Republic v Public Procurement Administrative Review Board; Accounting Officer County Government of Tana River & another (Exparte); Minet Kenya Insurance Brokers Limited & another (Interested Parties) (Judicial Review E134 of 2022) [2022] KEHC 14278 (KLR) (Judicial Review) (19 October 2022) (Judgment)
Neutral citation:
[2022] KEHC 14278 (KLR)
Republic of Kenya
Judicial Review E134 of 2022
AK Ndung'u, J
October 19, 2022
Between
Republic
Applicant
and
Public Procurement Administrative Review Board
Respondent
and
Accounting Officer County Government of Tana River
Exparte
County Government of Tana River
Exparte
and
Minet Kenya Insurance Brokers Limited
Interested Party
Scoreline Insurance Brokers Limited
Interested Party
Judgment
1.Pursuant to leave of this court granted on September 2, 2022, the ex parte applicants herein filed a Notice of Motion application dated September 5, 2022 seeking the following orders;1.That the Applicant be granted an Order of Certiorari to remove to the High Court for purposes of quashing the Respondent’s decision dated August 19, 2022 in Application Number 68 of 2022.2.That the costs of this application be provided for.3.Such further or Other relief as the Honourable Court may deem just and expedient to Grant.'
2.The application is supported by the grounds on its face, a statutory statement dated August 30, 2022 and a verifying affidavit sworn on even date.
3.The application seeks to have the Respondent’s decision of August 19, 2022 made in PPARB Application No 68 of 2022 requiring the 1st ex parte applicants herein to ensure that the procurement process with respect to tender number TRCG/OT/ADM/49/2021-2022, Tender for Provision of Medical Insurance Cover for The County Government of Tana River’s County Staff, proceeds to its logical conclusion within 14 days from the date of the Ruling. In the same breath the 2nd ex parte applicant was also directed to bear the costs of the application amounting to the sum of Kshs 221,363/=.
4.The 2nd ex parte applicant through a publication in the Standard Newspaper and through its website is said to have on April 25, 2022 invited sealed tenders from eligible candidates for Tender Number TRCG/OT/ADM/49/2021-2022 for provision of Medical Insurance Cover. The medical cover was intended for county staff.
5.Upon evaluation, it is contended that the Evaluation Committee recommended the 2nd Interested Party herein to be considered for the Award with a bid of Kenya Shillings One Hundred and Sixty-Two Million Forty-One Thousand Two Hundred and Seventy-Eight (Kshs 162,041,278.00) being the lowest responsive evaluated bidder.
6.On May 27, 2022, the 2nd Ex-parte Applicant’s Head of Procurement is said to have prepared a professional opinion noting that the procurement process had complied with the provisions of law and recommending that the 2ndInterested Party be awarded the tender. A notification of tender results was done through letters to all bidders dated May 30, 2022 and sent through their official emails and a Notification of award issued to the 2nd interested party as the successful bidder.
7.The 1st interested party being aggrieved by this decision filed PPARB 49 of 2022 on June 13, 2022.The Board’s decision delivered on July 4, 2022 was as follows;i.The 1st Respondent’s letter of notification of award dated May 30, 2022 with respect to Tender No TRCG/OT/ADW49/2021-2022 for provision of Medical Insurance Cover to the County Government of Tana River's County Staff issued to the Interested Party be and is hereby cancelled and set aside;ii.The 1st Respondent’s letters dated May 30, 2022 with respect to Tender No TRCG/OT/ADW49/2021-2022 for provision of Medical Insurance Cover to the County Government of Tana River's County Staff issued to the Applicant and all other tenderers be cancelled and set aside.iii.The 1st Respondent is hereby ordered to direct the 2nd respondent’s 
Evaluation Committee to admit the Applicant’s tender at the Technical Evaluation stage and conduct a re-evaluation at the Technical Evaluation stage of all tenders that were responsive at the Preliminary Evaluation stage including the Applicant’s tender, and if responsive, to conduct a re-evaluation at the Financial Evaluation stage;iv.Further to Order 3, the 1st Respondent is hereby ordered to ensure that the procurement process of Tender No TRCG/OT/ADM/49/2021-2022 for provision of Medical Insurance Cover to the County Government of Tana River's County Staff proceeds to its logical conclusion including the making of an award to the lowest evaluated responsive tenderer whilst taking into account the findings made in this decision within 14 days from the date hereof;v.Given that the proceedings of the subject tender are not complete, each party will bear its own costs.'
