a presentation on complaints and appeals mechanism in kenya

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A PRESENTATION ON COMPLAINTS AND APPEALS

MECHANISM IN KENYA

TO E.A.PROCUREMENT FORUM BY MR. P. M. GACHOKA

CHAIRMAN, ARB-KENYA

Presented on the 11th day of June, 2008

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BACKGROUND• Appeals Board was established by Regulation

41(1) of the Exchequer & Audit (Public Procurement) Regulations, 2001 as Public Procurement, Complaints, Review and Appeals Board- gazetted in November, 2001

• Board’s mandate was to deal with complaints submitted by candidates in accordance with the Regulations

• Established to provide aggrieved bidders with a opportunity to seek redress on the breaches of the Act/Regulations by the PE’s

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Background continued

• Board continued by Section 25 of the Public Procurement & Disposal Act, 2005 as Public Procurement Administrative Review Board

• Comprised of nine members appointed by Minister of Finance pursuant to Regulation 68(1) of the Public Procurement & Disposal Regulations, 2006

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Summary of PPCRAB/PPARB Appeals from 2001 to May, 2008

Year Total no of Appeals

Successful Appeals

Dismissed Appeals

Withdrawn Appeals

Appeals taken to Judicial Review

2001 12 2 8 2 0

2002 44 23 15 7 4

2003 33 22 10 1 10

2004 46 21 24 1 14

2005 52 28 22 2 4

2006 58 18 37 3 9

2007 70 22 44 4 10

2008 May, 2008

16 7 7 2 2

TOTALS 311 128 149 22 54

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THE 2005 ACT AND REGS, 2006

• Was the last step in legal reform of the public procurement sector started in 1997

• Assent to Act - 26 Oct 2005

• Commencement date- 1st Jan, 2007- via LN No. 171/2006

• PP&D Regs. of 2006 – est. by LN. No 174/2006

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THE 2005 ACT AND REGS, 2006

Act extended the frontiers of Admin Review to include reviews emanating from DG’s power to:

• Ensure Compliance directed to PE’s –under Part VIII

• Debar errant Tenderers from participating in public procurement – under Part IX

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THE BOARD

• Sec. 25(1) The PPCRAB was continued as the PPARB, with similar functions; to deal with complaints submitted to it

• Is a quasi-judicial body – must apply due process and the rules of Natural Justice

• PPOA provides admin services and Secretary to Board

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COMPOSITION AND MEMBERSHIP OF BOARD -1

• Minister appoints 6 members from amongst 28 nominees of 14 institutions: 50% of the institutional nominees should be women - Reg. 68(1)&(2)

• serve for a term of 3 years, renewable once - Reg. 67(1)

• Reg. 69 - quorum is 3 members, including the Chairman

• The Secretary may, in consultation with chairman, constitute panels of 3 Board members. Each panels to appoint its own chairman

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COMPOSITION AND MEMBERSHIP OF BOARD - 2

• Reg. 69(4) - decisions of board are by simple majority; Chairman’s position prevails in case of a tie

• Reg. 71 - Board members may be removed from office due to inability to perform functions due to infirmity; bankruptcy; conviction under Penal Code, Anti-Corruption and Economic Crimes Act, or the Act or Regulations.

• Board members’ allowances are met by the PPOA

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JURISDICTION AND MANDATE ISSUES - 1

No jurisdiction or Ltd Mandate where:

1. Act does not apply under Sec 4 (2): a) Where employer-employee relationship is

created by PE;

b) Where PE procures goods disposed by another PE per Sec. 129(3)(a); and

c) Where PE acquires services provided by the GoK or a department of the GoK.

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JURISDICTION AND MANDATE ISSUES - 2

2. In instances of negotiated grants or loans only, under a treaty or other agreement to which Kenya is a party, and Act conflicts therewith - Sec. 6(1)

-i.e. the instrument governing the negotiated grant or loan prevails

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JURISDICTION AND MANDATE ISSUES - 3

3. Limited mandate in Procurements where a condition in a donor agreement overrides the provisions of the Act –per Sec 7.

