Republic v Public Procurement Administrative Review Board & Office of the Attorney General Ex parte Intertek Testing Services(EA) Pty Limited & Authentix Inc; Accounting Officer, Energy and Petroleum Regulatory Authority & Energy and Petroleum Regulatory Authority [2022] KEHC 1135 (KLR) | Public Procurement | Esheria

Republic v Public Procurement Administrative Review Board & Office of the Attorney General Ex parte Intertek Testing Services(EA) Pty Limited & Authentix Inc; Accounting Officer, Energy and Petroleum Regulatory Authority & Energy and Petroleum Regulatory Authority [2022] KEHC 1135 (KLR)

Full Case Text

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

JUDICIAL REVIEW DIVISION

JUDICIAL REVIEW NO. EO13 OF 2022

IN THE MATTER OF AN APPLICATION FOR JUDICIAL REVIEW ORDERS OF CERTIORARI, PROHIBITION AND MANDAMUS

AND

IN THE MATTER OF ARTICLES 10, 47,50 AND 227 OF THE CONSTITUTION OF KENYA 2010

AND

IN THE MATTER OF FAIR ADMNISTRATIVE ACTIONS, ACT NO. 4 OF 2015

AND

IN THE MATTER OF THE PUBLIC PROCUREMENT AND ASSET DISPOSAL ACT NO. 33 OF 2015

AND

IN THE MATTER OF THE PUBLIC PROCUREMENT ADMINISTRATIVE

REVIEW BOARD

APPLICATION NO. 9 OF 2022

BETWEEN

REPUBLIC.....................................................................................................................................APPLICANT

VERSUS

PUBLIC PROCUREMENT ADMINISTRATIVE REVIEW BOARD...........................1ST RESPONDENT

OFFICE OF THE ATTORNEY GENERAL......................................................................2ND RESPONDENT

ACCOUNTING OFFICER, ENERGY AND PETROLEUM REGULATORY AUTHORITY... 1ST                      INTERESTED PARTY

ENERGY AND PETROLEUM REGULATORY AUTHORITY.............................2ND INTERESTED PARTY

AND

INTERTEK TESTING SERVICES(EA) PTY LIMITED & AUTHENTIX INC....EX PARTE APPLICANTS

JUDGEMENT

1. Pursuant to leave of court dated 7th February 2022, Intertek Testing Services (EA) Pty Limited and Authentix Inc (hereinafter, the applicants) filed a Notice of Motion dated 9th February 2022 seeking orders that;

1.

2.

3.

4.

2. The motion is supported by the affidavit of Miguel Cipriano and based on grounds in the statutory statement dated 5th February 2022 together with the verifying affidavit sworn on even date filed in the application for leave to initiate these proceedings.

3. The gist of the application is that the applicants, among others, made bids over tender No. EPRA/SCM.4/2/21-22/032for the provision of fuel marking and monitoring services (the tender). The opening of financial bids was done whereby the reading of the technical and financial scores of bidders was done.

4. Vide a letter dated 28th December,2021, the procuring entity made the decision to terminate the tender citing two reasons that-

a. Pursuant to section 63(1)(i) of the public procurement and AssetDisposal Act, the procurement process had been overtaken by operation of law and,

b. pursuant to section 63(1)(e) of the Act, material governance issues hadbeen detected.

It is urged that no real and tangible reasons were given for the termination.

5. Aggrieved by this decision, the applicants filed Request for Review Application No. 9 of 2022 before the 1st respondent. The 1st respondent delivered its decision on 1st February 2022 in which the letters of termination dated 28th December 2021 issued to all tenderers in the subject tender by the procuring entity were cancelled and set aside and an order made that the procuring entity do issue new letters of notification of termination of procurement proceedings of tender No. EPRA/SCM/4/3/21-22/032.

6. The applicant maintains that the issue they raised before the 1st respondent was whether the termination met the requirements under sections 63(1)(a)(i)and63(1)(e) as read with 63(3) and (4) of the Act which were the grounds relied on in the termination letter. In its pleadings the procuring entity refrained from addressing the termination on the basis of section 63(1)(e) only relying on ground under section 63(1)(a)(i) to justify the termination.

7. The 1st respondent is faulted for going further than the pleadings seeking to justify termination on the basis of detection of material governance issues. Further that it erred by treating as confidential letters dated 30th August 2021, 1st October 2021, 2nd November 2021 & 6th December 2021. It is urged that the applicant was not seized of these letters and were therefore prejudiced at the hearing. They were denied a fair hearing. This, despite that fact being put forth in a supplementary affidavit.

