but specific orders emanating from the said decision. Therefore this affirms the validity of the process hence this application is not only mischievous, unfounded but without any merit in law and must be dismissed.

23. It was submitted that the applicant had not demonstrated that the Board took into account irrelevant consideration, or failed to accord the applicant a right to the heard in breach of Article 50 of the Constitution. To the contrary, the Board expressly considered all the documents and submissions filed by the applicant and all other parties to the review in arriving at its decision in upholding the principle of natural justice. Further, the applicant had not demonstrated by an iota of truth that the Board was unreasonable in arriving at its decision or that it was guilty of unreasonable exercise of power and irrationality in arriving at its decision. To the Board, its decision was grounded in law after review of all material conditions placed before it and importantly in line with its mandate to uphold public procurement process.

24. Accordingly, it was submitted that the applicant had not demonstrated that the Board in arriving at its decision was guilty of any illegality, impropriety of procedure and irrationality to warrant the variance of the order of the board.

25. The Board therefore asserted that this is an appeal disguised as a judicial review application since the grounds upon which this application is premised are grounds of appeal not judicial review. In its contention, the applicant’s application is therefore, made in bad faith, has no merit and is only calculated to discredit the credibility of the respondent’s mandate and function, while ultimately eroding the public’s confidence in procurement procedures and processes. The applicant, according to the Board is in effect trying to have a hearing on the merits of the Board’s decision on matters not pleaded and on matters that have no bearing to the suit and importantly on matters that do not touch on the principles grounded to entertain a judicial review process.

26. In support of its case the Board relied on Re Bivac International SA (Bureau Veritas) (2005) 2 EA 43, Pastoli vs. Kabale District Local Government Council and Others [2008] 2 EA 300, Republic vs. Kenya Revenue Authority Ex parte Yaya Towers Limited [2008] eKLR, Seventh Day Adventist Church (East Africa) Limited vs. Permanent Secretary, Ministry of Nairobi Metropolitan Development & another [2014] eKLR as well as Republic vs. Kenya Revenue Authority & another Ex-Parte Bear Africa (K) Limited where Majanja J. quoting with approval the decision of Githua J in Republic v Commissioner of Customs Services ex-parte Africa K-Link International Limited Nairobi HC Misc. JR No. 157 of 2012 [2012] eKLR.

27. The Board also relied on the Court of Appeal decision in Kenya Pipeline Company Limited vs. Hyosung Ebara Company Limited & 2 Others (2012) eKLR.

28. It was submitted that in order for an applicant to move the Court into giving orders on the ground that a tribunal has committed an error of law, the applicant must demonstrate that there is indeed a mistake that goes to the jurisdiction of the tribunal and that misinterpretation of the law is not sufficient to move a judicial review application. The Board submitted that this Application is an appeal disguised as a Judicial Review Application and should therefore not be entertained because there is a clear distinction between an appeal and judicial review proceedings. In Judicial review the court is only concerned with the fairness of the process under which the impugned decision or action was reached. Once a judicial review court gives a clean bill of health to the process, it must down its tools without considering the merits of the decision for to do so would amount to usurping the power of the body that was mandated by the law giver to make the decision. In this respect the Board relied on Municipal Council of Mombasa vs. Republic & Another (2002) eKLRand Republic vs. Kenya Power & Lighting Company Limited & Another [2013]e KLR where the learned Judge quoting a decision of the Court of Appeal stated:

“The Board considering all the arguments of the Applicant and made findings on each of these issues. The Board may have been wrong in its decision but this Court would be usurping the statutory function of the Board were it to substitute its own views for those of the Board.”