4. Procurements where the complainant is not a Candidate in a tender - Sec. 93(1). Candidate def. - Sec 3(1) person who has submitted a tender

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JURISDICTION AND MANDATE ISSUES - 4

5. Procurement matters which are statutorily exempted from the purview of admin review under Sec. 93(2) include :

a) Choice by a PE of a procurement procedure under Sec. 29 – Not a competitive adjudicatory step in the tender competition.

b) Decision by PE under Sec. 36 to reject all tenders, proposals or quotations. – Not a competitive adjudicatory step in the tender competition.

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JURISDICTION AND MANDATE ISSUES - 5

c) Where a contract is signed in accordance to Sec. 68. Intention is to protect the sanctity of contractual relationships, which conform to law, thus may be adjudicated upon only by courts

d) Where an appeal is frivolous under Sec. 93(d). By Sec. 95 PPARB determines the issue of frivolity

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JURISDICTION AND MANDATE ISSUES - 6

6. Reg. 73(2) - Where request for review is not made within 14 day Appeal Window from either:- occurrence of breach, or- notification of award pursuant to Secs. 67 or 83. (choice is Applicant’s)

7. Where request for review is not accompanied by prescribed fee per Reg. 73(3)

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JURISDICTION AND MANDATE ISSUES - 7

8. Where, in terms of Sec. 97(2), an appeal will stay or delay procurement proceedings beyond the time stipulated in the Act or the Regs.

• E.g. where a complaint is filed and tender validity period or tender security has lapsed at or prior to completion of the hearing.

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TYPES OF REVIEWS – 1Procurement Proceedings

1. Review of Procurement Proceedings under Part VII.

a) The conduct of procurements and the adjudication of awards by PE’s may be reviewed by the PPARB Sec. 93(1).

b) Candidate must claim to have suffered or risk suffering due to a breach of duty imposed on PE by the Act or the Regulations.

c) Majority of reviews are likely to continue to be those on procurement proceedings, rather than the new types of review. i.e. DG Powers to debar and investigate.

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TYPES OF REVIEWS - 2

d). Information which can be availed to a tenderer on request, or for use in review includes :

i. The Summary of evaluation and comparison of tenders and (Sec. 45(2)(e) read together with Sec.44(3)

ii. Evaluation criteria used Sec 45(2)(e)

iii. Tender opening register Sec. 60(6)

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TYPES OF REVIEWS – 3aDG’s Compliance Orders

2. Review of DG’s Compliance Orders under Part VIII

a) Sec.102 empowers DG to enforce compliance to law by PE’s, and to investigate breaches of the law.

An Investigator appointed by DG submits a report to him on these.

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TYPES OF REVIEWS – 3b

b) If DG is satisfied that there has been a breach of the law he may make the following Compliance Orders under Sec. 105(1):

• Direct PE to rectify the contravention• Cancel the procurement contract• Terminate the procurement proceedings• Submit recommendations to PE and KACC

c) Sec 132 applies Part VIII, i.e. on PPOA’s powers of ensuring compliance, to disposal proceedings. Thus DG may also make such Compliance Orders with regard to Disposals.

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TYPES OF REVIEWS – 3c

d) Under Sec. 105(2), DG can only make Compliance Orders after giving a hearing to any person who will be affected i.e. persons who can be parties to the review Sec 109.

e) Sec. 106 – PPARB can review DG’s Compliance Order. Review may be initiated by person affected by order. Applicant’s right to review is additional to any other legal remedy - Sec 113.

f) Under Secs. 108 and 110, Board must convene meeting within 21 days, and the review must be completed within 30 days

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TYPES OF REVIEWS – 4aDG’s Debarment Orders

3. Review of DG’s Debarment Orders under Part IX.

DG may impose debarment sanction against errant tenderers

Object is to prohibit a person from participating in procurement proceedings – See Sec. 115(1)

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TYPES OF REVIEWS – 4b

Grounds for debarment include :a) Under S.115

• Commission of an offence under the Act• Commission of offence relating to procurement

under any Act• Breach of a contract for a procurement by a

public entity, • In procurement proceedings, giving false

information about qualifications• Refusal to enter into a written contract under

Sec.68, having been the successful tenderer

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TYPES OF REVIEWS – 4c

b) Breach of code of ethics under Reg. 91, is a ground for debarment

• Para.14 of Transitional Provisions in Third Schedule provides that pre-Act breaches constitute grounds for debarring a person under Sec. 115 – no limitation of time

d) Reg. 91 – Debarment Order extends to:- person debarred, and any firm in which debarred person has a controlling interest.