Evaluation Committee to admit the Applicant’s tender at the Technical Evaluation stage and conduct a re-evaluation at the Technical Evaluation stage of all tenders that were responsive at the Preliminary Evaluation stage including the Applicant’s tender, and if responsive, to conduct a re-evaluation at the Financial Evaluation stage;iv.Further to Order 3, the 1st Respondent is hereby ordered to ensure that the procurement process of Tender No TRCG/OT/ADM/49/2021-2022 for provision of Medical Insurance Cover to the County Government of Tana River's County Staff proceeds to its logical conclusion including the making of an award to the lowest evaluated responsive tenderer whilst taking into account the findings made in this decision within 14 days from the date hereof;v.Given that the proceedings of the subject tender are not complete, each party will bear its own costs.'
8.It is urged that by the time the Board made its decision on July 4, 2022, the Government Financial year, 2021-2022 (both National and County) had lapsed on June 30, 2022 and so had The Tana River County Appropriations Act, 2021 and the Tana River County Supplementary Appropriation Act 2022.All funds that had been appropriated for use within the financial year, and had not been spent at the end of the financial year for which it was appropriated lapsed immediately at the end of that financial year. This according to the ex parte applicants is in accordance with Section 136 of the Public Finance Management Act, 2012.
9.The ex parte applicants’ case is that pursuant to section 53(8), the 1st ex parte applicant did not know how to implement the said decision through setting up an Evaluation Committee and paying for the allowances of the Committee Members to conduct a re-evaluation that would result in the award of a tender when there were no funds to pay the tender due to the lapse of the Appropriation Act.
10.Further that it would be illegal to proceed with the said exercise knowing very well that there were no funds available or authority to incur expenditure to fulfil the resultant Award and Contract. A similar position was held by the 2nd ex parte applicant’s Principal Supply Chain Management Officer who advised the 1st ex parte applicant that they would have to wait until the new County Assembly passed the budget for the 2022-2023 financial year and the enactment of the Appropriation Act.
11.Pursuant to this, the ex parte applicants are said to have terminated the Tender process due to financial constraints. The termination was reported to the Public Procurement Regulatory Authority through a report dated July 29, 2022. It is also contended that the Respondent delivered its Ruling on August 19, 2022, but the same was sent to the ex parte applicants on August 22, 2022. In the decision the Respondent is said to have directed as follows;a.The Procuring Entity’s Letter dated July 25, 2022 communicating the decision to terminate the procurement proceedings with respect to Tender No.TRCG/OT/ADM/49/2021-2022 For the Provision of Medical Insurance Cover for Tana River’s County Staff be and is hereby quashed and set aside.b.The 1st Respondent is hereby ordered to ensure that the procurement process with respect to Tender No TRCG/OT/ADM/49/2021-2022 For the Provision of Medical Insurance for County Government of Tana River’s County Staff, proceeds to its logical conclusion within 14 days from the date hereof, whilst taking into account the findings made in the Board’s decision of July 4, 2022 in Application No 49 of 2022 and in this decision.c.In view of the Board’s findings and orders above, we order that the Procurement Entity shall bear the Applicant’s costs of this Request for Review amounting to Kshs 221,363/- (Kenya Shillings Two Hundred and Twenty-One Thousand, Three Hundred and Sixty-Three Only).'
12.The Respondent’s Ruling is challenged by the ex parte applicants for being illegal, ultra vires and contrary to the provisions of Article 207(2)(b) of the Constitution, the Procurement and Asset Disposal Act, 2015 and the Public Finance Management Act, 2012 specifically Sections 109 (6) and 136 respectively.
13.The ex parte applicants’ case is that the Interested parties had a legitimate expectation that the Respondent would take Judicial Notice of the provisions of Sections 125 (1)(e), (f) and (g) and 109 (6) of the Public Finance Management Act and Article 224 of the Constitution whose provisions mean that at the beginning of the financial year 2022-2023 the County Government can only incur expenditure and make withdrawals from the County Exchequer Account once the County Assembly approves the budget and enacts the Appropriation Act for the 2022-2023 financial year.