29. The Board therefore was of the view that the application does not raise any issue that warrants issuance of the order from the limited judicial review jurisdiction. To it, the applicant merely alleged grounds without any proof and based on Municipal Council of Mombasa vs. Republic & Another [2002] eKLR, Republic vs.Kenya Power & Lighting Company Limited & Another [2013]e KLR and Republic vs. Judicial Service Commission Ex-Parte Pareno [2004] KLR 203 at 219 submitted that the applicant had not demonstrated any breaches of the Law or procedure which would entitle this court to intervene in this matter and grant the orders sought. It had not been demonstrated that the Respondent is in breach of any statutory provision or that they acted in excess or without jurisdiction or breached rules of natural justice envisaged in a particular statute. Thus the application did not meet the basic tenets of judicial review application and should be dismissed with costs and the Respondent prayed so.

30. The Board thus prayed the application be dismissed with costs for lack of merit.

2nd Respondent’s Case

31. The application was similarly opposed by the 2nd Respondent.

32. According to them, after the Kengen made its decision as to who should be awarded respective packages i.e. Package 1 and Package 2 they requested the Public Procuring and Administrative Review Board to review the procuring entity’s decision. After considering the pleadings, submissions and evidence produced by all parties involved thereto, the Board directed Kengen to proceed with the procurement process herein based on the recommendations made prior to the due diligence exercise which was to award Package 1 of the EPC+F Tender for Modular Geothermal Power plant to the interested parties and Package 2 of the EPC+F Tender for Modular Geothermal Power plant to the Applicant.

33. Based on legal advice, the 2nd Respondent averred that judicial review is concerned with the decision making process and not the merits of the decision. However, emanating from our dissatisfaction by the decision of the Procuring Entity the Applicant has not displayed that the decision making process by the Board was in any way inconsistent and/or flawed to warrant issuance of the orders of judicial review it has sought since the Board exercised its powers and conducted the review suitably within the limits of the law.

34. It was contended by the 2nd Respondents that as per the provisions of section 173 of the Act, any candidate who claims to have suffered loss or damage due to the breach of a duty imposed on a Procuring Entity may seek administrative review in such manner as prescribed by the Act to the Board who has been vested with the jurisdiction vide section 167 thereof.

35. Just like the Board, the 2nd Respondents took the position that the Applicant herein from the prayers it seeks has indeed validated the process of Review by the Board as it seeks to quash not the decision of the Board but specific orders emanating from the said decision which is a total endorsement of the process as it means, the Board indeed conducted its role within the law. If the Board did not conduct itself within the law, the Applicant would have sought to quash the decision and not the orders emanating therefrom. Therefor this affirms the validity of the process and that this application is not only mischievous, unfounded but without any merit in law and must be dismissed.

36. It was averred that it was not in contention that the Company advertised a tender which consisted of two packages namely Package 1 and Package 2, which packages were to be evaluated and awarded separately. By virtue of Clause 20 of the Tender Data Sheet of the tender document the Procuring Entity required bidders to inter alia submit a technical envelope that was to encompass mandatory documents. The 2nd Respondents met all the requirements under both packages and not only that, but also, their bid was in compliance with the provisions of sections 77(3) and 79(1) of the Act.

37. Further, it was contended, they met all the requirements as set out in the tender document including obtaining authentication of the mandatory requirements which were duly confirmed by the providers of the various instruments including demonstrating that they had the necessary experience, financial means, personnel and equipment capabilities required to undertake the tender effectively. It was therefore the 2nd Respondents’ case that their bid succeeded in both the technical and financial evaluation ranking lowest in both packages as they complied with the requirements of clause 32. 1 of the tender document and in addition to the above, they also met the award criteria set out in clause 34. 1 of the tender document in that their tender was determined by the Procuring Entity as being substantially responsive to the tendering documents and also offering the lowest evaluated tender price.