8. It is urged that the 1st respondent considered extraneous matters and erred in framing questions for determination ignoring the real issues before it and the decision was unreasonable and irrational for the failure by the 1st respondent to limit itself to the issues brought before it for determination.

Responses:

9. The respondent filed a replying affidavit sworn by Stanley Miheso on 2nd of March 2022. He depones that the board afforded the parties the opportunity to file documents and urge their respective cases and the matter was heard by way of written submissions under the Board’s guidelines in Circular No. 2/2020 following the Covid 19 pandemic. It is urged that the Board reached its decision after considering all issue raised, including the law and the constitution and observed the rules of natural justice.

10. The Interested parties filed a replying affidavit sworn byDaniel Kiptoo Bargoria, the Director General of the 2nd Interested Party (Epra). Daniel confirms that the tender was advertised, bids made and the applicant herein was adjudged by the evaluation committee as the lowest evaluated bidder and the Director, Supply Chain Management recommended to the Accounting officer to award the tender to the applicant.

11.  It is deponed that prior to the award of the tender, the same was terminated on 28th December 2021 by dint of section 63(a)(1) and 63(e)of the PPADA by virtue of the fact that the subject procurement had been overtaken by operation of law (Government Policy) as communicated to EPRA vide a letter MICNE/SEC/1/43 dated 6th December 2021. The letter advised EPRA to integrate the fuel marking program under the IPMAS EGMS system and rescind the ongoing tendering and procurement process for the provision of fuel marking and Monitoring services.

12. Daniel depones further that vide Legal Notice No. 64, the minister of Energy made (Petroleum amendment rules), 2000 which requires all petroleum fuels made for export except jet kerosene to be marked with a chemical marker approved by the minister.

13.  In view of the above, termination letters were issued to all bidders pursuant to section 63(4)and a report of the termination issued to the Procurement Regulatory Authority pursuant to section 63(3) of the Act. The termination gave rise to the Request for Review at the 1st respondent and Daniel asserts that the Board correctly observed that there would be operational challenges that can only be cured by termination of the tender.

14. The application was canvassed by way of written submissions.  The applicant’s submissions are dated 24th February 2022. Counsel submits that in the termination letter, no real or tangible reasons are given with the procuring entity merely reciting two of the grounds for termination of a procurement provided under section 63 of the Act. The views of bidders were not sought. It is urged that the letters relied upon by the procuring entity to demonstrate government policy which according to them amounted to operation of law within the context of section 63(1)(a)(i) of the Act were not attached to the procuring entity’s pleadings but were included in the entity’s confidential report which was shared with the Board but was not available to the applicants.

Submissions:

15. It is submitted that the Board erred in law, engaged in procedural impropriety and acted irrationally and unreasonably. The board is faulted for breach of the constitution specifically Articles 10, 47,50, and 227 in addition to flouting sections 4, 7,8,9,10 and11 of the Fair Administrative Action Act. (FAAA). Counsel cited the decision in Kenya Human Rights Commission & Another v Non-Governmental Organizations Coordination Board & Another [2018] eKLR in which the court cited with approval the decision of the Court of Appeal in Judicial Service Commission v Mbalu Mutava & Another [2018] eKLR where the court emphasized fair administrative action as a constitution right.

16.  Counsel urged that the applicants were not accorded a fair hearing and relied on the case of Accounting Officer Kenya Ports Authority v Public Procurement Administrative Review Board & 3 Others [2019] eKLR to demonstrate that any judicial or quasi-judicial body must observe the principles of natural justice. It is submitted that the Board acted in breach of the rules of natural justice by formulating a question for determination without inviting any of the parties to make representations upon it. It is urged that the Board canvassed the issue of alleged malpractice on the part of the procuring entity which in its own opinion amounted to a material governance issue subject to termination under section 63(1)(e)of theAct. Counsel adds that this issue was not pleaded and parties are bound by their pleadings.

17.  The respondents and Interested parties filed submissions dated 10th March 2022 through Mr. Munene Wanjohi of the Attorney General’s Chambers, counsel on record for the parties. It is submitted that the applicant has not established that the respondent acted unreasonably irrationally or with misapprehension of the law. He cited the Ugandan case of Pastoli v Kabale District Local Government Council & others [2008] 2 EA 300 which gives the parameters a party needs to achieve to succeed in an application for judicial review.