14.The respondent’s decision is also challenged for being irrational and against the principles of public finance for directing that Tender Number TRCG/OT/ADM/49/2021-2022 proceed to its logical conclusion despite the fact that it was terminated under Section 63(1) (a) (i) and (b) of the PPAD Act.
15.The Respondent is said to have committed an error of law in failing to appreciate that compliance with its order had to be undertaken within the confines of the PPAD Act and for failing to appreciate that Section 53 (8) of the PPAD Act specifically bars the 1st Ex Parte Applicant, an Accounting Officer from commencing with procurement proceedings unless he is satisfied that there are sufficient funds to meet the obligations of the resulting contract as reflected in its approved budget estimates.
16.The Respondent is also accused of having misapplied the law and committing an error in the law in finding that 1st Interested Party herein had not furnished the Board with a refund statement to demonstrate inadequate budgetary provision. According to the ex parte applicants in accordance with Section 136 (2) of the PFM Act a Refund Statement was not required as the funds had not been withdrawn by the County Government from the County Exchequer Account operated at the Central Bank of Kenya.
17.The Respondent’s decision is said to be irrational and one that does not correspond to the provisions of Article 201, 207 and 224 of the Constitution of Kenya, Section 3 (e) and 44 (2) (a) of PPAD Act and Section 149 (1) of the PFM Act, which generally encompass the lawful and prudent use of public resources. It would be unreasonable and irrational for the ex parte applicants to proceed and incur expenses and conclude the tender exercise knowing too well that the ex parte Applicant has no authority to pay for the resultant contract.
18.The Interested Parties herein are said to have forwarded the whole procurement file pertaining to the Tender which included a Schedule of documents and that page 12 to 13 of the said Schedule contains the Budget in which the Respondent claims was never presented before it.
19.The respondent herein filed a Replying Affidavit sworn by Philip Okumu the Acting Secretary of the respondent and in the affidavit Mr Okumu swears that upon receiving the Request for Review No 68 of 2022 he proceeded to issue a Notification of Appeal together with a letter dated July 29, 2022 notifying the ex parte applicants of the filed Request for Review and the suspension of the procurement proceedings for the subject tender together with the Board’s circular No 02/2022 detailing administrative contingency measures to mitigate the spread of Covid-19.
20.The respondent upon considering the documentation filed before it framed three issues for determination as follows; whether the Procuring Entity complied with the Board’s orders issued in its decision in Application 49 of 2022, whether the termination of the procurement proceedings is valid and what are the appropriate orders the Board should grant in the circumstances? These issues are what the Board addressed in making its final orders dated August 19, 2022.
21.The respondent is said to have noted that the Procuring Entity did not take any action in complying with the Board’s decision at the expiry of the 14 days which lapsed on July 18, 2022 despite the Procuring Entity through its advocates exchanging correspondences with the 1st Interested party indicating that the Respondent had set up an Evaluation Committee which was undertaking the re-evaluation whose results would be communicated in due course.
22.The Board is said to have considered it to be trite law that a Procuring Entity must demonstrate compliance with both the substantive and procedural requirements under Section 63 of the Act in that there must be demonstrable reasons for termination (the substantive requirement) and that an accounting officer is required to give the Public Procurement Regulatory Authority a written report on the termination outlining the reasons and notifying all tenderers in writing of the termination with reasons within fourteen (14) days of termination (the procedural requirements).
23.The Board observed that the Procuring Entity had availed its Appropriation Acts being the Tana River County Appropriations Act 2021 and the Tana River County Supplementary Appropriation Act 2022.However, it did not avail its budget for the financial year 2021-2022 nor did it present as evidence a refund statement forwarded to the Controller of Budget in line with Section 136(2) of the Public Finance Management Act, 2012. It simply stated that the funds that had been budgeted for the subject tender had reverted to the National Treasury but did not show that this had indeed been done and under what legal provision it would be done.