38. It was deposed that upon both the technical and financial evaluation, the 2nd Respondents’ bid succeeded as the lowest in both packages. Notwithstanding that, the procuring entity wrote a letter addressed to the 2nd Respondents stating that they were not successful as a result of their bid not meeting the requirements set out in the tender documents. However, the reasons provided by the Procuring Entity in all their communication kept varying from letter to letter. In addition to the above, the procuring entity rejected the 2nd Respondents’ bid at the due diligence stage which was not procedural. It was the 2nd Respondents’ case that the due diligence which formed the basis for which the procuring entity disregarded their bid was invalid. This is because of the following:

i. The Applicant herein did not meet the threshold of the mandatory requirements of the Tender document. They did not provide a Power of Attorney which was a mandatory document therefore breached express terms yet its bid was considered as responsive by Kengen in breach of the Terms of the Tender.

ii. Kengen’s Evaluation committee decided to waive the requirement for the power of attorney as a mandatory document in breach of Section 76 of the PPDA Act 2015, hence proceeded to consider the bid by the Applicant yet despite the said waiver proceeded to consider and investigate the same document waived and terminated our bid which action was not only unfair but discriminatory.

iii. Kengen’s Evaluation Committee in this case carried out an inquiry on whether ICBC Bank provided a power of attorney to us, yet this very important requirement had been waived as a minor deviation by the same committee which adopted letters of intent by the Applicant as sufficient for the purposes of this evaluation.

iv. The due diligence conducted by the procuring entity in the subject tender did not meet the threshold as set out vide Section 83(1) of the PPDA 2015.

v. Moreover, the tender evaluation committee also conducted the inquiry during the tender evaluation process and not after as required by Section 83(1) of the PPDA. Curiously, they waived the power of attorney to favour the applicant yet still deemed it wise to consider the power of attorney they resolved was not a requisite having waived the same.

vi. According to Section 83 of the PPDA, due diligence can only be carried out by the employer and the procedure and criteria must be provided for in the tender document. It was thus improper for the procuring entity to involve a third party namely Stanbic Bank Limited in undertaking the due diligence exercise.

vii. The procuring entity did not avail a due diligence report prepared pursuant to the provisions of Section 83 of the Act. Since none was conducted therefore none could be availed.

viii. The Procuring Entity disregarded the fact that ICBC confirmed that they were supporting our bid and did not comment or rely on the said documents provided by ICBC Bank who had issued the Power of Attorney yet decided to rely on the strength of a letter provided by a 3rd party not privy to the contract. Clause 28 of the tender data sheet at page 37 and 38 of the document provides that a Power of Attorney is a mandatory requirement for both the EPC contractor’s Technical proposal and EPC Financial proposal and not letters of intent; therefore, these letters were not to be considered as substitutes for the power of attorney document.

ix. Stanbic Bank is not part of the evaluation committee by the Procuring Entity as per Section 46 of the PPDA Act 2015 and therefore cannot be involved in the evaluation process as the law only mandates those appointed under Sec 46 of the Act to conduct an evaluation as per Section 80 of the Act and their actions in the evaluation process are void to say the least.

39. It was revealed that the procuring entity in conducting an inquiry into the verification of documents submitted by the 2nd Respondents, wrote a letter to Stanbic Bank seeking their assistance in the matter. However, the power of attorney which was the subject matter of the inquiry was authored by ICBC Bank and not Stanbic Bank Limited, therefore Stanbic cannot comment on the same. This means that Stanbic Bank was therefore a third party and could not competently comment on the authenticity or otherwise of a document it had not authored. Furthermore, the 2nd Respondents provided all relevant letters and other documents from ICBC Bank to the procuring entity to support their financial submission and which conformation to date in undisputed hence no illegality had been proved to warrant such unfounded allegations.

40. It was averred that in further response to the above, the letters and other documents the 2nd Respondents provided were a confirmation that letters of intent to them and which formed part of their tender submission were not only genuine but a confirmation that the Bank still supported their submission.

41. Based on legal advice, the 2nd Respondents averred that the procuring entity contravened provisions of section 83 of the Act when it involved Stanbic Bank Limited in undertaking the due diligence exercise. Furthermore, as per the stipulations of section 47 of the PPDA, only procurement functions shall be handled by procurement professionals whose qualifications are recognized in Kenya and not by any other person which in this instance is Stanbic Bank Limited. It was further averred that the due diligence envisaged to be carried out under section 83 of the Act was to confirm the bidders qualifications in view of performing the works and not what the procuring entity did which was to base the due diligence on the wrong premise i.e. authenticating the power of attorney which the 2nd Respondents provided and which the Procuring Entity had resolved to waive as minor deviation. Further, the power of attorney with which the procuring entity used as evidence to justify our disqualification was authored by ICBC Bank and Stanbic Bank which had allegedly failed to confirm the authenticity of the power of attorney in contention was therefore a 3rd party and could not competently comment on the authenticity or otherwise of a document it had not authored.