18.  It is submitted that the applicants seek a merit review of the Boards decision and asking this court to substitute a decision arrived at procedurally with its own. It is urged that courts have held that judicial review jurisdiction should not act like an appeal. Reference is made to Peter Kaluma’s book, Judicial Review, Law Procedure and Practice at page 46 which states;

“The remedy of judicial review is radically different from those of review and appeal. Judicial Review is not an appeal from a decision but a review of the decision making process and the legality of the decision making process itself. When determining an appeal, the court is concerned with the merits of a decision. Conversely in Judicial review the court’s exclusive concern is with the legality of the administrative action or decision in question. Thus instead of substituting its own decision for that of another body, as happens in appeals, the court in an application for judicial review is concerned with the question as to whether or not the action under attack is lawful or should be allowed to stand or be quashed.’’

19. Counsel urges that the Board discharged its functions properly and made a determination of the issues in Request for review No. 9 of 2022 in the manner required under the PPADA and guided by the principles enshrined in Article 10 and 227 of the constitution.

20.  It is further submitted that under section 63(1) of the PPADA a procuring entity may terminate and/or cancel tenders. This can be done any time prior to the notification of award. It is the respondent and Interested parties case that the accounting officer terminated the tender proceedings prior to notification of award. The decision was thus within the law.

Analysis and determination

21. I have had occasion to consider the Notice of Motion herein, the supporting and verifying affidavits, the grounds raised in the statutory statement, the respective responses on record and submissions filed. I have had due regard to the proceedings at the Board.  It is common ground that that applicant and others made bids over tender No. EPRA/SCM/4/2/21-22/032. The financial bids were opened and the technical and financial scores of bidders who had qualified for evaluation were read out. The procuring entity, however, vide its letter dated 28th December 2021 terminated the tender citing 2 reasons, viz;

1. pursuant to section 63(1)(a)(i), of the PPADA, the procurement process had been overtaken by operation of law.

2. pursuant to section 63(1)(e) of the Act material governance issues had been detected. The applicant was aggrieved by the termination and lodged Request for review Application No. 9 of 2022 in which the Board found that the procuring entity was justified to terminate the subject tender but that the entity had not satisfied the statutory pre-conditions for termination of procurement proceedings under section 63(3) and (4) and proceeded to cancel the letters of notification of termination and directed that new letters of termination be issued in accordance with the law. The challenge by the applicant of this finding forms the subject of this ruling.

22. Distilled from the material before court, the broad issue for determination is whether the applicants have established a case for the grant of the judicial review orders sought.

23.  The subject matter herein involves the procurement of a public service. For a long time this country had the un enviable sojourn in what was an obscure and unaccountable public procurement regime. With the advent of the new constitution of Kenya 2010, and specifically the proviso in Article 227, any state organ or any other public entity engaged in public procurement of goods and services must do so in a system that is fair, equitable, transparent, competitive and cost effective. The procurement must also be done within the framework prescribed in the PPADA. This court’s jurisdiction in matters procurement is donated by section 175 (1) of the PPADA whereby a party aggrieved by the decision of the Board may seek judicial review orders.

24. It is opportune at this stage to appreciate that the review envisaged is under the special jurisdiction of judicial review with the court’s mandate being exercise of supervisory jurisdiction over the Board, a quasi-judicial body within the legally established scope. That scope was aptly captured by the court in Pastoli v Kabale District Local Government Council & Others (2008) 2 EA 300 where the court held;

“In order to succeed in an application for judicial review, the applicant has to show that the decision or act complained of is tainted with illegality, irrationality and procedural impropriety...Illegality is when the decision-making authority commits an error of law in the process of taking or making the act, the subject of the complaint. Acting without jurisdiction orultra vires, or contrary to the provisions of a law or its principles are instances of illegality. It is, for example, illegality, where a Chief Administrative Officer of a District interdicts a public servant on the direction of the District Executive Committee, when the powers to do so are vested by law in the District Service Commission...Irrationality is when there is such gross unreasonableness in the decision taken or act done, that no reasonable authority, addressing itself to the facts and the law before it, would have made such a decision. Such a decision is usually in defiance of logic and acceptable moral standards...Procedural Impropriety is when there is a failure to act fairly on the part of the decision-making authority in the process of taking a decision. The unfairness may be in non-observance of the Rules of Natural Justice or to act with procedural fairness towards one to be affected by the decision. It may also involve failure to adhere and observe procedural rules expressly laid down in a statute or legislative Instrument by which such authority exercises jurisdiction to make a decision.”

