Irregular contracting, poor contract management and late payment by contractors are causing taxpayers to lose billions of shillings, according to a report on government audited financial statements.
The 30 government body report of the Public Investment Committee of the National Assembly uncovered how procurement officials are failing to comply with the law, resulting in penalties for contractors being borne by taxpayers.
“The committee noted with concern that some state-owned companies are conducting procurement processes irregularly, on the contrary , carried out the provisions of the Government Procurement and Sale of Assets Act, Regulations of 2015 and Government Circulars, leading to inflated project costs,” it said.
Also read: State officials gobble up Sh12 billion in travel
“The board pros Seats and directors of state-owned companies should ensure that proper planning of projects is carried out, with credible feasibility studies being conducted to reduce variance.”
A case in point the committee found is the The Kenya Airports Authority (KAA) awarded the Sh 64 billion tender to a Chinese company. This happened before the contractor could even identify a funder, as required by law. According to the contract, one of the requirements was for the contractor to bring in a financier before signing the contract, but this was never done.
Although it was later canceled due to claims that its costs had been overstated at 9 billion shillings, the Taxpayers still paid the developer 4.3 billion shillings for work not done.
Another example given by the committee chaired by Abdulswamad Nassir is the 615 million shilling Lamu Port Housing Project , funded by the Ministry of Transport, Infrastructure, Public Works, Housing and Urban Development, but was later raised to over Sh900 million without reason. According to the report, following the change, the Kenyan Ports Authority was ordered to take on the project and fund it under unclear circumstances.
“There were numerous scrutiny reservations on the preliminary implementation of the project, which management did not bring to the Kenyan Ports Authority could respond as it was not the implementing agency at the time.”
The committee found that KPA could not justify changing the project by considering the cost of the engineers and whether the project was budgeted . It suggests that by prudently managing procurement processes and complying with government circulars, taxpayers could save billions in payments to contractors that result from either contract cancellations or delayed completion of projects Lawmakers now want heads of state who ignore procurement laws to take the additional Amount imposed.
“The chief executive officers who are subject to the provisions of Section 139(4) of the Public Procurement and Asset Disposal Act 2015 should be subject to a surcharge for the price fluctuations that their companies are subject to beyond what is permitted by law Of particular interest is the Kenya National Highways Authority (Kenha), which had accumulated interest on late payments of Sh6.4 billion. MEPs now want accounting officers to ensure a budget is in place before asking anyone to implement a project.
They have warned officials and board members about undue delays in payments and said they are responsible for be held responsible for loss of public funds. They also noted that several lawsuits regarding state-owned land ownership and other legal matters at taxpayers’ expense were pending, some for over a decade.