42. The 2nd Respondents adopted the position that there is no expectation in law that Stanbic Bank which is a completely separate entity from ICBC Bank could confirm the authenticity or otherwise of a document issued by the latter since section 83 of the Act requires that a report be prepared and presented by the tender evaluation committee and not Stanbic Bank a third party to the transaction, containing the basis and the outcome of the due diligence exercise and it is only on this basis that the tender evaluation committee can base its recommendation.

43. The 2nd Respondents averred that whereas the Applicant did not provide a power of attorney the 2nd Respondents provided both a power of attorney and letters of intent. However, the procuring entity decided to ignore the absence of the power of attorney in the Applicant’s tender documents and proceeded to discredit the authenticity of our power of attorney which they had resolved that it was not a mandatory document for consideration of the Bid. It was contended that it is only fair and just that the Procuring Entity should have treated all bidders equally in that if it had waived the mandatory criteria for one bidder the same should have been applied across the board. This is because it is a stipulation under Articles 27 and 227 of the Constitution and section 3 of the Act that a Procuring Entity shall treat bidders equally and without discrimination.

44. The 2nd Respondents asserted that the Applicant’s contention that it should be given preference over other bidders for the sole reason of it being a local company is not only delirious but also in contention with the terms of the tender as the tender was an open tender free for all bidders whether local or foreign to apply and not closed off to only allow specific bidders to apply. This was in fact not even a provision in the tender document. Bidders were to be evaluated based on the requirements set out in the tender document.

45. It was submitted on behalf of the 2nd Respondent that the Applicant herein seeks to quash not the decision of the Board but specific orders emanating from the said decision. It was the 2nd Respondent’s submission that the Application as sought is not only unmerited but is equally a total endorsement of the review process as it means that the Board indeed conducted its role within the purview of the law and within the mandate of section 173 of the Act. To the 2nd Respondent, if the Board did not conduct itself within the ambit of the law, the Applicant would have sought to quash the decision as a whole.

46. According to the 2nd Respondent, since the applicant does not challenge the Board’s decision to award it, package 2 of the EPC+F Tender for Modular Geothermal Power Plant at the sum enumerated in the evaluation report, the entire process conducted by the Board must not be disturbed as the same was conducted within the purview of the law. Otherwise they would have sought that the decision be quashed which they have not. In this respect the 2nd Respondent relied on Republic vs. Inspector General of Police , David Kimaiyo Ex-parte Akitch Okola [2014] e-KLR and Council for Civil Service Unions vs. Minister for Civil Service [1985] A.C. 374, at 401D, Independent Electoral and Boundaries Commission (IEBC) –vs- The National Super Alliance (NASA) Kenya, AlGhurair Printing and Publishing LLC & 5 Others (Nai CA No. 224 of 2017.

47. It was submitted that the Board took cognizance of the fact that as per the provisions of section 83(1) of the Act the time within which due diligence was to be conducted was after tender evaluation, but prior to the award of the tender. The tender evaluation committee however, in an absolute violation of section 83(1) conducted the inquiry during the tender evaluation process and not after. It was further submitted that the Interested Party did not avail a due diligence report prepared pursuant to the provisions of section 83 of the Act. Since no report was conducted none could be availed. The tender evaluation committee made recommendations of award to the Applicant, subject to due diligence and pre-contract negotiation yet it had decided to conduct the same exercise in the case of the 2nd Respondent before the award of the tender. The Board in this instance found that the 2nd Respondent was subjected to acts of discrimination by the tender evaluation committee.

