The National Treasury may have poured Sh2 billion down the drain, when it decided to pump the money into the construction of a national data recovery centre in Naivasha, Nakuru County.
More than a decade later, taxpayers risk losing the money, and the data recovery centre remains just a dream.
Despite years of spending, the project, conceived in 2009, remains unutilised, with mounting costs raising concerns over financial mismanagement.
A report by Auditor-General Nancy Gathungu covering the 2023/2024 financial year reveals that the National Treasury initiated the project in 2009 to create a critical backup for government data.
The contract was awarded to a company for Sh782 million, with an initial timeline of 96 weeks.
However, the project's scope was later expanded and split into three phases.
The first phase cost Sh899 million, while the second phase amounted to Sh205 million. Both were completed and paid for, bringing the project to 68 percent completion.
However, a dispute over payments in the third phase stalled the project, leading to additional financial losses.
"A disagreement arose after the Treasury failed to settle a Sh193 million claim meant to compensate for idle resources and expenses due to the delays. The contractor took the matter to arbitration and was awarded Sh4.1billion for "loss of profits and other associated costs", reads part of the report.
"As of June 30, 2024, the outstanding amount had grown to Sh5.5 billion due to accrued interest. Although, the arbitration decision was adopted by the High Court and the Attorney-General indicated that the possibilities of success in case of an appeal were slim and advised the Treasury to negotiate with the contractor, no evidence of negotiations having taken place was provided," the report adds.
However, the auditor-general has blamed Treasury officials for mishandling the contract, stating that the financial burden could have been avoided with proper management.
"The expenditure would have been avoided had management handled the contract in accordance with the applicable laws and regulations," Ms Gathungu said.
She also pointed out that the facility remains unused despite the massive expenditure, raising questions about wastage in government projects.
"In the circumstances, the value for money from the payment of Sh1,987,278,191 could not be confirmed. The full payment of the amount will adversely affect the budgetary allocation for the ministry and is not in public interest," she stated.
A recent visit of the site by the National Assembly Committee on Finance revealed that equipment worth over Sh100 million had been stolen or vandalised.
According to the report, Treasury ignored legal advice from the Attorney-General, who had recommended negotiating with the contractor to avoid a costly legal battle.
"The AG, after reviewing the case, warned that the government had little chance of winning an appeal. Despite this, the Treasury failed to initiate negotiations," reads the report
To date, the Treasury has paid Sh882 million as part of the court-awarded settlement.
With the project having stalled, the country's bid to establish the first ever data recovery centre, a critical project of ensuring recovery of government data, has ran into headwinds.
The stalling had been blamed on lack of funding by the National Treasury and the court case with the contracted firm, Misort Africa, that has further marred its completion.
The project, initiated in 2009 under President Mwai Kibaki's administration aimed to construct an alternative data recovery centre in Naivasha.
The initial cost was set at Sh782,499,814.30 but was later revised to Sh899,560,074.91.
The project's expected completion date was December 2014. However, more than 14 years later, the data recovery centre is incomplete.
Due to various revisions and disputes, the cost has now ballooned to about Sh5.17 billion.
The government and Misort Africa Limited got embroiled in court cases, further delaying the project.
A key turning point was in December 2021, when the High Court upheld an award of Sh3,874,450,575.55 to Misort Africa.
This ruling followed a finding by a Sole Arbitrator that the National Treasury had breached its contract by taking over the project before its completion.
The award included compensation for unused resources and lost profits, which the court upheld despite the Treasury's objections on public policy grounds.
Additionally, Misort Africa sued the National Treasury over another contract, pushing the total awards to approximately Sh4.1 billion.
The second lawsuit related to unpaid amounts for the supply of maintenance spares for air conditioning units at Herufi Treasury data centre, with Misort Africa being awarded Sh235,683,000 plus interest.
The blunders by National Treasury officials in designing and executing the project, ended up gifting Misort Africa Limited, a Sh5 billion payout.
The stalled data recovery centre project has since been transferred to the Ministry of Information, which says it is keen to revive it and spearhead it to completion.
"The data recovery centre is a very important project. We have since resolved matters around the project and we are keen to have the project revived and completed," Mr Loyford Murithi, the ICT Director, Ministry of Information, Communications and Digital Economy told the Nation in an interview.
"There were issues surrounding its construction, but they are now behind us. They have been resolved," added Mr Murithi.
If the remaining construction takes off, the Nation established that the centre will be completed by the end of 2026, to enhance the safety of digitised data and information for millions of Kenyans.
A parliamentary committee that visited the data recovery centre recently on a fact finding mission piled pressure on the National Treasury to prioritise the project, saying it is critical to government's digitisation of public services.
"The project was a vision that was done 10 years ago. Had it been completed as per the scope it would have cost taxpayers Sh800 million. But because of some delays the cost has shot up," said Mr Kuria Kimani, the chairman of the Parliamentary Committee on Finance.
"Kenya doesn't have any data recovery centre, making the Naivasha one very critical. It is important that the Treasury and National Planning and the ICT Ministry finds an urgent solution to have this data recovery centre completed," stated Mr Kuria.
"It is very risky for us not to have a data recovery centre, as a country at a time a government services have been digitised.”
According to the committee, the project now requires at least Sh3.68 billion to be completed.
It emerged that the protracted dispute between the National Treasury and the contractor was costing the Exchequer Sh600 million every year, on accrued interest.
Records show that the project's cost rose from Sh800 million to more than Sh5 billion in a span of four years.
“We are calling on the National Treasury to fast track full payments to ensure completion and operationalisation of the data recovery centre and ensure safety of data," said Kuria.
Kitui Rural MP David Mboni, a member of the committee, said that with time the project cost would rise to Sh13 billion if the matter is not resolved urgently, making it one of the most expensive IT projects in the continent.
Mr Mboni said that with the court ruling that awarded the contractor Sh5.4 billion, the cost was rising every month yet the facility had stalled.
