The Court of Appeal has dismissed an appeal by a Finnish company challenging the disqualification of its bid for a Sh1 billion tender to supply port equipment.
The Kenya Ports Authority issued a tender for the supply, testing and commissioning of 14 new reachstackers (heavy-duty vehicle specifically designed to lift, stack and transport shipping containers in ports) limited to four prequalified Original Equipment Manufacturers whose machinery was already in active use at the port.
Kalmar’s bid of about of Sh747,958,865 was the lowest, undercutting the eventual winner, Amberton Holdings FZC, by Sh190,372,412.
However, KPA disqualified Kalmar at the financial evaluation stage after discovering the firm had altered the pre-set quantity in a section of its price schedule from 14 down to one.
Aggrieved, Kalmar challenged the award of the contract to Amberton Holdings, an authorised agent representing Shanghai Port Machinery Heavy Industries Company Limited.
The Public Procurement Administrative Review Board upheld
the disqualification on April 7.
A subsequent judicial review application before the
High Court was also dismissed on May 28.
The company held that the entry was a typographical error.
“The appellant maintained that this clerical slip was a minor error of form, not substance and did not grant the appellant any unfair competitive advantage,” the court heard.
“It was contended that under Section 79(2) of the PPAD Act, minor errors and oversights that do not materially alter the scope, quality, performance, or competitive playing field must be protected to ensure substance prevails over rigid form.”
The firm argued that its total bid sum remained unambiguous and that KPA should have sought clarification before disqualifying it.
It also challenged Amberton’s eligibility, arguing that as a trading intermediary based in the Umm Al Quwain Free Trade Zone, it was not one of the four named Original Equipment Manufacturers permitted to participate in the restricted tender.
The respondents, however, argued that correcting the error would have fundamentally altered Kalmar’s tender sum, giving it an unfair advantage and violating the principle that a tender sum, once opened, is “absolute and final” under Section 82 of the Public Procurement and Asset Disposal.
Court of Appeal judges Wanjiru Karanja, Hellen Omondi and Lucy Njuguna held that the pricing error was not a minor slip but a material deviation.
Addressing the appellant’s contention that rejecting the lowest bidder prejudiced public funds, the judges agreed with the lower court's finding that "value for money cannot be extracted from a non-responsive bid".
“To force a public entity to award a contract based on a low price at the expense of compliance, operational viability and parts interchangeability would completely undermine the integrity of national public economic interests.”
Kalmar was ordered to bear the costs of both the appeal and the High Court proceedings.