48. On the authority of Kenya Pipeline Company Limited vs. Hyosung Ebara Company Limited & 2 others [2012] eKLR,OJSC Power machines Limited, Trancentury Limited vs the Public Procurement Review Board & 2 others (2016) eKLR at and Municipal Council of Mombasa vs. Republic & Umoja Consultants Ltd Civil Appeal No. 185 of 2001the Court was urged not to substitute the opinion of the Board which has been vested with the statutory authority to determine matters pertaining procurement. The reason for this being that the Applicant has not shown and/or demonstrated that the Board was unreasonable in arriving at its decision. They also relied on Ethics and Anti-Corruption Commission vs. Horsebridge Networks & Another Nairobi Civil Appeal No. 69 of 2015.

49. It was submitted that an order of Certiorari by definition is a formal request to a court challenging a legal decision of an administrative tribunal, alleging that the decision has been irregular or incomplete or if there has been an error of law. From the foregoing, an order of Certiorari cannot issue from this court as it would amount to this court sitting as a tendering entity or as an appellate court over the decision of the Board.

50. The Court was therefore urged to dismiss the application with costs as the Applicant has failed to demonstrate that the actions by the Board are deserving of intervention by this Honourable Court.

Determinations

51. I have considered the Notice of Motion, affidavits, the written submissions and judicial authorities cited herein and this is the view I form of the matter.

52. In my view the determination of this matter revolves around the interpretation and application of section 83 of the Public Procurement and Asset Disposal Act. The said section provides as follows:

(1) An evaluation committee may, after tender evaluation, but prior to the award of the tender, conduct due diligence and present the report in writing to confirm and verify the qualifications of the tenderer who submitted the lowest evaluated responsive tender to be awarded the contract in accordance with this Act.

(2) The conduct of due diligence under subsection (1) may include obtaining confidential references from persons with whom the tenderer has had prior engagement.

(3) To acknowledge that the report is a true reflection of the proceedings held, each member who was part of the due diligence by the evaluation committee shall —

(a) initial each page of the report; and

(b) append his or her signature as well as their full name and designation

53. Therefore since the evaluation committee’s parameters of conducting due diligence are circumscribed by the Act, the committee must, in the exercise of that power, confine itself within the four corners of the said provision. If it acts outside the same, it would be construed to have acted outside its powers or in excess hereof. Firstly the conduct of due diligence pursuant to the said provisions can only be undertaken after tender evaluation, but before the award of the tender. Secondly the purpose of the due diligence is restricted to the confirmation and verification of the qualifications of the tenderer who submitted the lowest evaluated responsive tender to be awarded the contract in accordance with the Act. In other words the Committee cannot purport to conduct due diligence in respect of any other tenderer save for the lowest evaluated responsive tender to be awarded the contract in accordance with the Act.

54. What provoked the due diligence was the fact that the applicant herein submitted a letter of intent from the financiers, ICBC while the 2nd Respondents submitted a power of attorney from the same financiers to the Kenyan representative of Shangdong Kerui authorising the Kenyan representative of Shangdong Kerui to sign documents on behalf of ICBC Bank. To the applicant this was unusual. The due diligence however revealed that the person who signed the power of attorney was not listed as the President or Chairman of the Bank on its website. As the documents issued to Shangdong Kerui could not be confirmed by Stanbic which was the common factor in the two bids, the Committee concluded that the documents submitted by the 2nd Respondent could not be relied upon and therefore declined to consider further the 2nd Respondent’s bid. The Committee then proceeded to carry out fresh ranking of bidders based on the merits as set out while omitting the 2nd Respondent. Accordingly it awarded Package 1 of the tender to the 2nd lowest evaluated bidder, the applicant herein, as opposed to the lowest evaluated bidder, the 2nd Respondent herein. Similarly, Package 2 was awarded to the applicant herein who was the lowest evaluated bidder.

55. According to the Board, the interested party having noted that the financial institutions supporting various submissions of tenders did not provide Powers of Attorney but instead provided letters of intent, treated this as a minor deviation and applied it to all bidders so that no prejudice was visited upon any bidder by waiver of this requirement.