• Debarment is for a min. of 5 years - Sec. 15(3).

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TYPES OF REVIEWS - 5f) Before issuing Debarment Order, DG must :

(i) Grant accused person a hearing - Sec. 116. Thus need for due process, and the application of the rules of natural justice

(ii) Obtain the approval of the PPOA’s Advisory Board.

g) Sec. 117(1) - PPARB can review DG’s Debarment Order. Review may only be initiated by debarred person. Applicant’s right to review is additional to any other legal remedy - Sec 124.

h) Secs. 119 and 121 - Board must convene within 21 days, and review must be completed within 30 days.

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REQUIREMENTSFOR FILING REVIEW REQUEST

I ) Review of Procurement Proceedings

• Under Sec. 93(1), request must be by a candidate who have suffered /risk suffering loss/damage due to breach of duty imposed on a PE by Act or Regulations in the manner prescribed in the Regulations

• Under Reg. 73(1), request must be filed in Form RB1 set out in the Fourth Schedule of the Regulations.

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REQUIREMENTS CONT’

• Under Reg. 73(2) the request must :

a) State reasons for complaint and the alleged breach of the Act or the Regulations;

b) Be accompanied by statements in support of request;c) Be made within 14 day “appeal window” from

occurrence of breach or from notification of award; d) Be submitted in 15 bound copies and a soft copy with

pages consecutively numberede) Be accompanied by non-refundable fees prescribed in

Part II of the Fourth Schedule of the Regulations.

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REQUIREMENTS CONT’

c) Be filed with the Secretary upon the payment prescribed fees. Secretary notify PE

d) Notification suspends procuring proceedings pending review

e) Board decision made within 30 days and is final unless judicial review commenced within 14 days

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REQUIREMENTS FOR FILING REVIEW REQUEST -2

II. Review of DG’s Compliance Order and Debarment Order

1. May only be made by the person adversely affected by the Order – Sec. 106(1) & 117(1)

2. Must be made within the appeal window of 21 days after the DG’s Order was made - Sec. 106(2) & 117(2)

3. Must be filed Form RB 1 in the Fourth Schedule 4. Must be accompanied by a Kshs. 20,000.00 fee

prescribed in Part II of the Fourth Schedule – See Sec. 106(3), 117(3) & Reg. 73(1).

5. To date no appeal has been filed on DG’s orders

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CONDUCT OF ADMINISTRATIVE REVIEW PROCEEDINGS -1

1. Once review is filed Secretary notifies PE of suspension of proceedings – Sec 94.

2. Board may dismiss frivolous requests of the three types of review – Secs. 95,107, & 118 if the request is frivolous or vexatious.

3. Parties to the respective types of review are as identified in Sections 96, 109 & 120.

4. The Board must complete review within 30 days from the date of receiving the request – Secs. 97, 110 & 121.

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CONDUCT OF ADMINISTRATIVE REVIEW PROCEEDINGS -2

5 Sec. 98, 113 & 124 – The right to request a review does not diminish the applicant’s other legal remedies.

6 No investigation may commence or continue in relation to an issue that is under review or has been reviewed – Sec. 114 unless new information is brought to DG’s attention that was not brought before the Board.

7 Regs 73-88 detail some of the key procedures in the review.

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COMMON BREACHES

• Section 29; failure to sue standard tender documents

• Section 34 on the PE’s specific requirements –tailor made specifications

• Section 37 regarding form of communications

• Section 44 and 45 e.g. PE’s failure to provide evaluation summary

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BREACHES CONT’

• Section 51 -invitation to tender• Section 52; information to be contained in tender

documents to allow fair competition• Section 58- submission and receipt of tender documents• Section 62; PE’s failure to seek clarifications

/clarifications causing modifications on the tender • Section 64 and 66 on responsiveness and evaluation of

the tenders; introduction of new evaluation criteria• Section 67; simultaneous notification of award to

bidders/notification outside tender validity period

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BREACHES CONT’

• Section 82; evaluation where PE’s use RFP

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BOARD’S REMEDIES - 1

1. On Review of Procurement Proceedings:-Board’s powers-Sec. 98 :

a) To Annul the entire procurement proceedings or anything the Procuring Entity has done therein.

b) Give Directions to the Procuring Entities with respect to anything to be done or re-done in the procurement proceedings.