24.The Board is said to have been of the view that Section 136(2) of the Act had two imports being a repayment of the withdrawn but unspent funds to the County Exchequer Account and a preparation of a refund statement for purposes of forwarding the same to the Controller of Budget. The refund statement would confirm that the unspent funds had been repaid to the County Exchequer and therefore safely kept for possible allocation pursuant to Section 130 (2)(3)(4) of the Public Finance Management Act which provide for allocation in the subsequent year of unspent funds that had already been appropriated but remained unspent in the preceding financial year.
25.The 1st interested party in its reply sworn by Edwin Macharia, the General Manager at the 1st interested party, Minet Kenya states that in a letter dated June 10, 2022 received via email it was informed that its bid had been unsuccessful as it had attached an unverified ISO certificate No xxxx from AAR Insurance Services.
26.Aggrieved by the Procurement Entity’s decision the 1st interested party herein lodged a Request for Review No 49 of 2022 on June 13, 2022 seeking a nullification of the award of the tender to the 2nd interested party and the re-evaluation of the said tender. The respondent ruled in favour of the 1st interested party and upon the lapse of the Board’s decision the ex parte applicant was yet to conclude the procurement process as directed by the respondent and therefore the 1st interested party lodged a further Request for Review, Application No 68 of 2022 dated July 26, 2022 where it sought orders compelling the ex parte applicants to complete and release the outcome of the procurement process in regard to the subject tender.
27.The respondent found the 1st interested party’s application to be meritorious and issued its decision dated August 19, 2022 this is what prompted the application before this court. The 1st interested party’s case is that the Respondent acted within its powers as conferred upon it by section 173 of the Act.
28.The 1st interested also reiterated the respondent’s position that no evidence had been provided of a refund statement being forwarded to the Controller of Budget in line with Section 136(2) of the Public Finance Management Act. It is deponed that the Public Finance Management Act under section 149 (2) (b) requires the 1st ex parte applicant herein to ensure that the 2nd ex parte applicant keeps financial and accounting records and as such the same should have been availed to the Board to substantiate its reason for termination.
29.The ex parte applicant’s notification to bidders had no effect according the 1st interested party as upon filing of a Request for Review the procurement proceedings stood as stayed/or suspended pursuant to section 168 of the Act. The 1st interested party also contended that the ex parte applicants have purported to adduce new evidence before this court which partly led to the respondent’s conclusion that they had failed to fulfil the procedural requirements under section 63 of the Act for failing to demonstrate by way of evidence that they had notified the authority.
30.The 2nd interested party in its replying affidavit contended that there being no party that had appealed the respondent’s determination in PPARB Application No 49 of 2022 the said decision is valid and binding on all parties as provided under section 175 of the Public Procurement and Asset Disposal Act,2015. Scoreline Insurance Brokers Limited is said to have subsequent to the 1st interested party lodging Request for Review no 68 of 2022, lodged Request for Review No 74 of 2022 seeking to have the ex parte Applicants to comply with the orders issued in PPARB No 49 of 2022, which Request was withdrawn after the respondent’s ruling dated August 19, 2022.
31.The 2nd interested party while reiterating the findings of the respondent in PPARB No 68 of 2022 contended that the instant application is outside the jurisdiction of this court as this honourable court is only mandated to review the legality, rationality and procedural impropriety of the Respondent’s decision. The instant application according to the 2nd interested party does not disclose/demonstrate any procedural impropriety, unreasonableness or irrationality in the respondent’s decision-making process. That the Circular No 5 of 2021 referred to by the Applicants allows County Governments to prepare and approve supplementary budgets.
32.The application before this court was canvassed by way of written submissions. The ex parte applicants herein filed written submissions dated September 20, 2022.
33.The ex parte applicants identify three issues for determination and on the 1st issue that is whether the Respondent’s decision to compel the Applicants to ensure that the procurement process with respect to Tender No. TRCG/OT/ADM/49/2021-2022 for the Provision of Medical Insurance Cover for Tana River’s County Staff, proceeds to its logical conclusion is illegal and ultra-vires. Learned counsel submitted that contrary to the assertions that there was no proof that the Report was submitted the same was sent via an email that was delivered August 3, 2022 at 10.38 a.m.
