Firms seek millions after Sh22bn schools project is halted

Kenya’s move to suspend a Sh22 billion World Bank project for improvement of secondary school infrastructure has exposed taxpayers to losses as the government would have to pay a number of companies millions in compensation.

This would happen as thousands of learners continue to suffer the effects of congestion in schools

Nearly one year after identifying 21 companies to construct classrooms, dormitories, toilets and other infrastructure in secondary schools under the World Bank project, the Education ministry is yet to offer them formal contracts, as some of them now push for compensation over the delays.

The World Bank’s Secondary Education Quality Improvement Project (Seqip) was to enable Kenya construct classrooms, laboratories, toilets and other infrastructure in thousands of schools across 110 sub counties.

But a move by President Uhuru Kenyatta to suspend the project in January has left it in jeopardy, and left Kenyans exposed to paying millions in compensation to at least 21 companies.

While no contract has been given to the 21 companies, letters of tender awards they received could become the stick they beat taxpayers with.

The tender award notifications were to serve as contracts until formal documents are provided, meaning government is already in an enforceable agreement with the companies.

On Thursday, the High Court stopped Education CS George Magoha from terminating contracts of four companies that were awarded tenders to construct infrastructure worth Sh4 billion in several schools across the country.

Samaha Company Limited, Columbia Developers Limited, All Weather Investment Company Limited and Lantana Africa Limited have sued to stop the Education ministry from terminating their contracts until the court decides whether their rights under procurement laws have been violated through delays.

Construction works

The four companies are among 17 others that were declared winners in procurement processes between November and December, 2020 and they were to construct facilities worth Sh20.5 billion.

The World Bank project was to run between 2017 and 2023.

Justice James Makau ruled that the four companies have demonstrated an arguable case, and there is need to stop government from taking any adverse action until the suit is determined.

The companies have also asked for compensation for costs they have already incurred in acquiring bank guarantees for execution of the construction works, and could be awarded millions if their suit succeeds.

The four companies have sued Prof Magoha and the PS State Department of Early Learning Julius Jwan for going mute on the tenders for close to one year, and want the government compelled to offer them formal contracts.

The court orders came one day after President Kenyatta directed the Education and the National Treasury to allocate Sh8 billion for the construction of over 10,000 classrooms, which are intended to accommodate more than a million students that will be joining junior secondary.

The Sunday Nation was unable to establish, by the time of going to press, whether the Sh8 billion will come from taxpayers’ funds or the World Bank kitty.

Kanze Dena, the head of the Presidential Strategic Communication Unit (PSCU), said that the Treasury is best placed to state where the money will come from.

Treasury CS Ukur Yatani and his Education counterpart Prof Magoha had not responded to our calls and text messages on the source of the Sh8 billion.

The ministry in its correspondence with successful bidders indicated that the letters of award would serve as contracts, pending the signing of formal agreements.

World Bank guidelines

Attorney-General Kihara Kariuki had objected the case and asked that it be dismissed, arguing that the procurement process has been conducted in line with World Bank guidelines.

Mr Gad Ouma, representing the four companies, argued that his clients have been exposed to insolvency and auctions by financial institutions which provided bank guarantees that were a requirement to execute the construction contracts.

Mr Kariuki added that no wrongdoing by government had been highlighted by the four companies, and the procurement process is still ongoing hence the case is premature.

Justice Makau has held that failing to offer the four companies contracts several months after topping tender evaluations is a violation of procurement principles.

The judge added that the Attorney-General did not deny any of the allegations on delay and violation of rights raised by the four companies.

“In the instant application, it is clear that the respondents have not disputed the facts as pleaded in the application. Upon consideration of the pleadings herein, counsels’ oral rival submissions, I find that the applicants have demonstrated a prima facie case with a likelihood of success as regards the violation of the petitioners’ fundamental rights and freedoms provided in the constitution.”

Justice Makau has also ordered the government not to take any steps to engage other companies for the multibillion shillings deals.

“An order be and is hereby issued to the effect that pending hearing and determination of the petition herein, the CS Education and the PS State Department of Early Learning be and are hereby restrained from taking any further adverse action in respect to the contract with an action of cancelling or terminating the contracts or entering into contracts with third parties in respect to the subject contract,” Justice Makau said.

Auditor-General Nancy Gathungu has also opened an investigation into the World Bank project, and has asked PS Jwan to provide details of tenders evaluated by December last year.

Infrastructural improvement

Ms Gathungu has also asked for details of the costs incurred in the Seqip programme, reasons why contracts have not been signed and consequences of delaying signing of formal agreements with tender winners.

Lawyer Apollo Mboya has now threatened to sue Prof Magoha if the Education ministry fails to provide him with information on the World Bank project.

Mr Mboya has asked the Education CS to share details on the schools marked for infrastructural improvement, companies that have been awarded the tenders and how much has been spent so far.

He has also asked for copies of contracts signed in relation to the project, performance bonds obtained by contractors and details of circumstances that led to suspension of the Seqip.

Seqip, aside from infrastructural improvement, also included helping the government to hire and train teachers, provide scholarships to needy learners and customise a curriculum.

President Kenyatta in January suspended implementation of the World Bank project pending completion of an audit of all secondary schools countrywide.

Head of Public Service Joseph Kinyua wrote to Prof Magoha on January 26, stating that the Executive was crafting a policy response to problems affecting secondary education, and that it was necessary to halt all development projects in the course of the analysis.

World Bank country director Keith Hansen warned that continued delays could see the project fail to meet its 2023 completion timeline.

Mr Hansen said the bank was satisfied with the procurement process that identified 17 contractors. “The bank has reviewed and cleared bid evaluation reports for these processes. However, we note with concern that, to date, the contracts have not been signed. This delay in signing of contracts presents both a risk to maintaining the integrity of the procurement process followed to date and is not in compliance with the agreed procurement guidelines for the project, as well as jeopardizing the timely achievement of the project objective,” he said.

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