56. The Board faulted the interested party’s decision on two grounds. The first ground was that the interested part having waived the requirement for the Power of Attorney proceeded to conduct due diligence on the very requirement it had waived. Secondly the due diligence was conducted during the tender evaluation process and not after as required by the law. In addition, the evaluation committee’s own tender report showed that contrary to the procedure adopted in the applicant’s case, the tender evaluation committee made recommendations to award the tender to the successful bidder, subject to due diligence and pre-contract negotiation; yet it had decided to conduct the same exercise in the case of the applicant before the award of the tender. In the Board’s view the conduct of the interested party was discriminatory against the applicant. The Board further found that whereas section 83(1) of the Act requires that a report be prepared and presented by the tender evaluation committee containing the basis and the outcome of the due diligence exercise and it is only on the basis of such a report that the tender evaluation committee can base its recommendations, there was no such report in the bundle of documents presented by the interested party herein.

57. I associate myself with the position of Githua, J in Republic vs. Commissioner of Customs Services ex-parte Africa K-Link International Limited Nairobi HC Misc. JR No. 157 of 2012 [2012] eKLR that:

“It must always be remembered that judicial review is concerned with the process a statutory body employs to reach its decision and not the merits of the decision itself. Once it has been established that a statutory body has made its decision within its jurisdiction following all the statutory procedures, unless the said decision is shown to be so unreasonable that it defies logic, the court cannot intervene to quash such a decision or to issue an order prohibiting its implementation since a judicial review court does not function as an appellate court. The court cannot substitute its own decision with that of the Respondent. Besides, the purpose of judicial review is to prevent statutory bodies from injuring the rights of citizens by either abusing their powers in the execution of their statutory duties and function or acting outside of their jurisdiction. Judicial review cannot be used to curtail or stop statutory bodies or public officers from the lawful exercise of power within their statutory mandates.”

58. That the Board has wide powers was appreciated in Civil Appeal No. 145 of 2011 - Kenya Pipeline Company Ltd vs. Hyosung Ebara & Co. Limited and Others [2012] eKLRwhere the Court of Appeal expressed itself as follows:

“The Review Board is a specialized statutory tribunal established to deal with all complaints of breach of duty by the procuring entity…S.98 of the Act confers very wide powers on the Review Board. It is clear from the nature of powers given to the Review Board including annulling, anything done by the procuring entity and substituting its decision for that of the procuring entity that the administrative review envisaged by the Act is indeed an appeal. From its nature the review board is obviously better equipped that the High Court to handle disputes relating to breach of duty of the procuring entity .it follows that its decision in matters within its jurisdiction should not be lightly interfered with. Having regard to the wide powers of the Review Board we are satisfied that the High court erred in holding that the Review Board was not competent to decide whether or not the 1st respondent’s tender had met the mandatory conditions. The issue whether or not the 1st Respondent’s tender was rightly rejected as unresponsive was directly before the Review Board and the Board had jurisdiction to deal with it. In conclusion, it is manifest that the application for Judicial Review was not well founded. The 1st Respondent did not establish that the Review Board had acted without jurisdiction or in excess of jurisdiction or in breach of natural justice of that the decision was irrational. The Judicial review was not confined to the decision making process but rather with the correctness of the decision on matters of both law and fact. So long as the proceedings of the Review Board were regular and it had jurisdiction to adjudicate upon the matters raised in the Request for Review, it was as much entitled to decide those matters wrongly as it was to decide them rightly. The High Court erred in essence in treating the Judicial Review Application as an appeal and in granting review orders on the grounds which were outside the scope of Judicial Review jurisdiction”.