34.It is the ex parte applicant’s submission that the import of Article 224 of the Constitution is that an Appropriation Act cannot be for a different period from the period of the budget for the County Government. Funds are therefore available for utilization for the period noted in the budget and the corresponding Appropriation Act, that is the period commencing July 1, 2021 and were to be utilized by the end of the financial year on June 30, 2022. Further that there is no requirement for provision of the budget to prove the lapse of the appropriation Act.
35.The 2nd ex parte applicant’s budget is said to be attached at Page 204 and which was mentioned Under Vote R3173 of the Applicant’s Appropriation Acts. The header is as follows: Vote R3173, Tana River-public Service, Administration & CitizeN Participation the next page (Page 205) under Row 23 shows the budget for provision of Medical Insurance Cover to the 2nd Applicant’s Staff. The amount allocated under the budget is Kshs 160,939,884.00. The item source program is 2210910-00001001.
36.On the second issue on Whether the Respondent’s committed an error of the law, is unreasonable and irrational in failing to appreciate that compliance with its order had to be undertaken within the confines of the Constitution, the Procurement and Asset Disposal Act, 2015 (hereinafter referred to PPAD Act), the Public Finance Management Act, 2012 and the principles of Public Finance encompassed in the stated Statutes learned counsel submitted that a refund statement only applies to funds that had been withdrawn from the County Exchequer Account and are unspent at the end of the financial year, any unutilized balances in the County Revenue Fund that are kept in the County Exchequer Account at the Central Bank of Kenya pursuant to the provisions of section 109 (4) of the Public Finance Management Act remain in the County Exchequer Account.
37.The case of Republic v County Government of Lamu & 2 others Ex parte Superserve Limited [2021] eKLR was cited where a tender process was cancelled due to inadequate budgetary allocation due to the end of a financial year.
38.Learned counsel submitted that Regulation 50 (2) of the Public Finance Management (County Governments) Regulations, 2015 requires all expenditure commitments for goods and services to be controlled against spending and procurement plans approved by the responsible accounting officer based on allocations and allotments from approved budgets. These budgets are passed annually by the County Assembly for each financial year as provided for in Article 224 of the Constitution.
39.The Respondent’s order according to the ex parte applicants was illegal as it failed to take judicial notice of matters of law presented to it, failed to take into account the effect and operation of public finance laws on the lapse of an appropriation and failed to take into account the fact that compliance with its order would result to the Applicants committing offences under various statutes. The court in the case of Republic v Public Procurement Administrative Review Board; Rhombus Construction Company Limited (Interested Party) Ex Parte Kenya Ports Authority & Another [2021] eKLR was cited in support of this position.
40.Section 148 (1) of the PFMA designates Accounting Officers to manage finances of County Government entities as specified in their designation while Section 149 (1) vests the responsibility of ensuring that the resources of the entity for which the Accounting Officer is designated are used in a way that is lawful and authorized; and effective, efficient, economical and transparent.
41.The Respondent in its decision sought to direct the Applicants to contravene the above provisions and go ahead with an exercise that had not been budgeted for or approved by the County Assembly in contravention of Regulation 50 (2) of the Public Finance Management (County Governments) Regulations, 2015. The said Regulation provides that expenditure commitments for goods and services shall be controlled against spending and procurement plans approved by the responsible Accounting Officer, based on allocations and allotments from approved budgets. Regulations 50 (6) of the said Regulation makes it an offence for any officer who contravenes this provision. This means that apart from being against the guiding principles of Public Finance, it is an offence under the law and makes the 1st Applicant culpable of criminal proceedings.
42.On the third issue that is whether the Respondent’s decision was in violation of the Applicants’ legitimate expectation that the decision would take Judicial Notice of the provisions of the Constitution of Kenya, the Public Finance Management Act,2012, the Tana River County Appropriations Act, 2021 and the Tana River County Supplementary Appropriation Act 2022, it was submitted that the applicants herein had legitimate expectation that the Respondent would take judicial Notice of the provisions of the Tana River County Appropriations Act, 2021 and The Tana River County Supplementary Appropriation Act, 2022 that the funds for the subject tender are only available for the financial year that it was appropriated which lapsed on June 30, 2022.
43.That the court would take judicial notice of sections 125(1)(e), (f) and (g) and 109 (6) & (7) of the PFMA and Article 224 of the Constitution. There was legitimate expectation that once an accounting officer terminates a tender on grounds of inadequate budgetary allocation and operation of the law he/she will not be compelled to proceed with the said exercise and that he/she would not be forced to commit an offence.