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BOARD’S REMEDIES - 2

c) Substitute the PPARB’s decision for any decision of the Procuring Entity e.g. make direct award to an aggrieved bidder.

d) Order the payment of Costs as between the parties

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BOARD’S REMEDIES - 3

2. On Review of Compliance Orders

and

Debarment Orders made by the DG

Secs 111 & 122 empower the Board to:

a) Confirm, Vary or Overturn the DG’s order.

b) Order the payment of Costs as between the parties to the review.

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CHALLENGING ADMINISTRATIVE REVIEW DECISIONS- 1

1. The Board’s decision is final and binding unless judicially reviewed or appealed against in the High Court – Sec. 100

2. Two distinct methods of challenging the decisions of the PPARB available under the Act:

• Judicial Review under Sec 100(1), in respect of Procurement Proceedings,

• Appeals under Secs. 112 and 123, in respect of the DGs Compliance Orders and Debarment Orders

3. Sec. 100(2) challenge procedure disjointed – provides for appeal, not JR to the High Court

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CHALLENGING ADMINISTRATIVE REVIEW DECISIONS - 2

4. Judicial review is a special procedure by which the High Court superintends over the activities of an inferior tribunal. It is a discretionary jurisdiction. In JR, court reviews the decision of the inferior tribunal and may only issue the following orders:

a) Certiorari - to remove the decision of the lower tribunal to the high court, to enable the decision to be quashed;

b) Mandamus - to order the lower tribunal to do something

c) Prohibition - to order the lower tribunal to refrain from doing something

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CHALLENGING ADMINISTRATIVE REVIEW DECISIONS - 3

5.Appeal invokes wider latitude of court’s jurisdiction. HC’s role is both to review decision, and to correct, vary, reverse, substitute or remit it for reconsideration by the lower tribunal. Court constitutes itself a trial body for purposes of rendering its decision.

6.Sec.100 – HC’s decision to be final only in respect of appeals on procurement proceedings. HC’s decision remains open to appeal in CA. Thus, the proceedings are opened up to endless litigation.

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CHALLENGING ADMINISTRATIVE REVIEW DECISIONS - 4

7. Sec. 100(3) - Any action of a party contrary to decision of Board or HC is a breach of the Act and null and void.

8. Sec. 100(1) – Judicial Review must be commenced within 14 days of Board’s decision. No timeframe is given for commencement of appeal against the Board’s decision in procurement proceedings.

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CHALLENGING ADMINISTRATIVE REVIEW DECISIONS - 5

7. Sec. 100(4) – If JR is not declared by the High Court within 30 days from date of its filing, the Board’s decision takes efffect

8. Secs. 112 and 123 – Appeals against the decision of Board in respect of Compliance Orders and Debarment Orders, must be filed in the HC within 14 days after decision is made.

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CHALLENGES OF THE BOARD

• Strict timeframes to conclude the reviews• Lack of capacity to enforce its decisions-board

functus officio once it renders decision• Erratic flow of requests for review• Balancing of commercial and public interests• Reluctance by PE’s to submit required

information within stipulated period/ prior to the hearing

• Awarding of costs to parties

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CHALLENGES CONT’

• Increased complexity of appeals due to:parties becoming more aware of their legal

rightsIncrease in parties raising preliminary

objectionslegal representations of the parties making

hearings more legal

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CONCLUSION

• Rapid increase of appeal from year to year/indication of public confidence

• All appeals heard within statutory period of 30 days from date of filing

• Board provided check and balances in the procurement process

• Existence of the Board enhanced/instilled transparency, prudence and fairness in public procurement system in Kenya

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THE END !!!

THANK YOU FOR

YOUR ATTENTION !