59. This was the position adopted in Republic vs. Public Procurement Administrative Review Board & 3 Others Ex-Parte Olive Telecommunication PVT Limited [2014] eKLR, in which the Court expressed itself as follows:

“Before dealing with the issues raised it is important for the Court to deal with the scope of the request for a review undertaken by the Respondent under the Act. In our view a review is not an appeal. Section 93(1) of the Act provides:

Subject to the provisions of this Part, any candidate who claims to have suffered or to risk suffering, loss or damage due to the breach of a duty imposed on a procuring entity by this Act or the regulations, may seek administrative review as in such manner as may be prescribed.

“Administrative review” is defined by Black’s Law Dictionary, 9th Edition at page 1434 inter alia as “review of an administrative proceeding within the agency itself” while Ballentines Law Dictionary at page 13 defines “administrative proceeding” as “a proceeding before an administrative agency, as distinguished from a proceeding before a court. Compare judicial proceeding”. What then is expected of the Respondent in exercising its jurisdiction on a request for review? A recent articulation of the elements of procedural fairness in the administrative law context was provided by the Supreme Court of Canada in Baker vs. Canada (Minister of Citizenship & Immigration) 2 S.C.R. 817 6 where it was held:

“The values underlying the duty of procedural fairness relate to the principle that the individual or individuals affected should have the opportunity to present their case fully and fairly, and have decision affecting their rights, interests, or privileges made using a fair, impartial and open process, appropriate to the statutory, institutional and social context of the decisions.”

The Court further emphasized that procedural fairness is flexible and entirely dependent on context. In order to determine the degree of procedural fairness owed in a given case, the court set out five factors to be considered: (1) The nature of the decision being made and the process followed in making it; (2) The nature of the statutory scheme and the term of the statute pursuant to which the body operates; (3) The importance of the decision to the affected person; (4) The presence of any legitimate expectations; and (5) The choice of procedure made by the decision-maker…“Review” is defined in Black’s Law Dictionary, 9th Edition at page 1434 inter alia as “Consideration, inspection, or reexamination of a subject or thing.” Ballentines Law Dictionary on the other hand defines the same word at page 482 inter alia as “A reevaluation or reexamination of anything.” Clearly a review is much wider in scope than an appeal.

60. Therefore since the 1st Respondent’s jurisdiction in the exercise of its powers of review are wider, it may well be entitled to consider the legality and constitutionality of the decision made by the Procuring Entity and make appropriate orders since as appreciated section 173 of the Public Procurement and Disposal Act gives it the following powers:

1) Annul anything the accounting officer of a procuring entity has done in the procurement proceedings, including annulling the procurement or disposal proceedings in their entirety.

2) Give directions to the accounting officer of a procuring entity with respect to anything to be done or redone in the procurement or disposal proceedings;

3) Substitute the decision of the review board for any decision of the accounting officer of a procuring entity in the procurement or disposal proceedings;

4) Order the payment of costs as between parties to the review in accordance with the scale as prescribed; and

5) Order termination of the procurement process and commencement of a new procurement process.

61. It is therefore my view that if the Board reasonably finds that the criteria adopted by the Procuring Entity would not achieve the principles under Article 227 of the Constitution, it may as well exercise its powers under section 173 of the Act.

62. I however hasten to add however that the Board’s powers are not unlimited. As was held in JGH Marine A/S Western Marine Services Ltd CNPC Northeast Refining & Chemical Engineering Co. Ltd/Pride Enterprises vs. Public Procurement Administrative Review Board & 2 others [2015] eKLR:

“The PP&DA and the Regulations bequeath the onus of amending a Tender Document on a procuring entity. When the Review Board decides that it can ignore the express provisions of a tender document and goes ahead to award the tender to another bidder, it crosses its statutory boundaries and in such circumstances it is said that it has acted outside jurisdiction. Those who approach the Review Board must be sure of its parameters. The power bestowed upon the Review Board does not include authority to act outside the law. Such power can only be valid if it is exercised for legitimate purposes. In the instant case, the Review Board exceeded its authority by purporting to read its own words in the Tender Document.”