44.Learned counsel for the respondent submitted that if this Honourable Court is minded to review the merits of the Respondent’s decision, it is the Respondent’s submission that a consideration of the merits of its decision will only serve to sustain its findings. Further, that courts have previously held that judicial review court should not act as a court of appeal.
45.To buttress these arguments, the cases of Republic v Public Procurement Administrative Review Board Exparte Giant Forex Bureau De’ Change Limited & 2 others [2017] eKLR, Municipal Council of Mombasa vs Republic & Umoja Consultants Ltd [2002] eKLR, Republic vs Public Procurement Administrative Review Board & Another Ex Parte Selex Sistemi Integrati Nairobi HCMA No 1260 of 2007 [2008] KLR 728 and Chief Constable v Evans [1982] 3 ALL ER 141 were cited.
46.The respondent also contends that its decision does not meet the threshold of procedural irregularities nor illegalities as was held in the case of Republic v Public Procurement Administrative Review Board Exparte Giant Forex Bureau De’ Change Limited & 2 others [2017] eKLR. Further that there is a pre requisite that ought to be satisfied by the accounting officer before the initiation of any procurement proceedings. One which if satisfied, the procurement proceedings ought to be commenced, taken through its motions and lastly to its conclusion at the tail end.
47.That for any procurement process to begin there must be a satisfaction that there are indeed sufficient funds to meet the ensuing contract. To that extent section 53 (9) emphasizes, that anything to the contrary is tantamount to an offence; it would be an offence to initiate a procurement process without the goods, work or services being budgeted for in the first place as was held by the court in the case of Yang Guang Property Design & Manufacturing Ltd Vs Vaghjiyani Enterprises Ltd and Public Procurement Regulatory Authority (2021) eKLR.
48.The 1st interested party in its written submissions dated October 3, 2022, contends that the Ex Parte Applicants were under a duty to not only prove before the Board that they had met both substantive and procedural requirements under Section 63, but also go a step further and provide sufficient evidence to justify the same.
49.The ex parte applicants are also faulted for failing to adhere to the substantive requirements under section 63(1) of the Act by unlawfully terminating the procurement proceedings citing the ground of inadequate budgetary provision under subsection (1)(b). A mere recitation of the statutory language of the grounds under Section 63 of the Act according to the 1st interested party is not sufficient proof of their existence as was held by the court in Republic v Public Procurement Administrative Review Board & another Ex-Parte SGS Kenya Limited [2017] eKLR.
50.The 1st interested party also urges that the Ex Parte Applicants failed to provide the 1st Interested Party with sufficient notice contrary to the provisions of Section 63(4) of the Act. The purpose of a termination notice was espoused by the Court of Appeal in Mukawa Hotels Holding Ltd v Beat Koch [2011] eKLR.
51.The respondent’s decision in Application No 68 of 2022 is said to be good in law as it seeks to safeguard the interests of not only the procuring entity but also the bidders. The court in the case Republic v Public Procurement & Administrative Review Board & 2 others Ex parte Applicant Dar-Yuksel-Ama (A Consortium of Dar-Al-Handasah In Joint Venture With Yukelproje AS & AMA Consulting Engineers Ltd; Korea Express Corporation (KEC) Korea Consultants International Company Limited (KIC) & Apec Consortium Limited & 2 others (Interested Parties) [2022] eKLR was cited where it held 'section 63 of the Act, if left unchecked, is prone to abuse by rogue accounting officers or procurement entities leading to erosion of the long fought for ethos of accountability in public procurement envisaged under Article 227 of the Constitution. Where it is disputed whether the termination was proper, the Board must rise to the occasion and resolve the question within its mandate under Section 167 of the Act. Anything to the contrary would be a carte blanche to procuring entities to seek refuge in section 63 even when not deservedly so.'
52.The 2nd interested party also filed written submissions dated October 6, 2022. The 2nd interested party’s case is that as was held in the case in Republic v Independent Electoral and Boundaries Commission (IEBC) Ex parte Super Alliance (NASA) Kenya & 6 Others [2017] eKLR a judicial review court ought not to interfere where the respondent acted within the powers donated to it under the PPADA,2015.
