NHIF will now be forced to award the Sh836 million life insurance tender to UAP after a rival firm withdrew a suit it had filled in the High court.
CIC insurance gave up the court battle on Tuesday.
This paved way for UAP which had been awarded the tender after a protracted legal duel at the Public Procurement Administrative Review Board (PPARB).
"Take notice that CIC Life Assurance has withdrawn the Chamber summons application dated February 8, 2018," CIC lawyer Eric Gumbo said.
The tender is for provision of life insurance to thousands of civil servants, police and prison officers.
NHIF had initially awarded the lucrative tender to Britam and Pioneer Assurance.
However, the review board in a landmark ruling annulled the tender citing breach of several procurement laws.
UAP was the lowest evaluated bidder at Sh797,623,500 while Britam and Pioneer submitted bids of Sh836,946,330 and Sh852,284,830 respectively.
The price difference between the sum at which the successful bidders were awarded the tender and that offered by the lowest bidder is approximately Sh40 million.
The board, which is headed by lawyer Paul Gicheru, put NHIF on the spot and said detectives could take over the matter if they so wish.
This is because NHIF awarded the tender as a joint venture yet all the 11 bidders, who were eyeing the contract, participated as individual companies with each quoting its own price.
"The Board has looked at all the original tender documents and notes that none of the bidders submitted their tenders as a consortium or as a joint venture," PPARB said.
"No consortium or a joint venture agreement was included in the separate bids submitted by the alleged successful bidders."
NHIF instead relied on a joint Britam, Pioneer letter dated December 29, 2017 as the basis of the joint venture yet the tender had already been awarded on November 10 to the two firms.
"The fact that a letter dated December 29, 2017, could lead to a recommendation of award on November 10, 2017 is a matter that would in itself require investigation by the relevant authorities that are empowered by law to do so if such authorities deem it fit," the Gicheru team ruled
In the ruling, the Review Board censured NHIF for wiring Sh418,473,165 to Britam and Pioneer as advance payment yet an appeal with the board had already been lodged.
In the ruling, the board stamped its authority and asked Britam and Pioneer to refund the advance claim.
"If the position on the payment advice is correct, it is obvious that the advance payment was made after this request for Review was filed on January 15, 2018."
"An order of stay of any further procurement proceedings relating to the procurement process had also been issued," the board said.