63. It was similarly appreciated in Republic vs. Public Procurement Administrative Review Board & 3 Others Ex Parte Olive Telecommunication PVT Limited [2014] eKLR that:

“Whereas we appreciate that the Board’s latitude in applications for review is wide, such latitude ought not to be expanded to such an extent that it renders the idea conceived by the PE totally useless. In providing its own definition of what an OEM is the Board in essence altered the bid documents which can only be done as provided by the Act and by the PE.”

64. The Board, in my view while has wide powers of review ought not to make a determination whose effect would amount to a decision totally different from the one which the procuring entity set out to achieve by commencing the tender process.

65. In this case, it is clear that the Board made findings of fact which were based on the material placed before it. It found that the requirement of the Power of Attorney had been waived in respect of all the parties and that the 2nd Respondent had in fact submitted the letter of intent which was what all the bidders had submitted and that the said letter was in fact confirmed. Article 227(1) of the Constitution provides as hereunder:

When a State organ or any other public entity contracts for goods or services, it shall do so in accordance with a system that is fair, equitable, transparent, competitive and cost-effective

66. Based on the findings of the Board which I am unable to fault the determination that the decision of the interested party was discriminatory as against the 2nd Respondent cannot be faulted.

67. It was further a finding of fact by the Board that the due diligence was conducted during the tender evaluation process and not after as required by the law. As I held hereinabove, the conduct of due diligence pursuant to the section 83 of the Act can only be undertaken after tender evaluation, but before the award of the tender. Therefore the Board was correct in its decision that the conduct of due diligence in respect of the 2nd Respondent during the tender evaluation process was not in accordance with the law. To make matters worse, as regards the ex parte applicant, interested party reportedly intended to conduct the same process after the award of the tender which was further evidence of discrimination.

68. The Board further found that whereas section 83(1) of the Act requires that a report be prepared and presented by the tender evaluation committee containing the basis and the outcome of the due diligence exercise and it is only on the basis of such a report that the tender evaluation committee can base its recommendations. However, it was a finding of the Board there was no such report in the bundle of documents presented by the interested party herein. Without such a report the results of the due diligence were of little value and could not be relied upon. In my view there are no compelling reasons why I should interfere with the Board’s factual findings and without such interference, its legal conclusions cannot be faulted. As was appreciated in Republic vs. Kenya Power & Lighting Company Limited & Another [2013] eKLR:

“The Board considered all the arguments of the Applicant and made findings on each of these issues. The Board may have been wrong in its decision but this Court would be usurping the statutory function of the Board were it to substitute its own views for those of the Board.”

69. In the circumstances of this case, to set aside the said findings of fact would amount to this Court sitting on appeal on the Board’s decision. That is not the function of this Court as was clearly held in Ethics and Anti-Corruption Commission vs. Horsebridge Networks & Another Nairobi Civil Appeal No. 69 of 2015 at paragraph 20 where it was observed that:

“...the function of the high court in judicial review proceedings is not to determine issues as if it is an appeal court nor is it to consider the merits or demerits of a decision by a public body but rather to undertake a consideration of the procedure and processes adopted so as to rule out any traits of allegations of procedural malpractices, lack of fair hearing, unreasonableness and other illegalities.

70. Whereas reliance was placed on section 176 of the Act as supporting the action that was taken by the interested party herein, suffice it to say that that was not the provision that the interested party relied on in not awarding the tender to the 2nd Respondent. The reliance on that provision can only be an afterthought. In any case that section falls within the part dealing with offences. It is doubtful whether the procuring entity has the power to find a person guilty of offences in order to justify the cancellation of an award.

71. Having considered the issues raised herein it is my view and I hold that this application is unmerited.

Order

72. In the result the application fails but each party will bear own costs of these proceedings as the main culprit in the saga was the procuring entity.

73. Orders accordingly.

Dated at Nairobi this 20th day of November, 2017

G V ODUNGA

JUDGE

Delivered in the presence of:

Mr Otieno or Mr Atonga for the ex parte applicant

Mr Omuganda for the 2nd Respondent and holds brief for Mr Munene for the 1st Respondent

Mr Akilona for the interested party

CA Ooko