53.According to the 2nd interested party judicial review is concerned with the manner in which a decision is made than the merits or otherwise of the ultimate decision as was held by the court in the case of Republic vs. Public Procurement Administrative Board & 2 others [2019] eKLR. The ex parte applicants it is contended have failed to discharge their burden to demonstrate how the Respondent’s decision was illegal irrational or procedurally improper as was held in the case of Republic vs. Kenya Power & Lighting Company Limited & Another [2013] eKLR.
54.The 2nd interested party is said to have had the legitimate expectation that both the Procuring Entity and itself would be bound by the respondent’s orders in PPARB No 68 of 2020.The Court of Appeal case of Chief Executive Officer, the Public Service Superannuation Fund Board of Trustees v CPF Financial Services Limited & 2 Others (Civil Appeal E150 OF 2022)[2022] KECA 982 (KLR)(9 September 2022)(Judgement) was also cited on the dangers of allowing procuring entities to ignore orders of Courts and Tribunals.
55.It is the 2nd interested party’s case that a party that blatantly disobeys and disregards orders of a quasi-judicial tribunal under an Act of Parliament is not deserving of discretionary remedies of the Court as was held in the cases of Fred Matiangi, The Cabinet Secretary, Ministry of Interim and Co-ordination of National Government v Miguna Miguna [2018] eKLR and Hadkison vs Hakison (1952) 2 ALL ER 567.
56.The 2nd interested party’s case is as was held in Nelson Kinyua Wambutu v County Government of Nyeri & Another [2016] eKLR that an applicant must demonstrate that a body acted in excess of the jurisdiction conferred upon it by law in order to obtain an order of Certiorari. A judicial review court according to the 2nd interested party ought to be slow to substitute the quasi-judicial tribunal’s decision with that of its own as was held in the case of Republic vs Public Procurement Administrative Board; Shenzhen Instrument Co Limited & another (Interested Party) Ex parte Kenya Power and Lighting Company Limited [2019] eKLR.
Determination
57.I have had occasion to consider in great detail the pleadings, the affidavit evidence, learned submissions by counsel and case law cited. Distilled from therein, the issues for determination are;1.Whether the Respondent’s decision dated August 19, 2022 in Review Application No 68 of 2022 fails the test of legality, rationality, and procedural propriety.2.Whether the decision breaches the legitimate expectation of the Applicants that the Respondent would take judicial notice of the provisions of the Constitution, Public Finance Management Act2012, Tana River County Appropriation Act 2021 and Tana River County Supplementary Appropriation Act 2022.3.What orders should issue.4.Who bears the costs of this suit.
58.As I understand it, the chronology of events leading to the present application is that the 2nd Applicant floated a tender for provision of insurance services for its staff. Upon evaluation, the 2nd Interested party was awarded the tender. Aggrieved by this award, the 1st Interested Party lodged Request for review No 49 of 2022 before the Public Procurement Administrative Review Board (the Board). The 1st Interested Party was successful and in a decision made on 4th July, the procuring entity was ordered to re admit the 1st Interested Party’s tender at the technical evaluation stage, re- evaluate the tenders and proceed with the procurement to its logical conclusion. By this time the financial year 2021/2022 had lapsed on June 30, 2022.
59.Subsequently, the Procuring entity terminated the tender based on lack of funds. It is this termination that elicited Request for Review Application No 68 of 2022. The Board upon hearing the said review made the following orders;a.The Procuring Entity’s Letter dated July 25, 2022 communicating the decision to terminate the procurement proceedings with respect to Tender No.TRCG/OT/ADM/49/2021-2022 For the Provision of Medical Insurance Cover for Tana River’s County Staff be and is hereby quashed and set aside.b.The 1st Respondent is hereby ordered to ensure that the procurement process with respect to Tender No TRCG/OT/ADM/49/2021-2022 For the Provision of Medical Insurance for County Government of Tana River’s County Staff, proceeds to its logical conclusion within 14 days from the date hereof, whilst taking into account the findings made in the Board’s decision of July 4, 2022 in Application No 49 of 2022 and in this decision.c.In view of the Board’s findings and orders above, we order that the Procurement Entity shall bear the Applicant’s costs of this Request for Review amounting to Kshs 221,363/- (Kenya Shillings Two Hundred and Twenty-One Thousand, Three Hundred and Sixty-Three Only).