25. The distinction between judicial review and an appeal is not a novel issue in our jurisdiction. It is a  well trodden   path. In Municipal Council of Mombasa v Republic & Umoja Consultants Ltd [2002] eKLR,the Court of Appeal stated;

“Judicial review is concerned with the decision making process, not with the merit itself; the court would concern itself with such issues as to whether the decision makers had the jurisdiction, whether the persons affected by the decision were heard before it was made and whether the in making the decision the decision maker took into account relevant matters or did take into account irrelevant matters……The court should not act as a court of appeal over the decider which would involve going into the merits of the decision itself-such as whether there was or there was not sufficient evidence to support the decision”.

26. Another important aspect for consideration in the determination of the matter before court is that matters procurement are a technical field and that the Board is a specialised statutory tribunal whose composition as provided in section 29(1) and (2) includes professionals nominated by the Law Society of Kenya, Chartered Institute of Arbitrators, Kenya institute of supplies management, Institute of Certified Public Accountants, Institute of Engineers of Kenya and Architectural Association of Kenya.  Its decisions are thus made by persons with the technical knowhow in their areas of practice and the court will only interfere when a clear case is made out and the necessary parameters for judicial review met.  The Court of appeal in Pipeline Ltd v Hyosung Ebara Company Ltd while addressing this aspect stated;

‘’The Review Board is a specialised statutory tribunal established to deal with all complaints of breach of duty by the procuring entity. By Reg. 89, it has power to engage an expert to assist in the proceedings in which it feels that it lacks the necessary experience. S. 98 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 than the High Court to handle disputes arising from the breach of duty by procuring entity. It follows that its decision in matters within its jurisdiction should not be lightly interfered with.’’

27. The applicants’ complaint before the board as gleaned from the proceedings thereon was that the termination of the subject tender was irregular, procedurally unfair, an abuse of power and was in blatant disregard of the Act, Regulations and related laws because;

a) The reasons given for the termination are vague, ambiguous and in total contravention of the requirements under section 63 of the Act.

b) The termination contravened section63(4) of the Act by merely relying on grounds listed in S63(1) with no tangible evidence to support the grounds.

c) by failing to provide reasons, the interested parties purported to exercise discretion in contravention of S63.

d) By terminating the procurement process in the manner it did, the respondents purported to indirectly invite the operation of section 66 of the Act ignoring procedures in the relevant laws and rules of natural justice.

27. In a nutshell the Interested Parties’ response before the Board was that the Request for Review was time barred and that the tender was cancelled based on the letter dated 6th December 2021 from the National Treasury & planning in compliance with a policy directive. They contended that the letter of notification of the termination contained reasons.

28.  I have deliberately set out the cases for both parties before the Board for an easier examination and understanding of the Board’s conduct of the proceedings to inform a determination of the propriety or otherwise. In doing so, the court will move with caution to avoid crossing over to the realm of merit evaluation of the Board’s decision.

29.  In making a determination of the twin issues before it, the Board took into account letters dated 1st October 2021 from the ministry of Interior and coordination of National Government, letter dated 30th August 2021 from the above ministry to the ministry of Energy and a letter dated 6th December from the National treasury to the ministry of Interior and Coordination of National Government. These letters formed part of the confidential documents submitted by the procurement entity to the Board pursuant to section 67(3)(e) of the PPADA.

30. These letters constituted communication between government ministries and certainly the contents thereof were confidential information on change in policy in Government operations. By virtue of section 67(3) of the Act, the Board was entitled to receive the same.

31. The complaint by the applicants is that the Board relied on the letters yet the same were not availed to them and as such there was denial of a fair hearing. Notably the response by the Procuring entity at the Board referred to these letters and indeed the applicants did a rejoinder to the response indicating that in some instances the letters pre dated and were outside the procurement process and there was no reason other than mischief for the procuring entity to refer to them and not make them available to the applicants. Suffice it to note that despite knowledge of the existence of the letters and aware of the rules on production and disclosure, the applicants did not take any action in that direction. The applicants retained the right to demand  particulars of  the response mounted by the procuring entity.  The best the applicants have done is to state in submissions that the Board was operating within strict timelines under the aegis of its Circular No. 2 put in place for mitigation challenges posed by of covid 19 and they did not, therefore, make the necessary application.