60.This court is alive to its narrow jurisdiction in judicial review which, with very few exceptions, is restricted to examining the legality, rationality and procedural propriety of decisions of quasi- judicial bodies like the subject Board herein. I perused the decision of the Board and I notice that the same is anchored and is heavily based on alleged omissions of the ex parte applicants which it sums up as follows;
61.Section 63 of the Public Procurement and Asset Disposal Act provides for the termination or cancellation of procurement and asset disposal proceedings. At Sub section 1(b), such termination is allowed due to inadequate budgetary provision. For this termination to pass the legal test, the burden would be on the procuring entity to demonstrate the non- existence of funds.
62.The application herein in my view turns on the question whether funds were still available on July 4, 2022 when the Board made the initial decision and still available after August 19, 2022 when the 2nd Decision was made. In our instant suit, it is certain that as at June 30, 2022, the contract in respect of the tender herein had not been signed. There was neither a contract, nor a Local service order or a local purchase order signed. In financial parlance, the funds allocated for the insurance tender were not committed and come June 30, 2022, the funds were not available to the procuring entity to spend. In line with Section 136(2) of the PFMA, the unspent funds are repaid to the County Exchequer Account whereupon a refund statement is prepared for purposes of forwarding the unspent funds to the Controller of Budget. My clear understanding of the PFMA is that unspent (uncommitted) funds as at the time the financial year lapses are not available for appropriation by any Government agency including a County Government.
63.It was not therefore necessary for the Applicants to present their budget before the Board in Request for Review No 68 of 2022 for the simple reason that the subject tender was floated since funds were available at the time. Circumstances only changed with the lapse of the financial year which rendered the procuring entity impotent on utilisation of any unappropriated funds as at June 30, 2022.
64.This court’s powers under judicial review extend to reviewing the legality of a decision like the one before court. Lord Diplock in Civil Service Unions vs Minister for Civil Service (1985) AC 374 addressed the matter in the following words;
65.On the test of reasonableness and rationality, I find the decision irrational and unreasonable for reason that the Board failed to appreciate that compliance with its orders required the Applicants to contravene the Constitution, the Procurement and Asset Disposal Act, 2015, the Public Finance Management Act, 2012 and the principles of Public Finance espoused therein. It was not possible for the Applicants to comply with the orders of the Board without contravening the law.
66.In the case of Republic v County Government of Lamu & 2 others Ex parte Superserve Limited [2021] eKLR the court stated;
67.Under Section 148 (1) of the PFMA an Accounting Officer is to manage finances of County Government while Sect149 (1) vests the responsibility of ensuring that the resources of the entity for which the Accounting Officer is designated are used in a way that is lawful and authorized; and effective, efficient, economical and transparent. The Respondent in its decision sought to direct the Applicants to contravene the above provisions and go ahead with an exercise that had been budgeted for earlier but which had been caught up with the lapse of the financial year. The resultant effect would be contravention of Regulation 50 (2) of the Public Finance Management (County Governments) Regulations, 2015. The said Regulation provides that expenditure commitments for goods and services shall be controlled against spending and procurement plans approved by the responsible Accounting Officer, based on allocations and allotments from approved budgets. Regulations 50 (6) of the said Regulation makes it an offence for any officer who contravenes this provision. This means that apart from being against the guiding principles of Public Finance, it is an offence under the law and makes the 1st Applicant culpable of criminal proceedings.
68.The sum total of the above is that the decision of the Board dated August 19, 2022 is laced with illegality, irrationality and unreasonableness and is not sustainable. The Application herein is thus wholly successful. I allow the same and make the following orders;1.An Order of Certiorari be and is hereby issued to remove to the High Court for purposes of quashing the Respondent’s decision dated August 19, 2022 in Application Number 68 of 2022.2.Each Party to bear its own costs.
DATED SIGNED AND DELIVERED AT NAIROBI THIS 19TH DAY OF OCTOBER 2022...........................A.K. NDUNGUJUDGE