32.  In those circumstances, and having not taken any step to apply for the letters as provided for in law, the applicants cannot be heard to blame the board over the alleged denial of a fair hearing.

33. On the question whether the Board fell into a procedural error for formulating an issue for determination without inviting any of the parties to make representations, I find it necessary to reproduce the second issue for determination framed by the Board. It read;

‘’Whether the 1st Respondent terminated the subject tender’s procurement proceedings in accordance with section 63 of the Acton account of the subject tender having been overtaken by operation of law and that material governance issues having been detected to divest the Board of its jurisdiction by dint of section 167(4)(b) of the Act.’’

34. The 1st prayer by the applicant before the Board sought that the termination of procurement proceedings in Tender No. EPRA/SCM/4/2/21-22/032 and any process or steps taken pursuant to the said termination be declared null and void. The 2nd prayer was that the procuring entity’s letter dated 28th December 2021 terminating the procurement process in Tender No. EPRA/SCM/4/2/2122/032    be and is hereby quashed for failure to meet the requirements of section 63 of the Act.

35.  Suffice it to note that the termination was based on two factors being that the procurement had been overtaken by operation of law and that material governance issues had been detected in the subject procurement. This termination was challenged before the board. It follows then that the two grounds of termination were live before the Board.  The Board had to determine the same on the material before it. I deciding the issue the board referred to the letters dated 1st October 2021 from the ministry of Interior and coordination of National Government, letter dated 30th August 2021 from the above ministry to the ministry of Energy and a letter dated 6th December from the National treasury to the ministry of Interior and Coordination of National Government. The Board never framed its issue from a vacuum. The issue was framed from the claim and material before it.

36.  A determination was made that the procuring entity was at all times aware of the Government policy and it was a malpractice to commence the procurement proceedings of the subject tender knowing very well that implementation of the tender may encounter operational challenges attributed to the said Government policy of integrating marking, tracing and authentication of products by Government ministries, departments and agencies. The Board concluded that these were significant issues that could not be overlooked and warrant termination of the procurement proceedings under section 63(1)(e).

37. The claim that the Board formulated its own issue is thus not backed by evidence and is discounted by the record of proceedings before the Board and I find no procedural impropriety or breach of the applicant’s rights by the Board in this regard.

38. Before I conclude, it occurs to me that a comment on the prayer No. 3 of the Notice of motion requires a special mention. The prayer seeks an order of mandamus directing the completion of the tender process. The process was at the award stage. The facts surrounding this procurement would show that such an order would not in the circumstances of this case be efficacious and may as well end up as a pyrrhic victory on the part of the applicants. There is clear demonstration of the Government intention to shift policy on the provision of the service in issue to the procuring entity and other government bodies. The aim as indicated on the material before court is to ensure efficient monitoring and reduced wastage of public funds utilized by developing different stamps. It is clear, then, that the Government would not be funding its agencies for this service. Granting an order of mandamus would not benefit the applicants in any manner as they would end up with a contract with no allocated funds for its payment.

39.  As held in the case of Republic v Public Procurement Administrative Review Board & 2 Others Ex Parte Rongo University [2018] eKLR the grant of orders of certiorari, mandamus and prohibition is discretionary. The court is entitled to take into account the nature of the process against which judicial review is sought and satisfy itself that there is reasonable basis to justify the orders sought. In our instant suit, am persuaded that grant of the orders sought would not be efficacious and more importantly, would go contrary to the principles enshrined in Article 227 of the constitution on public procurement of goods and services.

40. From the foregoing and for the reasons stated, the application herein fails to meet the threshold for the orders sought. The same is dismissed. In the circumstances of this case I direct that each party bears its own costs.

DATED SIGNED AND DELIVERED AT NAIROBI THIS 17TH DAY OF MARCH, 2022

A.K. NDUNGU

JUDGE

In the presence of: -

…………………………………………………………… for the Applicant

…………………………………………………………… for the 1st Respondent

…………………………………………………………… for the 1st Interested Parties

…………………………………………………………… for the 2nd Interested Parties

…………………………………………………………… for the Ex Parte

……….……………………………………………..……. Court Assistant